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ARBITRATIONS SEATED IN ‘THE EMIRATE OF ABU DHABI’

Updated: Nov 17, 2023

ARBITRATIONS SEATED IN ‘THE EMIRATE OF ABU DHABI’ MAY BE DETERMINED BY THE LOCATION OF THE ADMINISTERING INSTITUTION’S OFFICE.


In a nutshell


Where an arbitration clause specifies the arbitral seat as simply ‘the Emirate of Abu Dhabi’, the location of the arbitral institution’s representative office may be decisive in determining whether the arbitration is governed by either Federal UAE law or ADGM law and, ultimately, supervised by either the Abu Dhabi courts or the ADGM courts.


What is the “seat” of arbitration?


The arbitral “seat is”, at its simplest, the legal framework to which an arbitration is subject. For example, if an arbitration clause specifies the seat as London, the laws of England and Wales (notably the Arbitration Act 1996) apply to that arbitration.


What about arbitrations seated in Abu Dhabi?


The situation in the Emirate of Abu Dhabi is more complicated, as there are two very distinct options available to parties:


  • Abu Dhabi Global Market (ADGM) – a financial free zone with its own legal system. Arbitrations seated in the ADGM are governed by the ADGM Arbitration Regulations 2015 and supervised by the ADGM courts.


  • “Onshore” Abu Dhabi – essentially the rest of Abu Dhabi. Arbitrations seated here are governed by the UAE’s federal Arbitration Law and supervised by the Abu Dhabi courts.

Therefore, if an arbitration clause specifies the seat as simply ‘Abu Dhabi’ (or similar variations) there is scope for disagreement as to which legal framework applies and which court has overall supervision of the arbitration. This presents an opportunity for parties to exploit this uncertainty to derail/delay arbitration proceedings or seek to set aside an arbitral award.


Determining the proper seat may come down to something as simple as the location of the arbitration institution’s office in Abu Dhabi


The Abu Dhabi Court of Cassation (‘onshore’ Abu Dhabi’s highest court) has recently turned to a simpler (and somewhat controversial) approach in deciding the proper jurisdiction of an ‘Abu Dhabi’ seated arbitration: the location of the representative office of the arbitral institution administering the arbitration.


The case in question related to an application to annul an arbitration award based on (amongst other things) an incorrect determination of the seat. The relevant arbitration clause provided for an arbitration (i) seated in ‘the Emirate of Abu Dhabi’; and (ii) subject to the Rules of the International Chamber of Commerce Arbitration (the ICC).


The Court of Cassation (agreeing with the Abu Dhabi Court of Appeal) made two findings:


  1. The term ‘Emirate of Abu Dhabi’ does not automatically mean that the supervisory courts are the ‘onshore’ Abu Dhabi Courts. As stated in Abu Dhabi law, the ADGM Courts are “courts of the Emirate”.

  • Where necessary, the seat can be determined by reference to the location of the arbitral institution’s representative office.

In this case, the ICC’s office was located in the ADGM. Accordingly, and in applying the above findings, the Court ruled that the ADGM was the correct seat and the ADGM Courts had supervision of the arbitration.


What if the parties intended something different?


It is likely that determining the seat of an arbitration by reference to the arbitral institution’s local office will be an approach of last resort by the Abu Dhabi courts. The court will usually first attempt to find the intention of the parties (for example in the drafting of the contract, or by reference to the parties’ conduct) before resorting to matters of simple geography. However, that is not necessarily a given and parties should be mindful about this new approach to determining an arbitral seat.


How can this be avoided?


The simplest way of avoiding a dispute over the correct arbitral seat is to ensure that any Abu Dhabi seated arbitration clause is clear and unambiguous, making explicit reference to the intended law and supervisory court.


For more information about this topic and for any advice relating to your arbitration agreement, contact Nathan Hooper at nathan.hooper@supportlegal.com.




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