Originally published on Mediate.com, August 2018.
Mediation is a non-judicial means of dispute resolution, and it has become very prevalent because of the disadvantages or limitations faced in litigation. Mediation or conciliation has been in UAE for centuries as it has helped resolve disputes cheaply, efficiently and expediently. Sulh or amicable settlement has a long history within Arab and Islamic societies and has its roots in pre-Islamic Arabia. Sulh is the preferred result and process in any form of dispute resolution.
As per the voting results of the Global Pound Conference (Dubai) 2017, 67% of the voters feel that financial and time constraints are the main obstacles or challenges that parties face when seeking to resolve commercial disputes, and other major challenges voted were uncertainty and emotional and cultural constraints. It is widely accepted that litigation is a very costly and time-consuming mechanism for resolution of disputes and it destroys the commercial or personal relationship between the parties. In the past few decades, UAE has experienced an exponential amount of commercial growth and investment, but this has also increased commercial and labour disputes – effective and timely settlement of which is extremely important for UAE to maintain itself as a stable and attractive business and commercial hub.
In this article, we track the legal and regulatory framework surrounding mediation and conciliation in federal UAE and Dubai.
Mediation in UAE and Emirate of Dubai
A. UAE Federal Law
UAE does not have a dedicated law to cover all necessary aspects of commercial, family or labour mediation. Broadly speaking, mediation can be divided into two categories: compulsory mediation and voluntary mediation.
Compulsory or mandatory mediation is a dispute resolution process in which the parties are required, under the applicable law, to go through the mediation process before they can move to a court. Voluntary mediation is, as the name suggests, a dispute resolution process where parties opt to go through mediation voluntarily as opposed to being forced by any law to do so.
UAE Federal Law Number 17 of 2016 (the Mediation Centre Law) provides for the establishment of mediation and conciliation centers for civil and commercial disputes. Article 2 of the Mediation Centre Law provides that the minister or head of the local judicial authority can establish one or more mediation and conciliation centers within the jurisdiction of the Court of First Instance. Article 3 of the Mediation Centre Law provides that parties can refer the following kinds of dispute to such centers:
- A civil or commercial dispute not exceeding AED 500,000,
- A civil or commercial dispute of unknown or non-estimated value.
However, Article 4 of the Mediation Centre Law provides that the following disputes cannot be referred to a mediation and conciliation centre:
- Urgent and temporary orders and lawsuits,
- Lawsuits in which the Government is a party,
- Rent lawsuits settled by committees specialised in rental disputes,
- Labour lawsuits,
- Personal status lawsuits,
- Any other lawsuits decided to be settled before another Centre, committee or entity of similar competence.
The Mediation Centre Law further provides the duties and obligations of conciliators, work procedures, termination of mediation and conciliation proceedings etc. It is important to note that Article 15 of the Mediation Centre Law provides that the settlement reached in a mediation and conciliation proceeding is final and the judge overseeing the centre shall have the power of a writ of execution, and the settlement cannot be appealed in any way.
UAE Federal Law Number 26 of 1999 (the Conciliation Committee Law) provides for the establishment of conciliation and reconciliation committees at the Federal Court. Article 1 of the Conciliation Committee Law provides that one or more Conciliation and Reconciliation Committees can be set up at the seat of every Civil of Sharia Federal Court of First Instance, and Article 2 provides that such committees shall be competent to settle civil, commercial and labour disputes of whatever value. Article 3 of the Conciliation Committee Law further provides that the Federal Court of First Instance where such committee is established cannot register a case unless the concerned parties submit a no objection certificate issued by the concerned Conciliation and Reconciliation Committee. Furthermore, Article 7 of the Conciliation Committee Law provides that if an agreement is reached between the parties then it shall be final and the competent court shall have the force of the writ of execution and it cannot be subject to any further review or appeal.
