So long..

A lot happened since my last post. I finally took the exams and qualified as a solicitor. It was nerve wrecking till a week before the exams, as I tend to get calmer right before exams, by then I have the plan and preparation under control.

UAE Federal Law on Arbitration was also finally last year. It is very different from the drafts that were in circulation since 2012 but in my view the law is better than all previous drafts. It addresses issues and abuses of law with such precision as if the legislators were close to the ground on which practical madness used to take place. It’s a law for the UAE. Unlike DIFC law and many foreign jurisdictions, the legislator was showing its own back bone and control over the issues that faces its country. It was not an ignorant – followers mentality version of the UNCITRAL, it’s quite rightly one of the finest laws passed.

I joined Gateley and left it last summer. It was supposed to be a break but I was out of private practice all winter as well….

…

Be right back.

Criminal sanctions against arbitrators: policy issues, practical application and proving lack of impartiality and integrity

(This article is republished from Linkedin, originally posted on 8 January 2017.)

The UAE has been thriving as a regional arbitration hub, perhaps until now.

We saw the inception and success of the Dubai International Arbitration Centre (‘DIAC’); establishment of the DIFC-LCIA in the DIFC; and as recently as last month the launch of the Emirates Maritime Arbitration Centre (EMAC). Must we say DIAC is also set to open a branch in the DIFC.

Amidst the above developments has come a legislative amendment in the UAE law that has sent shockwaves and immense uncertainty in the arbitration community.

On 29 October 2016, Article 257 of the UAE Federal Penal Code No. 3 of 1987, was amended by Federal Decree Law No. 7 of 2016 to read:

“Anyone who issues a decision, expresses an opinion, submits a report, presents a case or proves an incident in favour of or against a person, in contravention of the requirements of the duty of neutrality and integrity, while acting in his capacity as an arbitrator, expert, translator or fact finder appointed by an administrative or judicial authority or selected by the parties, shall be punished by temporary imprisonment.

The aforesaid categories of persons shall be barred assuming once again the responsibilities with which they were tasked in the first instance, and shall be subject to the provisions of Article 255 of this Law.” [emphasis added].

Article 255 provides:

“Pardon from a penalty shall be granted to:


A witness who – if he tells the truth – may suffer serious damage which affects his freedom or honor, or may endanger his wife, even though they are divorced, or any of his ascendants or descendants, siblings or in-laws at the same degree of relationship.

A witness who divulges before the courts his name, surname and nickname when he is not supposed to give his testimony as a witness, and who has been warned that he may abstain from testifying if he wishes to do so.

In both the preceding cases, if a perjury subjects a person to criminal prosecution, he shall be punished by imprisonment for a period of at least six months.”

The above law, introduces criminal sanctions on those acting in capacities listed in the provision for failing to act with neutrality and integrity. It potentially puts an end to their career too.

Comparison with the old law

Prior to the amendment, Article 257 was limited in its application, both in terms of who it exposed to criminal sanctions and the threshold of mens rea or the mental element it required for Article 257 to bite.

Article 257 previously read:

“An expert who is appointed by a judicial authority in a civil or criminal action, and who knowingly resolves a matter contrary to the truth, shall be punished by detention for a period of at least one year, and shall be precluded from being an expert in future.

The expert shall be sentenced to imprisonment for term if his duty involves a crime.
Provisions of the preceding two paragraphs shall apply to an interpreter who willfully translates incorrectly in a civil or criminal action.
Provisions of Article (255) shall apply to the expert and the translator.”

The policy behind the old article 257 is relatively justifiable because its scope was limited to only court appointed experts and interpreters, both of whom deal with matters and statement of facts. The old article also required an intention to conceal the truth and to make incorrect translation of statements. A matter of fact or a statement to be translated can be either true or false. Either it is or it is not.

However, the new law expands criminal sanctions to court appointed and party appointed, arbitrators, experts, translators and fact finders.

Moreover, the liability is not restricted to intentionally acting untruthfully. It seems that the law imposes absolute liability, if the judge finds the arbitrator lacked impartiality or integrity, he/she would be criminally liable inspite of his/her intentions.

It also ought to be noted that the correlation between Article 255 and 257 may have been sensible under the previous provision of Article 257, because Article 257 previously dealt with matters of truth and false, and so does Article 255. Thus, a lying expert or translator under Article 257 could be treated in the same manner as a lying witness under Article 255.

However, now the criminal liability under Article 257 is not for acting untruthfully in matters of statements and facts. The scope of Article 257 now extends criminal liability for one’s conscience and impartiality. It remains unclear how Article 255 now sits neatly with the application of Article 257.

