The threat of imprisonment for arbitrators in the UAE has been removed as Article 257 is amended

A decision by the federal government of the UAE to remove arbitrators from the scope of application of Article 257 of the UAE Penal Code has been welcomed by the arbitral community in the UAE and beyond. Federal Decree No. 24 of 2018 came into force on 8 October 2018.

Dubai, seen as an arbitration-friendly jurisdiction, saw a threat to its image when Article 257 was amended in 2016 to include arbitrators in the category of individuals against whom criminal sanctions could be imposed if they failed to maintain integrity and impartiality in the discharge of their duties.

The Previous Law

Federal Law No. 7 of 2016 amended Article 257 of the UAE Penal Code to read:

Any person who issues a decision, gives an opinion, submits a report, addresses a case or proves an incident for the benefit or against a person, failing to maintain the requirements of integrity and impartiality, in his capacity as an arbitrator, expert, translator or investigator, appointed by administrative or judicial authority or selected by parties, shall be sentenced to temporary imprisonment.

Said categories shall be banned from being re-assigned to such tasks, and shall be subject to the provisions of Article 255 of the present Law.

The introduction of criminal sanctions created a risk for arbitrators, particularly because the words 'integrity' and 'impartiality' are not defined in the UAE criminal law. As the investigatory powers of the UAE Police are wide-ranging, arbitrators risked sanctions including confiscation of their passport and temporary imprisonment whilst an investigation process ran its course. The threat of criminal sanctions led some sitting tribunal members to resign and other respected arbitrators to decline appointments to sit on UAE tribunals.

Moreover, there was a tangible and negative impact on some arbitral proceedings and thus to the image of Dubai as an arbitration-friendly jurisdiction, as machine-gun practitioners used the threat of Article 257 as a guerrilla tactic to disrupt proceedings where they perceived it was in their client's interests to do so.

The New Law

Federal Decree 24 of 2018 amends several provisions of the Penal Code including Article 257 which now reads:

Any person who, while acting in the capacity of an expert, translator or investigator appointed by a judicial authority in a civil or criminal case, or appointed by an administrative authority, confirms a matter contrary to what is true and misrepresents that matter while knowing the truth about it, shall be sentenced to imprisonment for a minimum term of a year and a maximum term of five years.

The punishment shall be temporary imprisonment if the mentioned individuals were assigned to a mandate in relation to a felony. (Bablex translation[1])

Although arbitrators have been removed from the scope, experts and translators and investigators are still included and whilst its ambit appears more narrowly defined, it remains to be seen how this provision will be interpreted and whether it will continue to be used as a guerrilla tactic in the context of arbitration.

However, this latest amendment is seen by the arbitration community in the UAE as a tremendously positive move and it follows on the heels of the new UAE Arbitration Law, based on the UNCITRAL Model Law, which came into force in June of this year after many years of consultation. The new amendment gives relief to arbitrators, practitioners and parties alike and will give them added confidence to arbitrate in the UAE without the potential and harmful effects of Article 257 hanging over their proceedings.

[1] Bablex hold the copyright in this translation and have permitted HSF to use it in this article.

For further information, please contact Caroline Kehoe, Partner, Benjamin Hopps, Senior Associate, or your usual Herbert Smith Freehills contact.