International arbitration law and rules in Abu Dhabi

Parties outside of the ADGM are free to choose the ADGM as an arbitration seat. Awards made under the ADGM’s Arbitration Regulations can be enforced in other New York Convention jurisdictions, due to the UAE (including the ADGM) also being a signatory.

Located on Al Maryah Island, the Abu Dhabi Global Market (ADGM) is an international financial centre for local, regional and international institutions, established in 2013.  Generally, the ADGM is a free zone operating under its own legal system where the UAE’s federal civil and commercial laws are not applicable. 1 In this regard the ADGM is similar in nature to the Dubai International Financial Centre (“DIFC”), which is the subject of another guide in this series.

The ADGM has enacted legislation to govern arbitrations within its jurisdiction, in the form of the Arbitration Regulations 2015 (the Regulations) which are based on the UNICTRAL Model Law.

2.1.1 The Regulations apply where the seat of the arbitration is the ADGM, or where an arbitration agreement applies the Regulations. 2 The Regulations, section 3  The Regulations govern the enforcement and recognition of arbitral awards in the ADGM irrespective of the state or jurisdiction in which they are made. 3 ibid, section 4

2.2.1 The following are some general principles drawn from the Regulations.

2.3.1 The Regulations provide that:

• the parties are permitted to agree to arbitration disputes which have arisen between them in respect of a defined legal relationship; 4 ibid, section 13(1)  
• the parties are permitted to agree upon the procedure to be followed by the Tribunal in conducting the proceedings; 5 ibid, section 32(1)  and
• the parties are also free to choose the substantive law to be applied to the dispute. 6 ibid, section 44(1)   

2.4.1 The Regulations expressly state that the parties shall be treated equally and each party shall be given a reasonable opportunity to present its case. 7 ibid, section 31   

2.5.1 The Regulations generally provide that no court shall intervene in matters governed by the Regulations, except to the extent provided by the Regulations. 8 ibid, section 11

3.1.1 The Regulations prescribe the requirements for a valid arbitration agreement. 9 ibid, section 13(2)-(5)  The agreement must be in writing, which may include an exchange of correspondence, or be contained in a document to which reference is made in the main agreement. 10 ibid, section 13(2) The requirement that the arbitration agreement be in writing can be satisfied where: 

• the arbitration agreement is contained in an electronic communication; 11 ibid, section 13(3)
• the arbitration agreement is contained in an exchange of a statement of claim and a statement of defence in which the existence of the arbitration agreement is alleged by one party and is not denied by the other; 12 ibid, section 13(4) and
• the contract refers to another document containing an arbitration agreement, provided that the reference is such to make the arbitration agreement part of the contract. 13 ibid, section 13(5)  

3.2.1 The Regulations also recognise the concept of separability of arbitration agreements. Unless otherwise agreed, an arbitration agreement which forms or was intended to form a part of another agreement will not be considered invalid because that other agreement is invalid, did not come into existence or has become ineffective. For this purpose, the arbitration agreement shall be treated as a distinct agreement. 14 ibid, section 14   

4.1.1 The Regulations permit the parties to choose the number of arbitrators provided that it is an odd number. 15 ibid, section 17(1)  Where no agreement is reached the default position is that a sole arbitrator shall be appointed. 16 ibid, section 17(2)   

4.1.2 Furthermore, under the Regulations, the parties are free to agree on a procedure for appointing the tribunal. 17 ibid, section 18(2)  However, where no agreement has been reached:

• where a sole arbitrator is to be appointed, if the parties do not agree on the arbitrator within 30 days of one party requesting the other to do so, the arbitrator shall be appointed by the institution administering the arbitration, or if there is no institution, by the ADGM Court on the request of either party; 18 ibid, section 18(3)(a) and
• where three arbitrators are to be appointed, each party shall appoint one and the two appointees shall appoint a chairman. If a party fails to make an appointment within 30 days of a request to do so, or the two arbitrators fail to agree on the chairman within 30 days of their appointment, the appointment shall be made by the arbitration institution 19 ADGM does not have its own arbitration institution but instead The International Court of Arbitration (“ICC”) has established its first MENA representative office in ADGM , or, where there is no institution, by the ADGM Court. 20 ibid, section 18(3)(b)   