Policy, issues and difficulties in the application of the new law

Could it include mediators? Although the provision expressly applies to anyone acting in the capacity as arbitrator, expert, translator or a fact finder, it is unclear whether a mediator would also be caught by this provision.  A mediator clearly expresses opinions and submits reports, and clearly does some fact finding in order to reach those opinions and make those reports.

Mens rea: The law does not specify the threshold of mens rea or mental element of arbitrators required for criminal liability. Under the previous law the mens rea or the mental element required for criminal liability was specific intention. The new law seems to impose a strict liability on arbitrators for not acting impartially or with integrity in view of whoever judges them.

Proving culpability: Proving lack of impartiality and integrity is to prove one’s conscience. The new law does not define or contain the meaning it attaches to the terms ‘neutrality’ and ‘integrity’. When dealing specifically with arbitrators, their role inherently gives them powers of discretion in decision making. Proving whether discretion was exercised with neutrality and integrity would not be as black and white as proving whether an interpreter translated a document or statement correctly. Unlike the interpreter’s translation of a statement from let’s say French to Arabic, which could be judged as either correct or incorrect; an arbitrator’s discretionary power to decide in favour or against a claim cannot be strictly demarcated as right or wrong.

Integrity is a matter of morals and principles, far less easily to be judged against that of an interpreter’s translation of words from one language to another. It has various layers and shades. My definition of fairness could differ from yours. However, under the new law it appears irrelevant whether an arbitrator’s neutrality or integrity was lacking according to the standards with which he was judged or when the arbitrator genuinely believed that he was acting neutrally or with integrity as per his discretionary standards.

Burden of proof: At least we hope that the burden of proving lack of integrity and impartiality will be upon the claimant and will have to be proven beyond reasonable doubt. The claimant must bring vital proof of dishonesty, corruption or prejudice, all of which are hard to prove in frivolous claims.

Frivolous and vexatious claims: The major concern for arbitrators is not one of being caught for acting partially and without integrity, but for vexatious claims by disgruntled parties.

It is not uncommon for the party with the unfavorable award to quickly make up its mind that the arbitrator was not impartial. While it may be true in rare cases, in the vast majority of cases it is not true to say that the arbitrator lacked neutrality. Parties could have a very subjective and emotional attitude towards the decisions of the arbitrator. An arbitrator could simply be applying the agreed rules of arbitration or the letter of the law, but may also be receiving subtle accusations of unfairness. It is not uncommon for the parties to scrutinise arbitrators with an emotional and subjective viewpoint. If one adds the new Article 257 to the mix, arbitrators could not only face subtle accusations but also vexatious or frivolous claims and constant threats.

Frivolous claims would, to say the least, frustrate the arbitration process.

Workability: As said, arbitrators have an inherent discretion given to them by the partiesand the very role of the arbitrator is to exercise that discretion in his/her decision making. Arbitrators act with their conscience when exercising discretion. It is not workable for an arbitrator to be held accountable to prove his/her state of mind, integrity, even-handedness and conscience each time he/she exercises that discretionary power.

Reputational damage: But even if an arbitrator is not found culpable, a frivolous legal proceeding would have a detrimental impact on an arbitrator’s professional reputation. Reputation plays a vital role in the arbitrators’ nomination and appointment. Under the rules of most arbitral institution, arbitrators have to simply sign a declaration of impartiality and no conflict, and the arbitrator’s word equates to prima facie evidence. This is the professional standard of integrity inherent in being an arbitrator. The reputation of arbitrators precedes them. Arbitrators are nominated by virtue of their good reputation, technical expertise, knowledge and application of fairness and justice. A frivolous claim could damage that reputation. Even if not found culpable, only a claim of impartiality is enough to taint the delicate nature of the reputation of administrators of justice: judges, lawyers, experts and indeed arbitrators.

Pool of arbitrators: Until there is further clarity on the scope and application of the change in law, I am quite confident to say that non-lawyer and international arbitrators might steer clear of the UAE arbitration scene for a while. If the stakes of being an arbitrator in a UAE arbitration are set too high, it could keep the pool of world accredited arbitrators away from the UAE.

The questions are, could an arbitrator really act more impartially and as per his/her sense of justice if being under pressure of criminal sanctions? What could be the impact of the pressure of criminal or reputational consequences if he presses a wrong nerve or upsets the party quite likely to initiate legal proceedings under Article 257?

The question is quite simple, could a hanging sword and constant threat of criminal proceedings improve decision making or affect it adversely?

If in the course of exercising that discretion, one party feels it has been treated unfairly, should it open flood gates for criminal penalties?

The new law opens flood gates for abuse of process.

Strategies v Realities

This story is about those entrepreneurs (lets call them “bobbles” because in my theory they in live in a bubble). The bobble is an entrepreneur, firm founder that starts to live inside a bubble and makes it his comfort zone.