UAE Federal Law Number 8 of 1980 (the UAE Labour Law) provides provisions related to UAE labour law. Article 6 of the UAE Labour Law provides that in case of a dispute the employer, the worker or any beneficiary thereof shall file an application to the competent Labour Department that shall then summon both the parties and aim to resolve the dispute amicably.
Federal Law Number 28 of 2005 (the Personal Status Law) governs the legal issues related to disputes arising out of personal status. Article 16 of the Personal Status Law provides that disputes related to personal status matters shall be first referred to the Family Orientation Committee which shall be responsible for conciliation between the parties. If the parties reach a settlement, then it should be recorded and upon sanction by the competent judge, it shall be enforced as an executory deed and shall not be appealed unless there is a violation of the provision of the UAE Labour Law.
Law Number 16 of 2009 (the Amicable Centre Law) provides for the establishment of the Center for the Amicable Settlement of Disputes in Dubai. Article 4 of the Amicable Centre Law provides for the jurisdiction of the Centre. It states that the Centre shall have jurisdiction over all disputes, except:
- Summary and interim orders and actions,
- Actions to which the Government is party,
- Actions beyond the jurisdiction of the Courts,
- Actions registered before the Courts prior to the coming into force of the provisions hereof.
Article 12 of the Amicable Centre Law provides that if the parties settle, their settlement shall be recorded in the form of a reconciliation agreement as approved by the competent judge and shall have the force of an executive bond.
Furthermore, as per Article 1 of the Dubai Administration Decision Number 1 of 2017, the Centre shall have jurisdiction in the following matters:
- Division of common ownership,
- If the value of the debt principal in a dispute does not exceed AED 100,000,
- At the request of the disputing party or both parties upon registration,
- At the request of both parties in cases raised before the courts of first instance, or commercial, civil, or real estate courts regardless of the values involved following the approval of the competent chief judge of the circuit,
- Request of the appointment of an expert.
C. Dubai International Financial Center (DIFC)
The Rules of DIFC Court 2014 (the RDC 2014) apply to all DIFC Court proceedings in the Court of First Instance and the Court of Appeal.
Rule 27.1 of the RDC 2014 provides that the Court can encourage parties to consider alternative dispute resolution as a means of resolving disputes. Rule 27.2 further provides that the settlement of disputes by use of alternative dispute settlement mechanisms helps parties save the cost, time, commercial relationships and provides a border range of solutions than litigation. Rule 27.2 provides that judges will, in appropriate cases, invite the parties to consider whether their dispute could be resolved through alternative dispute resolution.
Contractual Mediation in UAE
Parties are also free to resolve their disputes through private mediation by agreeing to a mediation or conciliation clause. Several mediation centers offer mediation services to parties in UAE: DMCC Mediation Centre, DIFC-LCIA Arbitration Centre, Abu Dhabi Commercial Conciliation and Arbitration Centre.
Although UAE and any of its emirates do not have dedicated legislation for enforcing settlement agreements arising out of private mediation, the above analysis highlights the emphasis given to amicable dispute resolution processes by this Arab nation. It is advised that parties receive the help of experienced mediators and mediation counsels to ensure that they understand the process and mechanism to negotiate effectively for their rights.
Read the original article here.
Written by Sandeep Bhalothia & Vizita Singh.
Sandeep Bhalothia is an in-house lawyer working with an aviation company in Dubai. He is a member (MCIArb) with the Chartered Institute of Arbitrators (CIArb, U.K.) and a law graduate with first class degree from Jindal Global Law School (India). He also studied arbitration subjects (from LLM course) at Tsinghua University as a semester exchange student. Sandeep is also associated with Arbitrator Intelligence, LehmanBush, The PACT and WHO LDP.
Vizita Sing has completed her masters in Commerce (MCom) and is currently enrolled as an LLB Candidate in Avadh Law School (U.P., India). She has a keen interest in commercial and business aspects which has motivated her to do law after her masters in commerce.