UNITED ARAB EMRITES Law and Practice Contributed by: Ali Dakhlallah, Karen Seif, Matthew Page and William Prasifka, Habib Al Mulla & Partners
sequence is a procedural delay rather than outright dismissal in most cases. Failure to engage in non-mandatory ADR does not attract sanctions such as adverse cost orders. There- fore, the UAE courts do not penalise parties simply for refusing to mediate. Nonetheless, judges increasingly encourage ADR as part of case management as it reflects broader policy preferences favouring amicable resolution. 4.3 Impact of ADR Engaging in ADR in the UAE does not extinguish or waive a party’s right to litigate or arbitrate unless a binding settlement is reached. ADR is viewed as complementary rather than exclusionary. Parties thus remain free to pursue formal adjudication if ADR fails. Where ADR results in a settlement, the agreement may be submitted to the court for endorsement or enforcement. Once approved, a settlement acquires executory force similar to a judgment. In that scenario, subsequent litigation or arbitration on the same dis- pute is precluded. If ADR fails, proceedings resume or commence as usual. Courts do not treat unsuccessful ADR attempts as admissions of weakness or liability. Moreover, statements and concessions made during ADR are typically inadmissible in later proceedings. ADR can also narrow issues or clarify positions even when settlement is not achieved. This often shortens litigation or arbitration timelines and reduces eviden- tiary complexity. ADR has a practical impact even when it does not result in full resolution. 4.4 Timing of ADR ADR in the UAE may take place before, during or even after formal proceedings have commenced. Most commonly, ADR occurs at the pre-dispute or early- dispute stage, particularly where contracts include negotiation or mediation clauses. Early intervention is encouraged to preserve commercial relationships. Courts may also refer parties to mediation after pro- ceedings have begun. Judges frequently suggest ADR when disputes appear suitable for settlement, espe-
cially in commercial or contractual matters. Court- annexed mediation is increasingly used at this stage. Engaging in ADR does not automatically suspend limi- tation periods. Parties must take proactive steps such as filing a claim or obtaining formal acknowledgment in order to protect limitation rights. This is a critical consideration for parties relying on prolonged ADR negotiations. As a result, ADR is often pursued alongside procedural safeguards. Commercial parties routinely commence proceedings “protectively” while engaging in parallel settlement discussions. Timing ADR strategically is therefore essential within the UAE legal framework. 4.5 Confidentiality Confidentiality is a defining feature of most ADR pro- cesses in the UAE. Mediation and conciliation are confidential by law, and any information disclosed during sessions cannot be used in subsequent court or arbitration proceedings. This protection is central to encouraging open and candid negotiations. Confidentiality covers: • statements and proposals made during ADR; • admissions or concessions; and • documents prepared specifically for ADR. Negotiation confidentiality depends primarily on the agreement between the parties. While not automati- cally protected by statute, negotiations are often con- ducted on a “without prejudice” basis. Institutional mediation rules reinforce confidentiality obligations on both mediators and parties. Confidentiality obligations typically survive the termi- nation of ADR proceedings. Breach of confidentiality may expose a party to legal liability and would under- mine the enforceability of any settlement reached. 4.6 Costs ADR in the UAE is generally cost-effective compared to litigation and arbitration. Costs typically include mediator or conciliator fees, institutional administra- tion fees and each party’s own legal expenses. These
523 CHAMBERS.COM
Powered by FlippingBook