Litigation & Arbitration

Success in litigation can be a pyrrhic victory, and experienced attorneys know that litigation should be avoided when possible. Whether through settlement arising out of litigation or the use of alternative forms of dispute resolution such as arbitration or mediation, the right attorney minimizes conflict and cost in order to bring about the right result. Achieving this result in the UAE is a complex task suited for attorneys that understand the UAE legal system and can navigate it effectively and efficiently.

UAE Legal System

The UAE is a civil law country, with statutes and codes heavily influenced by the French and Roman legal traditions, Egyptian law, and the Islamic law codified in the Shari’a. UAE federal law is the highest law of the land, and is comprised of a number of statues and codes including laws relating to civil and criminal procedure, commerce, companies, intellectual property, immigration, maritime, industrial, banking and employment.

Courts in the UAE render decisions through judges rather than juries. Though the system does not operate based upon judicial precedent, a court’s past decisions can be persuasive, particularly where the Supreme Court espouses principles to serve as guidelines for other courts. Additionally, decisions are often based upon established usage and custom as well as the Shari’a, which can also serve as guidelines for a court in the absence of Supreme Court pronouncements.

Forums for dispute resolution in the UAE include federal courts, local courts, and Shari’a courts, each of which handle a distinct set of legal issues. Generally speaking, federal courts hear all matters for which those courts retain jurisdiction, local courts hear local issues relating to local issues such as property disputes, and Shari’a courts hear mostly family disputes among Muslims. It should be noted that the Shari’a applies in instances in which there are no specific provisions applicable to the case at hand.

Forums for Adjudication in Dubai

Although five of the seven emirates have adopted the UAE legal system, Dubai is one of two emirates with its own independent legal system, consisting of the Court of First Instance, the Court of Appeal, and the Court of Cassation. Dubai courts will apply UAE law as well as the pronouncements of the Ruler of Dubai where UAE law is silent on a particular issue. The Dubai court system is divided based on specialized areas of law; there is a civil division for civil claims, a criminal division for criminal cases, a Shari’a division for family disputes among Muslims, and specialized courts for labor and property issues. Additionally, Dubai houses a number of “free zones” intended to attract business and investment, which have their own laws and court systems that differ to varying degrees from non-free zones. Among these free zones is the Dubai International Financial Center (DIFC), as well as the Jebel Ali Free Zone and Dubai Media City. The DIFC has its own laws and courts based on English common law, and is the appropriate forum for disputes involving DIFC, relating to a contract executed in the DIFC, or where DIFC laws and regulations apply. DIFC judgments can be registered and enforced in Dubai courts, as can arbitration awards from the Dubai International Arbitration Centre, the DIFC’s LCIA, or foreign awards under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Dubai’s Federal Court System

The first step in the filing of any formal complaint in a UAE federal court is to submit that complaint to the Reconciliation and Settlement Committee, which will review the complaint and explore possibilities for settlement. The party instituting the proceeding will often apply for a no objection letter from the relevant reconciliation committee, which is often a condition precedent to referring the case to a competent court. Alternatively, the relevant reconciliation committee may look into the dispute and attempt reconciliation, referring the complaint to the relevant court only after alternative dispute resolution efforts have failed. Should the case proceed to litigation, the complaining party will face new challenges, particularly where non-Arabic speakers are faced with a UAE legal process conducted solely in Arabic, and in courts that only accept submissions in Arabic. UAE courts use experts appointed by the court rather than those proffered by parties to the dispute, and there is no formal discovery process.

UAE Federal Court Jurisdiction

UAE courts possess jurisdiction over cases that relate in some way to the territory; thus, if one of the parties is a citizen of UAE, is domiciled in UAE, or if the transaction took place in UAE, there would be a basis for instituting legal action in UAE courts. As in other legal systems, forum selection agreements will be enforced in UAE courts, thereby providing a jurisdictional basis for a lawsuit when no other basis exists. Furthermore, UAE courts have a kind of “emergency jurisdiction,” whereby a UAE court can determine preliminary applications for attachment of a defendant’s assets as well as urgent applications, even where the court would otherwise lack jurisdiction. Thus, if the putative defendant is a flight risk, if the assets available to satisfy judgment are soon to be concealed, or if the matter is simply urgent, a UAE court will hear the case.

