Reed Smith Client Alerts

The United Arab Emirates (UAE) is an extremely interesting jurisdiction from a legal perspective. Those contemplating entering into contracts that have a connection to the UAE, or indeed to the wider Gulf and Middle East region, may be interested to learn that there are three separate legal systems that operate within the UAE, which find their basis in both civil law and common law. When it comes to the resolution of disputes, this offers parties with a choice in how they would like their disputes resolved but also raises certain intricacies of which they should be aware in exercising that choice. This update deals with five such aspects.

The United Arab Emirates (UAE) is a federation of seven emirates – Abu Dhabi, Dubai, Sharjah, Fujairah, Ajman, Umm Al Quwain and Ras Al Khaimah – each with its own set of laws and court systems under the umbrella of the Constitution and certain Federal laws. The law finds its origins in the civil law that emanated from the old Napoleonic code as customised in Egypt to take into account Arabic traditions. The law is codified with no system of binding precedent, although the decisions of the higher courts have significant persuasive effect when compared to decisions of lower courts. Three of the emirates – Abu Dhabi, Dubai and Ras Al Khaimah – have their own ‘supreme’ court (the Courts of Cassation) – while appeals from the Courts of Appeal of the other four emirates are heard in the Federal Supreme Court.

Yet, amidst this geographic civil law jurisdiction, exists two ‘fictional’ jurisdictions based on English common law. In 2004, the Dubai International Financial Centre (DIFC) was formed as a legal ‘free zone’. In 2013, following on the success of the DIFC, the Abu Dhabi Global Market (ADGM) was formed. The applicable laws in the DIFC and ADGM, though modelled on the English common law, are slightly different.1 Today, there are three separate systems of law applicable in the UAE. This diversity – which is fairly unique in the international sphere2 – ought to be borne in mind when it comes to drafting UAE arbitration clauses and in the administration of arbitrations pursuant to those clauses. In this update, we look at five key aspects of arbitration in the UAE that are worthy of consideration.