Executive Summary
This report examines specific provisions of the Arbitration Laws that govern the issuance of arbitral awards under the UAE Civil Law and the English Common Law. A comparative analysis is then conducted on the UAE Civil Law and English Law arbitral awards provisions. The comparison begins by identifying the four main areas that relate to the issuance of arbitral awards. The areas that are associated with the issuance of arbitral awards include their legal requirements, remedies, enforcement, and appealing or challenging the awards.
A well-defined methodology is applied to compare arbitral awards under the UAE Civil Law and English Common Law. First, an area related to the issuance of an award is introduced, and its overview provided. Secondly, the provisions of both the UAE Civil Law and English Common law are objectively analyzed in this area. Thirdly, a comparative analysis of the provisions of the two legal frameworks that govern arbitral awards is conducted. The comparison helps in determining which of the two laws provide an effective way of issuing awards. Finally, a conclusion of this comparison is provided in each section based on the latter determination.
Introduction
Arbitral Award
An arbitral award is also referred to as an arbitration decision or arbitration award. It is the decision or award made by a tribunal during the arbitration proceedings. The award is required to correspond to a court of law judgment. It is still known as an award, even if the claim made does not materialize. This implies that no party receives money payment (Aḥdab and El-Ahdab 23). There are various provisions in the arbitration laws that govern different areas of an arbitral award. These areas include legal requirements, remedies, enforcement, and appeals. An award contains certain legal requirements for it to be ratified and enforceable. Various remedies are selected by the tribunal selects while issuing an arbitral award, including payment of a specified amount of money, a declaration, or an injunction, among others. Moreover, there are specific provisions governing the enforcement of an award and the appeals against an issued award (Aḥdab and El-Ahdab 37).
Arbitral Laws under UAE Civil Law
The UAE Federal Law on Civil Procedure 1992 governs the UAE arbitration agreements. This law contains certain sections that govern matters of arbitration. These sections include Article 203 – 218 that regulates the framework of the arbitration. Next is Articles 235 – 238 that regulates the execution of foreign judgments and Section 239 – 243 that regulates the execution procedures (Aḥdab and El-Ahdab 45). Under this law, a wide range of both commercial and civil disputes may be presented for arbitration proceedings. There are treaties and conventions that govern foreign arbitration awards in UAE and form part of the domestic laws (Aḥdab and El-Ahdab 48).
Arbitration Laws under English Common Law
The Arbitration Act 1996 governs the arbitral awards under English Common law. This Act is divided into four parts, and the provisions of issuing arbitral awards are found in the latter end of the first part of the Act. Further, part three deals with the adoption of the New York Convention that is concerned with the recognition and enforcement of foreign arbitral awards (Ashford 473).
Arbitral awards under UAE Civil Law Vs English Common Law
Legal Requirements
Arbitration awards have specific legal requirements that may vary from one country to another, depending on the laws applicable in those countries. The requirements may also differ depending on the arbitration agreement terms of reference (Aḥdab and El-Ahdab 52).
Under the UAE Civil Law, arbitral awards have to be made in the Arabic language if the parties have not agreed otherwise. The awards are granted through a majority decision, and in case there is a dissenting opinion, it is attached to the award. The award’s body must constitute an express wording of the agreement, a summary of each party, and the evidence. Further, the award must contain the legal reason behind the award or the facts of the dispute, its place of issue, and date of issue. The arbitrators are supposed to sign every page of the issued award, and it is necessary that the terms of reference in the agreement be attached to the award (Aḥdab and El-Ahdab 58).
Additionally, it is necessary for an award to have a statement highlighting that an arbitrator has refused to sign an award in the event this occurs. An arbitral award is usually time-barred if it is not issued within the first six months after the hearing of the dispute in the arbitration proceeding unless the parties agree otherwise. If the parties need an interpretation or correction of the award, they can make an immediate application to the courts if there are no rules providing otherwise. Consequently, the court makes a specific request to the arbitrator to take care of the omissions from or clarifications to the award. This request must be fulfilled within three months after the arbitrator receives the court request (Aḥdab and El-Ahdab 67).
