Whether in UAE or Saudi Arabia, arbitration is giving businesses some real options

This year, the GCC is in a strong position to boost economic growth, capitalising on recent developments to the regional dispute resolution offering.

The GCC continues to embrace alternative dispute resolution methods – also known as ADR – such as arbitration and mediation, recognizing their benefits for the business community. A strong ADR architecture not only gives corporate players the necessary confidence in their contractual agreements, it can also help de-escalate adversarial proceedings, fostering a collaborative and more efficient environment.

Arbitration as a real alternative

Since the UAE’s ratification of the New York Convention in 2006 which paved the way for enforcements of foreign awards, the region has seen a transformation within the arbitration realm. For commercial parties, arbitration offers an alternative to state courts, which is particularly attractive for cross-border contractual relationships.

Recently, the Dubai International Arbitration Centre (DIAC) experienced a comprehensive overhaul following Dubai’s Decree 34, merging with the Dubai International Financial Centre's arbitration institute, introducing state-of-the-art arbitration rules, as well as an experienced arbitration court and registry.

Most recently, the inauguration of arbitrateAD in Abu Dhabi with its arbitration rules issued on February 1, 2024, marked a further expansion of the region’s arbitral offering. Part of a broader effort to enhance and streamline the arbitration process, in 2023, the UAE's legislature enacted minor amendments to the 2018 federal arbitration law.

In Saudi Arabia, the Saudi Center for Commercial Arbitration (SCCA) is going from strength to strength, having issued wide-ranging updates to its rules in 2023. Many of the Kingdom’s giga-projects have been enabled by the ADR offering of the SCCA, giving foreign contracting parties the confidence to invest. (Riyadh is hosting its first disputes week in early March 2024 to mark the developments.)

Doing their part, GCC courts, particularly in the UAE and Saudi Arabia, are showcasing strong enforcement rates of arbitral awards — where approximately 10 per cent in the UAE and less than 10 per cent of awards in the Kingdom are annulled. While limited outliers remain, the trend is towards a supportive judiciary which swiftly rejects unmeritorious requests to annul arbitral awards.

Mediation: back to basics

While arbitration presents an alternative to litigation, often both options leave contracting parties unsatisfied. Mediation enables the resolution of disputes without the time and expense of formal proceedings. Though recently underutilized in the region, mediation has deep historical roots resonating with the local culture.

Mediation has recently been bolstered by the Singapore Convention on Mediation which allows for mediated settlement agreements to become enforceable: a major advancement towards global harmonization of mediation.

With Saudi Arabia and Qatar having already acceded to the convention, and the UAE’s anticipated signing, the region is demonstrating its commitment to ADR. At the same time, the UAE is proactively developing its mediation frameworks through initiatives such as mediation training, establishing mediator lists, and encouraging mediation across public and private sectors.

Strong dispute resolution frameworks

Recent dispute resolution reforms have fostered a more predictable and transparent environment. This enhances security and reliability for investors, encouraging further domestic and international investments. The region’s endeavour to refine its dispute resolution framework mirrors its ambition to emerge as a leading global business hub.

Aligning its dispute resolution systems with best practices enhances its investment appeal and demonstrates its commitment to fairness, efficiency, and innovation.

Having undergone major shifts in recent years, the region is well-prepared for the coming wave of technological changes poised to impact every stage of dispute resolution. The integration of technology, such as artificial intelligence (AI) and blockchain, into dispute resolution processes promises to make them more efficient, transparent, and accessible.

The region’s proactive stance on innovation and legal technology adoption, positions it at the forefront of addressing and leveraging these advancements for better dispute resolution practices.

By focusing on arbitration and mediation improvements and preparing for tech advancements, the region is well-positioned to set new global benchmarks. This evolution benefits all stakeholders and contributes to establishing a secure, reliable, and sophisticated business environment, paving the way for continued economic growth - and international investment.