Enforcing Arbitral Awards In The UAE And Across Borders

With the UAE having entered the top five seats of arbitration in the International Chamber of Commerce (ICC), the country is officially evolving into a global arbitration powerhouse. Substantially replacing the traditional mode of litigation, arbitration is becoming a widely employed mechanism, especially in the arena of cross border commercial disputes. This draws us to the cruciality of enforcing the arbitral awards.

Understanding the Legal Framework of Arbitration in the UAE

The laws governing arbitration in the UAE are:

• The Federal Decree No. 43 for the Year 2006 Regarding the United Arab Emirates Joining the Convention of New York on Recognition and Enforcement of Foreign Arbitral Awards.
• The Federal Law No. (6) of 2018 Concerning Arbitration (as amended by Federal Decree-Law No. 15 of 2023) (the Arbitration Law)
• Federal Decree-Law No. (42) of 2022 Promulgating the Civil Procedure Code

Arbitral awards in the UAE are governed by strict procedural requirements.

• Article 41 of the 2018 law expressly mandates an arbitral award to be in writing,
• It shall be signed by a majority of the arbitrators.
• It shall contain the details as to the parties’ names and addresses, along with a copy of the concerned arbitration agreement, a summary of claims, and the date and place of its issuance.
• The award shall also plainly state the reasons upon which the award is based.
• The confidentiality of the award shall be maintained and may not be published in whole or in part without the written consent of the parties.

Enforcement of Arbitral Awards in the UAE

Arbitral awards carry the force similar to a court judgment. Once rendered by an appropriate arbitral tribunal, they shall be binding and shall have self-executing force as if they were a judgment, as expressly provided under Article 52 of the 2018 Arbitration Law

Enforcement of Foreign Awards in the UAE

The New York Convention

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly known as the New York Convention, is a foundational instrument in the arena of international arbitration. Adopted by the UN in 1958, the Convention aims to ensure that foreign awards, i.e., awards made in other member countries, shall be recognised and enforced with fewer hurdles in a domestic country. Hence, it plays a central role in the cross-border recognition and enforcement of foreign awards.

Recognising the evolving significance of arbitration and the UAE’s growing role in global businesses, the UAE ratified the Convention in the year 2006, as arbitration was becoming an effective alternative dispute resolution mechanism for commercial disputes. This was officially undertaken under the Federal Decree No. 43 for the Year 2006 Regarding the United Arab Emirates Joining the Convention of New York on Recognition and Enforcement of Foreign Arbitral Awards.

The New Civil Procedural Law (CPL)

The Federal Decree-Law No. (42) of 2022, Promulgating the Civil Procedure Code, repealed the old 1992 CPL. It expressly lays down the procedure for the enforcement of foreign judgments, orders and instruments, including foreign arbitral awards.

How to enforce your arbitral award?

Chapter Five of the 2018 Arbitration Law outlines arbitral awards, wherein its Article 55 specifically envisages their enforcement mandates.

• Request to the Chief Justice: Firstly, the party wishing to enforce the award shall duly submit a request to the Chief Justice of the Court of Appeal for obtaining a confirmation of the award and an order to enforce the same.
• Submission of required documents: The aforesaid request shall be accompanied by the original award (or a certified true copy) and a copy of the concerned arbitration agreement. The arbitral award shall be in Arabic or, in other cases, a translated version certified by an accredited body shall be produced. The party shall also submit a copy of the transcript of filing the judgment with the Court.
• Order to confirm and enforce the arbitral award: After the aforesaid steps are duly complied with, the court may, within sixty days from the date of submission shall order to confirm and enforce the arbitral award.
• Challenging the Enforcement of the Arbitral Award: Article 57 further supplements that to challenge an award’s enforcement, a party may file a complaint before the competent court of appeal against the Court’s decision to order or reject the enforcement of the award within thirty days from the date of such notification.

How to enforce your foreign arbitral award in the UAE?

Article 223 of the new 2022 CPL envisages that the provisions of its Article 222 on the execution of foreign judgments, orders and instruments shall also apply to the awards of arbitrators made in a foreign country.

