0 ADR’s Effectiveness in UAE, Is it worth it to take the Time? كفا ء لبديل الحل ة "ال فض ارامات" في اعا لنزا ت العربية المتحدة نأخذ ، هل تستحق أن الوقت من أج لها؟By Student ID number: 2013122106 Student Name: Alaa Husni Zeidan A Research Project submitted as a fulfillment of the requirement of PG Diploma in Construction Law and Dispute Resolution Faculty of Business & Law Dr. Abba Kolo, Supervisor October 31, 2015
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ADR’s Effectiveness in UAE, Is it worth it to take the Time?
، هل تستحق أن نأخذ المتحدة العربية تلنزاعات" في اإلمارافض اة "الحل البديل لءكفا
لها؟من أجالوقت
By
Student ID number: 2013122106
Student Name: Alaa Husni Zeidan
A Research Project submitted as a fulfillment of the requirement of
PG Diploma in Construction Law and Dispute Resolution
Faculty of Business & Law
Dr. Abba Kolo, Supervisor
October 31, 2015
1
Abstract
The paper aims to discuss the most successful internationally recognized ADR's (Alternative
Dispute Resolution) and the obstacles and difficulties facing the implementation the same ADR's in
UAE.
The paper also aims to present the relevant legal framework in the United Arab Emirates effecting
the implementation of all proposed ADR's considering Cultural ,social and legal factors .Also the
study will factor the existing legislation and laws along with some draft laws such as the new draft
arbitration law.
Finally the paper will recommend the most appropriate choice based on statistics and views gathered
through a questioner addressing the subjected combined with recommendations to modify existing
legislation to help improve the likelihood of a successful implementation of the selected ADR.
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ملخص
في العالم والعقبات والمشكالت التي تواجه ( ADR) تهدف هذه الورقة البحثية إلى مناقشة أكثرالبدائل نجاعة في حل النزاعات
.تطبيقها في اإلمارات العربية المتحدة
ويهدف هذا البحث أيضا إلى تقديم اإلطار القانوني ذي العالقة في دولة اإلمارات العربية المتحدة الذي يؤثر على تطبيق البدائل
المقترحة في فض النزاعات آخذا في عين اإلعتبار العوامل الثقافية واإلجتماعية والقانونية. باإلضافة لذلك فإن هذه الدراسة ستنظر
لمطبقة والتشريعات المقترحة التي هي اآلن قيد الدراسة مثل قانون التحكيم الجديدإلى التشريعات ا .
وأخيرا، سيوصي البحث بتبني أكثر الخيارات مالئمة بناء على اإلحصائيات ووجهات النظر التي تم جمعها خالل إستبيان حول
تحسين إحتمالية نجاح تطبيق البدائل المختارة في فض الموضوع مع تضمينه توصيات لتعديل التشريعات القائمة حاليا للمساعدة في
2.1. Type of ADR’s……………………………………………………………………….….…...6
2.2. Why we need it? The Commercial Side...............................................................................13
3. Effectiveness and Enforceability ……...…………..............................................................14
4. COMMON VS CIVIL…………………………………………………………..……………15
4.1. The Common Law View …………………………….……………………………….…….16
4.2. The Civil Law View ……………….……………………………………………………….18
4.3. The UAE stand………………………………………………………………..……………19
5. Thinking Outside the Box! The Module Clause ………..……..…………………..……27
6. The Practical Side /Experts Views ………………………..…...…………………….….27
7. Conclusion ………………………………………………………………………...………29
8. Appendix…………………………………………………………………………..………30
9. BIBLIOGRAPHY ………………………………………………………………...………32
10. WORD COUNT ………………………………………………………………..…………36
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Acknowledgment
First of All I would Like to start By Thanking God for giving me the strength and endurance to finish up my studies )الحمدهلل على كل شيء(
I would like to express my gratitude to my supervisor Dr. Abba Kolo for the
useful comments, remarks and engagement through the learning process of this project. Furthermore I would like to thank Professor Aymen Masadeh for such a great program and for the knowledge I have gained through him as
well for the support on the way. Also, I like to thank the participants in my Questioner specially the guys at Hill International, who have willingly shared their precious time during the
process of interviewing . I would like to thank my loved ones, who have supported me throughout entire process, both by keeping me harmonious and helping me putting
pieces together. I will be grateful forever for your love
Special thanks for My wife Ruba Muwafi for her support ,and to my brother
Feras who was always there . Finally My parents and most importantly my mother who is the person that made me who I am, also my brothers and of course My Sister Thraa for her
support and Laughter.
