UAE Law and Practice Contributed by: Abdelhak Attalah and Ghassan Hidar, Attalah Legal Consultancy
Transfer of Rights and Arbitration Clauses When a B/L is transferred to the consignee, it typically transfers all the rights and actions of the shipper. However, arbitration clauses are treated differently. For an arbitration clause to be enforceable against the consignee, the con - signee must explicitly consent to it in writing. If the arbitration clause is negotiated sepa - rately and individually with the carrier, it may be deemed null and void. This means that a con - signee cannot be automatically bound by an arbitration clause unless they have agreed to it. Enforceability of Arbitration Clauses UAE courts have ruled that for an arbitration clause contained in a B/L to be enforceable, it must be prominently displayed on the front side of the B/L. This clause should be presented in the same font size and style as other essential information, such as the names of the shipper and carrier, ensuring that the clause is clearly visible and acknowledged by all parties involved. Thus, for an arbitration clause in a B/L to be recognised and enforced in the UAE, it must be clearly stated and prominently positioned in the document, and the consignee must give their explicit written consent. If these conditions are not met, the clause may not be enforceable. 6.2 Enforcement of Law and Arbitration Clauses Incorporated Into a Bill of Lading In the UAE, the recognition and enforcement of law and jurisdiction clauses in B/L depend on the specific conditions set by the country’s legal framework, including both its onshore civil law system and the offshore jurisdiction of the DIFC and ADGM.
Onshore Jurisdiction (UAE Civil Law System) In the UAE’s onshore civil law system, arbitra - tion clauses in B/L can be enforced, but certain conditions must be met. • Explicit consent: The consignee must explic - itly consent to the arbitration clause. If the clause is negotiated separately from the B/L, it might not be enforceable. • Clear incorporation: The arbitration clause must be clearly indicated in the B/L, typically with the same prominence as other critical details such as the names of the shipper and carrier. If the arbitration clause is incorporated by reference from the charterparty, the refer - ence must be specific and clearly identify the dispute resolution mechanism. For instance, in Al Buhaira National Insurance Co v The Shipping Corporation of India Limited (Cassation No 363 of 2011), the Dubai court of cassation ruled that a general incorpora - tion clause referring to terms in a charterparty, including the arbitration clause, was sufficient for enforcement. The court stated that even if the charterparty’s details were not fully specified, the incorporation clause was enforceable as long as it explicitly referred to arbitration in the B/L. Offshore Jurisdiction (DIFC and ADGM) In the DIFC, which follows English common law, the approach to arbitration clauses in B/L is more flexible. • General terms of incorporation: the DIFC courts may recognise arbitration clauses even if they are incorporated by general terms. As seen in cases such as The Merak (1964), the English court recognised that a general refer - ence to “all terms of the charter party” was sufficient to incorporate an arbitration clause if the clause was broad enough to apply to
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