Litigation is the most widely utilised form of dispute resolution in Maldives. However, it is fraught with red tape and consequent delays, as a result of which there has been a growing reluctance for commercial actors to refer their disputes to the courts.

The use of foreign-seated arbitration as a means of dispute resolution is well established in Maldives. Courts in Maldives recognised arbitration agreements prior to the enactment of the Maldives Arbitration Act (Law No 10/2013) in 2013, which was done as an application of the well-established doctrinal rule of pacta sunt servanda – ie, the rule that “agreements must be kept”. The use of dispute resolution clauses where arbitration is the preferred method is now very common, following the enactment of the Arbitration Act in 2013. This upward trend is expected to continue. Many high-profile precedent-setting matters in the jurisdiction, involving both public and private litigants, have been settled through international arbitration in international and regional hubs such as Singapore, Malaysia, Dubai and London.

The Maldives International Arbitration Centre (MIAC) opened to the public in 2020. Owing to the nascent nature of local arbitration in Maldives, referrals to the MIAC are expected to be relatively low, but such numbers have yet to be published. The MIAC has been leading an active charge in increasing engagement with and awareness of arbitration in Maldives, including initiatives to engage and train the judiciary on the principles of international arbitration.

The number of referrals to the MIAC has yet to be published, so it is difficult to determine with any degree of certainty how, if at all, the COVID-19 pandemic has impacted the use of international arbitrations seated in Maldives.

However, there has been an increase in the use of foreign-seated international arbitrations during the pandemic. Parties in Maldives have preferred to arbitrate at the Singapore International Arbitration Centre (SIAC), where the impacts of the pandemic are perceived to be less than on the courts of Maldives.

This increase may, however, be an incidental observation. It is no surprise that the pandemic has caused otherwise well-functioning relationships between large commercial actors to turn acrimonious unexpectedly. As has been observed before, these actors have shown a preference for arbitration. The underlying agreements in these disputes are usually well-negotiated commercial agreements, which more commonly contain an arbitration clause. The resulting effect is therefore a marked increase in the use of international arbitration for dispute resolution.

Arbitration agreements are prevalent in agreements used in the construction and real estate, aviation and hospitality industries.

Disputes in the construction and real estate industry, and the aviation industry, tend to be referred more commonly to international arbitration, as they tend to be technically complex and often require experts with experience in the industry to come up with sensible solutions. The industries’ inherent trust in their own expertise over that of those with a legal background is quite possibly the main driving force behind these referrals.

As for the hospitality industry, Maldives attracts high-profile multinational hoteliers who are well acquainted with international arbitration. The multinational nature of these corporations sits well with international arbitration. Clients in the industry tend to prefer arbitration as it is often viewed (arguably correctly) as resulting in far more sensible outcomes than local litigation. As a result, most of the hotel management, hotel operation or related lease agreements currently being drawn up tend to prefer arbitration as a method of dispute resolution.

Finally, with the MIAC opening its doors to the public, the use of arbitration agreements in agreements of key government agencies and state-owned entities is increasingly being seen. It is expected that more of this will be seen in the future.

Pursuant to the Arbitration Act, the MIAC has been the only institution in Maldives for both domestic and international arbitration since its establishment. The number of referrals to this institution has not yet been published.

Actors in Maldives have preferred to refer matters to the SIAC because it is the regional hub of arbitration with the closest proximity to Maldives.

The Arbitration Act identifies the High Court of Maldives as having jurisdiction over matters related to arbitration, namely:

• determining whether the arbitral tribunal is exceeding the scope of its authority regarding arbitrations seated in Maldives;
• issuing orders for interim measures in support of arbitration proceedings, regardless of whether the arbitration is foreign-seated or seated in Maldives;
• issuing orders to set aside an interim measure issued by a tribunal regarding arbitrations seated in Maldives; and
• issuing orders to set aside an arbitral award rendered in arbitrations seated in Maldives.

The High Court of Maldives has established procedural rules relating to these matters.

The Arbitration Act stipulates that an application for the enforcement of an award in Maldives shall be made to the "relevant court". In Hilton International Manage (Maldives) Pvt Ltd v Sun Travel and Tours Private Limited (High Court Case No 2017/HC-A/91), the High Court confirmed that the relevant court for the recognition and enforcement of an award is the Civil Court.