4.2.1 The Regulations provide for challenges against arbitrators and set out the grounds for challenge in this regard. An arbitrator may be challenged only where circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality or independence or that the arbitrator does not possess the agreed qualifications. A party may challenge an arbitrator appointed by him, or whose appointment they participated in only for reasons which became known after the appointment was made. 21 ibid, section 19(2)  

4.2.2 The Regulations also permit the parties to agree upon the procedure for challenging an arbitrator. 22 ibid, section 20(1)  Where no agreement is reached, the party who intends to challenge an arbitrator shall (within 30 days of becoming aware of the constitution of the tribunal or the grounds for challenge) send a written statement of the reasons for the challenge to the tribunal. Unless the challenged arbitrator withdraws, or the other party agrees with the challenge, the challenge shall be decided by the arbitral institution, or the ADGM Court where there is no institution. Whilst the challenge is pending before the arbitral institution or ADGM Court, the tribunal may continue with the proceedings and issue an award. 23 ibid, section 20(2)  

4.3.1 Where an arbitrator becomes unable to perform their functions or otherwise fails to act without undue delay, their mandate shall terminate if they withdraw from their office or if the parties agree. If no agreement is reached or if there is any controversy as to the failure by the arbitrator to perform their function, then either party may request the arbitral institution, or where there is none, the ADGM Court, to decide on the termination of the mandate. Such a decision shall not be appealable. 24 ibid, section 21(1)  

4.4.1 When an arbitrator’s mandate ends (either for the reasons set out above or for any other reason) then a substitute arbitrator shall be appointed according to the rules that governed the appointment of the arbitrator who is being replaced.  

4.5.1 The Regulations stipulate that arbitrators, arbitral institutions or appointing authorities shall not be liable for any act or omission in connection with the arbitration unless they are shown to have caused damage by conscious and/or deliberate wrongdoing. 25 ibid, section 23

5.1.1 The Regulations specifically permit the tribunal (unless otherwise agreed) to determine its own jurisdiction in terms of the validity of the arbitration agreement, whether the tribunal has been properly appointed and what matters have been submitted to arbitration in accordance with the arbitration agreement. 26 ibid, section 24(1) The tribunal’s ruling may be challenged by any available arbitral process of appeal or review that the parties have agreed in the arbitration agreement or in accordance with the Regulations. 27 ibid, section 24(2)

5.1.2 In terms of the timing of a jurisdictional challenge, this must be raised by a party not later than the time they take the first step in the proceedings to contest the merits. However, a party shall not be precluded from raising an objection because they have appointed, or participated in the appointment of an arbitrator. 28 ibid, section 25(1) Furthermore, where the objection relates to the tribunal exceeding its jurisdiction, the objection must be made as soon as possible after the matter alleged to be beyond the tribunal’s jurisdiction is raised. 29 ibid, section 25(2) The tribunal is empowered to permit late objections in either case if it considers the delay to be justified. 30 ibid   

5.1.3 The tribunal’s ruling on its own jurisdiction may be dealt with as a preliminary question or in an award on the merits. If the parties have agreed upon a particular course in this regard, the tribunal must proceed in accordance with it. 31 ibid, section 25(3)  

5.1.4 Where the tribunal has ruled on its own jurisdiction as a preliminary question, the ADGM Court may determine any question as to the substantive jurisdiction of the tribunal. 32 ibid, section 26(1)  An application in this regard shall not be considered unless it is made with the written agreement of all parties or it is made with the permission of the tribunal and the ADGM Court is satisfied that the determination of the question is likely to result in substantial cost savings, that the application was not delayed and that there is a good reason why the matter should be decided by the ADGM Court. 33 ibid, section 26(2)  Any decision issued by the ADGM Court shall not be subject to appeal. 34 ibid, section 26(5)  

5.2.1 Unless otherwise agreed by the parties, the tribunal (at the request of a party) may order interim measures provided that any such request by a party is made upon notice to the other parties in the proceedings. 35 ibid, section 27(1)    