These bobbles are fully aware of this bubble and while they talk about their ambitions to succeed and grow their companies they are also a bit too content to make it a reality. The hunger has started to die. But here is the tricky part, the bobbles are in self-denial of this lack of ambition.

So they hire a combination of Business Development, PR and Marketing Teams (we call them ‘security blankets‘), a Managing Partner or CEO (“heavy lifters“) to do the heavy lifting, but as the bobbles are founders of their businesses, they never wish to lose control or dilute their ownership so the heavy lifters have the responsibilities but ultimate authority is the the bobble himself. This is the structure of this company which I am focusing at. Sounds familiar? I do not know how many of you have worked with such companies, but being a die hard fan of HBR I can spot many that fit this model.

The bobble in this company is also making enough profits – at least at that moment – to keep him content but he would, like any other businessman, love to have more. The activities of the security blankets and heavy lifters around the bobble make him feel something great is happening and it makes him feel that he is neither lazy nor lacking real ambition or pro activeness.

Then he/she starts getting nudged, warned, pushed by the security blankets and heavy lifters. They advise him to step outside the bubble, that the company needs to keep up with the realities of the market, the competition or they will doom. In most cases the bobble is overcautious and too slow his reaction is either to accept or dismiss the idea but hardly to ever roll his sleeves and get involved on an active level and develop a well-documented strategy the progress of which is monitored at least every fortnight? The security blankets and heavy lifters start feeling the pressure as they face a wall time after time.

But lets not be completely biased, occasionally when the bobble feels threatened by the outside market forces and competition or gets shocked by the dwindling profits last quarter, he calls upon the security blanket and heavy lifter to document every precautionary, proactive advice and future strategy. Lets call that: we need a business development strategy guys!!

Don’t you just love making those strategies?. To re-write all the blabbering of the past, but make it more digestible to the bobble and easy for him to understand, yet knowing that this strategy too will not see the light of the day.

Once a strategy is made and presented to the bobble, he feels relieved as if ‘now all their problems are solved’ because come on! We have a strategy! finally! As if the strategy is in fact the reality.

So without sounding any more harsh than I already have, lets jot down what needs to be understood about a strategy, so next time we security holders and heavy lifters are not demotivated to the point of quitting:

• A Strategy is not a solution or a destination it’s a part of the journey.
• A strategist is a specialist at doing just that. They require the right resources, which includes partners time, attention and respect so that once the strategy is formed, the execution is not challenged on every step of the way
• Leadership and strategy are inseparable: In order to execute the strategy the bobble must demonstrate continuous not intermittent leadership. So before you bobbles start tossing out its and bits of a strategy because you are having a bad week or taking a much awaited vacation think twice.
• The bobble cannot do the above, he must appoint a leader.
• The leader, once selected, must replace the bobble for that project, so he is not just an unnecessary link in the chain, but rather a replacement of the bobble and follow the strategy with promptness and commitment. Then the bobble is no longer wearing the hat of the founder and leader both

So what should be the key factors to look for in that elected leader

• Someone who is tactful, managerial, has diplomatic skills: To manage at all levels of the firm, from partners to support staff.
• That leader must be ready to give his/her time and mind to this plan,consistently.
• A public speaker, someone who can be a spokesperson and have the charisma to become the face of the firm and to keep the audience captivated – inside the firm and out
• who keeps an eye on market trends and adapts to that change swiftly and quickly
• A brisk problem solver, who is proactive not reactive
• Someone who is liked and respected by the firm and its partners
• who gets sufficient freedom, confidence and trust from other stakeholders so he/she can navigate through challenges and find solutions without calling a partners’ meeting each step of the way.

Don’t choose the partner who is your biggest rainmaker – are you kidding me? Take their advise from time to time in making and implementation of startegy, but do not burden them with management or make them the leader. The rainmaker is good doing what they do best. Don’t lose what you already have.

The bobble must take a side-line once the strategy is approved and the leader, the heavy lifters and the security blankets work on it. Bobble is merely and silently to supervise that strategy at a macro level.

Commercially influenced Employers: You might be liable to your sub-contractors

Construction parties often contract under immense pressures; after work has already commenced, commercial influences; and at least occasional disregard of appointed legal advisory. The contractor’s goal is to get the tender; the employer is zealous to get its project launched before time; all parties are highly conscious of their market reputation; and all the while oblivious to the characteristic of the legal obligations that they are creating in the process of the foregoing.

It is no surprise then that in the event of disputes project owners and contractors are surprised to become aware of the obligations they either thought to have evaded through crafty drafting or did not even envisage would exist.

As a general rule, there is no contractual link between an employer and the subcontractor unless agreed otherwise. The subcontractor contracts directly with the contractor.

