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Arbitrators no longer face criminal liability: new section 257 UAE Penal Code

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Summary: In a move sure to be welcomed by arbitrators and the wider legal community in the UAE, Federal Decree Law 24 of 2018 has amended Article 257 of the Penal Code.

The widely anticipated amendment to the UAE’s Penal Code removing arbitrators from criminal liability has finally been enacted. Since its introduction in October 2016, the previous version of Article 257 had caused much concern amongst the arbitral community as it imposed criminal liability on arbitrators who failed in their duty of impartiality. Whilst the risk of criminal proceedings was low, some arbitrators were reluctant to take on new appointments particularly given the lack of clarity as to what would constitute a breach. Some commentators went as far as saying that the UAE’s reputation as an arbitration friendly jurisdiction took a hit when the amendment was introduced. 

Previous Article 257

  • “Temporary imprisonment shall be inflicted on whoever issues a decision or expresses an opinion or submits a report or presents a case or proves an incident, in favour of a person or against him, contrary to the duty of fairness and unbiasedness, in his capacity as an arbitrator, expert, translator or investigator who is appointed by a judicial or an administrative authority or elected by the parties.
     
  • The aforementioned categories shall be precluded from performing the duties they were charged with in the future, and the provisions of Article (255) of this Law shall apply thereto.”

New Article 257

  • “Any person who, while acting in the capacity of an expert, translator or investigator appointed by a judicial authority in a civil or criminal case, or appointed by an administrative authority, confirms a matter contrary to what is true and misrepresents that matter while knowing the truth about it, shall be sentenced to imprisonment for a minimum term of a year and a maximum term of five years.
     
  • The punishment shall be temporary imprisonment if the mentioned individuals were assigned to a mandate in relation to a felony.
     
  • The mentioned individuals shall be prohibited from undertaking the assignments commissioned to the another time, and the provisions of Article (255) of this Law shall apply to them”.

The new text of Article 257 omits any reference to arbitrators and although experts, translators and investigators are still caught by it, the scope of its application is much narrower with the focus on dishonesty rather than impartiality. Notably the new provisions also exclude party appointed experts. Under the previous Article there was a risk of a claim that because a party appointed expert was paid by a party his report was biased in favour of that party. The exclusion of party appointed experts in the new law clarifies the position and shows the government’s support for the arbitral process.

This change to the Penal Code, together with the introduction of the Arbitration Law earlier this year, brings arbitration in the UAE into line with international best practice and will help to cement the UAE’s position as the preferred seat for international arbitration in the region.

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