UAE Law and Practice Contributed by: Farida Safwat, Elham Mobini and Ramy George, NHB Legal
In addition, Arabic is the prevailing language for most onshore policies. Where policies are issued in both Arabic and English, inconsistencies can arise between the translated version of the policy which gives rise to disputes over interpretation and meaning. As a result, it is imperative that both language versions are care- fully drafted to reduce the risk of coverage disputes. 1.3 Dispute Resolution Strategy and Outcomes The UAE’s legislative framework encourages parties to engage in early realistic settlement where possible. For onshore insurance disputes, policyholders are required to file a complaint with the insurer first. If an agreement cannot be reached between the parties, in the absence of an arbitration clause, parties are then required to refer the dispute to the UAE’s financial ombudsman Sanadak, which has discretion to refer the matter to the Insurance Disputes Settlement and Resolution Committee (IDSRC) if necessary. Unless appealed by either party, the decisions of Sanadak and the IDSRC are final and enforceable. Larger commercial disputes, particularly in the marine, construction and reinsurance sectors, are frequently referred to arbitration pursuant to valid arbitration agreements. Arbitration offers parties a confidential, flexible and streamlined process, allowing them to appoint arbitrators with specialist expertise in the rel- evant issue. However, arbitration proceedings can be costly and are therefore more common in high-value and complex commercial disputes. In practice, parties often diverge from this. Insurers will often settle routine quantum-driven claims promptly because the costs of litigating far exceed the settle- ment value. However, parties are often prepared to litigate to trial cases that have the potential of estab- lishing a market-wide precedent in the Middle East and potentially the global market. 2. Jurisdiction and Choice of Law 2.1 Choice of Law in Insurance Contracts In the UAE, the governing law of insurance and rein- surance contracts is most commonly determined by
the parties’ contractual arrangements, subject to the applicable onshore legislative and regulatory frame- work. As a starting point, UAE law recognises party autonomy in determination of the applicable law. In the reinsurance market, parties commonly opt for foreign governing laws, most commonly English law. The UAE courts generally respect and enforce such choices because reinsurance contracts typically arise between sophisticated commercial parties and therefore the court affords them greater contractual autonomy. This contrasts with retail and consumer line insurance policies which are subject to more restrictive regula- tions and the mandatory requirements of UAE law, specifically when the insured risk or person is located in the UAE. Therefore, where the parties to an insur- ance contract have agreed on a foreign governing law clause, the UAE courts still have discretion to apply UAE law in matters of public policy or regulatory com- pliance. 2.2 Jurisdiction and Forum Selection Jurisdiction clauses are invariably not upheld by UAE courts. The UAE Civil Procedures Law governs jurisdiction in onshore insurance disputes. The gen- eral position is that disputes should be heard in the insured’s domicile or insured risks’ location. While contracts often include jurisdiction clauses iden- tifying a foreign court or arbitral tribunal, UAE courts can decline to give effect to this where they consider the UAE court would otherwise have jurisdiction under UAE law. In particular, UAE courts will be reluctant to uphold foreign jurisdiction clauses in matters that involve UAE transactions, events occurring in the UAE or ownership of property in the UAE. In practice, jurisdiction disputes are most commonly encountered in reinsurance disputes, particularly in the marine, energy and aviation sectors involving cross-border parties and risks. In such cases, con- tracts often contain jurisdiction clauses, however the enforcement of such clauses ultimately depends on the clause’s interaction with the UAE’s mandatory requirements.
270 I NSURANCE L I T IGATI O N 2026
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