The main contractor remains responsible to the Employer for all aspects of the subcontracted works and in exchange receives money for profit, attendance and supervision. Payments with respect to subcontracted works are made to the main contractor who can be demanded by the Employer to show sufficient proof that due payments have been made to the subcontractor[1]

The above mentioned position is in line with Article 890 of the UAE Civil Procedures which provides that “(1) A contractor may entrust the performance of the whole or part of the work to another contractor unless he is prevented from so doing by a condition of the contract, or unless the nature of the work requires that he do it in person. [And] (2) The first contractor shall remain liable as towards the employer.”

Moreover, Article 891 states “A sub-contractor shall have no claim against the employer for anything due to him from the first contractor unless he has made an assignment to him against the employer.”

Whereas the position between the three parties is neat in theory, in practice however – especially in relation to Employer nominated subcontractors[2] – the Employer may inadvertently deal directly; have a direct contract; collateral warranty, payment guarantee or an implied contract in place with the subcontractor; which may be interpreted to have created direct rights and obligations between them.

In a recent case however, between a UAE based developer and subcontractor, the latter unsuccessfully tried to create a contractual nexus with the employer on the basis of the letter of nomination and selection letter issued by the employer to both the contractor and subcontractor. By industry practice, a nomination letter does not create a contract between the employer and subcontractor; and doing so would destroy the employer’s right to nominate a “sub-contractor”.

Whereas, some courts have found exchange of letters emails and documents like tender submissions as creating legally binding contracts between employers and subcontractors,[3] local courts in the U.A.E are unlikely to follow that practice.

There are however certain circumstances, under which the employer and the sub-contractor, quite obliviously might end up creating a direct contractual arrangement between them, to the effect that an employer could be liable to the subcontractors; and similarly the subcontractors can be liable to the Employers for subcontracted works.

The recurrence of one or more of the following could be construed as a subcontractor and Employer having direct obligations towards one another:

1. The Employer made direct payments to the subcontractor;
2. The Employer and/or its Engineer issued instructions to the subcontractor to carry out the works[4];
3. Wording of the letter of nomination and selection issued by the employer; and
4. They had written a collateral warrant or payment guarantee in place.

Payment guarantees: the wording of the payment guarantee could be such that the employer is responsible to make direct payments to the subcontractor if the main contractor fails to pay the latter for subcontracted works.

In this case, the value of the payments must be undisputed; and if a dispute exists regarding the value of payments owed; then that dispute shall be first resolved through the mode of dispute resolution agreed between them so that the actual value of guarantee can become known.

Subsequently, once the final value of subcontracted works has become known,  the subcontractor must provide evidence that the main contractor has absolutely failed to pay. In order to satisfy this condition precedent to the activation of guarantee, it shall show that despite following the execution and recovery procedure under their respective jurisdictions, the main contractors did not make the payment.

Such conditions precedent to the activation of the payment guarantee will also would also minimize the risk of perpetration of fraud against the Employer.

Alternatively, the payment guarantee may state that the Employer is jointly and/or severally liable towards the subcontractor for the payment of subcontracted works. In this case, the subcontractor’s position is rather stronger and simpler as it can choose to claim payments from either the Employer and the main contractor, suing them both at the same time if needed. In such case, the pre-condition of main contractor’s absolute failure to pay would not be applicable.

Paid when paid clause: It must also be remembered that an employer can circumvent its duties under the payment guarantee through the imposition of a ‘pay when paid’ clause in the main contractor’s entire subcontractor chain agreements. Therefore, if the Employer never paid to the main contractor, payment by the main contractor never becomes due and the payment guarantee cannot thus be invoked.

Notwithstanding, the Parties shall nonetheless remain cautious of the fact that courts may find the existence of a legally binding contract between employers and subcontractors arising from the letters and emails that they exchanged prior to the latter’s appointment by the main contractor.

Employers, subcontractors and their management should always be mindful of the communication exchanged with subcontractors at the time of making deals and seek proper legal guidance to be aware of the implications that such communication would have on their respective contractual rights and obligations towards another.

The parties shall not simply assume that by adopting a mechanism of subcontracting or signing crafty conditions of contracts they are surely circumventing liabilities towards one another.

[1] Clause 5.4 FIDIC 1999 Redbook

[2] Under FIDIC Conditions of Contract for Building and Engineering Works 1999 a nominated subcontractor is a subcontractor whom the Engineer, under Clause 13 [Variations and Adjustments], instructs 
the Contractor to employ as a Subcontractor.

[3] Hong Kong Housing Authority v Rotegear Corporation Limited [2009] HKCFI 625; Sydenhams (Timber Engineering) Limited v CHG Holdings Limited

[4] Dixon v. Hatfield (1825) 2 Bing 439.

