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Sat 26 May 2007 12:00 AM

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Critics steer review of arbitration setup

Legal experts say current draft law does not go far enough to bring UAE in line with global players.

The Dubai International Arbitration Centre (DIAC) is set to make changes to the draft arbitration law after provisions contained within it raised criticism from the legal community.

Consultants were concerned that, even though the UAE had acceded to the New York Convention, its draft arbitration law does not meet international standards, and could affect the construction industry by impairing investor confidence.

"The draft law met with a lot of criticism so we're simplifying the procedures and taking out a lot of unnecessary provisions," said Dr Hussam Talhouni, director, Dubai International Arbitration Centre (DIAC), the official arbitration body in the UAE.

Other concerns were that the draft law, which is expected to be finalised later this year, would not provide the security that foreign companies look for and that it would force contractors to agree to arbitrate abroad.

"There are several provisions in the draft arbitration law which are not particularly up to date," said Philip Punwar, arbitration specialist and committee member of the UAE branch of the Chartered Institute of Arbitrators.

"For example, one of the suggested clauses is that a lawyer must represent both parties, which is not normally the case in international arbitration, where both parties are allowed to choose who represents them."

Punwar added that another requirement of the draft law is that when an award is made, it has to be lodged with a UAE court within five days and translated into Arabic, which in most cases is not needed.

"The hearing might have been in a different language, as the parties are free to agree to arbitrate in any language. Also, maybe the party doesn't have to enforce the award in the UAE; they may have to take it to another country, so again, the requirement is unnecessary," he said.

Under the New York Convention, which the UAE joined last November, commercial arbitration awards made in the country can now be directly enforced in 142 other countries. In return, foreign awards can also be enforced through the UAE's courts, boosting investment confidence in the construction industry.

Many construction companies in the region conduct their arbitrations in markets such as London, Singapore and Paris, which have simple and straightforward laws.

Marcelo Jardim, vice president of international business development for South American engineering and construction firm, Odebrecht, said: "We usually conduct all our arbitration procedures in Paris as they do not require us to provide any unnecessary additions. The point of arbitration is beaten if things get complicated and drawn out."

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