Cookies Policy

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we’ll assume that you are happy to accept these cookies.To get more information about these cookies and the processing of your personal data, check our Cookies Policy.

Continue

Ince Gordon Dadds Emergency Response +442072836999

Knowledge bank
Sector Insights

Mediation in the United Arab Emirates

19.12.2018 Mediation

Justin Whelan

Justin Whelan Managing Associate

Mediation is widely utilised globally as an effective means of Alternative Dispute Resolution (ADR) in many types of disputes (e.g. insurance, shipping, oil and gas etc.). It is becoming more prevalent in the United Arab Emirates (UAE), particularly in construction and property disputes. However, the use of mediation in the region remains relatively limited in comparison to other jurisdictions.his is surprising when considering the long standing practice of collective conciliation in settling disputes in Arabic and Islamic culture and the duty to reconcile under Sharia Law.

This article addresses the framework and facilities for mediation in the UAE, and provides comment on some of the obstacles to and benefits of this effective form of ADR.

The Mediation Framework

Although the UAE Civil Procedures Law does not contain express reference to mediation, Article 101 allows parties to agree to stay proceedings for up to 6 months to attempt settlement. Within the UAE Court system there are also a number of measures that encourage reconciliation between disputing parties.

For instance, the UAE Federal Courts offer various dispute reconciliation committees whereby the parties in, for example, civil, commercial and labour disputes may engage in pre-action mediation. In the event that the dispute remains unresolved it is necessary for the litigating party to obtain a statement of no objection from the committee prior to issuing a claim. In this way the committee must first be satisfied that mediation has been properly considered.

The respective UAE Chambers of Commerce also provide mediation services to its members. The Dubai Chamber, in recognition of the increasing requirement for mediation services, offers a Mediation Smart Application for the electronic submission of documentation.

In Dubai, the local courts have a Centre for Amicable Settlement of Disputes for certain cases (excluding e.g. labour, personal affairs and those involving banks) with values currently up to AED 100,000, whereby such cases must be reviewed by mediators and settlement via negotiation is encouraged prior to the commencement of proceedings.

The Dubai Land Department’s Rental Disputes Settlement Centre offers amicable settlement facilities prior to issuing a claim in landlord and tenant disputes. The Dubai Land Department has also established an investor-developer mediation committee to resolve property disputes. The Dubai Labour Department is empowered to order where possible that disputing parties attempt amicable settlement.

The DIFC Courts’ position on mediation is more reflective of English law. Part 27 of the Rules of the DIFC Court expressly encourages parties to consider ADR, including mediation, in resolving disputes and it lists the benefits of ADR. At the case management conference, the court may invite the parties, where it considers appropriate, to use ADR. It may also adjourn the matter to enable the parties to explore settlement options. When making costs orders, the court may under Part 38 consider the efforts made by the parties before and during the proceedings in order to try to resolve the dispute.

The DIFC Small Claims Tribunal also caters for consultation at court whereby parties may attempt to settle disputes through reconciliation.

The DIFC-LCIA Arbitration Centre offers mediation as well as arbitration services and contains comprehensive mediation rules. Similarly the Dubai Multi Commodities Centre (DMCC) provides free zone inhabitants with a mediation platform containing structured parameters.   

Other mediation facilities are offered through professional bodies such as The Royal Institute of Chartered Surveyors (RICS) which has a UAE mediation panel launched in association with the Dubai Land Department offering ADR training to the construction industry. Whilst the Emirates Maritime Arbitration Centre (EMAC) primarily provides arbitration services to the maritime industry, it has also adopted a set of Mediation Rules which comply with the best international practices.

The above facilities indicate an appetite for collective conciliation in resolving disputes in the UAE. However, there remain barriers to a wider take-up.

Obstacles to Mediation

Perhaps the most widely cited obstacle to successful use of mediation in the UAE is the lack of protection for ‘without prejudice’ communications.

