What is Dispute Resolution
The first port of call for business parties in dispute will generally be the dispute resolution clause of the contract that governs their relationship. This clause is often considered a ‘boilerplate’ provision that is left to lawyers at the time the parties are setting down the commercial terms and conditions they have negotiated at the start of their business partnership. However, to see the dispute resolution clause as a standard provision is to underestimate the fundamental importance of this clause that will come into play when disputes arise. This is because a contractual dispute resolution clause will not only set out the law that applies to a dispute but will usually also govern the process forum and rules that will govern the determination of that dispute. Most commercial contractual dispute resolution clauses will direct the disagreeing parties to follow a form of binding adjudicative form of dispute resolution – often mandating mediation or some other conciliatory dispute resolution process first.
Conciliatory forms of dispute resolution will require the parties to a dispute to work to resolve their differences by reaching guided agreement. This is often a successful way of determining a dispute to the mutual advantage of both cases – athough in some cases a binding outcome may not be achievable. This is why commercial disputing parties will usually choose a ‘back stop’ option in the form of a binding and moreover enforceable adjudicative process of dispute resolution either through formal litigation by way of the courts or through processes such as statutory adjudication and arbitration.
Arbitration as an adjudicative form of dispute resolution offers several advantages over formal court-based litigation proceedings some of which are briefly considered below.
Advantages of Dispute Resolution – Confidentiality
Arbitration proceedings and awards are usually confidential to the parties whilst court proceedings and judgements are often not. This is often an important consideration where sensitive or proprietary commercial information forms part of the subject matter in dispute.Advantages of Dispute Resolution – Appointment of Arbitrator
The rights of the parties to an arbitration to control the dispute resolution process through the selection of the arbitrator/s is also a key advantage over the court appointment of a judge or jury to determine a case. This applies in particular in complex cases which require some form of specialist knowledge or expertise. An arbitration process will allow the sole arbitrator or the panel of arbitrators to be selected by the parties based on their requirements for particular experience or expertise in the adjudicator who will determine their case. The arbitrator/s need not necessarily be lawyers or be legally trained. This means that parties can select an external party to determine their dispute based on his or her expertise in a particular field. This in in turn may lead to a more informed understanding of the complexities of a particular matter and accordingly to a more expedited, reasoned and equitable determination. In formal court proceedings a judge will of course be legally trained – but he or she may not be an expert in the subject matter of the dispute.
Advantages of Dispute Resolution – Control of Process and Costs
The parties to a dispute resolution process by way of arbitration are generally able to select the legal and procedural rules applicable to the dispute between them. This affords greater control of the timing, process and often of the costs of the proceedings.
Advantages of Dispute Resolution – Formality of Evidential Process
Hearings in arbitration proceedings are often less formal procedurally than a full trial in court. Parties to an arbitration can agree to have their arbitration hearing by way of documents only or can choose to have an evidentiary hearing of witnesses in any convenient setting of their choosing. Furthermore, the rules of evidence applicable to the evidence in the proceedings including the hearing can be simplified by agreement between the parties.
Advantages of Dispute Resolution – Enforceability
The decision of an arbitrator or tribunal and the ensuing award are generally enforceable through the court system. Only in certain situations including procedural irregularity or in instances in which an arbitrator or tribunal can be shown to have exceeded their authority or shown a lack of impartiality will the decision of an arbitrator or tribunal be reviewed by a court.
Considerations for Dispute Resolution through Arbitration in the UAE
Arbitration as a means of dispute resolution in the UAE received a boost last year through the promulgation of the widely anticipated new arbitration law Federal Law No. 6 of 2018. This Federal level Law repealed the limited previous laws governing arbitration which were buried within the UAE Civil Procedures Law No. 11 of 1992. The new law is based on the UNCITRAL Model Law on International Commercial Arbitration as adopted by the United Nations Commission on International Trade Law of 1985 and provides for a clear and comprehensive framework for the conduct of arbitral proceedings in the UAE.
The procedural certainty provided by the new Federal arbitral law described above in combination with the key advantages of arbitration as a process of dispute resolution considered below means that the resolution of disputes by way of arbitration should be a consideration for commercial entities in the region.
UAE businesses are advised to review the dispute resolution provisions governing their commercial contracts and to consider whether arbitration may in some cases be a more appropriate method of determining future disputes than the traditional route of litigation through the Courts.
