- Under UAE law an arbitration agreement must be in writing or it is void, and it must be signed by someone with authority to conclude it.
- The arbitration clause is separate from the contract, so the invalidity of the contract does not automatically invalidate the clause.
- Most disputes about the clause itself stem from vague drafting: an unnamed centre, an even number of arbitrators, or an unclear seat.
This article is for professional education and is not legal advice. Have a licensed legal adviser review the final wording.
The arbitration clause is often on the last page of a contract, copied by the legal team from a previous contract without review. Years later a dispute arises, and both parties discover the clause is vague or void, so they must fight a first dispute about the clause before reaching the real one. This article explains how to avoid that.
Why does the arbitration clause deserve special care?
Arbitration has become the preferred route for resolving large contract disputes in the Gulf, especially in construction, energy, government procurement and international trade. Gulf arbitration centres have updated their rules in recent years: the Dubai International Arbitration Centre issued its 2022 Rules, and the Saudi Center for Commercial Arbitration published the second edition of its rules in 2023.
But a strong centre and modern rules do not help if the clause itself is defective, and UAE law shows that some mistakes cannot be fixed after signature.
What does UAE law require?
Federal Law No. 6 of 2018 on Arbitration sets clear rules for the arbitration agreement:
- Writing (Article 7): the agreement must be in writing or it is void. Writing is satisfied by a signed document, exchanged letters, electronic communications under electronic transaction rules, or a clear reference in the contract to a document containing an arbitration clause.
- Authority (Article 4): a legal person, such as a company or entity, concludes an arbitration agreement only through a representative authorised to do so; otherwise the agreement is void.
- Separability (Article 6): the clause is separate from the other terms. Voidance or termination of the contract does not remove the clause if the clause is valid in itself.
- Number of arbitrators (Article 9): the number must be odd or the arbitration is void, and three arbitrators are appointed if the parties do not agree.
- Seat and language (Articles 28 and 29): the parties may agree the place of arbitration, and hearings may be held virtually. Arabic is the language of the arbitration unless the parties agree otherwise.
What makes a sound clause?
- In writing, signed by an authorised person
- Broad scope: any dispute arising out of or in connection with
- Clear referral to arbitration, not courts
- A named centre and its rules
- An odd number of arbitrators
- How arbitrators are appointed
- Seat of arbitration (city and country)
- Language of arbitration
- Law governing the contract
A sound clause settles three things: whether disputes go to arbitration, how the arbitration runs, and where, in what language and under what law. Any question left open becomes an extra dispute.
An example of comprehensive wording:
“All disputes arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the [full name of the centre] Rules in force at the time the request for arbitration is submitted. The tribunal shall consist of [a sole arbitrator / three arbitrators]. The seat of arbitration shall be [city, country], the language shall be [language], and the contract shall be governed by the law of [country].”
Most arbitration centres publish a model clause on their website. Start from it and adapt it to the contract rather than writing a clause from scratch.
Which mistakes keep repeating?
| Mistake | Problem | Alternative |
|---|---|---|
| "The parties may resort to arbitration" | Optional wording does not bind | "All disputes shall be referred to arbitration" |
| "Arbitration centre in Dubai" | Unspecified centre | Name the centre and its rules in full |
| Two arbitrators | Even number voids the arbitration | One or three arbitrators |
| Arbitration or courts | Conflict invites a dispute | One clear route |
| Signed by an unauthorised employee | Lack of authority voids the agreement | Explicit signing authority |
The most dangerous is “the parties may resort to arbitration”, because it opens the door for a party that prefers court. Next is naming a centre that is not specified or does not exist under that name, forcing a court to interpret the parties’ intention.
In government contracts in particular, confirm that the signatory has authority to agree to arbitration and that any prior approvals required by national regulations have been obtained. Lack of authority can void the agreement however well it is drafted.
Steps for the legal team now
- Review approved contract templates, especially arbitration clauses copied years ago, against the centre’s current rules.
- Standardise the clause: one model clause per contract type, approved by the legal department.
- Add an amicable step: a negotiation or mediation period of a set number of days before arbitration reduces cases.
- Check authority: keep a list of who may sign contracts that include arbitration.
Conclusion
A good arbitration clause attracts no attention, because it works when the dispute arrives. Make it written and clear, with a named centre, an odd number of arbitrators, a seat and a language, and have it signed by someone with authority.
Frequently asked questions
Does an email exchange count as a written arbitration agreement?
Under UAE law, writing is satisfied by exchanged letters and electronic communications under the rules on electronic transactions, as long as the agreement is clear.
What if the contract itself is void?
The arbitration clause is separate from the contract. Its voidance or termination does not remove the clause if the clause is valid in itself, and the tribunal may rule on the contract's validity.
How many arbitrators should we choose?
The number must be odd or the arbitration is void under UAE law, and three are appointed if the parties do not agree. A sole arbitrator suits smaller disputes because it costs less.
Do government entities need approval before agreeing to arbitration?
In some countries yes, under their own regulations. Check the signatory's authority and any required approvals before signing.
References
- UAE Ministry of Justice. Federal Law No. 6 of 2018 on Arbitration (2018)
- Dubai International Arbitration Centre. DIAC Arbitration Rules 2022 (2022)
- Reed Smith. Historic changes to the UAE's arbitration landscape (2022)
- Crowell & Moring. The Saudi Center for Commercial Arbitration Publishes the Second Edition of its Rules (2023)
- Mondaq. Drafting Arbitration Clauses in International Contracts: The Impact of the UAE's New Arbitration Law (2019)
