Introduction
Arbitration has emerged as a pivotal mechanism for resolving commercial disputes in the United Arab Emirates, offering an alternative to traditional court litigation. The UAE’s business-friendly environment, its cosmopolitan hub status, and significant regulatory developments have elevated the importance of arbitration. With Federal Law No. 6 of 2018 on Arbitration (the “UAE Arbitration Law”) acting as a foundational statute—and ongoing enhancements aligned with global best practices—the landscape governing the suspension and termination of arbitration proceedings is both complex and dynamic.
This article provides an authoritative analysis of the suspension and termination of arbitration proceedings under UAE law, focusing on the latest legal frameworks, practical business implications, and compliance risks for organizations. As the UAE continues to refine its arbitration regime, reflecting international standards and promoting judicial efficiency, understanding the circumstances, rights, and procedures related to the pausing or ending of arbitration is critical for executives, in-house counsel, and legal practitioners who demand certainty in dispute resolution.
Whether your enterprise is contemplating arbitration or is currently involved in proceedings, recent updates—including those introduced by Cabinet Resolution No. 57 of 2018 Concerning the Executive Regulations of Federal Law No. 11 of 1992, and amendments through Federal Decree-Law No. 15 of 2023—necessitate a proactive, compliance-focused approach. This guide combines legal analysis, practical insights, and actionable risk mitigation strategies tailored for the UAE’s evolving legal framework.
Table of Contents
- Legal Framework Governing Arbitration in the UAE (2025 Updates)
- Suspension of Arbitration Proceedings Under UAE Law
- Grounds and Procedures for Suspending Arbitration
- Termination of Arbitration Proceedings
- Comparison: Old vs. New Arbitration Law Provisions
- Practical Implications for Businesses
- Case Studies and Hypothetical Examples
- Risks of Non-Compliance and Compliance Strategies
- Best Practice Recommendations for UAE Organizations
- Conclusion: UAE Arbitration in Perspective
Legal Framework Governing Arbitration in the UAE (2025 Updates)
The Law in Context
The primary legislative authority for arbitration in the UAE is Federal Law No. 6 of 2018 (the Arbitration Law), supplemented by Cabinet Resolution No. 57 of 2018 and subsequent amendments, notably Federal Decree-Law No. 15 of 2023. These statutes align local arbitration practices with international benchmarks, particularly the UNCITRAL Model Law, increasing the international enforceability and integrity of UAE awards.
Importantly, the UAE’s dual judicial system—the local courts and specialized free zone courts in the DIFC and ADGM—also influences arbitration enforcement and the procedural choices parties may make. This context underscores the need for nuanced, onshore and offshore-specific approaches to the suspension and termination of arbitral proceedings.
Key Statutory Provisions
- Arbitration Law (2018): Articles 27–34 focus on the conduct, suspension, and conclusion of proceedings.
- 2023 Amendments: Strengthen arbitrator impartiality requirements and clarify grounds for expedited procedures.
- Cabinet Resolution No. 57 of 2018: Sets detailed executive regulations and procedural rules, impacting how suspensions and terminations are reported and enforced.
Suspension of Arbitration Proceedings Under UAE Law
Definition and Core Concepts
Suspension occurs when the arbitral tribunal, or in limited instances the courts, order a temporary halt in the proceedings without dissolving the arbitration itself. Such suspensions can have significant commercial and legal repercussions, delaying outcomes, affecting contractual obligations, and influencing enforcement timelines.
Legislative Basis for Suspension
Under Article 30 of the UAE Arbitration Law, either party may request, or a tribunal may order on its own motion, a suspension of proceedings if justified. Justifications generally include:
- Pendency of a related or preliminary judicial matter (e.g., validity of the arbitration agreement).
- Need for expert evidence or third-party intervention.
- Temporary incapacity of parties or arbitrators for causes beyond their control.
- Public policy considerations or regulatory investigations by UAE authorities.
Additionally, Article 38 empowers tribunals to suspend proceedings if circumstances warrant, such as applications before the courts that directly impact the arbitration (e.g., removal of arbitrators, jurisdictional challenges).
Procedures for Ordering Suspension
- Written application to the arbitral tribunal stating grounds.
- Notification and right of response for the opposing party.
- Issuance of a reasoned interim order by the tribunal.
- Obligation to set the duration or conditions for the suspension, and timeline for resuming proceedings.
Consultancy Insight
Prudent legal strategy requires that organizations anticipate suspensions by drafting arbitration agreements that address potential delays and define party rights. Being proactive not only minimizes business disruption, but also preserves the enforceability of awards by demonstrating procedural fairness and adherence to UAE law.