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1. Introduction
Evolution is a high speed train that waits for no one , where keeping yourself and your country
secured and looked up into a Cocoon is no longer an option, world is so interconnected through
the available technological and transportation advancement .
UAE is considered to be a leader in the field of evolution leaps in all aspects especially when it
comes to real estate and construction and such evolution was possible through the involvement of
international corporations and major construction companies.
The Evolution of UAE was possible through offering International Corporation a safe working
environment within an advance and speedy Court system, but without the introduction of
alternative Dispute Resolution referred to As ADR such as arbitration the evolution process was
never going to continue to grow.
Even though UAE does recognize Arbitration and it has laid down basic principles for it within the
CPC through articles 203 to 218 then followed by articles 235,236 and 2381, and have been
working on a Draft arbitration law2 to further enhance the process but it still has its peculiar way of
doing certain things when it comes to arbitration, for Example even though arbitration is federal
but you would still need to notice Each emirates perspective law and consider the impact and
effect of the Court system in a specific Emirate before choosing the seat since judges Experiences
in dealing with arbitration varies in each emirate which might have a big impact at the time of
ratifying the Award .
Other methods such as mediation, Adjudication, amicable settlement along with any other Hybrid
technic aren’t as advance as arbitration and still faces enforceability issues in UAE unless drafted
properly.
Disputes are almost an inevitable outcome of any construction contract, but the extent, severity,
complexity and how to deal with such disputes is connected to numerous factors, but mostly
relevant to the parties and their intent to actually solve the problem and maintain a healthy
business relationship. Party’s ability to own up to their share of the dispute and admit that they are
both to blame is essential, because after all a dispute is a conflict arising between two parties and it
would be quite rare for the blame to lay completely with a single party.
Another factor that affects disputes is the type of ADRs available within the jurisdiction of the
dispute, so there might be no use of introducing adjudication in your contract if the jurisdiction
you are operating in doesn’t support the enforcement of such ADR, moreover it might end as a
burden rather than what it was intended for as a speedy cost effective mechanism.
1 Civil procedural code, Law No.11 of 1992 ,Articles 203 to 218 and articles 235,236 and 238 .
2 UAE Draft arbitration law , released on 16 February 2012
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The types of ADRs that are currently available are so diverse and adaptable in a way that allows
parties to tailor made their preferred method of Dispute resolution, but regardless you would see
that many governmental institutions tend to stick to the traditional method of solving their disputes
which is through court because they are most likely bound by certain laws, so the only ADR’s they
could use is Negotiation through amicable settlement , the case is evident in the Command of
Military works standard contract 3 which is governed by resolution 12 dated 1986
4 .
on the other hand we can see that other government institutions who answers to a more updated
resolutions and decrees such as resolution 1 dated 2007 5 can use a modified version of the
standard FIDIC 1999 where the resolution adopted both red6 and yellow
7 version .Both of these
forms offer the option of DAB (Dispute adjudication Board) under clause 20.48 which is used in
many governmental contracts such as Abu Dhabi Municipality standard contract.
ADR’s can be tailor made to suit the parties of the contract considering many factors such as their
mentality, legal restrictions, financial capabilities , long term business relations and most
importantly project nature .
The paper will start with presenting the most used types of ADR’s globally then provide a linkage
to those ADR’s in the UAE market, which will later on be followed by the obstacles that might
face the application of such ADR’s in both the Common law and civil law jurisdictions and more
specifically in UAE.
An ADR measure of success is measured through its effectiveness and enforceability and it is what
differentiates each ADR from the other and as we mentioned earlier the process is governed by
many factors , so we would see for example that UK chose to rely on adjudication as their main
ADR and has provided the necessary legal backup to such method through the housing grant act 9,
which made it a statuary requirement rather than a contractual obligation in order to provide
support to the process, while we would see that Canada choses to go with Mediation as the main
ADR in the country which is most likely to be driven and influenced by the social element of the
population where the culture encourages conflict avoidances .
