11 Jun 2013

MEDIATION IN THE UAE

Authored by: Clare Raven

MEDIATION IN THE UAE

There are a number of formal types of mediation in the UAE and sometimes disputing parties adopt informal mediations in order to try to resolve their disputes. In this article Clare Raven of Hadef & Partners will consider the more frequently used types of mediation deployed in the UAE with a particular focus on Dubai.  This is not intended to be an exhaustive discussion of all types of mediation.


Compulsory mediation
 
The DIFC Court
 
The DIFC Court actively encourages parties to settle their disputes. The DIFC Court Rules (RDC) provide:
 
“RDC27.1

While emphasising the primary role as a forum for deciding civil and commercial cases, the Court encourages the parties to consider the use of justice by reconciliation (such as, but not confined to, mediation and conciliation) as an alternative means of resolving disputes or particular issues.”

The pro-reconciliation attitude of the DIFC Court continues with an explanation of why reconciliation is a good idea.
 
“RDC27.2
 
Whilst the Court remains an entirely appropriate forum for resolving most of the disputes which are entered in the Court, the view of the Court is that the settlement of disputes by means of justice by reconciliation:

significantly helps parties to save costs;
saves parties the delay of litigation in reaching finality in their disputes;
enables parties to achieve settlement of their disputes while preserving their existing commercial relationships and market reputation;
provides parties with a wider range of solutions than those offered by litigation; and
is likely to make a substantial contribution to the more efficient use of judicial resources.”
In fact, the Court may go beyond encouraging the parties to use justice by reconciliation as the case manager may order the parties to make use of justice by reconciliation (RDC26.44). Significantly, the RDC also confer upon the judiciary the power to award costs in the mediation. That can include an adverse costs order if a party fails to take serious steps to resolve their dispute by justice by reconciliation (see RDC 27.10 and the Schedule to RDC 27 Draft order for justice by reconciliation).

Under the RDC the case management sheet provides space for the parties to indicate whether a stay of the proceedings for the purpose of reconciliation is sought. If necessary, such a stay will be extended by the Court if all parties agree.
 
It is not known how many DIFC Court cases have settled at mediation but anecdotally it is perceived as having been successful.
 
The style of the mediation will usually be down to the mediator and the parties (and, perhaps, their representatives’ experience of mediation which in turn may depend upon their background and training). One style of mediation which has been used is “shuttle mediation” whereby following the mediator’s and parties’ opening remarks the mediator shuttles between the parties’ respective break out rooms.
 
DIFC Small Claims Tribunal
 
When cases are referred to the Small Claims Tribunal (SCT) the RDC provide for the parties to attend a consultation at the Court. The primary purpose of the consultation is to allow the parties to attempt to settle their disputes (RDC 53.16).
 
Dubai Courts
 
In Dubai, claims of AED50,000 or less, claims concerning commonly owned property and claims where any bank is a party must first be referred to the Dubai Centre for Settlement of Amicable Disputes (Centre). One party will complete a request and a hearing will be scheduled for the parties (together with their representatives) to discuss the dispute. Following the hearing the Centre will issue a notice of settlement or refer the matter to the relevant Court. Parties can also elect to submit a dispute to the Centre. The Centre’s success rate is unknown.
 
Employment cases
 
In Dubai, all employees outside of the free zones must have their employment contracts registered with the Ministry of Labour. In the event that a dispute arises, for either party to initiate a claim, they must first file a complaint with the Ministry of Labour who then requires the parties to undertake conciliation. The conciliation process should consist of three meetings between the parties (no representatives) and a Ministry of Labour inspector. In practice, the process often consists of only one meeting following which the inspector concludes that settlement is unlikely. The success rate of this preliminary stage is not currently known but in recent years it has been suggested that a success rate of 86% has been achieved [1]. Similar processes are adopted by the Dubai Free Zone authorities. Their success rate is also unknown.

In addition, there are certain Judges at the Dubai Courts who will order a further round of conciliation once a Court case has been filed. This amounts to a meeting in the Judges’ chambers with one or three Judges present together with the parties and their representatives. If the parties will not settle at the meeting the Court case will proceed, notably, usually before the same Judge or panel of Judges.
 