Without prejudice communication allows for open and frank discussions to take place without fear that any concessions made in negotiations will be used adversely during legal proceedings. Although the without prejudice concept exists in the DIFC Courts, (Practice Direction No. 6 of 2014 expressly stating that all mediation communications either pre-action or post-issue be treated as having been made on a without prejudice basis), it is not recognised elsewhere in the wider UAE.

Indeed, marking documentation ‘without prejudice’ when mediating disputes subject to court proceedings onshore in the UAE will not necessarily avoid any such ‘without prejudice’ exchanges being brought to the attention of the court. This is so even where parties agree to without prejudice communications in arbitration. If the arbitration agreement or award is challenged in the UAE courts, there is a risk that the court will view the intended without prejudice documentation.

That said, in the UAE there are alternative methods that can be adopted to encourage open dialogue between the parties when attempting settlement of disputes. Disputing parties may consider agreeing to the jurisdiction of the DIFC Courts. Onshore, they may wish to conduct negotiations verbally, make any concessions conditional only and accompany any written exchanges by a clear statement that nothing therein constitutes an admission of liability or a waiver of right. A carefully drafted confidentiality agreement may also assist in mitigating the risk of publication to the onshore courts.

Other obstacles in the region are perhaps a lack of familiarity with the facilities on offer, and a lack of understanding of the benefits of mediation.

Benefits of Mediation

Mediation essentially provides an alternative commercial forum to litigation, arbitration and traditional round-table negotiation for resolving disputes. It is a flexible and relatively speedy cost-effective medium that enables parties to cut through complicated and expensive legal disputes to achieve settlement on acceptable terms. It is usually voluntary and, by its very nature, less combative than litigation.

Mediation provides a facility to engage in negotiation with the help of an independent third party mediator in narrowing issues and reaching agreed resolutions. The mediator is uniquely placed to assess the parties’ respective viewpoints from an impartial stance. Unlike a judge or arbitrator the mediator cannot order a resolution and the parties are usually willing to be more transparent and less adversarial in their approach. The conciliatory role the mediator plays in assisting the parties reach settlement is invaluable.

In specialised areas the parties may prefer a mediator with expertise in the subject matter in dispute, for example with a background in insurance, construction or chartered surveying. Such specialised mediators may suggest settlement options that may have not been previously explored, particularly by parties entrenched in complex and heavyweight disputes. In this way mediation may circumvent lengthy litigation.           

If agreement is not reached the parties are under no obligation to be bound by any proposals and are free to litigate or arbitrate. However, should mediation bring disputing parties sufficiently close together to achieve resolution there is the satisfaction of commercial certainty and an immediate full and final settlement. 

Given the above it is perhaps not surprising why, in jurisdictions where mediation is more commonplace, the success rate of mediation is high. According to the UK’s Centre for Effective Dispute Resolution (CEDR) Mediation Audit in 2018, 12,000 commercial cases were mediated in the preceding 12 months with an overall success rate of 89%, with 74% of disputes settling on the day and the remaining 15% settling shortly after mediation.

The English courts cannot order the parties to attend at mediation. However, its use is actively promoted in that jurisdiction in recognition of the mechanism it provides for resolving disputes whilst maintaining commercial relationships and market reputations, saving time and costs, and increasing the efficacy of judicial resources. Indeed this recognition is reflected in the DIFC Rules at Part 27 being mindful of the broader pantheon of commercial and practical solutions offered by mediation as opposed to litigation.

Conclusion

Notwithstanding the philosophy of collective conciliation being deeply embedded in Arabic culture, the use of mediation remains somewhat limited and embryonic in the UAE. However, developments in legislative frameworks and mediation rules by professional organisations may be seen to reflect the appetite for this form of ADR in the region. Time will tell whether that appetite develops into a wider usage of mediation, and whether the UAE judicial system further develops to promote mediation as an effective form of ADR in a way similar to that of common law systems in other jurisdictions.             

Article authors:

Justin Whelan