According to English Common law, where there are three or more arbitrators, a majority decision is required while issuing arbitral awards. The vote of the chairperson in a tribunal will prevail if it is not possible to obtain a majority decision. English law permits dissenting opinions, although they do not form part of the award. Parties have the liberty of coming up with the type of award they should be granted. It is required that such an award must be put in writing, and the signatures of arbitrators assenting to it should be included. If the tribunal has made an agreed award or the parties do not decide to do away with the reasons, then the reasons for this award should be given. Moreover, the award should state the seat of arbitration, and the date it was made (Ashford 483).
There is no time limit for a tribunal to issue an award. Nevertheless, a court has the power to extend any existing time limit that has been imposed through the arbitration agreement. This is done as long as the court is assured that the limiting time factor would result in an injustice. An award could be corrected when the parties forward an application to the court or a tribunal initiates the corrections. Corrections should be made before 28 days have elapsed from the time a tribunal grants the award. Upon the receipt of this application, a maximum of 28 days is taken to make the necessary corrections. On the other hand, corrections should be within 28 days of the award if the application is made as an initiative of the tribunal. Parties may decide to agree on different time limits; for instance, they may adopt the rules of an institution (Ashford 486).
There are differences arising from the legal requirements of arbitral awards under the two legal frameworks. Firstly, no time limit for granting awards in English Law is given, unlike in UAE, where an award has to be granted within six months of the first hearing. Moreover, the courts have the power to extend the time limit if it exists in the agreement. Secondly, the English Law provides that the tribunal’s chairpersons in a tribunal have the power to vote to determine the decision of the tribunal if the majority vote rule fails. However, in UAE, only the majority decision prevails when issuing awards. Further, if there is an arbitrator who gives a dissenting opinion, such an opinion is attached to the award in UAE. This is unlike under the English Law where opinions that differ are not included in the award.
Therefore, the issuance of arbitral awards is required to meet less legal requirements under English Common law as compared to UAE Civil Law. In UAE, the fact that a tribunal decision is only reached by obtaining a majority vote makes it difficult for the tribunal to reach a decision. However, the time limit specifies the exact time when an award is issued thereby eliminating uncertainties. Consequently, under English Common law parties can set the time limit for issuing the award in the agreement. This allows the tribunal to be flexible influencing the quality of its decision. For this reason, English Law provisions give more appropriate legal requirements for arbitral awards than the UAE Civil law provisions.
Remedies
Damages awarded in the arbitration awards form part of the key characteristics of awards granted by a tribunal. The arbitration tribunal is empowered to award various remedies that may be in the form of damages, injunctions, costs and interest. The remedies that form part of an award can be further explained as the order made to pay a given amount of money. Other explanations include a declaration, an injunction relief, orders for specific performance in contracts, and a rectification or cancelation order of a given document or deed (Aḥdab and El-Ahdab 75).
Under the UAE Civil Law, the arbitration tribunal’s has interim remedies. These entail the provisional orders like injunctions or taking measures that conserve goods forming the subject matter of the dispute. The final remedies of the tribunal may include damages, injunctions, costs and interest. The UAE civil law does not provide restrictions on the types of remedies or relief that the arbitration tribunal may grant. However, remedies touching on the public policy are unenforceable. Public policy is defined broadly in UAE Civil Law. It involves matters that relate to trade freedom, wealth circulation, and rules applied to ownership of private property and foundations of the society. It ensures that certain basic provisions of the Islamic Sharia do not conflict (Aḥdab and El-Ahdab 78).
Costs included in the awards are awarded based on the nature of the dispute or its complexity. It also depends on submissions made by parties, the time spent and the tribunal’s freedom in issuing the costs. Legal costs are not recoverable in the arbitral awards under the UAE law. This is especially the case if there is no prior agreement stating that legal costs are to be recovered in the award. However, rules applied in practice by arbitration institutions allow parties to recover the costs, and if the parties do not claim them, the tribunal is implicitly given the consent to award the costs. Thus, the best practice provides that the tribunal is explicitly conferred the power to award legal costs through the terms of reference prepared for the agreement (Aḥdab and El-Ahdab 83).
