Alternative Dispute Resolution
12 mons ago
Advocate NIKITA CHITALE
Category : Alternative Dispute Resolution
Well the whole
point and principal behind Arbitration is that the Arbitral Tribunal (“AT”)
must act fairly and without any partiality while formulating the final award,
however does this come at the stake of penalising the Arbitrator or can an
Expert witness be penalised for delivering his expert opinion? Due to the
recent amendment in the United Arab Emirates (hereinafter referred to as “UAE”)
this is a possible scenario.
Dispute resolution in the Middle East has been cumbersome historically speaking
since there was lack of uniformity in laws and the Dispute Resolution
regulations were not in consonance with the standard international law.
However, the execution of the International sense of Dispute Resolution has
been established by means of the local arbitration institutions, namely the Abu
Dhabi Commercial Conciliation and Arbitration Centre (“DIAC”) and the Cairo
Regional Centre for International Commercial Arbitration (“CRCICA”). At the end
of 2006, UAE became the 138th State to adopt the New York Convention
and 2008 the UAE government firstly
enacted a brand new arbitration law; secondly,
DIFC enacted a jurisdictionally inclusive arbitration laws and; thirdly DIFC and the London Court of
International Arbitration came together to initiate the DIFC-LCIA Arbitration
Centre. From then onwards Dubai has promoted them as an arbitration friendly
zone in order to allure the International investors.
As we speak in
the present times, the recent amendments in the penal laws of UAE has put
arbitrators and Experts into terror and there has been an increasing number of
arbitrators disengaging themselves with the UAE-seated Tribunals and are
rejecting nominations at the same time.
Article 5 of
UAE Federal Penal Code No. 3 of 1987 has been amended by the Federal Decree Law
No. 7 of 2016 and it has its application in the DIFC and ADGM, the aforesaid
amended Article reads as under:
“Anyone who issues a decision, expresses an opinion, submits a report,
presents a case or proves an incident in favour of or against a person, inc
contravention of the requirements of the duty of neutrality and integrity,
while acting in his capacity as an arbitrator, expert, translator or fact finder
appointed by an administrative or judicial authority or selected by the
parties, shall be punished by temporary imprisonment.
The aforesaid categories of persons shall be barred assuming once again
the responsibilities with which they were tasked in the first instance, and
shall be subject to the provisions of Article 255 of the law.”
Form the bare
reading of the same, it becomes evident that the initiation of the criminal
sanctions which might lead to a sentence of 3 to 15 years, places the arbitrator
in a pedestal far more dangerous further when the scope of the offence is
in-definitive, since the terms “integrity”
and “impartiality” are not defined
under the UAE Criminal law. Arbitration proceedings which were far from the
horizon of the Police, now under the UAE law by the way of a complaint to the
Police Authorities alleging that the Arbitrator has breached Article 257, as a
consequence it will frustrate the arbitration proceedings and create a ruckus
for the Arbitrator.
the fact that the statute includes the Experts, it is not a shocker that they
are resigning from their role in on-going arbitrations to not attract such
penal charges on the mere ground of their expert opinion on the matter. Because
of the great influence of Shariah law and the difficulty in enforcement of
schemes and regulations, various foreign investors alongwith renowned Lawyers
and Experts have recused themselves from seating their arbitrations in
UAE. The amendment in the Federal law
leaves several questions that would have to be addressed by the Courts, leaving
the essence of arbitration infructuous and the interest of the Companies
Thus, the idea
of ADR friendly UAE becomes vague or rather more costing. It is a known fact
that International companies and their investors calculate their chances of
dispute resolution and thus recent change has drawn out potential foreign
investor to avoid hassles of criminal prosecution.
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