However, it shall meet certain conditions:

• The foreign award must’ve been made on an issue that is arbitrable under UAE’s law.
• The award shall have the force of enforceability in the country in which it was issued.

Then the party may enforce such a foreign award in the UAE by:

• Execution Petition: The concerned party seeking to enforce the award may submit an execution petition to the Execution Judge for obtaining an order for execution.
• Submission of required documents: Along with the petition, the party shall also submit the relevant documents and details as outlined by the law (Article 44 of the 2022 CPL).
• Issuance of the Order: The Execution Judge shall issue their order within five working days from the date of its submission after due verification.
• Appeal: A party may appeal against the decision of the order within 30 days.

Grounds for Refusal of Enforcement of Arbitral Awards

Arbitration is considered to be a final, efficient and party autonomous dispute resolution mechanism globally, and hence challenging an arbitral award’s recognition and enforceability is often restricted to limited grounds.

In the UAE, the key legislation, the Federal Law No. (6) of 2018 Concerning Arbitration, under its Article 53 specifies the limited grounds upon which a court may refuse enforcement or nullify an award. While Article 53(1) envisages the reasons that a party can invoke by instituting an action for annulment of the award before the court, Article 53(2) provides grounds wherein the court shall invalidate the arbitral award on its own.

Reasons specified in Article 53(1):

• Arbitration Agreement: An arbitral award shall not be enforced if a party seeking the annulment of the award proves that there existed no arbitration agreement for the concerned matter, or that such agreement was void, constituting an invalid arbitration agreement. A party shall also challenge an expired agreement.
• Legal Capacity of the Parties: An award shall be challenged on the ground that one of the parties, totally or partially, lacked legal capacity at the time the arbitration agreement was concluded. Here, the legal capacity of the parties shall be determined in accordance with the law that governs their capacity.
• Proper Notice: An absence of proper notice to the other party regarding the appointment of the arbitrator(s) and the arbitral proceedings, thus causing difficulty for the other party to present their defence.
• Legal Principles: Any violation of basic litigation principles on the part of the Arbitral Tribunal.
• Composition and appointment of the Arbitral Tribunal: An award shall also be challenged if the composition of the Arbitral Tribunal or their appointment conflicts with the provisions of the UAE’s Law or the agreement of the parties.
• Limitation Period: The arbitral award was rendered after the due time limit.
• Scope of the Agreement: If the award dealt with matters beyond or ultra vires the concerned arbitration agreement, thereby exceeding the limits of such agreement, it shall be refused. However, the separability doctrine may be applied here, meaning only the parts of the award that are beyond the agreement shall be separated and held null.

Reasons specified in Article 53(2)

• Non-arbitrable disputes: The court shall invalidate the arbitral award on its own if the subject matter of the dispute is a matter in which Arbitration is restricted as per the law.
• Public order and morality: If the rendered arbitral award in any way contradicts the public order and morality of the State of the UAE.

What are the Practical Steps For Businesses

• Drafting Effective Arbitration Clauses: As we saw, the Arbitration agreement and its clauses play a fundamental and crucial role in the enforcement of an arbitral award.  Hence, determining and clearly inculcating clauses as to the seat, governing law, tribunal composition and language can be crucial.
• Ensuring Proper Notice and Due Process: Each party to the arbitration shall be given a fair opportunity to present their case. Any violation of these basic legal principles or the natural justice may result in the annulment of the award.
• Enforcement provisions: The agreement shall clearly define the governing law and applicable law. Parties may also identify where the opposing party’s assets are located and ensure that the chosen arbitration framework allows enforcement in those jurisdictions.
• Preserving relevant documents: Maintaining the proper records of notices, procedural steps, arbitration agreement and compliance throughout the arbitration proceedings, as these may be required during enforcement proceedings.

Hence, businesses shall seek early legal advice and engage experienced arbitration counsels from the stage of agreement drafting, arbitral proceedings, to their enforcement to ensure full and effective compliance with the award’s enforcement standards.