The tribunal awards interest on arbitral awards at a rate ranging from nine to twelve per cent per annum. Although the CPC reflects the position of the Sharia law that provides that interest should not be awarded, interest may be awarded under the Commercial Code. Article 76 of the Commercial Code provides that interest can be awarded on the amount of the final award where appropriate. The interest rate may be specified in the agreement. Alternatively, the interest rate prevailing in the market at the time of the agreement is applied. This rate must not exceed the rate of 12% until the award is fully settled. For this reason, it is common for the applied interest rate to be a little bit lower than 12% and not near the prevailing EIBOR rate (Aḥdab and El-Ahdab 84).
The tribunal usually awards interest from either, the date that the dispute was filed up to the last date of settling the award or from the time, the award is made final up to the time it is fully settled. This is as long as the amount of the claim has not been specified by the original claim. Most of the arbitral disputes in UAE involve sale and purchase agreements associated with real estate. For this reasons, parties to such kind of disputes request for an award of interest because it constitutes a commercial contract. In addition to other reliefs, the party claims the interest in accordance with the provisions of the UAE Commercial Code.
However, if a party uses the Commercial Code to seek interest awards, it may also rely on the UAE Civil Code to terminate the contract. Hence, it is not clear whether such contracts should be regarded as Civil or Commercial contracts (Aḥdab and El-Ahdab 89). In conclusion, if a dispute constitutes a commercial agreement then interest may be awarded under the UAE Commercial Code. Additionally, Article 88 of the Commercial Code provides that a party may be awarded interest to be compensated for the other party’s delay in debt settlement. Thus, the UAE civil law allows a tribunal’s award of interest to be ratified as a whole and enforced in UAE despite the existing prohibitions on interests by the UAE Sharia Law (Aḥdab and El-Ahdab 90).
Under English Common Law, parties are given the freedom to choose the remedies that they wish to be granted by the tribunal as per Section 48 of the Arbitration Act. Subsequently, restrictions resulting from public policy rules allow parties to request the tribunal to issue remedies that are not applicable under the English Law. Sec 48 states that an award may be comprised of a declaration. In this case, a tribunal’s declaration assists in determining any matter in the proceedings. It gives the arbitrator the power to come up with the meaning of the contractual provisions. In instances where a declaratory award is given, it may form part of the substance of the award. The declaration may order payment of money, an injunction, and specific performance, ratification, setting aside or cancelation of a document or deed (Merkin and Flannery 64).
An award of all costs involved in arbitration proceedings is distributed to the parties involved in the dispute. The tribunal requires that the party that is unsuccessful to pay the successful party, reasonable costs. The parties have the liberty to agree on the tribunal powers to award interest on the principal claim and the costs. The Act provides that the arbitration tribunal may award either simple or compound interest at its appropriate rate. The interest is on the entire or part of the awarded amount based on the principal claim and the allocated costs of the award. There is no specified rate of interest that is applied (Merkin and Flannery 69).
The differences arising in the remedies issued under the provisions of the two laws relate to firstly, how the tribunal arrives at remedies that are to be granted. Under the UAE Civil Law, the arbitration tribunal is given the power to come up with the remedies to grant. Additionally, no restrictions are imposed on the Tribunal as long as the remedies meet the public policy rules. On the other hand, the English Law allows the parties to select the remedies that they want the tribunal to grant as per the arbitration agreement. Secondly, costs that include legal costs can be awarded in both laws. However, contrary to English Law that awards cost unless there is an agreement stating otherwise, the UAE laws awards legal costs only if there exists an agreement supporting the award of costs.
Interests are also awarded in UAE under the Commercial Code. This is due to the prohibition of interest awards by the Sharia law. Thus, the interest awards are only for the contracts dealing with commercial transactions such as real estate contracts. The rate of interest is also specified, ranging from 9% to 12%. Contrary, English Laws give the tribunal powers to grant both simple and compound interest awards. This is irrespective of the type of contract under dispute, and any interest rate may be used as long as the tribunal finds it appropriate. This comparison indicates that the UAE Civil Law gives remedies that are subject to various restrictions such as those on legal costs awards and interest award. Therefore, the English Law is more effective in granting remedies for arbitral awards.
Enforcement
Enforcement of an award ensures that parties take the appropriate action on the tribunal’s decision. This involves the enforcement of both the domestic and foreign awards. Domestic awards are enforced subject to the local laws in a country. Foreign awards are enforced subject to various treaties and conventions that deal with enforcement of cross-border arbitral awards (Aḥdab and El-Ahdab 95).
