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Mediation and Conciliation in Civil and Commercial Disputes

 Mediation and Conciliation in Civil and Commercial Disputes

Overview of the law


As part of the UAE government’s commitment to simplifying judicial procedures and providing alternative dispute resolution methods for civil and commercial disputes that may arise in contractual or non-contractual relationships, Federal Decree Law No. (40) of 2023 has been issued. The law introduces Mediation and Conciliation in Civil and Commercial Disputes, allowing disputing parties the option to appoint a neutral third party (the mediator or conciliator) for assistance, either voluntarily or through a court referral. The decree distinguishes between voluntary mediation and court-mandated mediation, defines associated costs, and also differentiates it from conciliation. Mediation is optional, whereas reconciliation is mandatory in specific situations outlined in Article 27 of this Decree, or when parties request it during litigation. Any agreements reached through mediation or conciliation must be approved by the supervising judge.

Key provisions


Article 3 of the Decree outlines the procedures for mediation and reconciliation processes shoulder adhere to the advertisement provided in the Federal Civil Procedures Law unless the parties agree otherwise.
Article 8 of the same Decree outlines the mediation procedures and the scope of issues that can be addressed through mediation, distinguishing between mediation procedures conducted domestically and those conducted abroad.

Implications for clients

The outcomes for individuals resorting to mediation and reconciliation varies depending on the type of mediation used and whether an agreement is reached. Generally, when parties reach a full or partial settlement agreement at the end of the mediation process, the competent court will enforce this agreement. Challenging the settlement agreement and the decision to terminate the dispute can only be done by filing a lawsuit for annulment before the court or raising the issue of annulment during the agreement’s approval process. A settlement agreement that has been endorsed is binding on the parties, and they are not allowed to retract from it. It carries the same legal effect as a court judgment and prevents the same dispute, with the same subject or cause, from being litigated again between the same parties in court.

 Enforcements and penalties


As per Article 38 of the mentioned Federal Decree, if the parties have reached a full or a partial settlement before the mediator, that settlement will be treated as an enforceable order and possess the authority of a judicial judgment. It cannot be challenged through any appeal process.
The Mediation and Conciliation Center aims to resolve disputes through conciliation within a maximum of 21 working days from the date the parties initially appear before the Center. However, this timeframe can be extended for an equivalent period based on a well-founded decision by the mediator or with the agreement of the parties for further extension. If a dispute remains unresolved due to the absence of one of the parties for any reason or if a settlement cannot be reached, the dispute file will be referred to the competent court.

This Galadari Alert was authored by Mohamed El Naggar.
Mohamed has over a decade of experience in litigation matters related to civil, criminal, family, and commercial cases. For more information on Civil and Commercial Disputes on the UAE please contact Mohammed on:

Mohamed El Naggar
Assoicate 
E: M.Elnaggar@galadarilaw.com