Taking the arbitration route
An alternative option for resolving commercial disputes
Many sales and purchase agreements relating to off-plan real estate contain arbitration clauses in which parties agree that they will resolve disputes by way of arbitration. Many purchasers, however, are not familiar with the arbitration process. This article provides a preliminary introduction to arbitration proceedings within the UAE.
Arbitration is an alternative and private means of resolving commercial disputes. Instead of approaching the courts, parties to a dispute nominate one or more persons to make a decision which is final and binding.
The person, or people, who are nominated to make such decisions are called arbitrators and the decision is called an award. The party seeking to have the award executed or implemented must apply to the court to ratify the award.
Parties can choose to adopt their own procedure of arbitration or can engage in arbitration under the supervision and rules of one of the arbitration centres that are in place.
One such centre is the Dubai International Arbitration Centre (DIAC). The steps to be taken by parties engaged in arbitration at the DIAC are as follows:
DIAC arbitration process
In order to initiate the arbitration process, the aggrieved party (i.e. the claimant) has to send a request to DIAC. This should contain the following:
n A demand that the dispute be referred to arbitration under the DIAC rules;
n The contact information of the parties to the arbitration and the representative of the party that has filed the request;
n A copy of the arbitration agreement together with the contractual documentation in which the arbitration agreement/clause is contained;
- A brief description of the nature and circumstances of the dispute;
- A preliminary statement of the relief sought; and
- All relevant particulars concerning the number of arbitrators and their choice.
The reply
Once the DIAC receives the request, it forwards it to the other party (i.e. the respondent) for its reply. The respondent has to file a reply/answer within 30 days of receiving the request. The reply/answer must contain the following:
- Full contact details and name of the representative (legal or otherwise) of the respondent;
- Its preliminary comments as to the nature and circumstances of the dispute;
- Its preliminary response to the relief sought by the claimant;
- Any objection concerning the validity or applicability of the Arbitration Agreement;
- Any comments regarding the number of arbitrators and their choice in light of the claimant's proposals; and
- Any counterclaim.The DIAC would then, subject to its rules, appoint the arbitrators as per the agreement of the parties in the arbitration clause. The arbitrator or arbitrators, once appointed by the DIAC, constitute the tribunal.
The DIAC will transmit a copy of the file (which will include the request and the answer) to the tribunal as soon as it has been constituted. Within 30 days from the date of the transmission of the file to the tribunal, the tribunal must notify the parties of the date of the preliminary meeting and will fix a timetable for submission of documents, statements and pleadings.
Pleadings
Within 30 days of the receipt of notification from the DIAC of the establishment of the tribunal, the claimant must serve the Statement of Claim (if they haven't already done so).
The Statement of Claim consists of a narrative of the whole case of the claimant and identifies the acts or breach that the respondent has committed and lists out the relief and compensation sought. The respondent then has 30 days after the issuance of the Statement of Claim, to issue its Statement of Defence.
Once the above-mentioned pleadings are submitted, the tribunal may request that the parties provide further written statements if it is not satisfied with the pleadings. Such statements may also be requested by the parties.
Furthermore, oral hearings may also be ordered with respect to evidence, arguments and expert witnesses.
If no hearings are held, the proceedings shall be conducted on the basis of the documents and witness statements alone. The tribunal, upon reviewing the documents, evidence and witness statements, will issue its award. An award can take anywhere between six months to a year after the preliminary hearing for dispute relating to real estate purchases.
Fees involved
As arbitration is a private form of dispute resolution, there are costs to consider. The parties are responsible for paying the centre's administration and tribunal fees. The claimant will also be responsible for the payment of registration fees. This does not include the fees for legal counsel.
The writers are lawyers at Afridi & Angell