Clients and Clients Relations

Be responsive and always meet the deadline

I know it is a cliché, but a cliché is a cliché for a reason. Responsiveness is the starting point of your commitment to improve your client relationship skills. If you do not have an update which you promised you will deliver, send an email from your smartphone telling the client just that: “As promised, I am writing to inform that I have no update… (Followed by the context of the update)”

If you have set a deadline to deliver substantive work, meet it. Period. There is no if and but about it.

If you have set a deadline which is subject to performing of an action by a third party, email or better yet call and send a follow up email in advance of the deadline if such deadline cannot be met.

Keep it simple

By that I mean, cut through the complexities or procedures. If a client calls you while you are having breakfast asking for your assistance, a) don’t tell the client you are in a meeting, tell him you are having breakfast; b) if the required assistance will or should take 20 minutes of your time, do not make a big deal out of it by showing the client that you will have to move mountains to provide that assistance.

If your job is so complex for you to deliver, you shouldn’t be doing it then. A query that can be precisely and reasonably answered taking 10 minutes of your time, should not take 11 minutes of your time, plus 5 other team members you will involve in that.

Example:

I am in a meeting right now, I will go back to the office discuss with my team and revert to you within 2 business days

vs

I am having breakfast right now, once I get done give me twenty minutes to look into it and I will get back to you.

Do not put them on a pedestal

Be friendly and courteous and they would be too. A client, like you is also human, a regular person at the end. He/she also feels lazy getting out of bed sometimes and frustrated when people do not meet deadlines causing work to become stagnant. They also like to laugh and smile, have a nice lunch on a weekday. Treat them like your equals.

Set them right, when they are wrong and do it sooner before the relationship turns so sour that it gets to a point of no return. Provide your clients with excellent service, that is second to none but never allow them to take out their frustrations on you or walk all over you. Trust me; they will respect you for that. You are selling your services, not yourself. So provide the best service and keep your chin high.

Mutual respect is the backbone of any successful relationship.

Understand and be understood

If you write, write clearly and precisely. If you receive an inquiry, hit the nail on the head and give a clear and complete answer.

If you do not understand a written inquiry, do not sit on it for 5 days and then ask for clarification. Call (try not to email) the client immediately and seek clarification. Asking for clarification when the client has already waited long enough for a response shows incompetence.

Your clients can be your best referrers, your road to success and your second best asset, first of course is yourself. With the dearth of geniuinely good client service providers around by providing good client service and maintaining good relationships you can create a niche for yourself, become unbeatable and have your clients coming back to you.

Remember that your client will make the mistake of working with a firm providing poor client services only ONCE.

Enforcement of arbitration awards in U.A.E: what is the fuss anyway?

Today, I would deal with all the (unnecessary) frenzy that surrounds lawyers and parties alike when it comes to the question of enforcement of an arbitration award.

I have actually come across a party making a claim for security of costs before an English arbitrator in an LMAA arbitration on the grounds that enforcement of an arbitration award in the U.A.E is unpredictable, risky, challenging and using other synonyms of the same context. Yes, the party did manage to win an award on security of costs on the basis of those arguments. Sad. I know.

While I acknowledge that UAE judgments relating to enforcement of foreign and domestic awards always enlighten us with something new, in my view, it is not because the jurisdiction is ‘unpredictable’, but rather the jurisdiction is ‘relatively new’. Many of the provisions pertaining to arbitration under the U.A.E Civil Procedure Law and New York Convention alike are still being tested in the U.A.E for the very first time. The law is being developed, not changing rapidly.

In my view, the reason behind the prevailing views regarding the so called difficulty or unpredictability of enforcement of arbitration awards comes from a) ‘jurisdiction bias’ because party representatives although practicing in the U.A.E are also critical of it; b) when people do not comprehend something, they have a tendency to call it ‘uncertain’ or a ‘gray area’; c) large majority of party representatives in the U.A.E come from age old jurisdictions such as England & Wales and Egypt and find the constant development (or as they call it change) of judicial principles, unpredictable instead of exciting.

At the risk of sounding arrogant, which is certainly and genuinely not my intention, the enforcement of an arbitration award can be a relatively simple process if the parties or their representatives:

1. understand that in U.A.E arbitration is a waiver of the fundamental right to access to courts, hence all the proxies and POAs;
2. have thorough knowledge of the U.A.E Civil Procedures Law and the U.A.E Law of Evidence and not just the provisions that relate to arbitration;
3. know matters which are or by analogy could be considered non-arbitrable under UAE law;
4. know matters of public policy under U.A.E laws
5. understand what constitutes a valid arbitration agreement under U.A.E law;
6. the importance of parties’ fundamental right to present their case and the right of defence;
7. importance of proper service
8. are aware of opportunities available under the law for seeking court-intervention to rectify procedural irregularities before an award is passed
9. importance of proper composition of arbitral tribunals
10. have knowledge of comparative law, international jurisdictions, which again all comes with the knowledge of UAE Civil Procedure Law

I am an arbitrator myself, and I do not underestimate the importance of experience and knowledge of various guidelines (such as IBA etc.), procedures and rules, institutional and ad hoc (such as UNCITRAL etc.) applicable to the arbitration process itself. Knowing how to conduct an arbitration, whether ad hoc or institutional is pertinent to having a smooth, timely and cost effective resolution of disputes.