Foreign awards involve any award that is not issued within the UAE, and there are certain rules that are applicable to the enforcement of such awards. The UAE is party to some international treaties that are associated with various matters including the enforcement of foreign awards. Some of these treaties in UAE are the New York Convention, Arab Convention on Judicial Co-operation and Agreement of Execution of Judgments and the Delegations and Judicial Notifications in the Arab Gulf Cooperation Council Countries (Mayew and Morris 281). Thus, if an arbitral award is granted in a certain jurisdiction that is party to the mentioned treaties, then the award will be subjected to the UAE laws and it will be enforceable.
Before UAE accession to New York Convention in 2006, UAE courts had the power to refuse a foreign arbitral award enforcement based on several reasons. These include one, where the tribunal does not have proper jurisdiction at the place of arbitration. Secondly, deficiency existed while issuing the award at the place of arbitration. Thirdly, if one of the parties involved in the arbitration proceedings was summoned or represented wrongly. Fourth, the foreign award contradicts or violates UAE previous judgment or public policy respectively (Mayew and Morris 283).
However, the UAE courts are currently obligated to comply with international conventions and treaties in the enforcement of foreign awards. The laws within these treaties form part of the domestic laws. For instance, a foreign award is enforced under the New York Convention if it goes under the right process of legalization and it is translated where necessary. In case there is no treaty that can be applied to enforce a foreign award, then a party has the right to file a civil claim, and the award is used as evidence. The court considers the facts and evidence that pertains to a dispute afresh if no treaty is present to enforce the principle of reciprocity although the CPC already supports it. If a foreign award contradicts the provisions of the UAE Constitution or the Islamic Sharia, then it is not enforceable (Barwick and Abbott 97).
Additionally, the CPC has provisions that explain the conditions under which foreign arbitration awards are enforced. An award has to satisfy certain conditions in Article 235 for it to be enforceable. These include the fact that the UAE courts do not have jurisdiction over the dispute that a judgment or award was issued, but the foreign court that is issuing it has such jurisdiction. This is under the International Judicial Jurisdiction Rules that have been decided under the law applicable to the foreign court. Secondly, a court that has issued the award should be competent as per the law of that nation.
Thirdly, parties are summoned in a proper manner, and they are appropriately represented. Fourth, the issued judgment is final, and it is not contrary to the public policy in UAE or a Court judgment made previously. However, it is difficult to enforce such awards successfully in the absence of any reciprocal treaty supporting enforcement. Courts may also rely on other provisions of CPC such as Article 21. The Article provides that parties to the dispute have to be domiciled in UAE and performance of the subject matter have to be in UAE (Mayew and Morris 285).
A domestic arbitral award is enforced if only it contains an operative part. This section of the award specifies the tribunal’s decision and mentions who is required to pay what. If an award lacks this part, then it is not complete and enforceable. Secondly, it is a requirement to involve the local courts to ratify domestic awards thereby parties take their application to court for ratification of the award for it to be enforceable. In this case, the claiming party will file a civil suit requiring the court to issue a declaration that the award should be ratified. The application comprises of the previously issued award as well as its annexes. An award may be denied ratification for enforcement if the dispute under the tribunal is related to the applications of the provisions of CPC under Article 203 (4).
The provisions provide that, one, an arbitration agreement is not permissible if it is not possible to reconcile the dispute’s subject matter. Two, the parties that have taken the dispute to the tribunal must have the right to exercise their disputed right. The ratification procedures may take a long time such as two years. It is determined by the complexity of the matter involved and the resolution or the decision of the unsuccessful party to make sure all avenues of appeal are exhausted. An arbitral award is only enforceable and executed when a final ratification decision of the award is rendered by the court and accepted by the parties. In this case, the court decision to ratify the award is based on how the tribunal reached the decision (Aḥdab and El-Ahdab 99).
Under English Common Law, the issue of an award by the tribunal does not guarantee that the incumbent party will execute it. The award is commonly enforced voluntarily by the unsuccessful party. If it is not voluntary enforced, the successful party may be required to enforce it against the other party through the national courts. Here, the party may have the award entered as a judgment. If this does not happen, the party enforcing the award seeks this enforcement in the place where assets belonging to the other party are located.
