12th Al Jazeera Forum: Session 4 - Changing Alliances in the Region

 

14/n An Analysis of UAE's Commercial Mediation Law, Federal Law No. 6 of 2021, the Mediator's Fees and Expenses

Background

Mediators can charge by the hour, the half day, the whole day, or a flat fee for the entire mediation. Most ethics codes in the U.S. discourage a contingency fee based on the settlement value because it can compromise the mediator's impartiality towards and independence from the outcome of the mediation.  I wrote about this risk here.  In some cases, usually family law cases, the spouse with greater financial resources may agree to pay the entire fee.  In that case, the mediator must take care that he or she does not show partiality towards the fee-paying spouse. 

Mediation rosters, whether court-connected or created by private third-party providers (like AAA, JAMS, and IMI), will often list the mediator's fee schedule.  In any event, the mediator and the parties will negotiate the fee.  That fee agreement typically appears in the agreement to mediate or a separate fee agreement. Typically, the fee must be paid whether the parties reach agreement or not.  Some mediators will request a deposit on the fee.  

Most mediators charge for any time spent before and between sessions when they are reviewing pre-mediation submissions, reading documents or exhibits, or talking with the parties or their lawyers by email, text, or phone.  A mediator would also expect the parties to compensate him or her for time spent drafting, signing, copying, and filing the settlement agreement.

Parties should expect to pay any travel or lodging expenses incurred by a mediator who does not reside in the same city as the parties.  Increasingly, parties are using on-line mediation to avoid those expenses. I wrote more about that option here. 

Sadly, fee disputes can give rise to a complaint filed against the mediator in states with robust grievance processes.  A fee dispute creates more work for the mediator and can damage his or her reputation.

The UAE Commercial Mediation Law Protects Mediator's Fees

Articles 1, 6, and 21 of the UAE Commercial Mediation Law govern a mediator's fees.  

Article 1 defines "Mediation Fees" as "[t]he financial consideration payable to the mediator for performing his mission and is agreed upon by the parties."  It defines "Mediations Costs" as the "administrative expenses for mediation together with the fees payable to the mediator for the mediation process."

Article 6 provides: "The private mediator may determine his fees in agreement with the parties to the dispute, not exceeding 5% of the value of the matter in dispute."

Article 21 is dedicated to the topic of mediation costs.  It provides:

• Subject to Article [5] of the above-referenced Federal Law No. [17] of 2016 [Establishing Mediation and Conciliation Centers for Civil and Commercial Disputes, as amended], the parties shall pay initial mediation costs, both fully and directly, to the Center before commencement of the mediation procedures, as described in the referral decision.

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• Subject to Articles [6.3] and [7.1] of this Law, the Competent Court shall, under all circumstances, determine the 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 the respective interests 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 into the Court's treasury.  

• 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.

• The parties and the mediator may each file a grievance against the costs assessment decision within five [5] business days following the notification date.  Such grievances shall be based on a report to be filed with the competent Case Management Office and shall give rise to stay of execution of the costs assessment decision.  The grievance shall be decided on by a different judge or chamber of the Competent Court after hearing the Grievant's evidence and the decision made on the grievance shall be final and may not be challenged by any means of challenge.

Taken together, this language makes the fee a matter of negotiation, but gives clear recourse to a mediator seeking payment of his or her fee.  Interestingly, Article 21 indicates a pre-payment of the fee before commencement of the mediation.  Thus, do mediators provide parties an estimate of the costs?  

While the law protects a mediator's fee even if the parties fail to reach agreement, the UAE law, unlike the Qatar Mediation Law, does not specify the fee recovery if a mediator is recused or disqualified mid-mediation. 

Finally, it allows the Court to impose a penalty, in the form of the full mediator's fee, if a party scuttles the mediation by failing to attend scheduled sessions. 

Next up?  Mediator misconduct.  It will be my second to last post on the 2012 UAE Commercial Mediation Law. 

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.