5.2.2 An interim measure may be in the form of an award or in another form; 36 ibid, section 27(2)  ordering a party to maintain or restore the status quo pending determination of the dispute, 37 ibid, section 27(2)(a)  take action that would prevent or refrain from taking action that is likely to cause harm or prejudice to a party or the arbitral process, 38 ibid, section 27(2)(b)  provide a means of preserving assets out of which an award may be satisfied 39 ibid, section 27(2)(c)  or preserve evidence that may be relevant to the resolution of the dispute. 40 ibid, section 27(2)(d)  

5.2.3 The Regulations permit the tribunal to require that an applicant for interim measures provide appropriate security in connection with the application, 41 ibid, section 27(7) and the party requesting the measure shall be liable for costs/damages caused by a measure if the tribunal decides later it should not have been granted. 42 ibid, section 27(8)  

5.2.4 In terms of the enforceability of interim measures, the Regulations provide that these shall be recognised as binding and, unless otherwise provided by the tribunal, shall be enforced through an application to the ADGM Court. 43 ibid, section 28(1)  Again, the ADGM Court may order the requesting party to provide security in respect of the measure if the tribunal has not already done so, or where such a decision is necessary to protect third party rights. 44 ibid, section 28(3)  Finally, the recognition and enforcement of an interim measure may be refused on the grounds set forth in the Regulations for refusing the recognition and enforcement of an award (see Section 9 below). 45 ibid, section 28(4)

6.1.1 The Regulations permit the parties to agree on the procedure for the conduct of the proceedings. 46 ibid, section 32(1)  Where there is no agreement, the tribunal may conduct the arbitration in such a manner that it considers appropriate. 47 ibid, section 32(2)  In all cases, the tribunal must adopt procedures which are suited to the circumstances of the particular case and which prevent unnecessary delay and expense. 48 ibid, section 32(4)  

6.2.1 Unless otherwise agreed, the tribunal has the power to order a claimant to provide security for costs in the arbitration. However, this power shall not be exercised on the grounds that the claimant is an individual ordinarily resident outside of the ADGM or an entity incorporated outside of the ADGM or whose management and control is exercised outside of the ADGM. 49 ibid, section 32(3)   

6.3.1 Unless otherwise agreed, the arbitration shall commence on the date the respondent receives the request for the dispute to be referred to arbitration. 50 ibid, section 34  

6.4.1 The Regulations stipulate that the parties are free to agree on the seat of arbitration, otherwise the arbitral institution or the tribunal shall decide, having regard to the circumstances of the case including the convenience of the parties. 51 ibid, section 33(1) The Regulations also permit the tribunal (unless otherwise agreed) to hold meetings at any place it considers appropriate. 52 ibid, section 33(2)  

6.4.2 The parties are free to agree on the language of the proceedings and, in the absence of such agreement, the tribunal shall determine the language or languages to be used. 53 ibid, section 37(1)  The tribunal is also empowered to order the translation of evidence into the language of the arbitration. 54 ibid, section 37(2)  

6.5.1 The arbitral institution or the ADGM Court (where no institution is acting) may allow third parties to be joined to the arbitration upon the request of a party and where it is considered in the interests of justice to do so, unless the arbitral institution or the ADGM Court considers that the joinder should not be permitted because of prejudice to the parties. The third party must be a party to the arbitration agreement or have consented to the joinder in writing. 55 ibid, section 36(1)   

6.5.2 No additional party may be joined after the confirmation or appointment of any arbitrator, unless the parties (including the joined party) agree. 56 ibid, section 36(2)  

6.6.1 The parties are free to decide on the requirement for, and if so the form of, written statements of claim and defence, when these should be supplied and the extent to which such statements can be later amended. In the absence of an agreement this shall be determined by the arbitral tribunal. 57 ibid, section 38

6.7.1 Under the Regulations and subject to the parties’ contrary agreement, the tribunal shall decide on whether to hold oral hearings or whether the proceedings shall be conducted on a documentary basis. However, unless the parties have agreed that no hearing will be held, the tribunal must convene hearings at an appropriate stage of the proceedings at the request of a party. 58 ibid, section 39(1)   

6.8.1 The Regulations provide that, unless otherwise agreed, the tribunal may (after consultation with the parties) appoint an expert to report on specific issues, require a party to give any relevant information to the expert, or to produce and provide access to any relevant documents, goods or property for inspection. 59 ibid, section 42(1)   

