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UAE accedes to New York Convention15 July 2006, Dubai, UAE By Essam Al Tamimi LLB (Al Ain) LLM (Harvard) Member IBA, Senior Partner Al Tamimi & Company Advocates & Legal Consultants writes on the UAE acceding to the New York Convention on the International Enforcement of Arbitration awards (article below, bio & company profile attached)
THE UAE’S DECISION TO ACCEDE TO THE NEW YORK CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS WILL GREATLY BENEFIT THE COUNTRY’S ECONOMY AND ITS STATUS IN THE INTERNATIONAL COMMUNITY
What is the New York Convention? The New York Convention of 1958 is one of the most important and successful United Nations sponsored commercial law treaties. Following a recent decree issued by His Highness the President Sheikh Khalifa Bin Zayed Al Nahyan; the United Arab Emirates has become the latest of 138 states to agree to implement its terms. The advantages to everyone doing business in and with the UAE will be considerable. The Convention lays down conditions for the recognition and enforcement of foreign arbitration Awards in the territories of its member states. Thus an arbitration Award issued in the United Arab Emirates will become directly enforceable in the territory of another member state and an Award from any other member state will become directly enforceable in the UAE. The New York Convention, however, only governs the recognition and enforcement of Awards made overseas i.e. foreign Awards. Any Award made in the UAE (a domestic Award) which is to be enforced in the UAE will be not be subject to the New York Convention’s rules.
What is Arbitration? Arbitration is a private form of dispute resolution based upon an agreement between two or more parties to let an independent arbitrator (or panel of arbitrators) resolve any claims they may have against each other. The agreement to arbitrate may be embodied in a contract entered into between the parties (such as an agency, distribution, sales, service or construction contract) or in a later “submission” agreement; even if such later agreement is made after the dispute/claim has arisen. At the end of the arbitration proceedings the arbitrator or panel of arbitrators issue a legally binding decision - the Award. Arbitration Awards are generally considered final and non-appealable – except where the arbitrator(s) has acted dishonestly, unlawfully or unfairly. Awards are enforceable through the courts as if they were court judgments The arbitrators are normally chosen by the parties or a neutral third party such as an Arbitration Centre. Similarly, the procedure followed by the arbitrator(s) may be agreed on by the parties (either before or during the proceedings) or according the Rules of an Arbitration Centre previously chosen by the parties Arbitrators are normally individuals possessing technical, scientific, legal or commercial knowledge and experience relevant to the subject of the dispute. Quite often they are lawyers with specialist training in arbitration. This is especially the case when the dispute is between parties from different countries or when more than one country’s laws may apply to the contract or when the law governing the contract has not been specified. Unlike judges in court proceedings, arbitrators only have authority to decide a claim because the parties have previously agreed that they should have that authority.
Why is Joining the New York Convention Important? The New York Convention, as previously stated, is a treaty that promotes the mutual recognition and enforcement of foreign, rather than domestic, arbitral awards. That so many states have acceded to the Convention clearly demonstrates that international businesses from around the world support arbitration and wish their governments to do likewise. Arbitration agreements are popular in a wide range of international contracts in large part because such agreements protect foreign parties from national courts that may be partial to the interests of their co-nationals, heavily politicised, lacking in relevant industry expertise, slow or even expensive. An additional attraction of arbitration lies in the fact that, unlike court proceedings, arbitration hearings are held in private and their existence and outcome are confidential to the parties. These advantages would clearly be meaningless, however, without there being a legally binding means of enforcing Awards wherever in the world the losing party may have their assets. It is here that the importance of the New York Convention becomes self evident. Now, just because a party’s assets may be overseas and far removed from the Claimant, a party may no longer ignore arbitration proceedings or Awards made against it.
What are the Conditions Required for the Enforcement of an Arbitral Award abroad? Article IV.1 of the New York Convention states that at the time of application the party applying for enforcement must provide; (a) The duly authenticated original award or a duly certified copy thereof; (b) The original agreement referred to in article II or a duly certified copy thereof. Furthermore article IV.2 goes on to specify that the Award and agreement must be made in the language of the country in which the award is relied on, or a certified translation provided. Therefore, if these conditions are met, the courts of any other Convention state must enforce the Award without amendment, as if it was a judgment of its own.
