As per the arbitration and civil rules in the UAE, the arbitration rules shall be governed by the Terms of Reference. The Terms of Reference is a document used within international arbitration law. Its main purpose is to ensure the fast and efficient progress of arbitration proceedings. The agreement is drawn and signed by mutual consent of the parties and arbitrators.
The Terms of Reference clarify the terms of dispute, and if the arbitrator is able to conclude evidence or not. The period of arbitration is usually defined in the Terms of Reference, and if it is not it will only be for six months. This period can only be extended by the court or the authority which appointed the arbitrator's attendance.
The document sets out the scope and limits of the duties of the arbitrators. The document includes information relating to the parties and arbitrators, a summary of pleas and defence of the parties, the claims, the dispute in question, and the procedural provisions which shall be applied. Therefore, the document sets out the framework to the proceedings, and as it reflects the consent of the parties, the recognition and enforcement of the arbitration awards at the end of the proceedings is guaranteed.
The parties and the arbitrators, by drawing up the Terms of Reference, ensure that the dispute is clearly put forward. The parties agree to the rules that are to be applied to the procedure of the arbitration, such as the language and place of arbitration, terms, and means of notification. Therefore, any procedural issues which may arise at a later stage can be avoided at the beginning of the arbitration proceedings, and any disruption in the proceedings may also be prevented. In addition, the arbitrators discussing and ruling on an issue falling outside the scope of their capability is also prevented by the Terms of Reference. All these matters reduce the possibility of the arbitration decision being annulled, and help to enforce the decision from the courts of the country where the decision shall be implemented. Another function of the Terms of Reference is to determine any legal gaps. The Terms of Reference provide the possibility to agree upon provisions, for matters where the procedural rules to be applicable to the procedure of arbitration are silent.
The Terms of Reference come into force when the document is signed by the parties and the arbitrator or the arbitration tribunal and bears all its impacts and consequences. Nevertheless, under the International Chamber of Commerce's Rules of Arbitration, signing of the Terms of Reference by both parties is not mandatorily required in order to advance with the arbitration proceedings. However, if the award is going to be used in the UAE, Terms of Reference would be important to avoid annulment. Therefore, the Terms of Reference prevents the prolongation of the procedures by a party refusing to sign the agreement. The International Chamber of Commerce's Rules of Arbitration regulates that in the event one of the parties refuses to participate in the preparation or signing of the Terms of Reference, the document shall be referred to the arbitration tribunal for approval. In the event both parties choose not to sign a Terms of Reference, the document will not subsist.
By preparing the Terms of Reference, the parties will have validated their agreement to resolve the dispute through arbitration, so they may not claim the invalidity of the arbitration clause at a later stage. Given that the parties shall have acknowledged the choice of arbitrators, they shall not be able to initiate annulment proceedings claiming the undue choice of arbitrators, or the failure to pronounce a decision within the period of arbitration; requesting the annulment of the arbitral award by claiming that the arbitrators have ruled on a matter falling out of scope of the arbitration agreement or not ruling or all matters set forth in the claims of the parties or by claiming that the procedures have been violated.
Another consequence of the signing of the Terms of Reference by the arbitrator and the parties is to state that the arbitration award materially bears all enforcement qualifications. Pursuant to article 5/1 of the New York Convention, claiming the invalidity of the arbitration clause, that the appointment of arbitrators is in violation of the procedural law, that a matter falling out of scope of the arbitration agreement has been resolved, that all matters raised in the claims have not been addressed in the award, or that the procedure has been violated shall constitute a violation of the good faith principle in the event the parties have signed the Terms of Reference without any reservations.
The Terms of Reference has become a document of significant priority under UAE civil law and the New York Convention because a lack of Terms of Reference in arbitration proceedings is a violation of the provisions of Article 216 (a) of the UAE Civil Procedures Code and Article V (c) of the New York Convention. The Terms of Reference aims to speed up the proceedings, and ensure legal security and efficiency by avoiding any procedural issues, through determining matters such as: revealing the respective claims and defences of the parties, the means of notification, and language of arbitration in order to resolve the dispute in question. Furthermore, the parties expressly confirm their agreement on the dispute to be resolved under arbitration law, thus preventing any future objections and challenges to this matter and obtaining an arbitral award, which may be recognised and has enforceability.
Mr. Hassan Elhais is a professional lawyer who specialized in litigation in Dubai, United Arab Emirates.
Article Source: http://www.abcarticledirectory.com
Mr. professionallawyer.me/ Hassan Elhais is a professional lawyer who specialized in litigation in Dubai, United Arab Emirates.
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