Arbitration and Misconception

abdelaziz Managing Partner

Merchants and investors may resort to arbitration due to the element of secrecy that surrounds the whole process. Arbitration also saves time and spares effort and money. For this reason, some investors and jurists in some private companies, when drafting contracts between the company and its clients regardless of the nature of the contract, tend to add an arbitration clause that may be brought to bear in case of disputes. Problems lie galore in this point and they continue to remain unnoticed until the eruption of disputes. Parties of a contract stipulate that in case of dispute, they shall go for arbitration, but they fail to mention the place or language of arbitration, or even the number of arbitrators. Some of them state that in case of dispute, they shall go for arbitration at Dubai Arbitration Center only.

Many investors and businessmen misconceive arbitration an easier, swifter and cheaper way. So, they distance themselves from the local courts either due to lack of confidence or awareness of the court procedures in the country, or their concern that their claims would drag on in courts for several years. When we look at the procedures followed when dispute arises between the parties and they resort to arbitration at Dubai Arbitration Center, we shall find the following:

The case is filed at Dubai Arbitration Center and fees are paid. Then, the subject of the case is sent to the respondent and he is given 30 days to answer the case. After that, the subject of the case is referred to the Executive Committee to set the fees of arbitrators and then the parties are notified of the names and fees of arbitrators. The fees are paid by the parties. If any of the parties fail to pay the fees, the appointment of arbitrators may drag on for several months until the fees of arbitrators are paid in full. A preliminary hearing is then slated for arbitration. During this hearing the terms of reference are signed. This is followed by successive hearings until the arbitration tribunal gives its award. During the course of arbitration, the arbitrator may appoint experts in the case or hear the witnesses of any of the parties. Furthermore, the arbitrator may stop his work and return to the judge of the competent court in case any of the witnesses fails to appear or assigns a third party to produce a document that may be necessary in passing the award.

After that, all parties must apply separately to the court in order to certify the arbitration award or file a case to cancel the award, according to the case of the parties filing the case. This is done through a regular statement of claim submitted to the court through regular means after paying the fees. Then, the court may hear the defenses of each party and the matter would take several hearings during which the parties may submit the merits and defenses before adjudication in the case is scheduled. The court then decides whether to approve or cancel the arbitration award. The same course of action is pursued in the cases filed before the courts and all procedures, requests and hearings apply to such cases. Appeal deadlines and other procedures shall be similar to other normal proceedings.

If the court decides to invalidate the arbitration award, everything shall begin from scratch. After completing all the stages we mentioned hereinabove, the enforcement of the award may take some time.

Consequently, resorting to arbitration because it is faster than normal proceedings is a misconception because most arbitration claims take longer time in courts and the procedures therein are so time-consuming and so costly, especially when the arbitrator and attorneys’ fees and the fees needed to certify the award at the court are considered. So, we must reconsider the arbitration clause which, most of the time, proves to be unhelpful. Arbitration may be suitable in some countries which are known for their slow judiciary system. However, this is not the case in the UAE where the judiciary system is deemed to be faster than other Arab states. Finally, the parties must go to the court whether there is an arbitration clause or not.

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