Commercial disagreements are a normal part of doing business. A supplier may miss the deadline, business partners may have different ideas about what they owe each other, or the same contract may be read differently. While court proceedings are sometimes necessary, they are not always the first or most practical option.
The UAE provides several forms of alternative dispute resolution UAE businesses and individuals can consider before, or in some cases during, formal litigation. These include negotiation, mediation, conciliation and arbitration.
What Is Commercial Mediation?
Mediation allows parties in a dispute to discuss their differences with the assistance of an independent mediator. Unlike a judge or arbitrator, the mediator does not normally decide who is right or impose a solution. Instead, the mediator assists the parties in identifying the real issues and exploring terms they may both accept.
The main governing law is Federal Decree-Law No. 40 of 2023 on Mediation and Conciliation in Civil and Commercial Disputes. It replaced the previous Federal Law No. 6 of 2021.
A mediation commercial dispute UAE process may be particularly useful where the parties want to preserve an ongoing business relationship, control the outcome or resolve a disagreement without immediately proceeding through lengthy litigation.
What Happens During Mediation?
The process is generally more flexible than court litigation. Each party is given an opportunity to explain its position, identify the issues in dispute and discuss possible solutions.
Depending on the circumstances, the parties may negotiate matters such as:
An important feature of mediation is confidentiality. The federal framework places obligations concerning the confidentiality of information disclosed during the process, allowing parties to discuss settlement possibilities more openly than they might in public proceedings.
If an agreement is reached, the settlement can be legally recorded. The legislative system also includes tools for settlement agreements established through regulated mediation or conciliation procedures to be judicially approved and enforced.
Mediation Is Different from Arbitration
Mediation and arbitration are both forms of alternative dispute resolution, but they work very differently.
In mediation, the parties remain responsible for deciding whether to settle and on what terms. If they cannot agree, mediation may end without a settlement.
An arbitrator or arbitral tribunal hears the dispute and then issues an award. Arbitration in the UAE is primarily governed by Federal Law No. 6 of 2018 on Arbitration, as amended. The law recognises the binding nature of arbitral awards, subject to the procedures and grounds set forth by law.
Arbitration is therefore closer to private adjudication, while mediation focuses on helping the parties negotiate their own solution.
Conciliation in the UAE
The UAE has a systematic legal framework for amicable settlement of disputes at federal and local levels. Federal Decree-Law No. 40 of 2023 on Mediation and Conciliation in Civil and Commercial Disputes at the federal level encourages the settlement of eligible disputes through conciliation and mediation before litigation.
Additionally, many judicial authorities across the UAE have conciliation committees and settlement centres which are designed to resolve civil and commercial disputes quickly and amicably. In some kinds of cases, parties may be compelled to seek settlement through these committees before taking their claim to the competent courts.
Where a settlement is reached, it may be documented and, subject to the applicable legal procedures, granted executory status so that it can be enforced as a court judgment.
Accordingly, it is important to determine whether a dispute falls within any mandatory conciliation or settlement requirements under UAE law before initiating formal court proceedings.
When Should a Business Consider ADR?
Alternative dispute resolution can be particularly helpful when both sides have an interest in finding a commercial solution.
For example, a company may prefer recovering an outstanding debt through an agreed payment schedule rather than spending months disputing the entire contract. Two shareholders may also want to resolve a disagreement while continuing to operate the business together.
However, ADR is not automatically the right solution for every dispute. Urgent interim measures, serious allegations, limitation concerns, asset preservation issues or a complete refusal to negotiate may make formal proceedings necessary.
At this stage, obtaining an early assessment can make a significant difference. Mrs Awatif Al Khouri assists parties in reviewing the contract, the nature of the dispute and the available resolution mechanisms so that mediation, negotiation, arbitration or litigation can be considered in light of the particular circumstances.
Preparing for Commercial Mediation
Successful mediation requires preparation. Parties should understand what the contract says, identify the amount or obligation actually in dispute and collect supporting documents such as invoices, emails, payment records, purchase orders and correspondence.
They should also decide what outcome they realistically want. A settlement does not always mean accepting less. It may involve changing payment dates, revising performance obligations or agreeing practical terms that a court judgment may not necessarily provide.
Conclusion
The UAE increasingly supports mediation, conciliation and other ADR processes, where suitable, to resolve commercial disputes. Mediation and conciliation are mainly regulated by Federal Decree-Law No. 40 of 2023, while arbitration continues to be regulated by Federal Law No. 6 of 2018. Dubai also has its own conciliation framework for disputes within the jurisdiction.
For businesses, residents and expatriates facing a commercial disagreement, the key is to choose the dispute resolution method that matches the contract, the amount involved, the relationship between the parties and the urgency of the matter. Mrs. Awatif Al Khouri provides guidance on the available options and helps parties determine whether an amicable settlement or a more formal dispute resolution process is appropriate.
