UAE Dispute Resolutions — What Israeli Companies Should Consider
Written by Yair Geva and Ayalah Teitelbaum.
In light of the recent Normalization Agreement made between Israel and The United Arab Emirates, Israeli companies, among other international companies, are excited by the business prospects this may bring. In order for businesses to take advantage of this bright, new future, they must consider the legal system operating in the UAE, and how it might affect companies looking to expand their business there.
In particular, companies must take into consideration the different ways commercial and civil disputes are resolved in the UAE.
The UAE is made up of seven Emirates, each with its own set of individual laws. The federal UAE Law overrides any individual Emirate laws in the event of a clash between the two. The legal system in the UAE is one of civil law, while it also contains two independent and separate financial centers (economic free zones), which have their own legal jurisdictions: the Abu Dhabi Global Market (ADGM) and the Dubai International Financial Centre (DIFC). These have their own laws based on a common law system and are not bound by the UAE’s commercial and civil laws.
The laws in these jurisdictions are heavily derived from English law, and they are written in English. The courts in these zones include judges from the Emirates, as well as Singapore, Hong Kong and the United Kingdom.
The ADGM contains three authorities, which include a financial services regulator, a registration bureau and a court system. Since 2018 it has also been regulating trading of digital assets.
For a dispute to be processed by the ADGM or FIDC, an agreement must be made within the financial centers, executed within them, or have one the parties based in them. This is the case unless the parties have chosen a different jurisdiction in their agreement. If the aforementioned options don’t apply, the ADGM/FIDC courts may still have jurisdiction provided the parties included them as the governing law in their initial agreement. Since these centers are based on common law, they also have binding precedent, which allows for more legal certainty than the regular UAE legal system.
Within the regular UAE legal system, authorities have been encouraging parties in legal disputes to pursue alternative forms of dispute resolution.
In addition to traditional litigation, arbitration is also an option in the UAE; an option preferred by many companies. Mediation and conciliation are, while not as common, also viable options for dispute resolution. It is not uncommon for parties to include a mandatory mediation section in their agreement, stipulating that only if mediation fails are they allowed to seek litigation or arbitration. Agreements made through mediation are enforceable by the UAE legal system.
Abu Dhabi has been active in trying to encourage parties to seek alternative methods of dispute resolutions, and in certain types of disputes (civil, for example) will require that the parties seek a settlement with the Reconciliation and Settlement Committee before handling the dispute in court.
In Dubai, the Centre for Amicable Resolution of Disputes offers mediation for a variety of legal situations, and under certain circumstances the courts will refuse to debate a case before it has been submitted to the Center.
It is likely that we will see a more frequent use of alternative dispute resolutions in the UAE, as they are being encouraged by the authorities and many companies prefer them to the traditional method of litigation.
Companies should consider all these options for dispute resolutions as they look towards expanding their businesses and seeking new opportunities in the UAE.