Grounds and Procedures for Suspending Arbitration
Recognized Grounds Under UAE Law
The UAE Arbitration Law is clear in permitting suspensions only on serious and substantiated grounds. Key scenarios include:
- Judicial Determinations: Where a preliminary issue (such as the validity of the arbitration agreement) is referred to court and its decision is a prerequisite to continuation.
- Appointment or Challenge of Arbitrators: If an arbitrator needs to be replaced due to resignation or successful challenge, proceedings may be suspended until the new appointment is validated.
- Force Majeure: Where unforeseen events, such as pandemics or natural disasters, preclude the parties or arbitrators from proceeding.
- Other Statutory Reasons: Including ongoing criminal or regulatory proceedings with direct impact on the arbitration.
Procedural Safeguards
- Transparency: Tribunals must notify all parties and record the suspension in writing.
- Clarity of Duration: Suspensions should specify exact periods or criteria for resumption to prevent indefinite delays.
- Appeal Options: In rare cases, if a suspension is ordered outside legal grounds, parties may appeal to the UAE courts for relief or clarification.
Best Practices for In-House Counsel
- Pre-emptive Audits: Assess foreseeable risks to arbitration schedules, such as internal investigations or dependencies on court decisions.
- Document Controls: Ensure all communications regarding suspensions are formally recorded and stored for audit and enforcement purposes.
Termination of Arbitration Proceedings
Understanding Termination
Termination constitutes the formal conclusion of the arbitration process, either with or without an award. This may follow from the arbitration’s natural completion, mutual agreement by the parties, withdrawal or default of a party, or a binding settlement. The UAE Arbitration Law, primarily Article 43, defines the permissible grounds and procedural requirements for valid termination.
When is Termination Permitted?
- Award Rendered: Upon pronouncement of the final award, proceedings terminate, save for post-award clarifications or corrections.
- Settlement Agreement: If the parties settle, the tribunal can render an award reflecting the terms of the settlement.
- Withdrawal of Claim: Where a claimant withdraws the case, unless the respondent objects and the tribunal finds a legitimate interest in proceeding.
- Failure to Proceed: If parties fail to actively participate or comply with procedural orders, after proper notice, the tribunal may terminate.
- Incapacity or Death: Where continuation is rendered impossible, unless there is a legal or contractual provision allowing for substitution.
Procedural Formalities
- A termination order (or award) must be issued and signed by the tribunal.
- Notice of termination must be served to all parties, with a statement of reasons.
- Documentation of the grounds for termination enhances enforceability and protects against subsequent challenges.
Practical Consultancy Guidance
Parties are advised to include clear clauses in their arbitration agreements concerning the triggers and consequences of termination. This anticipates possible early exits and mitigates post-termination controversy, especially over cost allocation, fee recovery, or confidentiality of settlements.
Comparison: Old vs. New Arbitration Law Provisions
To clarify significant legal developments, the following table contrasts key differences between previous and current UAE legal frameworks for suspending and terminating arbitration proceedings:
| Feature | Pre-2018 Framework | UAE Arbitration Law 2018–2025 Updates |
|---|---|---|
| Legal Basis | Civil Procedures Law (Federal Law No. 11/1992); limited arbitration code | Dedicated Arbitration Law (Federal Law No. 6/2018), amended via Federal Decree-Law No. 15/2023 |
| Suspension Grounds | Limited to rare judicial references | Expanded: judicial interference, force majeure, arbitrator replacement, regulatory intervention |
| Suspension Procedure | No explicit process; court-heavy | Tribunals empowered, detailed application and notice process |
| Termination Grounds | Largely on final award or party withdrawal | Broadened: includes incapacity, party default, and comprehensive settlement rules |
| Appeal Rights | Direct appeal to courts with delays | Specified limited grounds for judicial challenge |
| Settlement Awards | No explicit provision | Tribunal may render consent award upon party settlement |
Visual Suggestion: Penalty comparison chart for suspension-induced delays versus improper termination claims.
Practical Implications for Businesses
Financial and Commercial Impacts
- Commercial Delays: Prolonged suspensions can disrupt cash flow, contract performance, and key project milestones.
- Legal Costs: Unjustified or poorly managed suspensions or premature terminations often result in increased legal and arbitration fees.
- Credit Ratings and Investor Confidence: Ongoing or indefinitely suspended arbitrations may be viewed as contingent liabilities, affecting audits and external financing opportunities.