However, knowledge of local laws of the seat of arbitration, is as much important as the knowledge of how to control arbitration proceedings and timetables, preparing your witnesses of facts and expert and giving a closing that wont soon be forgotten and compels the other party to approach you for a settlement right after the final hearing.

Whether the seat of arbitration is U.A.E or the party intends to enforce an arbitration here, the knowledge of U.A.E law is not just to be applied at the time of enforcement, because at that time it is already too late.

For any party or representative hoping to enforce an award in U.A.E, knowledge of U.A.E laws is essential to be applied at the time of handling the arbitration proceedings and not after a potentially unenforceable award is already issued.

Expert evidence in International Arbitration: Tribunal appointed experts

In every arbitration proceeding, there are certain issues in dispute out of which the claims of the parties arise. Both parties will have conflicting answers to those issues and thus, they will provide conflicting evidence and account of what happened. Each party shall give evidence to support their contentions, which can be in the form of documents and witnesses of the fact.

However, when the issues in dispute not only involve what happened but also why and how it happened, experts’ opinion and evidence may be needed for the arbitrator to find an answer to those issues and make a determination. Expert evidence will also be needed if the issues involve scientific, technical and specialized knowledge; or to assess the cause and quantification of damages.

Arbitrator appointed expert

Even if the arbitrator deems that expert evidence is required, the arbitrator cannot instruct the parties to appoint experts. Instead, the arbitrator is empowered to appoint its own independent expert, unless otherwise agreed by the parties.

The arbitrator should send the expert’s terms of reference to the parties as soon as possible. The terms of reference should be prepared in consultation with the parties and outline the list of key issues that the expert is to report upon. The terms of reference should clearly separate the issues an expert can determine and issues that are exclusively for the arbitrator to determine.

There are cases where the Parties may be perfectly represented and have already appointed or prepared their own experts, yet the arbitrator decides to appoint its own expert. This decision should be assessed against a number of factors, such as duplication, costs, delays and the tendency of the arbitrator to rely only upon its own expert at the end.

Although this would be the topic of my next article, it is pertinent to briefly emphasize here that an arbitrator would not and cannot simply set aside the evidence of party-appointed experts, because one of the requirements of a valid arbitration award is that it must contain reasons. The standard of reasoning that an award should contain is also high, therefore, the arbitrator cannot only simply say that he decided to choose the opinion of expert A over expert B, but also explain the reason for that decision and the facts and the facts that lead him to that reason. [1]

The arbitral tribunal may also direct the parties to provide such information and documents to the expert as may be required by them, and permit the expert to seek further information and material by the parties.

Another reason why an arbitrator will prefer its own appointed expert is its perceived independence from the influence of the appointing party. However, as mentioned, that may also lead the parties to fear that in the event of conflicting evidence of party-appointed experts, the arbitrator would simply favor the opinion of its own expert, while fulfilling the requirement of reasoning to be contained in a valid award. This dilemma has been redressed by the introduction of certain rules governing the use of party-appointed experts, as will be elucidated in this article below.

What should the report contain and what happens after?

The drawback of having only one tribunal appointed expert is that its report may not expound, or not emphasize upon

From an expert’s report, the arbitrator not only wants to know the expert’s opinion but also the facts that formed the basis of that opinion and that led him to the findings in relation to the causation and quantification of damages. The books and articles upon which he relied, and the reasoning for its rejection of another expert’s opinion, if that was known to prior to the preparation of his report.

An expert’s report is always in writing and is taken as ‘read’ and therefore, if an evidentiary hearing is requested by either party, the expert goes straight into cross-examination and no examination in chief is conducted.

Once the expert’s report is produced and delivered, the parties are allotted or may request a period of time to serve written comments on the report.

These written comments may include a request for an oral hearing to question the expert’s finding; a request that the expert should expand or clarify a particular aspect of his report, or that the party wishes to appoint its own expert to conduct further investigations and file a supplementary report of its own.

Expert witnesses, whose prime duty is to the tribunal, and not to the party, the Expert must produce an objective and even-handed analysis of the issues about which they are to testify. An expert who acts more like an advocate and fails to demonstrate objectivity is not doing any favor to the appointing party. If a party wants its experts’ reports to be taken seriously, have credibility and be relied upon by the Arbitrator, they ought to ensure that the experts understand that their duty is towards the arbitrator and not the party that appointed them.

