12/n An Analysis of UAE's Commercial Mediation Law, Federal Law No. 6 of 2021, Referring Court's Management of the Litigated Case and the Mediation

I now want to turn to the court's role throughout the mediation process.

Court's Power to Refer Parties to Mediation

The UAE Commercial Mediation Law makes clear that courts may refer cases to mediation if the parties have executed an agreement to mediate.  Two sets of judges come in to play depending on which mediation track the parties choose.

As I noted in an earlier postArticles 1, 3, 5, 22, and 23 give the parties the power to enter mediation voluntarily by executing a mediation agreement either before or after a dispute arises.  The agreement can be a separate contract or a condition included in a contract. Under Article 5, the agreement must be in writing, and it survives the death of any party.

Article 5 provides: 
  • "The Competent Court may issue a decision to refer the dispute to mediation at any stage of the case, based on the court's proposal coupled with the approval of the parties, based on the request of the parties, or in enforcement of the mediation agreement.
* * * 
  • "Referral decisions issued by the Competent Court may not be challenged by any of the ordinary or extraordinary methods of challenge."
Article 6, governing the appointment of a private mediator, provides: "If the mediation agreement designates a private mediator, the Competent Court shall observe such designation upon issuing the referral decision . . . ."

Article 1 defines the Competent Court as "the Trial Court that hears the case referred to mediation or the court judge supervising the case management office, as the case may be."  It defines the Referral Decision as "the decision issued by the Competent Court to refer the parties to a dispute to mediation in an attempt to have their dispute amicably settled."

Parties working through Centers on disputes that have not yet gone to litigation [extrajudicial mediation] are governed by Articles 22 and 23.  Under Article 23, parties must file an application for mediation, which must include a copy of the mediation agreement and any supporting documents.  "The application shall indicate the desire of any or all parties to resort to mediation . . . ."  The law gives the Supervising Judge the same powers of the Competent Court to appoint a mediator.

Article 1 defines the Supervising Judge as: "The judge supervising the [C]enter."



Time Limits on the Mediation Process and the Judge's Role in Extending Them

Note that Article 5 also says that the mediation "may not exceed three months of the date of notifying the mediator of the assignment, and shall be renewable for a similar period only once under a decision of the competent court at the request of the mediator and with the approval of the parties. Similarly, Article 23, governing extrajudicial mediations, limits the mediation to "three months of the date of the mediator's acceptance of [the] mediation mission.  Such timeframe shall be renewable once for a similar duration under a decision of the supervising judge, based on an agreement to be concluded by the parties according to the same conditions set out in Article 3 of this law [referring to the mediation agreement]." 

What are the Responsibilities of the Court while the Parties Attempt to Resolve the Dispute by Mediation?

Expert Fees

Article 11 gives the mediator the power to engage experts to provide technical expertise.  The mediator will negotiate the fee and the scope of engagement. However, the Competent Court will set the fees if a dispute arises over them.  

Provisional and precautionary measures

The court can maintain the status quo during mediation in two ways.  First, Article 5 states: [D]uring the mediation period, the Competent Court may . . . take necessary measures and actions to safeguard the rights of the parties and issue urgent or interim decision deemed necessary."

Tolling power

In addition, the court can also maintain the status quo under the tolling provisions of Article 5.  It provides: "Legal and judicial time limits shall be interrupted once the referral decision is issued and shall only become effective again after the mediation comes to an end."  Again, while the language is general, I assume it allows a tolling of any statute of limitations while the parties mediate.  It would also seem to toll any time limits for filings or other matters under any rules of civil procedure. 

Managing new or pending cases

The court has responsibilities for managing any litigation either pending or filed during the mediation.  However, the UAE Commercial Mediation Law fails to spell out those responsibilities comprehensively. 

Unlike the Qatar Mediation Law, the UAE Commercial Mediation Law does not expressly instruct the court to stop considering the pending lawsuit. Unlike the Qatar Mediation Law, it does not impose a penalty on any party who files a lawsuit while the mediation process is pending or in the presence of a valid agreement to mediate. 

An exception exists for extrajudicial mediation, where parties have a mediation agreement and seek to settle the dispute through a Center without first filing suit.  Article 24 provides that if the plaintiff brings a suit "in respect of a dispute brought to the mediator in enforcement of a mediation agreement" the court "shall dismiss the case if so requested by the defendant before any claim or plea relating to the subject of the case is submitted by the defendant, unless the Court is convinced that the mediation agreement is invalid or impossible to be implemented."   The language is confusing, but seems to say that the court will quickly dismiss any lawsuit alleging the invalidity of the mediation agreement and seeking to proceed in court, unless the claim seems plausible.  Article 25 says the filing of this case by the defendant "shall not preclude commencement or continuation of extrajudicial mediation procedures." 

In the absence of similar provisions in Article 5, governing judicial mediation, parties will invoke the more general language found there allowing the court to "safeguard the rights of the parties and issue  . . .  decisions deemed necessary" about any pending or new lawsuits while the mediation process begins or continues. 

Management of Multi-Party Disputes

Article 10 gives the court supervisory power over multi-party disputes that protects the mediation process.  It provides: "For multiparty disputes, the parties may, subject to approval of the Competent Court, agree that the mediation procedures would continue when any of them fails to get involved in whatever way, unless such failure would adversely affect the proper administration of mediation and settlement of the dispute between them."  This provision does not appear in the Qatar Mediation Law.  Its utility is obvious. 

