The UAE's new Federal Decree Law No. 40 of 2023 unifies the country's mediation and conciliation frameworks for civil and commercial disputes, streamlining the process under a single, consolidated law.
Christine MaksoudSenior Associate,Private Client Services
On a federal level, the mediation and conciliation framework in the UAE were governed by two separate laws, Federal Law No. 6 of 2021 on mediation in civil and commercial disputes (Mediation Law) which regulates both the judicial and non-judicial mediation, and Federal Law of 17 of 2016[1] which governs conciliation and regulates the establishment of court-annexed conciliation and mediation centres for civil and commercial disputes (Mediation and Conciliation Centres Law)[2].
On a local level, court-annexed mediation and conciliation centres have been established in Dubai[3] and Abu Dhabi[4], and are governed by separate local laws and resolutions from the local judicial authorities.
Federal Decree Law No. 40 of 2023 on mediation and conciliation in civil and commercial disputes (Mediation and Conciliation Law) is a recent piece of legislation that consolidates both the mediation and conciliation frameworks at a federal level. Consequently, it repeals both the Mediation Law and the Mediation and Conciliation Centres Law.
The Mediation and Conciliation Law will come into effect on 29 December 2023. According to this law, the Federal Judiciary or the local judicial authority will be responsible for establishing mediation and conciliation centers within the territorial jurisdiction of the Court of First Instance, (Mediation and Conciliation Centre(s)) and/or online mediation and conciliation platforms. Additionally, they will issue pertinent regulations to govern the operations of these centres.
While the Mediation and Conciliation Law does merge the previous mediation and conciliation laws, there continue to exist two parallel structures.
Under the court-annexed system, mandatory conciliation is a prerequisite for specific types of disputes before litigation can proceed. As for mediation, is voluntary process that can be initiated either through contractual agreements or by court referral, subject to the parties' mutual consent.
The key distinction between mediation and conciliation lies in the role of the neutral chosen by the parties seeking a resolution. In mediation, the mediator acts as a facilitator, helping the parties reach an agreement using mediation techniques; whereas, in conciliation, the mediator is more interventionist, suggesting possible solutions to the parties involved for settling the dispute.
Despite these role differences, both mediation and conciliation share a common objective: amicably resolving conflicts, whether before, or at any stage of legal proceedings. Consequently, establishing two separate, parallel systems with distinct procedures may potentially lead to confusion among disputing parties and the legal community.
Furthermore, global best practices in court-annexed ADR programs, whether on a voluntary or mandatory basis, adopt a unified system - either mediation or conciliation - rather than parallel structures. Mediation has a well-established framework that can be uniformly implemented across different cases and numerous jurisdictions worldwide incorporate mediation within their court-annexed ADR programs.
The Mediation and Conciliation Law provides for two parallel processes for the accreditation and qualification of mediators and conciliators[5].
The Judicial Inspection Department or the local judicial authority will establish a roster of mediators and define the criteria and procedures for their enrolling on the roster.
These mediators shall be selected from the experts already registered in the roster of experts maintained by the Ministry of Justice or the local judicial authority. Furthermore, the law allows the enrolment of professional mediators, including retired judges and lawyers nominated by the Federal Judiciary or the president of the local judicial authority.
The Mediation and Conciliation Law differentiates between mediators enrolled on the roster of mediators and private mediators who are selected by the parties but are not enlisted on the roster. The law also allows private mediation centres and branches of foreign mediation centres to be established in the UAE.
The appointment of conciliators, as outlined in the Mediation and Conciliation Law, follows a procedure akin to employment. The Federal Judiciary or the president of the local judicial authority will establish the qualifications for this position. Conciliators will be subject to a specific compensation scheme and must take a legal oath before assuming their duties.
The Mediation and Conciliation Law imposes specific restrictions on mediators and conciliators with regard to conflict of interest described in Article 6. It also stipulates that the applicable disciplinary measures applicable in the event of violation by a mediator or conciliator of their obligations under the law, will be the same as those applied to experts.
The roles of a mediator or a conciliator are fundamentally different from any expert role, and allowing selection from the experts’ roster or making certain expert related rules applicable to them should be carefully considered by the regulator. While there is a technical distinction between the functions of a mediator and a conciliator, both serve as neutral facilitators in interest-based negotiations, with the aim of assisting the parties in achieving a mutually agreeable resolution. As a result, both roles necessitate similar competencies in addition to legal expertise. These include proficiency in negotiation and mediation techniques, emotional intelligence abilities, business acumen, and a problem-solving mindset. Consequently, the criteria and accreditation procedures for mediators and conciliators should be carefully defined, harmonized, and aligned with international standards. Continuous professional development and training should also be mandated to retain eligibility on the mediator roster or the appointment as a conciliator. Ensuring high standards of qualifications foster trust by the users and the legal community as a whole in the mediation and conciliation system and its services.
The parties, as part of executing a mediation agreement, can directly resort to the Mediation and Conciliation Centre to appoint a mediator (from the roster or private) to settle their dispute before initiating any legal proceedings before the Court.
The Mediation and Conciliation Law governs the process of the contractual mediation[6]. The supervisory judge of the Mediation and Conciliation Centre has authorities in relation to certain aspects of the mediation process, including, appointment of a mediator, assessing the costs of mediation, receiving the reports from the mediator and affirmation of settlement agreement etc.
Although the supervising judge’s role is regulatory and administrative in nature, the idea of seeking decisions from the judge in the context of contractual mediation may have an impact on the perception of mediation as an alternative process to amicably resolving disputes out-of-court, and may put psychological pressure on the parties. Despite the existence of confidentiality obligations and without prejudice communications, a limited involvement of the overseeing judge could affect the willingness of the parties to cooperate with the mediators in disclosing information, which could hinder achieving settlement.