6.8.2 Further, unless otherwise agreed, if a party requests, or if the tribunal considers it necessary, the expert shall (after the delivery of their report) participate in a hearing where the parties will be able to examine them on the points in issue. 60 ibid, section 42(2)    

6.8.3 The expenses and costs of the experts appointed by the tribunal shall be borne by the parties in accordance with the arbitral award. 61 ibid, section 42(3)  

6.9.1 The tribunal or a party (with the approval of the tribunal), may request assistance from the ADGM Court (or any competent court) in taking evidence. The ADGM Court (or any competent court) may execute the request within its competence and according to its rules on taking evidence. 62 ibid, section 43  

6.10.1 The Regulations stipulate that (unless otherwise agreed), no party may publish, disclose or communicate any confidential information to any third party. 63 ibid, section 40(1)  Confidential information is defined as any information relating to the proceedings under the arbitration agreement or an award made in those proceedings. 64 ibid, schedule 1, section 3   

6.10.2 The Regulations make clear that they do not prevent the publication of confidential information in certain circumstances, including (by way of example and without limitation) where the publication is made to protect or pursue a legal right or interest of a party or to enforce or challenge the arbitral award. 65 ibid, section 40(2)   

6.10.3 Subject to any contrary agreement, the confidentiality obligations also do not prevent a party from disclosing or communicating confidential information to a third party who has a substantive legal or pecuniary interest in the outcome of the proceedings. 66 ibid, section 40(3)  

7.1.1 The tribunal shall decide the dispute in accordance with the rules of law chosen by the parties. Any law so chosen shall be construed, unless otherwise expressed, as directly referring to the substantive law of that jurisdiction and not to its conflict of laws rules. 67 ibid, section 44(1)

7.1.2 In the absence of any designation by the parties, the tribunal shall decide the dispute in accordance with the rules of law it considers appropriate 68 ibid, section 44(2)  and, in either case, the tribunal shall take trade usages into account. 69 ibid, section 44(3)  

7.2.1 The Regulations permit the tribunal to make more than one award at different times and in respect of different matters to be determined. 70 ibid, section 49  

7.3.1 If the parties settle the dispute during the course of the proceedings, the tribunal shall terminate the arbitration and, (if requested by the parties and agreed to by the tribunal), record the settlement in the form of an award on agreed terms. 71 ibid, section 48(1) Such an award shall state that it is an agreed award and will have the same effect as any award made on the merits of the case. 72 ibid, section 48(2)  

7.4.1 The arbitral proceedings are terminated by the arbitral tribunal’s award (or where there is more than one, by its final award), or by an order of the arbitral tribunal. 73 ibid, section 51(1)  Such an order shall be given for the termination of the proceedings in the circumstances prescribed by the Regulations, for example where the parties agree to terminate the proceedings. 74 ibid, section 51(2)  

7.5.1 The Regulations dictate the form and contents of an award, specifying that:

• the award must be made in writing; 75 ibid, section 50(1)   
• the award must state the reasons upon which it is based, unless otherwise agreed or the award is being issued on agreed terms; 76 ibid, section 50(2) and
• the award must state its date and the seat of arbitration. The award will be deemed to have been made at the seat, irrespective of where it was written or signed. 77 ibid, section 50(3)     

7.5.2 Once the award is made, a copy must be delivered to each party. 78 ibid, section 50(4)  

7.6.1 In proceedings with more than one arbitrator, any decision of the tribunal shall be made by a majority of its members, unless otherwise agreed. If there is no majority, the award shall be made by the president alone. 79 ibid, section 45  

7.7.1 The tribunal shall fix the costs of the arbitration in the award. 80 ibid, section 50(5)  The Regulations set out an exhaustive list of what the term “costs” includes: being the tribunal's fees and expenses, the costs associated with experts and of other assistance required by the tribunal, the costs of witnesses (to the extent they are approved by the tribunal), disbursements, the costs of legal representation (if claimed in the arbitration and they, or a part of them, are considered reasonable by the tribunal) and the fees and expenses of the arbitral institution or appointing authority. 81 ibid   