What are the Court's Responsibilities When the Mediation Ends?

Failure to Reach Agreement in Mediation and Return to Litigation

Article 17 provides that in the event a judicial mediation does not resulting in a settlement agreement, the mediator will report to the Center, which in turn will report to the court the failed mediation.  "[T]he Competent Court shall assign the case to hearings for reconsideration, with no need for new notification."  Article 23, governing extrajudicial mediation, states: "The supervising judge shall have the same powers of the Competent Court in terms of  . . . receipt of the mediator's reports and affirmation of the settlement agreement, as described in Chapter Two of this Law."   Presumably, these powers include allowing the parties to proceed in litigation. 

Court Affirmation of the Settlement Agreement

Article 18 requires the mediator to file with the Center a report and a signed copy of the settlement agreement at the close of the mediation, whether the mediated agreement resolves the dispute in whole or in part. The Center will forward these documents to the Competent Court. Then, 
  • "The Competent Court shall affirm such agreement and issue a decision terminating the dispute, in whole or in part as the case may be.  Once affirmed, the agreement shall be deemed a writ of execution and the executive formula shall be fixed thereto at the request of either [or] both parties in light of the provisions of the settlement agreement submitted to the Court.  In addition, the affirmed agreement shall be enforced according to the procedures set out in the above-referenced civil procedure law, as amended."
Unlike the Qatar Mediation Law that expressly penalizes a party for filing a lawsuit on a claim resolved in mediation, the UAE Commercial Mediation Law focuses on enforcement on the settlement agreement.  Article 20 provides: "Subject to Article 19 of this Law, the court-affirmed settlement agreement shall be binding upon the parties, may not be reevoked, and shall have the same probative force of court judgments.  Hence, the merits and grounds of the same dispute between the parties may not be brought again to the Court, and the Court shall order such probative force sua sponte."  It thus expressly invokes principles of res judicata or estoppel.

Thus, a party who has any buyer's remorse after mediation should express it in the authentication stage, because Articles 18 and 20 should prevent the filing of a lawsuit after the court authenticates the settlement agreement.  

Under Article 19, a party claiming invalidity of the settlement agreement must file a case coinciding with the application to affirm the settlement agreement.  Grounds for invalidity include a party's lack of mental capacity or diminished capacity at the end of the mediation; the parties' failure to reach a settlement agreement; the invalidity or voidability of the settlement agreement; that the parties reached agreement after the mediation timeframe expired; if the mediation agreement is invalid or avoidable; or when a party fails to offer a defense in mediation due to an invalid notice of the proceedings or was unaware of the pending mediation for "any other reason beyond its reasonable control."  Any decision on the validity of the settlement agreement is final and subject to appeal by way of cassation.  

While the language is confusing, it appears a party must seek invalidation within 30 days "following the date on which the judicial dispute termination is served upon that party."  Even if the court finds the settlement agreement invalid, in whole or in part, the mediation agreement shall remain valid, unless its invalidity was the basis for invalidating the settlement agreement.  Presumably, this provision of Article 19 would protect the parties' ability to return to mediation if it might result in a valid settlement agreement.  



Refund of Judicial Fees

In addition, the law gives the court power to refund judicial fees.  Article 6 provides that: "In case the dispute ends in a settlement agreement, the Claimant shall get back the judicial fees paid thereby as described in Article 21.2 of this Law."   Article 21, in turn provides: "When the mediator's mission comes to an end and full settlement is reached for the dispute, all parties involved may get back the judicial fees paid.  They may also get back half of the judicial fees paid by them in case the settlement involves part of the matter of dispute." 

Management of the Mediator and Her Fees

The court also must ensure that the mediation is not causing unreasonable delay in the resolution of the dispute.  Under Article 8, the court may terminate the appointment of a mediator who has failed to resign, at the request of the parties, if he "fails, becomes unable or ceases to perform his mission in such a manner that would give rise to unnecessary procedural delay . . . based on a decision of the Competent Court that may not be challenged by any means of challenge."  

Articles 6 and 21 of the UAE Commercial Mediation Law expect that the parties, along with the mediator, will set compensation for the mediator, payable even if the parties fail to reach agreement.  However, 
  • "[T]he Competent Court shall, under all circumstances, determined non-agreed final mediation costs under an Order on Petition.  Such costs shall be divided and distributed between the parties either equally or in proportion to their respective interest in the case, at the discretion of the Court.  The Court may also order either or both parties to bear such costs and shall permit the private mediator to receive the fees due him and which are deposited in to the Court's treasury." 
In addition, the Court has discretion to allocate the mediator's fees if the parties fail to reach agreement.  Article 21 states:

  • "If the mediator fails to reach settlement for the dispute, the Competent Court shall issue an Order on Petition obliging the parties to pay final mediation costs based on the mediation agreement and referral decision.  The Court may also order either party to pay full mediation costs if such party is the cause of failure of the mediation process due to failure to attend mediation sessions."
I'll talk more about the settlement agreement and its authentication by the court in my next post. 

Also, this reminder:  The 2021 law has now been replaced by Federal Decree-Law No. 40/2023 On Mediation and Conciliation in Civil and Commercial Disputes, issued on September 28, 2023, and effective 90 days after its publication, which is some time in December 2023.  A copy of the English-language version is available here

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