20 Dec 2016

Hadef in the Courts - Arbitration in the UAE and the new criminal implications for arbitrators

Authored by: Walid Azzam

Hadef in the Courts - Arbitration in the UAE and the new criminal implications for arbitrators

In Brief:

  • Discusses the change in language following the amendment to Article 257 of the Criminal Code
  • Refers to the term “duty of impartiality and integrity” and its relevance to the practice of arbitration in the UAE
  • Considers the potential impact of this modification to the Criminal Code

The UAE has recently issued Federal Decree No. 7 of 2016, which amends Federal Law No. 3 of 1987, as amended (the “Criminal Code”).

Decree No. 7 of 2016 has amended 130 Articles, and added 23 Articles to the Criminal Code. It was issued on 18 September 2016, published in the Federal Gazette on 29 September 2016 and came into effect on 29 October 2016.

A notable amendment that we would like to address is Article 257, which has been debated extensively in relation to its new reference to arbitrators.

The new Article 257 of the Criminal Code states:

Temporary imprisonment shall be imposed on whoever issues a decision or expresses an opinion or submits a report or presents a case or proves an incident, in favour of a person or against him, contrary to the duty of impartiality and integrity, in his capacity as an arbitrator, expert, translator or investigator who is appointed by a judicial or an administrative authority or selected by the parties.

The aforementioned categories of persons shall be precluded [from] performing the duties they were assigned with in the first instance, and the provisions of Article (255) of this Law shall apply thereto.

[Unofficial translation]

Previously, Article 257 of the Criminal Code stated:

The expert appointed by a judicial authority in a civil or criminal lawsuit, who knowingly asserts a matter which is contrary to the truth or gives it an untrue meaning, shall be sentenced to detention for a minimum term of one year and shall be prohibited to practice his profession in future .

In case the assignment of the expert concerns a felony, he shall be sentenced to term imprisonment.

The provisions of the two preceding paragraphs shall apply on the translator who deliberately gives a wrong translation in a civil or criminal case.

The provisions of Article 255 shall apply to the expert and translator.

[Translation on UAE Ministry of Justice website]

Therefore, Article 257 of the Criminal Code has been specifically amended to also include arbitrators and investigators, in addition to the previously mentioned experts and translators. This specific Article also changes the basis upon which a potential violation may be determined. 

The former basis for the commitment of a crime in relation to Article 257 was asserting an untruth or knowingly presenting a false interpretation. This was perceived as setting a relatively precise standard to establish whether a crime had been committed.

The new basis appears to capture acts that are contrary to the duty of “impartiality and integrity”. The concern of some commentators is how, in the absence of a specific definition of impartiality and integrity in the Criminal Code,  the “duty of impartiality and integrity” will be determined or measured.

These commentators have observed that the new basis appears to be wider, more general and is potentially open to increased subjectivity in its determination.

Regrettably, one cause of concern is that there have been several attempts in the past by some of the parties involved in arbitration to pressure arbitrators through the filing of administrative or criminal complaints in what has been dubbed “guerilla tactics”. The aim may sometimes have been to delay the arbitral proceedings or intimidate the arbitrators.

While such tactics have occasionally been adopted under the old Article 257, we have rarely seen such complaints gain momentum or be successful. However, this does not detract from the nuisance and aggravation that may have been caused.

We, accordingly, believe that the new amendment to the Criminal Code may increase efforts by some to adopt hostile tactics, which may cause delays and stress to arbitration proceedings. 

In the meantime, it remains to be seen how the public prosecutor and the criminal courts will address such complaints.

It should be noted that the previous version of Article 257 was in existence for a long time and there were very few successful criminal complaints against experts.  

It is also worth mentioning that the proposed draft arbitration law, which has been under consideration and eagerly awaited for a number of years, may also address this issue.

Although we do not believe that the new Article 257 will lead to significant change in practice in the overwhelming majority of cases, it may lead to tactical proceedings and stress in a minority of situations. We recommend that experts and arbitrators be very clear in their minutes of meetings / hearings and in correspondence to the parties, giving detailed adequate reasoning for each decision made. This will help avoid giving a party any justification or excuse for initiating criminal proceedings under the new Article 257.

 
 

This article, including any advice, commentary or recommendation herein, is provided on a complimentary basis without consideration of any specific objectives, circumstances or facts. It reflects the views of the writer which may, in some cases, differ from those of the firm, especially in the developing jurisdiction of the UAE.