Parties need to keep the decision within the parties control rather than a third party is an essential
element that encourages people to adopt mediation. The full spectrum of effects that might
influence an ADR selection is totally subject to the specific project and parties involved.
The middle east most effective ADR so far has been negotiation where many contracting parties
relay heavily on long term business relations, so the intervention of a third party will most likely
mean the end of that relationship which represents a higher risk factor than the possibility of going
to court, because a party how is not able to negotiate and sticks to a stringent contractual position
will most likely not survive in the middle east market.
3UAE command of Military Works standard Contract, which is a heavily modified version of 1987 FIDIC Construction
Contract. 4 Resolution No. (12) of 1986 on the tenders and auctions system at the Armed Forces.
5 Abu Dhabi resolution Executive Council No.1 of 2007. 6 FIDIC 1999 standard form contract for Construction works designed By Employer (Red Book).
7 FIDIC 1999 standard Form contracts , Design and Built (Yellow Book)
8 FIDIC 1999 Standard Form Contract, Sub-clause 20.4
9 Housing, Grants, Construction or Regeneration Act, 1996
The methodology of the research as evident above relied heavily on reliable expert’s journals and
articles combined with Books and conclusions were backed up with Case law and legislations.
The Drive was to illustrate and Cluster the items addressed in the research and discus
advantages and disadvantages combined with solutions in a way that brings into the conclusion
that with ADR’s are so flexible to change but under expert supervision.
Finally prepare and acquire data from experts to support the views presented or present
possible other scenarios and outcomes
6.2. The Questioner
As part of this project requirement and in order to obtain confirmation in regards of the views
presented in the paper and to utilize experts input, I have conducted multiple interviews
through face to face approach, online or telephonic Questioner that involved 18 questions that
was initially drafted by me but later on audited and refined after the first few interviews based
on the experts input in order to obtain best results.
The Experts chosen poses extensive expertise in the field of Dispute resolution worldwide and
In UAE All Questioners are presented in Appendix no 1 and summarized as follows:
The Questioner aimed to recognize the practical application of some Key topics where it
started by asking the experts about their views of the UAE legal system and the recommended
ADR within UAE then shifted into confirming the personal experience of each of the experts
through questions relating to their own experience where all those how answered Q11 with
none when asked about the number of disputes that their company where involved in were
eliminated .
What is suppressing in the data gathered through the questioners that the Experts has almost
unanimously agreed on most of the views which indicates that the data doesn’t reflect a
personal individual experience and many have believed strongly in their views .
The questioner was sent out to 35 experts through emails and social media, only four replied to
email correspondence and almost 20 refused or lacked the time or interest to join, the rest
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where contacted through a telephonic conversation 9 has expressed genuine interest and have
given valuable information, the rest have been partially irresponsive and weren’t real interested
so the data gathered was questionable and there for it was crossed out.
So the final test group was confined to 13 questioners and the answers reflected the following:
The most effective ADR in UAE was listed as negotions where 77% have chosen it and the rest
23% have chosen Mediation so it is clear that the cultural framework have forced such an
approach which was also confirmed through question 7 when asked about the effectiveness of
Mediation where answers ranged from Good to very Good and again through the answers in
question 8 when asked about adjudication where the answer was remarkably unanimous with
100% confirming that it was poor and some has added the phrase it’s a waste of money .
Once the questions have addressed arbitration the answers where a bit conflicted in some parts
but when dealing with question 2 at the level of UAE courts interference 77% said occasional
and 7% regarded it as a breach to the new work convention and 16% classified it as limited.
The Conflict regarding arbitration was concentrated on the rating of the arbitration process in
UAE where in Question 3. 70% of the test group answered good and 30% answered very good
but most has made the answer conditional to arbitration under DIAC or DIFC-LCIA but when
asked in Q4 about recommending UAE as a seat of international arbitration 77% answered No
due to the possibility of Court intervention and only 23% said yes but conditional to a very
defined arbitration agreement and recommended DIFC-LCIA specifically and such believe in
the professionalism of DIFC-LCIA was confirmed in the answer of Q9 where the answer
ranged between Favorable to Very advance when comparing DIFC-LCIA to other institutions
in UAE .
