IN THE NAME OF FAIRNESS AND CHECKS

Existence of 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 138^th 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.

Considering 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 seaward.

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.

NIKITA CHITALE

Advocate