A subsequent order is made to seize assets whose value amount to that of the award. Thus, it is not a must that enforcement takes place under the same jurisdiction the arbitration took place. An order to enforce an award may apply to the entire award or part of it including costs and interests owed. The enforcing party is required to demonstrate that the award and the arbitration agreement are valid. Moreover, the party should state through an application to the court that the other party has not complied with the award or the extent to which they have not complied as at the date of application (Merkin and Flannery 81).
A foreign arbitration award under English common law is enforced through many ways. Firstly, a court judgment can be secured to enforce the foreign award. Secondly, a claimant has a similar position as that of the domestic claimant when the award is made within certain treaties. These treaties include the New York Convention, the 1965 Washington Convention or the 1927 Geneva Convention that governs the Execution of Foreign Arbitral Awards. Thirdly, if the award has been enforced by a foreign judgment, a party may seek an action in the courts on that judgment.
Fourth, if the award was rendered in a nation that subscribes to the Foreign Judgments Act 1933 and Part II of the Administration of Justice Act 1920, it is taken as if the judgment was made by a court in that country. Finally, an award made in a different part of the United Kingdom besides England and Wales is enforceable through registration. Under section 103 (2) of the Arbitration Act, a court is allowed to maintain its freedom in enforcing an award that has been put off by the courts in the seat of Arbitration (Merkin, and Flannery 86). Awards found within the New York Convention are recognized and enforceable under the English law provisions (Barwick and Abbott 102). The courts refuse to enforce such awards only if they are based on public policy matters
The difference arising in the enforcement of the domestic awards is that, under the UAE law, the award has to be ratified and enforced through the courts. The enforcing party has to file a civil suit in the courts for the court to issue a final ratification decision. On the other hand, an award is only enforced through the courts under English Common Law only if the unsuccessful party does not voluntarily comply with the tribunal’s decision. In the enforcement of foreign awards, the UAE civil laws provide certain conditions that have to be meet by such awards even in the presence of treaties and conventions that support foreign arbitral awards enforcement.
Contrary to the English Laws, it is difficult to enforce a foreign award if there is no reciprocal treaty supporting the enforcement in UAE. If the awards are subject to certain treaties and conventions, they should meet all the conditions provided under UAE Civil Law. This enables them to be enforced in a similar manner as the domestic awards. However, there are more options and fewer restrictions for the enforcement of awards under the English Law. These include the enforcement through a court judgment, use of the rules in the treaties and conventions, by registration and reciprocity. Thus, the comparison of the two laws indicates that it is easier to enforce both domestic and foreign arbitral awards through the English Common law.
Appeals
Arbitration awards may be challenged under limited circumstances in most countries while other countries do not subject the awards to appeals, but they are invalidated. An award is commonly challenged because the tribunal lacked jurisdiction while granting it or the tribunal had a serious irregularity while making the award (Aḥdab and El-Ahdab 104).
Under UAE law, arbitral awards are final and cannot be appealed on substantive grounds as per Article 217 of CPC. However, an award can be invalidated due to certain reasons as per article 216 of CPC. First, the award may have been made with documents that are not valid or in the absence of an agreement or deed. Secondly, the arbitrator was not appointed according to the right procedures. In this case, there is a high possibility that such an arbitrator was not appointed by adhering to the law provisions or did not satisfy its law requirements. Thirdly, only one arbitrator was involved in issuing the award without the presence of the tribunal members or their permission. Fourth, the award was made outside the provided time limit.
Fifth, an invalid occurrence influenced the ruling or the procedures. Sixth, the award is associated with a matter that cannot be put under arbitration. Seventh, the award is against the UAE public policy. Additionally, the subject matter of the dispute should be determined before the arbitration agreement is made for the award to be enforceable. Parties are not allowed to surrender their rights to invalidate an award before it has been granted. However, they have the right to waive their right to apply for an annulment of an award after it is issued (Aḥdab and El-Ahdab 107).
The English common law provides that an arbitral award can be appealed in court. This is under the Arbitration Act 1996 Section 67-69. According to Section 67, an individual may challenge the substantive jurisdiction of the tribunal to decide on a case. As per Section 68, the award may be appealed based on serious irregularities in the procedures used by the tribunal. The court must be satisfied that these irregularities provided in section 68 (2) will result in substantial injustice to the applicant (Galloway, Bell, Williams and Rutkowski par.6).