Attachments, Execution Judgments and Enforcement of Judgments

Generally speaking, Dubai courts will enforce foreign judgments, arbitration awards, and awards from other tribunals such as those housed within the DIFC. The first step in the enforcement process is to register the judgment with the Dubai court. Once a foreign judgment is converted to a UAE judgment, it will be sent to the execution department of the relevant court, at which point the party responsible for the judgment must pay. Failure to pay can result in the attachment of that party’s assets by the court, and attached assets will be sold at public auction where practicable pursuant to the satisfaction of the judgment. If the party responsible for paying the judgment has no assets in the UAE, and there is a legitimate concern that party will fail to satisfy the judgment, a provisional attachment order can be granted by the court. In certain circumstances, a person may even be imprisoned if he fails to pay the amount due against him.

Enforcement of a local judgment can take place in many ways. Once a judgment is final and is certified by the execution court for execution, the procedures to enforce a local judgment include the following; attachment and sale of a debtor’s property, attachment and sale of real estate, attachment of stocks, bonds and shares. In most circumstances the judgment debtor is given fifteen days to pay the judgment amount that is due.

Foreign judgments may also be enforced in the UAE. A party wishing to enforce such a judgment should first file a petition for an execution order with the Court of First Instance. The Court of First Instance will consider a variety of factors in order to determine whether or not the foreign judgment or arbitration award may be executed. These factors include the following; the judgment or order is final, the UAE courts have no jurisdiction over the dispute in which the judgment or order has been passed, parties to the lawsuit were summoned and duly represented, the judgment or order does not conflict with or contradict a judgment or order passed by a court in the UAE. Either party may appeal a court order for the enforcement of a foreign judgment or award.

Appeals

An unsuccessful party may appeal against judgments made by the Court of First Instance. The appeal is filed with the Court of Appeal and can be made against judgments on commercial or civil actions. Only final judgments can be appealed. Even though interlocutory judgments or judgments on procedure may not be appealed, judgments delivered on precautionary attachment orders, objection applications and jurisdiction points are appealable. Findings of both fact and law may be appealed and the Court of Appeal allows the submission of further evidence.

The appeal must be filed within 30 days of the date on which the Court of First Instance delivers its judgment. The appellant must file a Memorandum of Appeal which details the summary of the judgment delivered, the grounds of the appeal and the action required from the Court of Appeal. New facts, evidence and arguments may be submitted at this point. The appeal can be on points of law or facts. Counter appeals are also permitted, so long as the counter appeal is filed before the first hearing date of the appeal. Once pleadings, memorandums and evidence have been submitted, and parties are done commenting on the submissions, the Court reserves the matter for judgment.

The Court of Appeal’s judgment is final and executable. Even though a party may appeal to the Court of Cassation, the judgment of the Court of Appeal will remain good for execution unless the Court of Cassation grants an interlocutory order to the stay the execution of the judgment. Every Emirate except the Emirate of Ras Al-Khaimah has a Court of Cassation. Federal judgments are within the jurisdiction of the Abu Dhabi Supreme Court of Cassation, which is also the constitutional court of the UAE. Dubai Court of Appeal decisions are subject to an appeal to the Dubai Court of Cassation. The time limit to file an appeal with the Court of Cassation is 60 days from the date the judgment is delivered by the Court of Cassation. Judgments delivered by the Court of Cassation are final. There are certain circumstances in which a party may request the Court of Cassation to review its judgment, these include instances in which an adversary committed fraud or if the verdict granted relief not claimed.

Choice of Law and UAE Arbitration Rules

It should be noted that UAE courts have jurisdiction to hear actions filed against both UAE nationals and foreigners having a domicile or a place of residence in the UAE. If UAE courts have jurisdiction than they will ignore a choice of law provision in a contract that is the subject of the civil claim. If the contract contains a provision that all disputes be referred to arbitration in another jurisdiction, then the UAE courts will recognize such a provision as long as the defendant relies on the arbitration clause at the first hearing of the claim.

An agreement for arbitration will be upheld as long as it is in writing. If there is a dispute as to the appointment of an arbitrator, the parties may request the court to appoint one for them. The arbitrator is required to deliver the award within six months from the date of the first hearing. Parties may agree to extend this deadline. Parties must also agree on procedure and rules of reference prior to the commencement of arbitration. Although the arbitration award once passed is not subject to any appeal, the award must be validated by the court in order for it to be enforced legally.