Federal Court Mediation Committees

The Federal Law No 26 regarding the Establishment of Conciliation and Reconciliation Committees at the Federal Courts was passed in 1999 and has subsequently been amended. As its title suggests, the law set up conciliation committees in all of the Federal Courts (Sharjah, Ajman, Umm Al Quwain, Fujairah). The Abu Dhabi Courts still apply Law No. 26 despite having opted out of the federal court system in 2007. The Conciliation and Reconciliation Committees, which form part of the Courts, are responsible for facilitating settlement of civil, commercial and labour disputes. The Courts will not issue a case if the parties have not first submitted the dispute to the Conciliation and Reconciliation Committee. Parties will usually be asked to attend on at least seven days notice. The law provides that the Conciliation and Reconciliation Committee and the parties will have thirty days to achieve a settlement. If a settlement is reached it is embodied in a Court document. Significantly, the settlement is treated as a writ of execution and therefore in the event of default by one party the settlement can be directly enforced without first obtaining a Judgment.
 
Mediation committees
 
There are also a number of other committees which have been set up with the word “mediation” in their title, but they are not a form of mediation in the traditional ‘reconciliation’ sense of the word. For example, in Sharjah, the Rental Mediation Committee actually has exclusive jurisdiction to consider tenancy disputes in Sharjah applying Sharjah Law. There is no right to bring a claim before the Courts and there is no appeal from the Committee’s decision.
 
Voluntary mediation
 
Dubai Land Department
 
At the end of 2010 the Dubai Land Department set up an investor developer mediation committee with six members to help parties to property disputes resolve them.
 
When a party lodges a complaint with the Land Department Legal Affairs Department seeking cancellation of a sale and purchase agreement, the Legal Affairs Department will try to mediate between the parties but ultimately will decide on what it believes is the right decision. The Land Department may act on its decision and register or de-register ownership of property. A disgruntled party is free to apply to the Court or bring an arbitration [2] to try to reverse the Land Department’s decision but a challenge to a Land Department decision on registration of a property is not without its difficulties. In this sense, the Land Department process may start as a form of mediation but could end up being the final determination of a matter.
 
Traditionally parties might meet and discuss their gripes at a Majlis and the dispute may be resolved over tea or coffee.
 
It is not uncommon for parties to informally appoint or request the help of a mutual intermediary to help them resolve their dispute. A decade or so back, members of the Royal family have been known to mediate between members of high profile families who had found themselves in disputes. This may be less common now or, perhaps, less known outside such circles.
 
Contractual clauses
 
It is common for parties to agree that they will endeavour to resolve disputes amicably and some such clauses will contain a tiered dispute resolution mechanism prescribing that mediation must be adopted before arbitration or Court proceedings are commenced.
 
Although formal mediation where the parties to a pre-existing dispute enter into a mediation agreement to try to resolve their dispute may not be that common in the UAE, it has been known. The Dubai Chamber of Commerce offers mediation services as do individuals many of whom are practising or non-practising lawyers with Middle East experience.
 
Conclusion
 
Mediation is in use in the UAE in different forms. However, the success rate of parties reaching a settlement through mediation is, unfortunately, unknown. It may be that formal use of mediation will become more common. Given that Court cases in the UAE (excluding the DIFC) can run through all three tiers of Court, parties might welcome a genuine opportunity to mediate in order to avoid the delay and costs involved. Perhaps if the Courts took more of a lead role in requiring the parties to be committed to mediation, mediation could become a useful tool in resolving what would otherwise be lengthy and costly disputes. However, without the threat of adverse costs orders, it is difficult to see how, in practice, the Courts could compel such conduct of the parties. Indeed, there is a school of thought that would argue that since a large majority of cases before the Courts are debt claims, mediation will simply play into the hands of the debtor and prolong the time before he is compelled to pay. Such critics of the use of mediation in the UAE probably have little to be concerned about since, on balance, the legal system in the wider UAE is unlikely to adopt mediation in the same way as the DIFC Courts in the foreseeable future.  
 
[1] Al Khaleej 13.07.2009
[2] Note: whether claims affecting property registration are arbitrable remains unclear.

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 develop jurisdiction of the UAE.