Moreover, under section 69, the award may be challenged on a point of law. Galloway et al. claim, “an appeal under section 67 and 68 assists in preserving a proper administration of justice and, therefore, apply to all English seat arbitration awards and cannot be excluded” (par.8). Thus, it is possible to exclude the right to appeal under Section 69 in an arbitration agreement. This section is only used to appeal if a question of law appears. When making the appeal, it is essential to obtain permission from the court and an agreement made by parties. The court only gives permission if it is satisfied with certain things. These include that the arbitration tribunal had obviously erred on the issue in question, this issue is a matter of general public interest, and the tribunal’s decision is openly doubtable (Galloway et al. par.11).
The appeal must also be filed within 28 days after the award is given. Section 67 to 69 of the Arbitration Act 1996 in English Law applies to appeals where the arbitration seat is within nations such as England and Northern Ireland. This means the designated place of the parties. Parties may avoid an appeal under section 69 by making use of explicit exclusions with clear words. Another way is referencing certain rules of arbitration. These are the various arbitration rules that limit the right to challenge an award such as the ICC arbitration rules section 69(3), which is effectively excluded. Thirdly, parties may under section 69 (1) make an agreement that provides an arbitral award does not require reasons. This will be taken as an exclusion of section 69. After an appeal, the court may; make variations in the award, confirm the award or make a remission to the tribunal for the award to be reconsidered in whole or in part. Additionally, if it is inappropriate for the tribunal to reconsider the award, it is set aside either in whole or in part (Galloway et al. par.13).
A comparison of the manner in which an award is challenged under the two legal frameworks indicates that the reasons for the appeals are almost similar. This is because challenged awards may have been made against the applicable laws and certain irregularities in the process of granting awards are present making them unenforceable. Both laws provide sound reasons for challenging an arbitral award.
Conclusion
The decision arrived at by arbitration tribunal is referred to as an arbitral award. Different countries issue arbitral awards to solve disputes in arbitration proceedings. These awards are issued as per the laws applicable in solving arbitration disputes in those countries. A comparative analysis of the arbitral awards under the provisions of UAE Civil Law and English Law that govern arbitration has highlighted certain differences. Four areas that are analyzed include awards legal requirements such as its language, time limits, majority vote requirement, reasons for the award among others. Next are the remedies that are mostly provided in awards that include damages, injunction relief, declaration, costs and interest.
The third is enforcement, where an award is taken as either a domestic award or foreign award. Enforcing of a domestic award is subject to the domestic laws of a country. On the other hand, various treaties and conventions help in enforcing cross-border awards. In UAE, the treaties and conventions are applied subject to certain conditions of the local laws while enforcing foreign awards. Lastly, provisions for appeals provide the various reasons for appealing and challenging awards as per the two legal frameworks.
These areas are exhaustively analyzed using the provisions of the UAE Civil Law and English Common Law. The analysis shows the key differences that are brought out in the comparative analysis. Finally, the comparative analysis forms the basis on which a conclusion is drawn stating the law that is more appropriate for the issuance of arbitral awards. In the four areas analyzed, the English Common Law is seen to be more effective in issuing arbitral awards. This is because, it has fewer restrictions on its legal requirements, provides a wider scope in the selection of remedies and enforcement of both local and foreign awards. Besides, sound reasons are provided for appealing or challenging an award.
Works Cited
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Ashford, Peter. “The Law of the Arbitration Agreement: The English Courts Decide?”The American Review of International Arbitration 24. (2013): 469-681. Print.
Barwick, Charles, and J. Abbott. “New York Convention.” International Financial Law Review 25.11 (2006): 75. Print.
Galloway Diane , Gordon Bell, Laura Williams and Bartek Rutkowski. “Are English Arbitration Awards Final Conclusive and Binding? Revisiting the Right to Challenge Arbitration Awards in English Courts” Reed Smith Client Alerts n.p. 2015. Web.
Mayew, Gregory, and Mark Morris. “Enforcement Of Foreign Arbitration Awards in the United Arab Emirates.” Defense Counsel Journal 81.3 (2014): 279-287. Print.
Merkin, Robert, and L. Flannery. Arbitration Act 1996. Hoboken: Informa Law from Routledge, 2014. Discovery eBooks. Web.