Understanding the Clarity Requirement for Arbitration by Reference under UAE Law (Item 3 of Article 5) of The Arbitration Law No. 6 of 2018
In commercial contracts, it’s not uncommon for arbitration clauses to be found in separate documents, such as standard conditions or external agreements. UAE law recognizes the validity of such references—but only if the reference is clear. This article explores what “clarity” means in this context under Article 3 of the UAE Arbitration Law (Federal Law No. 6 of 2018).
Item 3 of Article 5 of the Arbitration Law
It stipulate that parties may agree on arbitration through reference:
“The parties may agree to arbitration through a reference included in a contract or in any other document that contains an arbitration clause, provided that such reference is clear in considering that clause as part of the contract.”
What Does “Clear” Mean
For a reference to an arbitration clause to be valid, it must meet several clarity criteria:
1️. Explicit Reference to Arbitration
The reference must clearly state that the referred document contains an arbitration clause.
Example:
“The arbitration clause in Clause 67 of the FIDIC 1987 Conditions shall apply.” “1987”
Unclear Example:
“The general conditions shall apply.”
2️. Document Must Be Known or Accessible
The referred document should be available or made known to the other party at the time of signing.
3️. Precise Identification of the Document
Required details: name, issuing body, edition/date
“FIDIC Conditions of Contract, Fourth Edition, 1987.”
4️. Part of the Contractual Understanding
The reference should be included within the main contract and clearly acknowledged by both parties.
“The parties acknowledge having read and accepted the arbitration clause.”
UAE Case Law: Importance of Clarity
Dubai Court of Cassation – Case No. 152/2014 Commercial
Reference to general conditions was insufficient without identifying the arbitration clause or showing mutual acceptance.
Abu Dhabi Court of Appeal – Case No. 194/2020
Rejected enforcement of an arbitration clause found in a document unsigned and unacknowledged by one party.
Practical Drafting Tips
- Clearly identify the document (name, source, date):
- Confirm it contains an arbitration clause e
- Confirm it contains an arbitration clause.
- Declare that the reference makes it part of the contract Include acknowledgment of review and acceptance.
Sample Clause:
“The parties agree to refer any dispute arising out of or in connection with this contract to arbitration in accordance with Clause 67 of the ‘General Conditions of Contract for Works of Civil Engineering Construction’ issued by the International Federation of Consulting Engineers (FIDIC), Fourth Edition – 1987. These general conditions shall form an integral part of this contract. The parties confirm they have reviewed and accepted the arbitration clause therein.”
Final Thoughts
While arbitration by reference is legally valid under UAE law, lack of clarity can invalidate the clause entirely. Practitioners should ensure references are explicit, precise, and well-documented. Clarity isn’t just legal—it’s strategic.