Strategies for Limiting Disruption
- Draft tailored arbitration clauses pre-defining permissible suspension and termination triggers.
- Monitor and document all procedural actions related to pause or conclusion of proceedings.
- Appoint experienced counsel familiar with both onshore and offshore frameworks (DIFC, ADGM).
Case Studies and Hypothetical Examples
Case Study 1: Suspension Due to Judicial Reference
Scenario: A real estate developer invokes arbitration after a dispute with its contractor. The contractor challenges the validity of the arbitration agreement before the UAE onshore court, alleging non-compliance with public order requirements. The tribunal orders a suspension of proceedings until the court’s ruling. After a three-month court review, the court affirms the agreement’s validity, and the tribunal resumes proceedings, averting costly parallel litigation.
Case Study 2: Termination on Settlement
Scenario: Two technology start-ups, engaged in a licensing dispute, opt for early mediation during arbitration. They successfully reach a settlement. The arbitral tribunal, following Article 43, issues a consent award based on their terms, formally terminating proceedings, and providing a binding written record enforceable in the UAE and abroad.
Case Study 3: Risk of Improper Termination
Scenario: An international supplier unilaterally withdraws from arbitration without a settlement or tribunal acknowledgment. The counterparty objects, but the tribunal issues a termination order. Later, the award is challenged and the court sets aside the order for lack of procedural safeguards, underscoring the need for strict adherence to statutory process.
Visual Suggestion: Process flow diagram depicting suspension and termination timelines with party obligations at each step.
Risks of Non-Compliance and Compliance Strategies
Common Pitfalls
- Suspending or terminating arbitration without clear legal justification or proper documentation.
- Failure to notify all parties or comply with procedural safeguards mandated by the UAE Arbitration Law.
- Ignoring regulatory or court orders that necessitate or prohibit suspension or termination.
Potential Consequences
- Setting Aside Arbitration Awards: Procedural irregularities can render awards unenforceable in the UAE or internationally, per Article 53 of the Arbitration Law.
- Regulatory Sanctions: Non-compliance may attract fines, reputation risk, or regulatory intervention.
- Loss of Contractual Rights: Parties may forfeit claims to damages or performance due to delay or procedural error.
Compliance Checklist for UAE Organizations
| Checklist Item | Recommended Action |
|---|---|
| Review Arbitration Clauses | Ensure agreements are up-to-date and compliant with UAE 2025 provisions |
| Develop Internal Policies | Establish standard operating procedures for addressing suspensions and terminations |
| Training for Legal Teams | Provide regular updates and workshops on legislative changes |
| Document All Steps | Maintain detailed records of tribunal orders, party communication, and payment of arbitration fees |
Visual Suggestion: Compliance checklist or editable audit template for in-house teams.
Best Practice Recommendations for UAE Organizations
- Proactively include comprehensive suspension and termination clauses in all arbitration agreements, referencing the latest UAE laws.
- Engage qualified arbitration experts and counsel with cross-jurisdictional skills (especially for UAE free zones).
- Implement internal incident escalation policies to ensure swift action on suspension or termination triggers.
- Conduct regular legal audits reviewing all active arbitration processes to verify adherence to statutory timelines and procedural rules.
- Provide robust training and resources for contract managers and in-house legal teams on evolving UAE arbitration requirements.
- Use specialized legal technology platforms to document, track, and evidence all key actions during arbitration.
Conclusion: UAE Arbitration in Perspective
The UAE’s arbitration landscape has witnessed transformative change with the adoption of the Arbitration Law and its 2023–2025 updates. These reforms align local practice with international standards—introducing clarity, flexibility, and procedural rigor to the suspension and termination of proceedings. Adherence to statutory safeguards is essential for parties seeking finality and enforceability in dispute resolution.
For executives, HR managers, and legal practitioners, mastering the nuances of suspension and termination is vital for preserving rights and managing liabilities. Looking forward, ongoing regulatory enhancements are likely to further streamline procedures, reduce opportunities for tactical delay, and support the UAE’s vision to be a leading hub for international arbitration.
Key Takeaways:
- The updated legal framework empowers arbitral tribunals while curbing abusive procedural tactics.
- Non-compliance risks are substantial—award enforcement, cost recovery, and reputational trust are all at stake.
- Forward-thinking organizations should adopt robust internal controls and responsive legal strategies to remain competitive and compliant.
For further expert advice or tailored support on arbitration agreements, suspensions, or terminations, consult your UAE legal advisor or contact our firm for a confidential assessment.