Why Arbitration is Overtaking Litigation in Global Commercial Disputes: Lessons from the UAE

In recent years, arbitration has become the preferred method for resolving commercial disputes, especially across borders. This trend reflects a broader shift in global dispute resolution strategies, moving away from traditional court litigation toward more flexible and enforceable mechanisms. Arbitration is increasingly attractive to businesses that operate internationally and need reliable, neutral, and efficient forums to settle disputes.

A major reason for the shift is the flexibility and enforceability of arbitration compared with litigation. Arbitration allows parties to choose the venue, governing law, language, and even the arbitrators themselves, tailoring procedures to the specific needs of the dispute. This degree of customisation is rarely available in national courts, which operate under rigid procedural rules. Additionally, arbitration awards are widely enforceable under international law. The New York Convention binds more than 160 countries to recognize and enforce arbitral awards, giving parties confidence that an award made in one jurisdiction will be enforceable in another.

Confidentiality and speed are also strong advantages. Unlike litigation – where the court proceedings and judgements are usually public – arbitration hearings are private and confidential, protecting sensitive business. information from competitors and the public domain. Arbitration is usually faster than litigation, which may involve years of appeals and procedural delays.

However, there are drawbacks to consider. Arbitration can be expensive, especially in large, complex disputes where institutional fees and arbitrators’ costs accumulate. Unlike litigation, there are limited avenues for appeal, so parties may have less recourse if the award is unfavourable. Additionally, enforcement, while generally strong under the NewYork Convention, may still face practical challenges in certain jurisdictions, particularly if the losing party resists compliance.

The United Arab Emirates serves as a model of how jurisdictions can promote arbitration to attract international activity. Several UAE arbitration institutions and legal frameworks have evolved to align with global standards and business needs.

Dubai’s legal reforms in 2025 demonstrate the country’s commitment to developing an efficient arbitration ecosystem. For instance, recent changes under Dubai Law No. 2 of 2025 have streamlined jurisdictional rules in arbitration, even incorporating mediation support and digital case management systems. Meanwhile, traditional centres like the Dubai International Arbitration Centre (DIAC) continue to modernise, increasing caseloads and promoting diversity among arbitrators while adopting technology to improve operations.

The UAE’s courts are also enforcing foreign arbitral awards with increasing consistency. According tom recent legal analysis, Dubai courts have reaffirmed the liberal approach mandated by the New York Convention, limiting grounds for refusal to the narrow. exceptions set out in the treaty – such as invalid arbitration agreements or public policy concerns. Additionally, new arbitration hubs such as arbitrateAD in Abu Dhabi have emerged, joining established institutions and broadening the UAE’s appeal as a dispute resolution centre.

The UAE’s arbitration framework offers lessons for businesses and jurisdictions alike. First, adopting modern arbitration laws that align with international norms encourages foreign investment by reducing legal uncertainty. Second, ensuring that arbitral awards are enforceable under the New York Convention – as the UAE courts increasingly do – promotes confidence among global firms. Third, a competitive arbitration ecosystem with multiple centers helps meet diverse commercial needs.

Ultimately, as commerce continues to transcend national boundaries, arbitration’s flexibility, enforceability, and neutrality make it a more attractive choice than traditional litigation for resolving international disputes. The UAE’s example shows how legal reform and institutional support can accelerate this global trend, making arbitration an essential tool for modern business.