7.7.2 In deciding the costs of the arbitration, the tribunal may direct which party bears responsibility for such costs. 82 ibid, section 50(6)  

7.7.3 Where the tribunal does not fix the costs of the arbitration in its award, either party may, (within 30 days of receiving the award), apply to the tribunal for a further award on costs, which shall be made after the tribunal has heard the parties. 83 ibid, section 50(7)  

7.8.1 The parties to the arbitration may agree upon the tribunal’s powers with regard to the awarding of interest. 84 ibid, section 47(1) Furthermore, and subject to any contrary agreement, the tribunal’s powers shall be in accordance with the substantive law governing the claim. 85 ibid, section 47(2)  

7.8.2 Moreover, unless otherwise agreed and subject to any contrary provision in the substantive law applicable to the claim, the tribunal’s powers to award interest shall include (without limitation) the power to award simple or compound interest:

• from such dates, at such rates and with such rests as are required by the justice of the case, on the whole or part of the amount awarded or on the whole or part of any amount claimed in the arbitration and outstanding when it commenced, but paid prior to the making of the award; and
• from the date of the award (or a later date) until payment, at such rates and with such rests as are required by the justice of the case, on the outstanding amount of any award (including any award of interest or costs). 86 ibid, section 47(3)   

7.8.3  Any reference to an amount awarded by the tribunal in the context of interest includes an amount payable as a result of a declaratory award by the tribunal. 87 ibid, section 47(4)  

7.9.1 Under the Regulations, within 30 days of receipt of the award (unless another period is agreed), a party may make a request for the correction of errors in or the interpretation of a specific point or part of the award. 88 ibid, section 52(1) and (2)  If the tribunal considers the request to be justified, it shall make the correction or give the interpretation within 30 days of receipt of the request and any modification shall form part of the award. 89 ibid, section 52(2)  Furthermore, the tribunal may also make corrections using its own initiative within 30 days of the date of the award. 90 ibid, section 52(3)  

7.9.2 Additionally, unless otherwise agreed, either of the parties (upon notice to the other) may request an additional award in respect of any claims made in the arbitration but omitted from the award. Such requests must be made within 30 days and, if accepted, the supplemental award must be issued within 60 days. 91 ibid, section 52(4)   

8.1.1 In matters governed by the Regulations, the courts have a supervisory function and shall not intervene except as provided for in the Regulations. 92 ibid, section 11   

8.1.2 The instances of the courts’ involvement envisaged by the Regulations include (without limitation) appointing arbitrators, 93 ibid, section 18(3) determining challenges against arbitrators, 94 ibid, section 20(2)  taking evidence, 95 ibid, section 43  and enforcing any injunctive relief awarded. 96 ibid, section 28  

8.2.1 The Regulations stipulate that where a matter subject to an arbitration agreement is brought before the ADGM Court, the other party may apply (with notice to the other parties) for a stay of the ADGM Court proceedings. 97 ibid, section 15(1) The application must be made before any action has been taken to answer the substantive claim in those proceedings. 98 ibid, section 15(3)(b)   

8.2.2 In such circumstances, the court shall stay the proceedings unless the arbitration agreement is null and void, inoperative, or incapable of being performed. 99 ibid, section 15(2)  Moreover, where an application for the stay of proceedings has been made, an arbitration may nevertheless be commenced or continued and an award may be made whilst the issue is pending before the ADGM Court. 100 ibid, section 15(4)  

8.3.1 Irrespective of the existence of an arbitration agreement, the parties may still apply to the ADGM Court prior to or during the arbitration for measures relating to the taking of evidence or provisional or conservatory measures, such as obtaining an attachment order over the other party’s assets. 101 ibid, section 29(1)  In any case, the ADGM Court shall act only if, or to the extent that, the tribunal or the arbitral institution has no power or is unable at that time to act effectively. 102 ibid, section 29(2)  

8.3.2 The Regulations also specifically provide that the tribunal or a party (with the approval of the tribunal) may request from the ADGM Court (or any competent court) assistance in taking evidence. 103 ibid, section 43

