Imprisonment fears have been allayed for arbitrators and party-appointed experts involved in UAE-seated arbitrations following the latest amendments to Article 257 of the UAE Penal Code.
The previous wording of Article 257 of the UAE Penal Code
In October 2016 arbitrators and party-appointed experts involved in UAE-seated arbitrations (who may or may not have been based in the UAE) were left unnerved when Federal Law No. 7 of 2016 amended Article 257 of the UAE Penal Code exposing them to the risk of temporary imprisonment if they were accused of "issuing a decision, giving an opinion, submitting a report, addressing a case or proving an incident for the benefit of, or against, a person" without maintaining the requirements of integrity and impartiality.
Although arbitrators and party-appointed experts are generally required by the relevant arbitration rules (and laws) to remain impartial and independent, the imprecise wording of Article 257 of the UAE Penal Code created a widespread concern since the provision could have been used tactically and unjustly by parties in order to derail UAE-seated arbitration proceedings. It was acknowledged by UAE-based arbitration lawyers that the amendment to Article 257 in 2016 was unhelpful and threated to damage the UAE's reputation as the preferred venue for regional arbitrations.
Most reputable UAE-based lawyers would have been very unlikely to rely on Article 257 to raise a criminal complaint on the basis that any threat to the liberty of an arbitrator or party-appointed expert would be extremely disproportionate, and particularly damaging to the UAE's arbitration brand. However, the concern regarding the potential application of Article 257 remained a valid one.
Of particular concern was the fact that Article 257 (as amended and in translation) did not define what acts would amount to "failing to maintain the requirements of integrity and impartiality". There were no other provisions within the UAE law which would have assisted with interpreting Article 257. As a result, there was a much greater risk that Article 257 would be used tactically and thereby deter experienced arbitrators and the most proficient experts from accepting appointments on UAE-based arbitrations. Why, for example, take the risk of being imprisoned in the UAE when you can act on arbitrations elsewhere without this risk?
During Dubai's Arbitration Week 2018 it was stated by DIAC officials that in respect of any Dubai International Arbitration Centre (DIAC) Arbitrations at least there had been no formal complaints made pursuant to Article 257 and no related resignations by arbitrators concerned about such complaints. However, DIAC were still promising to protect arbitrators appointed under their Rules if any cases were filed against them pursuant to Article 257.
The October 2018 amendment to Article 257 of the UAE Penal Code
On 8 October 2018 Federal Decree No. 24 of 2018 came into force to amend the wording of Article 257 of the UAE Penal Code so as to remove arbitrators entirely from the ambit of Article 257. It also appears from the amended wording of Article 257 that it no longer applies to party-appointed experts which are, often part and parcel of arbitrations, but rather only those experts appointed by a judicial or administrative authority. Article 257 now provides (in translation) that:
"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".
This is welcome news that has been well-received by the arbitration community in the UAE. Everyone will now be hoping that the latest amendment to Article 257, together with the UAE Federal Arbitration Law, Law No. 6 2018, will reinstate the UAE as the venue of choice for regional arbitrations.