New Federal Law on Mediation and Conciliation in Civil and Commercial Disputes

Federal Decree Law No. 40 of 2023, concerning Mediation and Conciliation in Civil and Commercial Disputes, represents a recent piece of legislation that consolidates and streamlines the mediation and conciliation frameworks on a federal level. Consequently, it repeals both the federal mediation law, Federal Law No. 6 of 2021, concerning mediation in civil and commercial disputes, and Federal Law No. 5 of 2021, which amended the provisions of Federal Law No. 17 of 2016 governing conciliation and the establishment of court-annexed conciliation and mediation centers for civil and commercial disputes.

The Mediation and Conciliation Law will come into effect on 29 December 2023. According to this law, the Federal Judiciary or the local judicial authority will be responsible for establishing mediation and conciliation centers within the territorial jurisdiction of the Court of First Instance, (Mediation and Conciliation Centre(s)) and/or online mediation and conciliation platforms. Additionally, they will issue pertinent regulations to govern the operations of these centres.

Parallel mediation and conciliation structures

While the Mediation and Conciliation Law does merge the previous mediation and conciliation laws, there continue to exist two parallel structures.

Under the court-annexed system, mandatory conciliation is a prerequisite for specific types of disputes before litigation can proceed. As for mediation, is voluntary process that can be initiated either through contractual agreements or by court referral, subject to the parties’ mutual consent.

The key distinction between mediation and conciliation lies in the role of the neutral chosen by the parties seeking a resolution. In mediation, the mediator acts as a facilitator, helping the parties reach an agreement using mediation techniques; whereas, in conciliation, the mediator is more interventionist, suggesting possible solutions to the parties involved for settling the dispute.

Despite these role differences, both mediation and conciliation share a common objective: amicably resolving conflicts, whether before, or at any stage of legal proceedings.

Parallel mediators and conciliators accreditation processes

The Mediation and Conciliation Law provides for two parallel processes for the accreditation and qualification of mediators and conciliators.

The Judicial Inspection Department or the local judicial authority will establish a roster of mediators and define the criteria and procedures for their enrolling on the roster. These mediators shall be selected from the experts already registered in the roster of experts maintained by the Ministry of Justice or the local judicial authority. Furthermore, the law allows the enrolment of professional mediators, including retired judges and lawyers nominated by the Federal Judiciary or the president of the local judicial authority.

The Mediation and Conciliation Law differentiates between mediators enrolled on the roster of mediators and private mediators who are selected by the parties but are not enlisted on the roster. The law also allows private mediation centres and branches of foreign mediation centres to be established in the UAE.

The appointment of conciliators, as outlined in the Mediation and Conciliation Law, follows a procedure akin to employment. The Federal Judiciary or the president of the local judicial authority will establish the qualifications for this position. Conciliators will be subject to a specific compensation scheme and must take a legal oath before assuming their duties.

The Mediation and Conciliation Law imposes specific restrictions on mediators and conciliators with regard to conflict of interest described in Article 6. It also stipulates that the applicable disciplinary measures applicable in the event of violation by a mediator or conciliator of their obligations under the law, will be the same as those applied to experts.

Contractual mediation

The parties, as part of executing a mediation agreement, can directly resort to the Mediation and Conciliation Centre to appoint a mediator (from the roster or private) to settle their dispute before initiating any legal proceedings before the Court.

The Mediation and Conciliation Law describes in Articles 13 the process of the contractual mediation. The supervisory judge of the Mediation and Conciliation Centre has regulatory and administrative authorities in relation to certain aspects of the mediation process including, appointment of mediator, assessing the costs of mediation, receiving the reports from the mediator and affirmation of settlement agreement etc.

Mediation agreement

Article 9 of the Mediation and Conciliation Law outlines the requirements for a mediation agreement to be valid. The agreement must be in writing and bear the signature of the parties involved, whether in private or official document, or referenced in their communications, whether electronically or in physical form.  The agreement can be established prior to the occurrence of the dispute or after the dispute has arisen.

Article 11 of the law stipulates that the mediation agreement must explicitly state the mediation’s language, its subject matter, the mediator’s appointment, his/her fees, and the party responsible for covering these fees; otherwise, the agreement will be deemed invalid.

Judicial mediation

The competent court may referral a dispute to mediation at any stage of the legal proceedings. This can occur upon the Court’s proposal with the consent of the parties, at the parties’ request, or to enforce the terms a mediation agreement.

Conciliation

Except for specific types of disputes specified in Article 28 of the Mediation and Conciliation Law, the Mediation and Conciliation Centre shall have the jurisdiction to induce mandatory conciliation in (i) disputes which value do not exceed AED 5,000,000; and (ii) disputes in which both parties are spouses or relatives up to the fourth degree, whatever their value.

If a dispute falls within the mandatory jurisdiction of the Mediation and Conciliation Centre, it cannot be brought before any Court that has established a Mediation and Conciliation Centre, unless it has been initially referred to the center and the center determines that the attempts for amicable settlement have been unsuccessful.

Key principles under the law

Several fundamental principles that were upheld in the previous legal framework have been preserved in the Mediation and Conciliation Law, one of which is the concept of ‘without prejudice communications.’ Another principle that remains safeguarded under Article 11(3) and Article 14(4) pertains to the suspension of limitation periods during the mediation process for both contractual and judicial mediation. The possibility of seeking interim measures is also addressed in Article 14(4), which grants the relevant Court the authority to take necessary actions and measures to protect the rights of the parties within the mediation process’s timeframe.

How can we help?

At Al Tamimi & Company, we are committed to guiding you through this new mediation and conciliation framework. Our lawyers have extensive experience of successfully representing clients in mediations and ADR procedures across the MENA region and beyond.