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Impartial …. or Imprisonment!

Special Reports

by Paul Taplin FRICS - Head of Diales (Middle East)

A recent unexpected amendment to the UAE Federal Penal Code is set to have a profound impact on those practicing as arbitrators or experts in a Country which has worked hard to position itself as a worldwide and regional hub for arbitration.

With effect from 29 October 2016, Article 257 has been amended by Federal Decree Law No 7 of 2016 to read as follows (this is an unofficial English translation):

“Anyone who issues a decision, expresses an opinion, submits a report, presents a case or proves an incident in favour of or against a person, in contravention of the requirements of the duty of neutrality and integrity, while acting in his capacity as an arbitrator, expert, translator or fact finder appointed by an administrative or judicial authority or selected by the parties, shall be punished by temporary imprisonment [defined under Articles 28 and 68 of the Penal Code to mean between 3 and 15 years].

The aforesaid categories of persons shall be barred assuming once again the responsibilities with which they were tasked in the first instance, and shall be subject to the provisions of Article 255 of this law." [emphasis added]

When contrasted with the previous version the differences can be seen (again this is an unofficial English translation):

“An expert who is appointed by a judicial authority in a civil or criminal action, and who knowingly asserts a matter contrary to the truth or misconstrues such matter, shall be punished by detention for a period of at least one year, and shall be precluded from being an expert in the future.

The expert shall be sentenced to temporary imprisonment if his mission relates to a felony.”

There are a number of key differences but perhaps the most important is that the duty now applies not only to experts appointed by a judicial authority (likely to be court appointed experts) but to anyone who issues a decision, expresses an opinion, submits a report, presents a case or proves an incident of favour of or against a person. This includes arbitrators and expert witnesses acting in private arbitral proceedings.

The requirement for committing the violation ‘knowingly’ has been removed presuming therefore that it can be performed ‘unknowingly’.

The process for making a complaint (regardless of the merits) is to bring it to the attention of the Police. The recipient of such a complaint will likely have their Passport retained whilst the matter is being investigated. There is no timescale for the investigation to be carried out and completed and therefore even the most spurious of claims could see the recipient confined to the UAE for a considerable period of time until eventually acquitted.

The new amendment will be of particular concern to those acting as sole arbitrator as it is easy to see how a disgruntled party (of which there is always likely to be one) could use this as an unscrupulous tactic when on the receiving end of an award not in their favour.

Indeed there have already been a number of arbitrators hearing cases seated in the UAE who have resigned from tribunals for fear of being subject to vexatious criminal proceedings.

So what about experts? In the majority of cases there are two experts (one appointed by each party) which would seem to make the test of appearing to be “… in contravention of the requirements of the duty of neutrality and integrity …” a little more challenging especially in instances where the experts are able to reach agreement on various items.

But what about those instances where the opposing party appoints an expert who perhaps doesn’t understand, or indeed doesn’t wish to embrace, the independent nature of the role that experienced practitioners abide by? It seems feasible that where experts are not able to agree then there is an easy exposure to a claim regardless of how potentially unmeritorious it is. The problem however is that when accepting an appointment an expert might not know who is appointed for the other side and cannot therefore make a judgment call at the time of enquiry or engagement.

And what about a Jointly Appointed Expert? In this instance it seems as though the expert could have similar exposure to that of a sole arbitrator.

Many practitioners are suggesting that there is an overreaction to the new amendment and that in practice it was rare for parties to file criminal proceedings under the previous code. However, prior to the recent amendment there were no specific grounds for bringing criminal proceedings against arbitrators or experts who were alleged to have been in breach of their obligations.

It seems as though the mere threat of being on the receiving end of a claim has already been enough for some arbitrators to resign. If nothing else it will certainly make individuals think long and hard about the potential repercussions before accepting an appointment.

The general perspective of the legal and expert community in the UAE is that the code needs to be amended in some way, and indeed a degree of lobbying of the relevant authorities has already begun. The feeling is very much that unless it is repealed, changed or clarified then there is a real chance that the considerable effort put in over the past 20 years in establishing the UAE as a worldwide recognised hub for international arbitration is at serious risk of collapse.

That said the UAE government has always taken positive steps to ensure the growth of arbitration in the region and will no doubt understand the concerns raised about the new amendment and the effect it may have on international arbitration in the country.

We therefore wait to see whether any of the current concerns are found to be justified and what measures, if any, the UAE government intends to take to remedy the situation.

Paul Taplin FRICS Head of Diales (Middle East)

Diales is part of the Driver Group plc and specialises in providing Expert Witness services to the global engineering and construction industry.