Mediation in the UAE

The UAE has undergone a significant transformation in its approach to dispute resolution, with a growing emphasis on alternative dispute resolution mechanisms. Mediation is not yet as widespread in the UAE as in many other jurisdictions, but its use is on the rise. This article explores the role of mediation in the UAE, recent legislative developments, and some of key benefits and downsides of mediation.

Mediation is a dispute resolution process involving a neutral third party, the mediator, who facilitates communication and negotiation between disputing parties. Unlike a judge or an arbitrator, a mediator does not impose a decision on the parties. Instead, they assist the parties in reaching a mutually agreeable settlement.

Traditionally, the UAE legal system relied heavily on litigation to resolve disputes and mediation was not widely used. The main reasons for this were the lack of a comprehensive legal framework for mediation and insufficient focus on confidentiality leading to a concern that information and documents exchanged during mediation could be used later against a party in court.

UAE Mediation Law

In April 2021, the UAE enacted Federal Law No. 6/2021 on Mediation for the Settlement of Civil and Commercial Disputes. It provides a comprehensive legal framework for mediation in an effort to promote mediation as a method of dispute resolution. Key provisions of the new mediation law include:

• Mediation procedure: The law sets forth the process to be followed at various stages of mediation (e.g. commencement and termination of mediation, appointment of mediators and their powers and duties, payments and allocation of costs.)
• Confidentiality: The law provides for confidentiality of information and documents exchanged during mediation.
• Mediation agreements: It sets out requirements for an enforceable mediation agreement.
• Mediators’ qualifications: It sets out the required qualifications for mediators.
• Mediation centres: It establishes a framework for the establishment and operation of mediation centres where all mediations shall be conducted.
• Enforceability of settlement agreement: It provides for ratification by a court of the settlement agreement so that it can be enforced as a court judgment. Further, parties are prohibited from raising the same dispute again before the courts, unless limited grounds for appeal are applicable.

The enactment of the new mediation law suggests the UAE is committed to promoting mediation. While it is not without its challenges, the UAE’s legal framework is likely to contribute to making mediation a more valuable tool for dispute resolution in the UAE.

Further, a non-profit organisation, the Mediation Hub MENA, was launched in November 2024 to promote and facilitate mediation in the UAE and the MENA region.

Key Benefits of Mediation

Mediation offers numerous advantages in comparison to litigation and arbitration:

• Cost-effectiveness: Mediation is generally less expensive than litigation or arbitration, as it avoids the high legal costs associated with legal fees, court/tribunal fees, and expert witness fees.
• Time-efficiency: Mediation process is typically shorter than litigation or arbitration and often lasts just 1-2 days.
• Preservation of relationships: Mediation can help maintain or restore relationships by fostering open communication and cooperation between parties.
• Flexibility: Mediation offers a flexible approach, allowing parties to control the process and outcome.
• Confidentiality: Mediation proceedings are typically confidential.
• Compliance: In certain cases, there is a higher chance of compliance because the outcome is agreed by the parties. By contrast, when a decision is imposed by a court/tribunal, the defeated party often resents it and seeks to avoid compliance.

Key Drawbacks of Mediation

While mediation may offer advantages, it is essential to be aware of its potential downsides:

• No guaranteed outcome: Unlike arbitration or litigation, mediation does not guarantee a resolution. If parties cannot reach an agreement, they may need to resort to other dispute resolution methods. Time, money and effort invested into the mediation process will be lost.
• Power imbalance: If there is significant power imbalance between parties, it may influence the mediation process and outcome.
• Lack of enforceability: Historically, a settlement agreement was not as easily enforced as a court judgment or an arbitral award, however the new mediation law aims to make it easier.
• Inappropriate for certain disputes: Some disputes, for example those involving complex legal issues or fraud, are better suited for other dispute resolution methods, such as litigation, arbitration or expert determination, in which witnesses can be cross-examined and evidence tested by experts.
• Potential for misuse: A party may use mediation for tactical advantage – for example as a delay tactic or to better understand the other side’s arguments at an earlier stage of litigation. In some cases, a party may even misuse information disclosed during mediation in subsequent litigation or arbitration, despite the risk of facing the consequences of breaching confidentiality.

It is important to evaluate carefully the nature of the dispute and the parties involved before opting for mediation and to determine the most suitable strategy for participating in it. Consulting with an experienced legal professional is advisable. Further, parties can use legal representatives during the

mediation process if they wish or they can obtain legal advice before mediation and then attend themediation on their own. Lawyers can also help with appointment of a suitable mediator and with enforcement of a settlement agreement.

ADG Legal is a law firm headquartered in Dubai which specialises in dispute resolution. If you need assistance, do not hesitate to contact Arthur Dedels at [email protected].