9.1.1 The Regulations stipulate that recourse to the ADGM Court against an award issued from an ADGM seat may only be made by an application for setting aside in accordance with section 53(2) of the Regulations. 104 ibid, section 53(1)  The grounds upon which an award can be set aside are:

• the incapacity of a party; 105 ibid, section 53(2)(a)(i)  
• the invalidity of the arbitration agreement under the law to which the parties have subjected it, or failing any indication in this regard, the law of the ADGM; 106 ibid, section 53(2)(a)(ii)  
• improper notice being given to the party against which the award is invoked of the appointment of an arbitrator or the proceedings, or where such party was prevented from presenting their case; 107 ibid, section 53(2)(a)(iii)  
• the award dealing with a matter not contemplated or not within the terms of the submission to arbitration, or if it contains matters beyond the scope of the submission to arbitration; 108 ibid, section 53(2)(a)(iv)  
• a failure to adhere to the parties' agreement and or the Regulations in appointing the tribunal or the procedure in general; 109 ibid, section 53(2)(a)(v)  or
• the award has not yet become binding, has been set aside or suspended. 110  ibid, section 53(2)(a)(vi)  

9.1.2 The Regulations also permit the court to set aside an award where the subject matter could not be arbitrated under the law of the ADGM or where the enforcement of the award would be contrary to the public policy of the UAE. 111 ibid, section 53(2)(b)      

9.1.3 Any application to set aside an award may not be made after 3 months have elapsed from: 

• the date upon which the applicant received the award;
• where the parties have agreed to any other arbitral process of appeal or review, the date when the application or appellant was notified of the result of that process;
• the date upon which any request for the correction or interpretation of an award or the issuance of a supplemental award was disposed of by the tribunal; or
• such a period of time as the parties have agreed in writing. 112 ibid, section 53(2)(c)  

9.1.4 The Regulations specifically dictate that the ADGM Court must not undertake any review of the merits of the award either on a factual or legal basis. 113 ibid, section 53(4)  

10.1.1 The recognition and enforcement of an award under the Regulations can be undertaken in respect of:

• awards made in ADGM-seated arbitrations;
• awards issued under the New York Convention; and
• all other awards in respect of which recognition and enforcement is sought in the ADGM, irrespective of the state of jurisdiction in which they were made. 114 ibid, section 55     

10.1.2 The party seeking enforcement shall provide to the ADGM Court the original or certified copy of the award in respect of which enforcement is sought and the arbitration agreement itself. If the award is not made in English, the ADGM Court may request the provision of a translation. 115 ibid, section 56 (2)  

10.1.3 The Regulations set out that the recognition and enforcement of an award may only be refused by the ADGM Court where the party making the application provides proof that:

• a party to the arbitration agreement was incapacitated; 116  ibid, section 57(1)(a)(i)  
• the arbitration agreement was not valid under the law to which the parties subjected it, or failing any indication thereon, the law of the country where the award was made; 117 ibid, section 57(1)(a)(ii)   
• proper notice of the appointment of an arbitrator or the proceedings was not given to the party against whom the award is invoked, or they were otherwise unable to present their case; 118 ibid, section 57(1)(a)(iii)
• the award deals with issues not contemplated by, or falling within the terms of the submission to arbitration, or it contained decisions on matters which were beyond the scope of the submission to arbitration; 119 ibid, section 57(1)(a)(iv)
• the composition of the tribunal or the arbitral procedure was not in accordance with the parties’ agreement or failing such agreement, was not in accordance with the law of the country where the arbitration took place; 120 ibid, section 57 (1)(a)(v) or 
• the award has not become binding or has been suspended or set aside by a competent authority in the country in which, or under the law of which, the award was made. 121 ibid, section 57(1)(a)(vi)       

10.1.4 Further, the ADGM Court may refuse to recognise or enforce an award if the subject matter is incapable of being settled under the laws of the ADGM, 122 ibid, section 57(1)(b)(i)  or because the award would be contrary to the public policy of the United Arab Emirates. 123 ibid, section 57(1)(b)(ii)  

10.1.5 Importantly, any party seeking recourse against an award made in the ADGM shall not be permitted to make an application for the refusal of recognition or enforcement if it has made, or could have made, an application to set the award aside. 124 ibid, section 57(2)