Abstract
Dispute resolution should not necessarily be made through courts; the consensus between the conflicting individuals or organizations can be achieved in mediation agencies. People in the United Arab Emirates prefer to solve problems related to financial and commercial matters in arbitration centers because this approach coincides with the Shariah rules. Indeed, adjudication of conflicts by the authority was a common practice in Islamic and Christian countries in the past before formal legislative bodies were formed. In modern times, international organizations still use arbitration to ensure that the divergences in laws in different countries do not impede collaboration between nations. In the UAE, mediation centers play an essential role in resolving disputes onshore and with foreign firms. Overall, this report aims to discuss the history of arbitration in the UAE, its implementation to local and international conflicts, and the use of electronic negotiation.
Introduction
Adjudication of disputes between two parties can be done in a court or a specific agency. In fact, the alternatives to the formal judicial system are mediation, negotiation, arbitration, and conciliation. Negotiation means coming to an agreement between individuals or organizations, while mediation and conciliation involve an independent intermediary. In the case of arbitration, a moderator possesses an official authority to release decisions. When it comes to the internal problems between individuals, families, or companies, mediation is performed by qualified judges, who must be “mature, wise, free, sane, fair, jurist” [3, p. 5]. These methods of resolving personal and commercial disputes are prevalent in the United Arab Emirates because litigation is a costly and lengthy process. Indeed, mediation and arbitration gain their popularity due to higher speed, confidentiality, and flexibility compared to court cases. Therefore, this report aims to discuss mediation history in the UAE, its rules, advantages, and disadvantages. Arbitration centers in the UAE are popular among the local population since this approach is close to the Islamic tradition of conflict resolution, but these agencies had to acquire flexibility when working with Western companies.
History of Mediation in the UAE
Historically, mediation has existed since the early times of the development of the concept and structure of a state. In fact, in Islamic systems, the negotiation was one of the most prevalent methods for resolving discourse between conflicting parties. The medieval Christian countries also preferred to ask an authority to arbiter particular disagreements. However, this approach to solving disputes disappeared in the sixteenth century in the European states, being replaced with the judicial system. Nevertheless, the arbitration system is still prevalent in international relations because laws vary between countries; hence, universal regulations should enable fair trade and communication between different nations.
The modern legislation regarding mediation in the UAE was formulated stagewise. According to, there are three main phases of arbitration development in the UAE and other Islamic countries in the twentieth century, internally and in its international financial relations. The first stage lasted from the end of World War II to the 1970s when oil production and export were regulated through agreements and negotiations with western investors. In the second phase, from the 1970s to the 1980s, Islamic states became independent from the world leaders and started to claim the implementation of their suggestions to international mediation rules in the industrial sector. During the third stage, the UAE and its neighbors started establishing arbitration centers that would allow dispute resolution according to the local legislation and Shariah. Notably, even though Islamic laws may not coincide with the internationally accepted norms since most were formulated by the West, cooperation and trade with other countries are being conducted successfully.
Application of Arbitration to Internal Issues in the UAE
Internal mediation of personal and financial problems is regulated in the UAE by special centers. For example, one of the most renowned agencies in the country is the Dubai International Arbitration Center (DIAC), which was established in 2007. It coordinates issues based on the UAE Arbitration Law, which was developed in 2018 instead of the Civil Procedure Law, initially passed in 1992. This center applies the new regulation mainly to the disputes related to the onshore trade. Still, DIAC can be involved in resolving controversies in relations with foreign firms. Other similar centers in the UAE are the Abu Dhabi Commercial Conciliation and Arbitration Center, the Sharjah International Commercial Arbitration Center, and the International Islamic Center for Reconciliation and Arbitration. Individuals and companies have the right to seek the help of either the DIAC or court, but not both.
Since arbitration is close to the Islamic rules, it is widely prevalent among citizens of the UAE. Notably, since the Quran does not explicitly prohibit women from participating in arbitration and negotiation, many Islamic states allow females to become adjudicators in mediation organizations. Arbitration centers often review issues related to commercial and financial disagreements between individuals or companies. Moreover, the cases that may be examined in the mediation agencies include the guardianship of orphans, patrimonial rights, and sometimes criminal punishment. However, the UAE legislation still requires more complex matters to be sent to the national courts.