Also we could see that experts still regard arbitration as relatively faster than courts where 93%
answered 18months when asked about the expected duration to render an arbitration award
while 70% answered 1 to 2 years for court and 15% answered 2 to 3 and 15% answered 3 to 4
years .
The rest of the questions where mainly to confirm the level of expertise that the institution and
the expert answering the questions poses in order to evaluate the accuracy of the information,
for Example for Q11 on how many commercial dispute did your business enter in the last 5
years was none then the answers would be disqualified and if the answer for and the same goes
for answer on question 13 if anyone answers not applicable since he haven’t used arbitration.
When asked about the possibility of UAE court finding Mediation as a Condition precedent to
Court on the bases of contractual agreement 48% answered likely,30% answered Most likely
and 22% always but when asked about the legal bases of such believe most have stated that it
is the general direction of the judicial community specially that the Courts have to conduct
Conciliation as a legal requirement in all commercial disputes prior to court proceedings
following the requirements of law No.
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7. Conclusion
When drafting a Dispute resolution Clause one should always consider the practicality end
effectiveness of the clause rather than ending up with a clause that will either waste your time
since it involves many approaches that prolongs the disputes rather than solve it, or have none
and causes you to end up in court almost every time .
We could see that many UAE standard form contracts still follow the FIDIC 1987 first edition
dispute resolution clause structure where they rely on the engineer decision which FIDIC
themselves has chosen to abandon since it has proven to be almost useless and it only works
because it hides behind the negotiation process that runs on the Background, the reason behind
this rigidity against change is mostly that many institution are still subject to old and outdated
laws and resolutions.
It is essential to understand the proportional relation between losses caused by disputes and the
lack of options to resolve the dispute due to poor drafting.
Finally, it is important to note and to highlight possible solutions to upgrade the dispute
resolution process in UAE and minimize disputes and avoid loses in the construction industry
due to the rigidity of the current procedure.
The Ideas presented are guide lines that aim to better the chances of resolving the dispute.
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8. Appendix
Appendix 1:
A summary of the 13 questioners is indicated within the Format for easy reference
Questionnaire
The Questionnaire is part of my Master’s degree project on the subject
of “ADR effectiveness in UAE” and is directed towards professionals in
the dispute resolution and construction law field
1. Which of the following types of ADR’s do you believe to be the most effective in UAE?
Mediation 23% 3
Expert determination
Adjudication
negotiation 77% 10
2. How would you classify the UAE Courts intervention with Arbitration Awards?
None only the supportive part
limited 15.3% 2
occasional 77% 10
interference to the extent that it breaches the New York Convention 7.6% 1
3. How would you rate the level of professionalism that the Arbitration institutes of UAE
are providing?
Bad
Good 69.2% 9
Very good 30.7% 4
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Excellent
4. Would you recommend UAE as a seat of arbitration to an international contract?
Yes 23% 3
No 77% 10
5. ADR’s tends to prolong the dispute if not properly supported would you say that this
is the case in UAE?
Yes 100% 13
NO
6. UAE tends to use FIDIC in many contracts but the dispute resolution clause seems to
be drastically changed, how would you describe the professionalism of the
amendments compared to the original clause?
Poor 69.2% 9
Occasionally good 30.7% 4
Generally good
Excellent
7. How would you rate the effectiveness of Mediation in UAE?
Poor
Good 53.8% 7
Very good 46.1% 6
Excellent
8. How would you rate the effectiveness of adjudication In UAE?
Poor 100% 13
Good
Very good
Excellent
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9. How would you rate arbitration under DIFC-LCIA compared to other institutions in
UAE?
Not favoured
Same
Favourable 53.8% 7
Very advanced 46.1% 6
10. What are the chances that a UAE court will hold an ADR mechanism such as
mediation as a condition precedent to court proceedings?
