Choose Wisely: Arbitration or Litigation!

Posted by Awatif Mohammad Shoqi Advocates & Legal Consultancy on March 27th, 2022

Dubai skyline is most admired amongst several countries due to multiple sky-scrappers and beautifully constructed buildings. It obviously indicates that country’s construction market is booming and holds the potential to invite multiple investments around the globe.  Country has certainly witnessed an increment in international investment in construction industry and other commercial sectors which indirectly means an increment in commercial disputes amongst parties involved in such transactions. In such scenarios, Top Lawyers of Dubai are often asked about the benefits of entailing arbitration clauses in their commercial agreement as compared to litigation in UAE. Therefore, the present article will discuss some reasons behind opting for Arbitration over litigation in the country.

Federal Law number 6 of 2018 regarding UAE Arbitration Law governs and regulates the arbitration registered within the countries. However, every arbitration institute has set down rules and regulations mirroring the Federal law which further defines the procedure under which the arbitration will be conducted. Whereas, the Federal Law on Civil Procedures of 1992 governs the litigation or cases registered before the UAE courts. There are several arbitration institutes registered within the country for instance Dubai International Arbitration Centre (DIAC) or London Court of International Arbitration- Dubai International Financial Centre (LCIA-DIFC). As Lawyers of Dubai believe, there are few notable differences in arbitration and litigation and why in most countries companies opt for arbitration over litigation for dispute resolution, which are follows:

• The first and foremost advantage of arbitration over litigation is that once an award is issued by an arbitration institute, challenging the award on its merits is not possible, however, such award can be challenged before courts only on procedural grounds. Whereas, judgments issued by courts can be appealed by either or both parties until a final decision is issued by Court of Cassation which is binding on both parties. Therefore, while considering arbitration over litigation, one must be satisfied by the award issued by the arbitration and shall willingly let go their rights of filing an appeal.
• Second most interesting difference between arbitration and litigation is the influence of disputing parties on the case as in arbitration the parties have the autonomy to choose the arbitrator. However, the parties are obliged to receive a judgment from a judge entertaining their matter.
• Having said that, it is obvious that the arbitrator opted in the said proceedings will have utmost experience in handling such matters or will possess the technical expertise required in such matter as he has been appointed on the mutual agreement of both parties.
• Lastly but the most important difference and the reason for choosing either of the option is the enforcement process post receiving the judgment. Practically, the enforcement of judgments issued by courts may face multiple difficulties for enforcement, if the judgment has to be enforced in another jurisdiction, considering the difference in laws. However, the process of enforcing an arbitral award becomes less expensive and avoids duplicity of cases in parallel jurisdiction as most awards issued by arbitration institutes are acceptable and enforced internationally.