The dark side of CIArb Protocol on party-appointed​ experts

When the parties’ appoint their own experts, the case may boil down to “a battle of experts” in which each side’s experts produce conflicting opinions, leading to lengthy cross-examinations and oral hearings. The procedure not only increases costs and causes delay in arbitration proceedings; it does not really help the Tribunal in deciding the issues, which is the whole purpose of appointing experts anyway. 

To mitigate the foregoing, UNCITRAL Rules of Arbitration, IBA Rules on Taking of Evidence and the Protocol of Practice and Standards Committee of the CIArb have developed certain rules applicable to production of evidence and opinions by party appointed experts. The parties shall nonetheless remain careful about which rules they agree to be applicable to the proceedings because they differ from one another in many significant aspects.

The CIArb Protocol applies only to party-appointed experts. It is not intended to cover tribunal-appointed experts or single-joint experts and has been structured along the lines of IBA Rules on Taking of Evidence. In order for the Protocol to apply, parties must expressly agree that that  expert evidence will be adduced according to this Protocol.

For instance, one special aspect of the CIArb Protocol is that it makes it mandatory for party-appointed experts  to have a meeting before the report is produced. The purpose of the meeting is to establish points of agreement between between the experts.

The party appointed experts should bear in mind that their duty is to assist the arbitral Tribunal in deciding the issue in respect of which they have been appointed. Experts are obliged to be independent and impartial, not biased and not to act as advocates of the parties that appointed them.

Prior to agreeing upon the application of the Protocol, the Parties should bear in mind that the requirements of Article 6 thereto expect the experts to be overtly cooperative and transparent with each other with the method, tests and analysis that they will conduct in the provision of their opinion; and even prepare draft outline opinions prior to the meeting.

As per Article 6 (b), the experts’ shall submit a report to the parties and the Arbitral Tribunal which: a) contains those issues upon which all experts agree b) the tests and analyses which they all agree need to be conducted and the agreed manner for conducting them c) issues upon which they disagree and a summary of their reasons for disagreement d)  tests and analyses in respect of which an agreement has not been reached and a summary of their reasons for disagreement.

Although the role of the Protocol can be of tremendous assistance to the arbitral tribunal, but only if both parties play ‘fair’.

But if one party complies genuinely with this approach, shows the transparency it requires and is candid about its methods and findings however the other party’s participation in the protocol is not so genuine then the protocol can be damaging to the party whose expert is willing to disclose all its cards. Whereas communications between the experts are without prejudice, there is no guarantee that a party will not take advantage of these communications during cross-examinations. There is always a risk of finding that your opponents are ‘dirty players’.

Therefore, caution must be taken and parties should advise their experts to strike a balance between an expert’s goal to serve the tribunal and remembering that what he says or does can be held against the appointing party by even handedness opponents. The fair player appointed expert may find him/herself falling into traps and tricks employed by the opponent party.

Arbitrability & Public Policy: The saga comes to an end and the winners are who knew that a principle of a judgment is in its ‘ratio decidendi’

Instead of going straight to the point to make this article more readable, I am choosing to make this article more sensible and putting the whole “Real Estate registration is a Public Policy issue, hence not arbitrable” into perspective by explaining a little bit about the origin and concept of Arbitration, so instead of parroting back information written in this article, people actually under the concept; and then draw logical and learns conclusions themselves. Because if the readers understand and apply these concepts,

Arbitration was originated because it was an efficient method of solving disputes between merchants, who believed that the procedure to resolve disputes arising out of private and commercial issues amongst themselves must be resolved by a body of rules. Thus, the concept was to have the right to private disputes to be resoled privately. But the extent to which each country granted and restricted this right was varied sharply.

Thus, arbitration has always been subject to the arbitration laws of the country where the arbitration is conducted. Movements of harmonization of arbitration laws underlie the New York Convention and the UNCITRAL Model Law. The Model Law as the name suggests is only a model, an exemplary set of arbitration law that countries are encouraged to adopt as the arbitration law of their country.

Expect for the two restrictions mentioned, parties have the right to agree to refer any type of future or existing dispute to arbitration including non-contractual or those arising from tortious claims; as long as the claim and subject matter of the dispute is not in conflict with public policy of the country where arbitration is conducted or it cannot be settled or waived by the parties under the law of that country; a position accepted by the Model Law itself [take note of the emphasis added on the term ‘claim’ and ‘subject matter’]

As per Article 34(2) of the Model Law “An arbitral award may be set aside by the court specified in article 6 if: the court finds that: The subject-matter of the dispute is not capable of settlement 
by arbitration under the law of this State; or The award is in conflict with the public policy of this State.”