Mediation and Conciliation Law outlines the requirements for a mediation agreement to be valid[7]. The agreement must be in writing and bear the signature of the parties involved, whether in private or official document, or referenced in their communications, whether electronically or in physical form. The agreement can be established prior to the occurrence of the dispute, either as a standalone agreement or as part of a specific agreement between the parties. It can also be established after the dispute has arisen, even if legal proceedings have been initiated regarding the dispute.
The mediation agreement should determine the subject of the dispute to be mediated, appointment of a mediator or mechanism of such appointment, and the chosen language. However, the law stipulates that the mediation agreement must explicitly state the mediation’s language, its subject matter, the mediator’s appointment, his/her fees, and the party responsible for covering these fees; otherwise, the agreement will be deemed invalid[8].
Invalidating the mediation agreement due to the omission of language specification appears to be controversial. According to the UAE’s general principles regarding contract validity, language is not typically considered a key element for contract validity. By analogy, an arbitration agreement remains valid even when the language is not specified, however Arabic will apply as the default language. Considering the voluntary nature of mediation, the parties can always agree on the language during the sessions.
The competent court may refer a dispute to mediation at any stage of the legal proceedings. This can occur upon the Court’s proposal with the consent of the parties, at the parties’ request, or to enforce the terms a mediation agreement.
Generally speaking, after filing the claim and exchanging submissions, the parties will have a clearer view regarding the strengths and drawbacks of their case and an estimate of legal costs and time required to conclude the case. This is when a referral to mediation by the Court might be effective. We believe that a set of criteria for the referral should be developed by the Courts, and the judges should be trained to determine whether a dispute is ready or suitable for mediation and the time and stage for such referral considering the characteristics of the dispute. The judge should also be able to identify the attributes of the mediator who would be competent to settle the dispute given its nature. These factors have considerable impact on the likelihood of settlement and the mediation success.
Except for specific types of disputes[9], the Mediation and Conciliation Centre shall have the jurisdiction to induce mandatory conciliation in the following civil and commercial disputes:
Disputes which value do not exceed AED 5,000,000; and
Disputes in which both parties are spouses or relatives up to the fourth degree, whatever their value.
If a dispute falls within the mandatory jurisdiction of the Mediation and Conciliation Centre, it cannot be brought before any Court that has established a Mediation and Conciliation Centre, unless it has been initially referred to the center and the center determines that the attempts for amicable settlement have been unsuccessful.
The disputes subject to mandatory conciliation are now of significantly high value. Consequently, it is anticipated that there will be an influx of disputes directed toward the Mediation and Conciliation Centre. This raises questions regarding whether the existing centers possess the requisite human resources, including conciliators and support staff, to handle and accommodate all incoming applications. Additionally, it raises concerns about the quality and efficiency of the process and whether each conciliation case will receive fair consideration and adequate time for settlement.
It is advisable for the local judicial authority to consider offering the parties the option of utilizing private mediators and private mediation providers within a mandatory conciliation process, which would potentially enhance user satisfaction and improves the likelihood of settlement. It expands the pool of specialized mediators available for selection. Additionally, an effective approach would be to invite volunteers from the legal community, such as attorneys or judges who have undergone the required mediation accreditation and necessary training, to serve as conciliators in the Mediation and Conciliation Centre.
Several fundamental principles that were upheld in the previous legal framework have been preserved in the Mediation and Conciliation Law, one of which is the concept of 'without prejudice communications.' Although this concept is not a recognized general law principle, the UAE legal system has its own set of legal principles and regulations governing the confidentiality and admissibility of statements made during settlement negotiations. While it is originally a common law concept, it has been incorporated into the procedural law of the DIFC and ADGM Courts.
Mediation and Conciliation Law[10] states that mediation proceedings and the information and documents submitted therein are strictly confidential, and any information disclosed during the process, including agreements or concessions made by the parties, cannot be pleaded in Courts without the consent of the disclosing party, except in cases related to criminal acts. However, the confidentiality rules do not apply to the terms of the Settlement Agreement, which can be enforceable through the legal system.
Another principle that remains safeguarded under the Mediation and Conciliation Law[11] pertains to the suspension of limitation periods for contractual and judicial mediation. Once the mediation process is initiated or a Court referral decision is made, all legal and judicial time limits will be suspended and only resume after the conclusion of the mediation process, unless a settlement is reached.
The possibility of seeking interim measures is also addressed under the Mediation and Conciliation Law[12] which grants the relevant Court the authority to take necessary actions and measures to protect the rights of the parties and issue urgent or interim decisions as deemed necessary within the mediation process's timeframe.
At Al Tamimi & Company, we are committed to guiding you through this new mediation and conciliation framework.
Our lawyers have extensive experience of successfully representing clients in mediations and ADR procedures across the MENA region and beyond.
[1] Amended by Federal Law No. 5 of 2021.[2] Applies to Sharjah, Ajman, Fujairah and Um Al Quwain.[3] Governed by Dubai Law No. 18 of 2021.[4] Governed by Judicial Department Chairman's Resolution No. 39 of 2021.[5] Articles 10, 31 and 32 of the Mediation and Conciliation Law.[6] Article 13 of the Mediation and Conciliation Law.[7] Article 9 of the Mediation and Conciliation Law.[8] Article 11 of the Mediation and Conciliation Law.[9] The exclusions are specified in Article 28 of the Mediation and Conciliation Law.[10] Article 5 of the Mediation and Conciliation Law.[11] Articles 11(3) and 14(4) of the Mediation and Conciliation Law.[12] Article 14(4) of the Mediation and Conciliation Law.
For further information,please contact Christine Maksoud.
Published in November 2023
