By Walid Jaafar & Ravi Jawani

An unanswerable question would be, can disputes ever come to an end? As there is no answer to this question, the present fast paced market demands for an expedited solution with less cumbersome protocol, thereby making arbitration a well-established and widely used means to resolve disputes. The threat, “I’ll see you in court!” is used a lot less often than it used to be.

Arbitration with a solution is one of several kinds of alternative dispute resolution systems and is viewed to provide parties to resolve a dispute outside of the traditional court systems in a faster and less expensive way. Arbitration takes place out of court and gives freedom and flexibility to the parties to choose the number of Arbitrators, applicable laws, language of the proceedings and the venue to conduct such proceedings. This can be done vide a contract or by a separate agreement executed by the parties in dispute.

When there is a choice of one arbitrator as per the contract or by an agreement then both the parties mutually select an impartial third party, either done directly through their legal representatives or approach the arbitration centers to assist in choosing the arbitrator; agree in advance to comply with the arbitrator's award; and then participate in a hearing at which both sides can present evidence and testimony. The arbitrator's decision is usually final, and courts rarely re-examines the findings of the arbitrator. In most of the international contracts, there is a choice of three Arbitrators, whereby, both parties choose their respective Arbitrators and the respective Arbitrators mutually choose a third umpire, hence less room to doubt any decision of the arbitrators.  

Over several years, parties globally have accepted arbitration as a successful dispute resolution  when compared to the Court Litigation. Arbitration is known to have been put in place in order to facilitate the dispute resolution between the parties in labor or commercial matters. Contracts were being drafted in a manner allowing arbitration to be the parties’ recourse to resolve their differences.

In theory, arbitration has many advantages over the conventional Court litigation. Efficiency is perhaps the greatest. Some say arbitration is easier, cheaper, and faster. Although arbitrators can be lawyers, retired judges or legal professors, there is no fixed criterion to qualify as an arbitrator. They are often selected for their expertise in a particular area of business/industry, and may be drawn from private practice or from other organizations. Arbitrators have significantly more freedom than court judges to make decisions, because they do not have to abide by strict procedural rules and do not have to give reasons to support their awards.

All that glitters is not gold, however and over the last several years, parties inserted arbitration clauses even in the most basic agreements, without a true understanding of the effects arbitration can have. Depending on the circumstances, it can be a less desirable alternative to the Court system. The hard reality here is that the arbitration awards, though fully recognized by the courts, are appealable similar to any judgement pronounced by the court of first instance. Even when efficiency is achieved, some critics argue, the price is a lower quality of justice, and it can be made worse by the difficulty of appealing an award. Today, as arbitration has become increasingly formal, it resembles litigation in its complexity, whereby the concept of reduced costs for an expedited resolution is definitely defeated and in the present environment arbitration seems to be one of the most expensive measures for resolving disputes.  

In practice, the arbitration center might take 2 to 3 months to appoint an arbitrator. In comparison, Dubai courts are reaching their first instance decision in the same amount of time or even less. Some might argue that court proceedings take forever, however, it is evident that Dubai Courts are exerting every effort to facilitate the process. This is seen in the special tribunals and committees that are being formed to help deal with the increasing number of cases especially in the area of property disputes. It is true that the Courts are not very keen to order Costs in favor of the winning party, however, the claimant does get his court fees, if successful.

On the other hand, we cannot see arbitration surviving without the Court system as any arbitration award has to go through the Court proceedings in order to be enforced. Whereas Court decisions can be executed immediately after the orders are issued, thereby saving costs for translation of documents being one of the major factors in litigation.

No matter how popular arbitration is or how convenient it is for those who chose it, it is evident that the practice is still very shy in the UAE. Though there are quite a few Arbitration Centers, people still prefer to go through the traditional way allowing the courts to resolve their disputes. This might be due to several aspects one being that they are used to and have faith in this system and another would be that they are not very familiar with arbitration as an alternative.