Unlikely
Likely 46.1% 6
Most likely 30.7% 4
Always 23% 3
11. Roughly, how many commercial disputes has your business entered into within the
past 5 years?
None
1-10
11-20 38.5% 5
20+ 61.5% 8
12. What factor(s) would influence your decision in choosing a means of settling
disputes?
Cost
Time
Other – Please specify: __BOTH_________ 100% 13
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13. If you are currently using or have previously used arbitration as a dispute resolution,
how long did it take to render an award?
6 months
12 months 7.7% 1
18 months 92.3% 12
18+ months
14. If you have previously submitted a case to court, how long did the entire process
take to resolve?
6 months
Within 1 year
1-2 years 69.2% 9
If more than 2 years, please specify: __2-3 15.4% 2 &
3-4 15.4% 2
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9. Biography
1. Books
1) John Adriaanse, Construction Contract Law (3rd edition , palagrave macmillan,2010)
2) John Murfoch & Will Hughes, Construction Contracts law and Management (Fourth Edition, Taylor & Francis, 2008).
3) The FIDIC Contracts Guide, 1st edition 2000 issued by the international federation of consulting engineers.
4) N G Bunni, The FIDIC Forms of Contract (3rd edn, Blackwell Science, Oxford 2005).
5) Michel Hwang, Contemporary issues in international arbitration and mediation (Martinus Nijihof f publishers).
6) Nigel Blackaby , Constantine Partasides ,Alen Redfen and Martin Hunter , Redfen and Hunter International Arbitration , student Version ,fifth edition
2. CASES
1) International chamber of commerce case No 10619 (1994).
2) CRW Joint Operation v. PT Perusahaan Gas Negara (Persero) TBK [2011]
SGCA 33.
3) Stump v. Sparkman 435 U.S. 349 (1978Tamari Vs. Conrad , 552 F.2d 778).
3. Legislations
1) UAE Civil Transaction Code- Federal Law No.5 1985
2) FED RES MIN JUS No. 133 of 2001
3) FED LAW No. 26 of 1999
4) UAE Federal Law no.11 1992 , Civil procedural law.
5) Abu Dhabi resolution Executive Council No.1 of 2007
6) Housing, Grants, Construction or Regeneration Act, 1996
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4. Articles
1) Expansion of arbitral immunity: Is Absolute immunity a Foreign conclusion ? ,
Jenny brown , Journal of Dispute resolution , Volume 2009 , issue 1.
2) N.G. Bunni, The Gap in Sub-Clause 20.7 of the 1999 FIDIC Contracts for Major
Works, ICLR [2005] 272, April 2005
3) F. Gillion, How easily can a DAB decision be enforced?, Shadbolt/Law FIDIC
Briefing Paper, June 2009
4) Seppälä C.R., An Engineer’s/Dispute Adjudication Board’s Decision Is
Enforceable By An Arbitral Award, White & Case, December 2009
5) Dr. Götz-Sebastian Hök article, Dispute Adjudication in Civil Law Countries:
Phantom or Effective Dispute Resolution Method? , The Dispute Resolution
Board Foundation The Forum , Volume 15, Issue 3 August 2011
6) G. Di Folco & M. Tiggeman, Enforcement of a DAB Decision through an ICC
Final Partial Award, The Dispute Board Federation, Newsletter, September 2010
7) F. Gillion ,Enforcement of DAB decisions under the 1999 FIDIC Conditions of
Contract – A recent development: CRW Joint Operation v. PT Perusahaan Gas
Negara (Persero) TBK [2011]SGCA 33 , Fenwick Elliot
8) Christopher R. Seppälä ,How Not to Interpret the FIDIC Disputes Clause: The
Singapore Court of Appeal Judgment in the Persero Case , This paper combines
an article with the same title published in the January 2012 issue of The
International Construction Law Review, London, and the author’s article “Sub-
Clause 20.7 of the FIDIC Red Book does not justify denying enforcement of a
‘binding’ DAB decision” published in the October 2011 issue of Construction Law
International, Volume 6, Issue 3
9) Taner Dedezade , Mind the Gap: Analysis of Cases and Principles Concerning
the Ability of ICC Arbitral Tribunals to Enforce Binding DAB Decisions under the