Are There Any Disadvantages to Joining the New York Convention? The New York Convention has been applied internationally for almost fifty years, its exact meaning has been examined in numerous judicial decisions and its pros and cons discussed in countless articles, books and conference papers. After all this, it is generally agreed that its advantages far out weigh its disadvantages - particularly bearing in mind that it only seeks to regulate the enforcement of foreign awards and not domestic awards. Some may criticize the New York Convention because it renders UAE citizens and entities liable to enforcement proceedings overseas. I believe that this criticism should not be taken very seriously nor is it sound for the following reasons: 1- Arbitration is a result of the parties’ agreement - an Award cannot be enforced against a party that did not agree to resort to arbitration in the first place. When an agreement has been willingly entered into it is only natural that the parties should honour the terms of their agreement. 2- In the majority of arbitrations the parties have chosen the language, venue, procedure and number of arbitrators – possibly even their exact identity. In such circumstances it is difficult to see why any party should consider itself disadvantaged by having to arbitrate its disputes. 3. While the UAE is not a New York Convention state, UAE parties are at a disadvantage because, whereas foreign parties (from New York Convention states) can often enforce arbitration awards made in their own country against the assets of UAE parties held in any other New York Convention state, a UAE party that obtains an Award in the UAE cannot enforce that Award against the foreign party’s assets located in many New York Convention states because the UAE has not also signed the New York Convention. 4. The United Arab Emirates long ago committed itself to becoming an active and responsible member of the international community and a significant force in the international economy. This is reflected in its position as one of the founding members of the World Trade Organization. It is inconsistent for a country so proactively involved in international trade and investment to not also be a member of the New York Convention. I congratulate the leadership and people of the United Arab Emirates on taking the decision to adopt the New York Convention, as it is a significant and vital step towards ensuring the continuing economic prosperity of the United Arab Emirates. It is a strong signal to the rest of the world that the UAE is committed to strengthening its position in the international community and the world economy even further. The UAE’s accession to the New York Convention will undoubtedly help to attract more foreign investment to the UAE. It will also enable the courts and arbitral institutions of the UAE to develop greater international knowledge and experience. Equally, acceding will help develop and promote a greater number of international commercial arbitrators from among UAE nationals.
When will the New York Convention be Effective? The UAE will become internationally bound by the Convention ninety days after it has deposited its instrument of accession with the Secretary-General of the United Nations.
Will the Convention Supersede Local Legislations? The New York Convention, being an international treaty, will supersede incompatible local legislation. It is likely, in due course, to lead to the introduction of a wholly new UAE arbitration law along the lines of the UNCITRAL Model Law.
COMPANY PROFILE
Essam Al Tamimi LLB (Al Ain) LLM (Harvard) Member IBA Essam Al Tamimi is the Managing Partner of Al Tamimi & Company, Advocates & Legal Consultants, the largest independent law firm in the UAE. As the senior litigator of the firm, he assumes direct responsibility for directing the actions of the firm’s clients through the court systems in the UAE. He is nonetheless a strong believer and an outspoken proponent of arbitration and alternative dispute resolution and his experience in this regard has been at the centre of the increasing popularity of local and international arbitration panels of which he is a member, including the Chartered Institute of Arbitrators, the London Court of International Arbitration, the Chamber of Commerce Court of Arbitration, Paris, the Abu Dhabi Commercial Conciliation and Arbitration Centre and the GCC Commercial Arbitration Centre, Bahrain. Publications by Essam include Arbitration Law in the United Arab Emirates, Court of Cassation Judgements 1989-1997 and 1998-2003, Setting Up In Dubai and The Practical Guide to Litigation and Arbitration in the United Arab Emirates. These and other publications are available from: www.tamimi.com <http://www.tamimi.com/>
Al Tamimi & Company Advocates & Legal Consultants Al Tamimi & Company is the largest independent law firm in the United Arab Emirates. Our international team of high caliber lawyers serves clients across the world. We have offices in Dubai, Dubai Internet City, Abu Dhabi, Sharjah and Baghdad, and an associate office in Doha. We provide corporations and local government with international-standard legal and advisory services specialising in Banking & Finance, Corporate & Commercial law, Intellectual Property & Information Technology, Media and Telecommunications, Litigation, Alternative Dispute Resolution and Arbitration, Maritime Trade & Insurance Law, Aviation, Construction and Property Law. We assist multinational companies and Family Businesses in doing business in Gulf States independently, or with local partners. We subscribe to the belief that the world of opportunity does not recognize national boundaries.
Note our new address from 23 July 2006 Al Tamimi & Company Advocates & Legal Consultants Dubai International Financial Centre Dubai, U.A.E.
Released on behalf of Essam Al Tamimi by: Edward Cooper |
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