Space Law and Arbitration: An introduction to Space Law in the UAE

This is the fourth article in Clyde & Co’s international arbitration series covering the topic of Space Law and Arbitration. In this article we consider the United Arab Emirates’ (UAE) approach to arbitration and whether it is a jurisdiction that can, in principle, deal with space related disputes.

This series is timely given that the space industry is no longer dominated by a handful of space faring nations. We are now in the era of NewSpace and with that comes an increase in private commercial players acting individually and in concert with government programmes, all seeking to access space. An increase in access to and activity in space will inevitably lead to an increase in space disputes.¹ Arbitration generally is a mechanism well suited to deal with commercial space related disputes as it in principle provides a flexible and neutral forum,² the speed of resolution is usually faster than the courts and the parties can control the process.

The UAE Space Law Framework

The UAE international space law obligations arise out of four principal UN treaties ratified by the UAE and briefly outlined below. In addition, the UAE has enacted various domestic space laws, some of which are to implement their United Nations treaty obligations, and others are to promote and develop the UAE space sector more generally.³

1. The United Nations Outer Space Treaty 1967 (OST), which sets out the foundational principles governing the use of and activities in space.
2. The Liability Convention 1972,⁴ which sets out, amongst other things, the basis of liability on the part of a launching state (absolute and fault-based) to pay compensation for damage caused by its space objects, depending on whether the damage is caused in space, on the surface of the Earth, or to aircraft in flight. 
3. The Rescue Agreement 1968,⁵ which requires states to take all possible steps to rescue, assist, and return astronauts in distress.  
4. The Convention on Registration of Objects Launched into Outer Space 1975, which sets out the requirement for space objects to be placed on the registry maintained by the UN Secretary General.

Arbitration Law in the UAE

The UAE arbitration law is set out in the standalone Federal Law No.6 of 2018 on Arbitration (UAE Arbitration Law) and replaces and repeals articles 203 to 218 of the UAE Civil Procedural Law No.11 of 1992 (that historically dealt with arbitration).

The UAE Arbitration Law is largely based on the UNCITRAL Model Law and as such it is now modernised and aligned with expected international standards in arbitration such as fairness, party autonomy, and limited intervention by courts. We set out below some important aspects of the UAE Arbitration Law:

Applicability of the UAE Arbitration Law: The UAE Arbitration Law applies to arbitrations seated in the UAE. The parties can agree their own procedure, jurisdiction and law of the arbitration, so long as any chosen do not offend UAE public policy or morals. The UAE Arbitration Law is applicable to arbitrations outside the UAE where the parties agree it should apply.  

Confidentality: The UAE Arbitration Law provides for confidentiality of the hearing unless the parties choose otherwise, and the award is implicitly confidential. The law does not, however, expressly provide for confidentiality of the pleadings, documents, and evidence. It is likely that any space disputes would have certain elements that must remain confidential or restricted and therefore the parties should address any confidentiality requirements through express agreement at the outset.  

Conservatory and Interim Measures: To the extent that the parties either expressly agree or the institutional rules provide, the tribunal can order interim or conservatory measures which can be requested by either party or by the tribunals own motion. The court can also deal with conservatory and interim measures by application from a party or the tribunal, but such an application will not stay the proceedings.

Challenge to the Award: There are limited grounds permitted for seeking to annul an award. For example, challenges can be made if it can be shown that a party agreeing to the arbitration lacked capacity or was not duly authorised.⁶ A challenge can be made if the tribunal does not apply the substantive law as agreed, or if the final award is not issued within the specified time period. The court can also set aside an award on its own initiative if the subject matter of the dispute is not arbitrable,⁷ or if the award is contrary to UAE public policy or morality. 

Enforcement: A party can now short cut the award ratification and enforcement proceedings by applying directly to the Chief Justice of the Court of Appeal, and enforcement should be granted within 60 days unless the award is annulled.⁸ 

Location/nature of hearings: The UAE Arbitration Law expressly builds in a certain amount of flexibility in that the hearings can be held anywhere the parties choose (not just the UAE), and they may be held virtually. 
     
Challenges to Arbitrators: Proceedings will not be stayed if there is a challenge to an arbitrator. 

Foreign (non-UAE lawyers): Foreign (non-UAE lawyers) are now also expressly permitted to appear in UAE seated arbitrations.