Implementation of Mediation in International Projects
Arbitration centers play an essential role in negotiating disputes that arise in the foreign trade between the UAE and other countries. Indeed, the importance of these agencies in international relations cannot be overstated because there is always a risk of bribery, corruption, confiscation, delay in the approval of documentation, unstable local policies, and armed conflicts. Western firms may not agree to the terms of Islamic states. For example, in the court case Aramco, the Kingdom of Saudi Arabia v. Arabian American Oil Company, the western contractors refused to accept the rules of Shariah. Their argument was that it is not a sufficiently competent set of laws. Furthermore, there is a variation in Shariah’s interpretation, making it challenging to codify these rules and assimilate them with the international laws. Therefore, there should be an independent official organ that will enable the achievement of consensus. In the UAE, all disputes must be coordinated using the 1985 Civil Transaction Code. According to this law, if the country’s legislation does not provide a specific solution for a problem under investigation, Sharia rules must be applied to find a balanced decision.
When arbitration agencies work on resolving disputes that involve foreign non-Islamic companies, they can implement non-Shariah rules, provided that they do not violate the UAE’s legislation. One of the most common examples is a collaboration with international construction contractors. For example, construction projects in the UAE often require alternative dispute resolution approaches due to change in order variation, delays, payment issues, scheduling errors, governmental regulations, design problems, accidents, or work termination. Furthermore, these claims can be classified by the amount awarded as compensation to a party that wins. Specifically, they can be below $0.5 million, between $0.5 and 1 million, $1-1.5 million, and above $10 million. Overall, in the UAE, construction companies and owners can resolve their disputes using any of the available methods, from mediation to litigation.
Electronic Arbitration
In the age of the Internet and especially during the ongoing COVID-19 pandemic, electronic arbitration (E-Arb) became popular. E-Arb is considered to be a fast and reliable approach for dispute resolution through online platforms. Furthermore, E-Arb eliminates the stress of face-to-face mediation, especially in the cases of serious personal conflicts. Another significant advantage of online arbitration is that the participants do not have to travel to a specific site, which saves finances. E-Arb also allows for a faster exchange of information and documentation between the parties and an adjudicator from different parts of the country or the world. However, the biggest concern about online mediation, raised by the UAE arbitrators, is the security and privacy of digital data. Indeed, these platforms can be subjected to hacker attacks using special software to steal certain information and use it for malicious purposes. Thus, it is essential to address the issue of cyberthreats when creating such websites.
Several international mediation organizations that have existed for a long time became interested in E-Arb, too. For instance, the American Arbitration Association is a leading conflict resolution company, which was founded in 1926. It is estimated that it may take from five to thirty days to complete reviewing and making decisions about different discourses on an online platform. The World Intellectual Property Organization established a unique center that allowed to remove “the need for physical evidence presentation and established the viability of a cyber tribunal”. Overall, introducing the concept of cyberspace in the area of mediation and arbitration allowed to widen the possibilities for individuals and business organizations to find legitimate solutions for their conflicting situations.
Conclusion
In summary, mediation and negotiation are prevalent dispute resolution methods in the Islamic states, and the UAE is not an exception. Indeed, this approach has been implemented since ancient times, before formal legislative systems in states were established. The special arbitration centers, located in major cities in all emirates, help citizens and international firms reach a consensus in cases related to commercial and financial matters. These agencies are present in Dubai, Abu Dhabi, Sharjah, and other major cities of the UAE. Many citizens of the country prefer this way to resolve disagreements because it is close to the morals and rules described in Quran. However, the Sharia statements used by adjudicators in these mediation organizations do not always coincide with the laws of non-Islamic companies that collaborate with the UAE businesses. In that case, they have to implement western legislation, provided it does not violate the local policies and regulations. Lastly, electronic arbitration is the recent trend dictated by the fast technological advancement and the COVID-19 pandemic. It saves time and finances for the conflicting parties, producing the same result as a physical presence during the negotiation process.
References
M. S. S. Zaineddin, “The legal provisions of the arbitral award of electronic arbitration with respect to the international conventions and UAE law,” M.S. dissertation. The British University in Dubai, Dubai, UAE, 2018.
E. K. Zaneldin, “Investigating the types, causes, and severity of claims in construction projects in the UAE,” Int. J. Constr. Manag., vol. 20, no. 5, pp. 385–401, 2020.
A. Q. Farah and R. M. Hattab, “The application of Shariah finance rules in international commercial arbitration,” Utrecht Law Review, vol. 16, no. 1, pp. 1-22, 2020.
C. Ezeoke and A. P. Singh, “Interim relief and emergency arbitration in Singapore, U.K. and UAE: a comparative review of practices and procedures,” Kilaw Journal, no. 4, pp. 275-314, 2019.
T. Ali, A. Butt, A. Arslan, S. Y. Tarba, S. A. Sniazhko, and M. Kontkanen, “International projects and political risk management by multinational enterprises: insights from multiple emerging markets,” Int. Mark. Rev., vol. 38, no. 6, pp. 1113–1142, 2021.
M. Bakhramova, “E-arbitration and its role in modern jurisprudence”, JEDIC, vol. 1, no. 8, pp. 15–20, 2022.