This is precisely the position adopted by the UAE Civil Procedure Law under Article 203(4) “Arbitration shall not be permissible in matters, which are not capable of being reconciled. An arbitration agreement may be made only by the parties who are legally entitled to dispose of the disputed right.”

Dubai Court of Cassation Appeal No. 14 of 2012

In this infamous judgment, the court held that Article 2 of Dubai Law No. 13 of 2008 regulating the Interim Real Estate Register is a public obligation, which is not capable of being disposed off by the Parties; meaning, that if the developer did not register your property, this breach would not be waived because the purchaser waived developer’s obligation to register the unit. This is because a developer’s obligation to register the unit is towards the state, to protect the private property; and while the owner certainly benefits from this obligation, he/she cannot waive it at its own disposal.

This was the limitation of this judgment. Period. However, the manner in which this judgment was publicized was abysmal; to the point that till present date I am ‘informed’ by some developers and investors that real estate disputes cannot be arbitrated under UAE law. Abysmal. In fact, why should we even go that far, lawyers within the same law firms were deeply divided on the understanding – or lack thereof – of this judgment?

It must be noted that whereas in other countries, it is mandatory to pass the bar examination of that country to become eligible to practice law, under the present laws of UAE, national bar examinations are not conducted – at least at present. This leads to a lack of harmonization amongst practicing lawyers. For example, one of the questions in the New York Bar Examination conducted in 2013 presented a factual scenario and asked the candidates “was a contract formed”?

Ask this question to any lawyer in UAE, there will be an endless debate and plethora of articles online. Clearly, there is a need for harmonization amongst the legal fraternity, so they all have the same rules of conduct, professional ethics, they interpret laws and judgments using the sametools (of course the outcome of interpretation will still differ amongst them but at least the tools applied will be the same).

It must be noted that practicing lawyers in UAE are qualified from different jurisdictions, and with no entrance exam or UAE national bar examinations harmonizing their approach to law, the manner in which they analyzed this judgment varied sharply. Those of us who learnt to understand a judgment on the basis of its ratio decidendi “the reason for the decision” understood the limitation of this judgment. This group of lawyers, including myself, insisted that the meaning of this judgment is that if the claim or subject matter of the dispute was arising out of Article 3 of Law No. 13 of 2008 then that claim is not arbitrable.

However, depending on the scope of the arbitration agreement, if the claim or subject matter of the dispute is breach of a provision of contract, damages, consequential losses or even negligence, the dispute will be arbitrable.

Position clarified

This is why after one year of debating over something that a first year law student is expected to understand correctly, I was very pleased to come across a copy of another Dubai Court of Cassation judgment issued on 3 February 2013, which states ‘if the plaintiff confined his claim to claiming termination of the contract for the failure to perform it when the developer did not fulfill its obligation to construct it, the arbitration clause under the contract remains existing and valid’

I would personally want to highlight this judgment and send a hard copy to every lawyer who disagreed with me, but that would be futile as well, because as I am lawyer who uses the ratio decidendi approach, I understand that the reason for their incorrect understanding of the judgment was because they accept a judgment on its “face value” without going behind the concept and logic it is based upon or even looking at the facts of that case to distinguish the judgment and not using it for general application.

This is why, I am confident that if I present the new cassation judgment to them, they would simply argue that this limitation is set under this new judgment but under the previous judgment it applied to all real estate arbitration, and wouldn’t that just make your blood boil

So for all those who knew that the cassation judgment of 2012 was limited to disputes and claims arising from Law No. 13, congratulations we were right. For the rest, I will simply advise that please do not over simplify the law or its interpretation to a point where it becomes ignorance.

Court rulings should be understood in light of the particular facts of that case, understanding of the legal concept it covers and most of all logic behind the law, which it applies.

To explain by analogy, back in 2011 I told everyone to first understand the concept of force majeure, then understand that anything defined as force majeure under the contract is force majeure, and in the absence of contractual definition, any event that passes the three step test is force majeure; and please do not say that an Act of God is force majeure, because that is nothing but, at best an example of force majeure, depending on the wording of the contract.

Why plans don’t work?

• Reluctance amongst partners to invest
• Expectation that the elected Partner is a magic manager/octopus
  with eight hands
• Expecting the elected partner to not supervise, manage and issue
  execution instruction from the top but to also execute him/herself at
  all levels of the firm, Result = counter-productivity
• Reluctance to give autonomy to one elected partner
• Loss of interest mid-way
• Impatience to see Return on Investment
• Changing company policies and issuing orders to keep the strategy
  on hold, and then issue orders to resume, and to hold etc. Lack of
  Commitment
• Failure to honor obligations towards staff, PR firms, Suppliers etc.
• Change of mood and mind that creates spiral down affect and
  demotivates the whole firm.

Result: Paralysis of the firm