A recent change to Article 257 of the UAE Federal Penal Code has alarmed lawyers across the region as it threatens the efficacy of arbitration. The amendment, which came into effect on 26th October 2016, is originally in Arabic as published in Arabian Business, but can be translated as:
“Any person who issues a decision, gives an opinion, submits a report, addresses a case or proves an incident for the benefit or against a person, failing to maintain the requirements of integrity and impartiality, in his capacity as arbitrator, expert, translator or investigator, appointed by administrative or judicial authority or selected by parties, shall be sentenced to temporary imprisonment. Said categories shall be banned from being reassigned to such tasks, and be subject to the provisions of Article 255 of the present law.”
The article applies to anyone who ‘issues a decision, expresses an opinion, submits a report, presents a case or proves an incident in favour of or against a person’. This means that an arbitrator can be imprisoned if the court believes their decision is biased or ‘without integrity’, even if this was not intentionally done. ‘Temporary imprisonment’ is later defined as 3 to 15 years, a far vaguer and less forgiving sentence, discouraging arbitrators to volunteer their services.
Although the reason for the amendment is unclear, the impacts seem far more concrete. Since its implementation, several arbitrators have resigned from their cases in fear of prosecution let alone incarceration. Moreover, many law firms who operate in the region have asked employees to refrain from private arbitration to avoid losing employees due to temporary disbarment during investigation or imprisonment.
Perhaps the most significant impact is the threat to the UAE’s reputation for arbitration. Over recent years the country has been promoting its arbitration services and their success to rival other key players such as Hong Kong and the UK. Prior to the amendment, this had been successful; the DIFC Courts’ arbitration tribunal (the DAI) saw a 10% increase in arbitration cases and the Dubai International Arbitration Centre a 13% increase rise since 2016. However legal consultants suggest that this growth will not be sustained if this amendment is strongly enforced.
Professor Aymen Masadeh, legal expert in arbitration in the UAE, spoke out on the contentious article. “Indeed, all arbitrators need to maintain the requirement of integrity and impartiality. The article leaves a significant burden on the court as the scope of integrity and impartiality is not easy to determine. Further, evidence of bad faith or intention is not expressly required under article 257. However, the purpose of this article may allow the court to require such evidence.”
As expected, many lawyers are trying to convince the government to repeal Article 257. Although their attempts have been recognised, the article remains in full force today, only escalating the impacts on the UAE’s legal community in the near future.
Creative Word offer professional accredited training on relevant topics such as arbitration and mediation, aimed at both new and experienced lawyers who wish to know more about the recent changes to the law. Please contact us to find out more about the legal training we provide.