Dubai Centre of Commercial Conciliation and Arbitration (DIAC)

In 1994, the Dubai Chamber of Commerce and Industry established the Dubai Centre of Commercial Conciliation and Arbitration (DIAC). The DIAC modernised it rules in 2022. The new rules have brought the DIAC in line with the other major arbitration institutions such as the LCIA and ICC. 

The default seat of the arbitration is the Dubai International Financial Centre (DIFC) Court unless the parties agree otherwise. The DIFC Court has supervisory jurisdiction over arbitration proceedings, including the ratification and annulment of awards. This is a useful innovation because the DIFC is offshore (i.e. not a local UAE court), and it is a common law and English language court. The DIFC is generally considered to be pro-arbitration. 

The DIAC Arbitration Court was established to review arbitral awards, appoint arbitrators and deal with jurisdiction objections. 

Additionally, the new DIAC rules include the following provisions which are useful to those seeking to engage the DIAC to administer arbitrations: 

• Hearings and witness evidence may be virtual
• Awards can be signed electronically or in-person
• Legal and other arbitration costs may now be awarded
• Disclosed third party funding is permitted
• Claims can be consolidated and joined
• Expedited proceedings are permitted in matters of exceptional urgency or if the quantum is equal to or below
• Emergency arbitrators permit parties to seek interim relief before the tribunal is fully constituted

DIFC Courts - Courts of Space

In 2021, the UAE, via its Future Foundation, launched a dedicated court to deal with space related disputes. The UAE court “signals to the international space community the intent of the UAE to play a leading role in advancing its judicial systems to specifically direct capacity and capability to commerical space related disputes”.⁹ The UAE is offering up the framework of the DIFC Courts, dicussed above, which, helpfully, are common law and English language based. 

The Courts of Space is described as an “opt-in” jurisdiction and the courts have the capability to deal with a variety of space disputes such as contactual, regulatory, tort, or pursant to a treaty. The DIFC Courts also states its aim to provide its judges with specific space law training. It is too early to tell if the international space community/industry will opt-in and bring disputes to the UAE Space Courts.  

Conclusion

As identified in this series of articles, arbitration has been adopted by many in the space industry to resolve conflicts, particularly in relation to launch and satellite disputes. Now that the UAE has updated its Arbitration Law, and the DIAC has updated its rules, both are more aligned with international arbitration standards and as such the UAE, does, in principle, have suitable mechanisms for resolving space disputes both in respect of arbitration, and possibly court.

The article continues next week with a perspective from China. 

¹ In this article, we do not consider the issue of third-party damage (disputes that may arise between non-contracting parties).

² Historically, there have been space related disputes resolved between private parties and states via arbitration pursuant to investment treaty dispute resolution rules and commercial arbitrations between private contracting parties under, for example, ICC rules. 

³ For example, Federal Law No.12 of 2019 Regulating the Space Sector, Federal Decree Law No 46 of 2023 regarding the Organisation of the Space Sector and Cabinet Resolution No 20 of 2023, which relates to compensation for damage.

⁴ Convention on the International Liability for Damage Caused by Space Objects - Article II - absolute liability for damage caused on the surface of the Earth or an aircraft inflight. Article III - fault-based liability for damage caused elsewhere than the surface of the Earth/aircraft in flight. 

⁵ The Agreement on the Rescue of Astronauts, the return of Astronauts and the return of Objects launched into Outer Space 1968. The UAE is not a signatory to the 5th UN treaty, the Moon Agreement 1984, which expands on the Outer Space Treaty specifically regarding the Moon and other celestial bodies. The Moon Agreement is the least successful Space treaty. In addition to the four 4 UN treaties, the UAE has also ratified important intergovernmental agreements relating to space such as the ITU, IMSO and ITSO many of which have either ad-hoc or mandatory arbitration as the dispute resolution mechanism. 

⁶ The UAE does not yet automatically accept ostensible authority to arbitrate. In view of this, parties should ensure that all UAE requirements to ensure capacity and due authorisation are expressly and satisfactorily dealt with before advancing an arbitration. Indeed, the DIAC Rules require parties to file a POA to act. 

⁷ Generally non-arbitrable disputes relate to crime, family, labour, bankruptcy matters as well as some agency disputes and UAE insurance policies. 

⁸ The UAE is a signatory to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), facilitating the enforcement of both domestic and international awards in the UAE. 

⁹ DIFC Courts, Space Disputes Guide, Edition 2