The Arbitration Act notes that a "competent court" has the power to recognise and enforce a tribunal-issued interim measure. By extension of the principle in the Hilton case, the competent court should be the Civil Court, although this proposition has not yet been tested.

The national law governing arbitration in Maldives is the Arbitration Act, which is not a word-for-word adoption of the UNCITRAL Model Law but does closely mirror it and establishes a framework that is largely in line with the Model Law. Most provisions in the Model Law are adopted word-for-word, but some provisions are modified in order to take the local context into account.

There have been no changes to the Arbitration Act in the past year, but amendments to the current legislation are expected to be made in the coming year, based on recent developments.

There are cases presently pending before the courts that are expected to result in precedents that interpret provisions of the Arbitration Act, and that might change the present interpretation of certain provisions relating to the stay of proceedings in favour of arbitrations and the recognition and enforcement of arbitral awards.

The arbitration agreement is to be in writing.

In this context, "in writing" means there is a record of its content in written form, even if the agreement is initially concluded orally or by other means, or if a record exists in a form that is acceptable as evidence.

As such, an arbitration agreement may be recorded in electronic communications, or confirmed where one party states that an arbitration agreement exists in communications and the other party does not deny its existence, or if a contract contains a clause referring disputes to arbitration.

The Arbitration Act does not identify specific disputes that are non-arbitrable but notes that, if another legislation carves out certain commercial disputes as not being arbitrable, or if other legislation states that certain commercial disputes shall be subject to the mandatory jurisdiction of a court, these matters will not be arbitrable.

Generally, Maldivian courts tend to follow the principles of international arbitration adopted by other well-regarded jurisdictions, especially England and Wales. As per the position of England and Wales, albeit untested locally, it would be safe to assume that criminal matters, family law matters, insolvency proceedings, employment disputes and tax disputes will not be arbitrable in Maldives.

The national courts will enforce the arbitration agreement as long as the legal requirements of an arbitration agreement under the Arbitration Act are satisfied. The Civil Procedure Code that came into effect in June 2022 also recognises that disputes over which arbitration agreements apply shall be governed by courts, as per the provisions in the Arbitration Act.

If an action is brought to court in a matter that is the subject of an arbitration agreement, the Arbitration Act provides thatthe court shall order a stay of legal proceedings and refer the matter to arbitration if the following two conditions are satisfied:

• a request for referral is made in the respondent’s first statement of a defence to a claim; and
• the arbitration agreement is not null and void, inoperative or not capable of being performed.

However, the Arbitration Act provides that the foregoing is not applicable if the seat of arbitration under an arbitration agreement is not Maldives.

The High Court has, through case law, issued guidance on how a court may approach such a matter in relation to foreign-seated arbitrations. The requirement to make a request for the referral to arbitration in the first statement of defence was treated as an estoppel against subsequent requests to referrals after a party submits to the jurisdiction of the court. However, this estoppel only applies to arbitrations seated in Maldives. The Court found that a party may not be estopped from requesting a referral to arbitration after having failed to raise this in the first statement of defence in relation to a foreign-seated arbitration.

This leaves the question of when the estoppel would be effective against a party requesting referral to arbitration in foreign-seated arbitrations. This is untested, but it surely seems unreasonable to expect the estoppel to disapply completely, particularly if the request for arbitration comes much later in a litigation.

The Arbitration Act recognises the doctrine of separability. It provides that an arbitration clause shall be treated as an agreement independent of other terms of a contract and that, if an arbitral tribunal determines that an agreement containing an arbitration clause is null and void or partially invalid, it shall not entail ipso jure the invalidity of the arbitration clause.

There are no limits on the parties’ autonomy to select arbitrators. Parties are free to determine whether one or more arbitrators shall be appointed.

An uneven number of arbitrators shall be appointed if the parties intend to have more than one arbitrator, in which case each party shall appoint one arbitrator and these two arbitrators shall unanimously agree on the third arbitrator.

Priority is given to the parties’ agreement on the procedure of appointing the arbitrator or arbitrators.

Where parties fail to agree on the number of arbitrators, the default position in the Arbitration Act is to determine the number based on the value of the dispute.

Disputes involving a sum equivalent to or more than MVR1.5 million will result in a panel of three arbitrators. A sole arbitrator will be appointed for disputes involving a sum of less than MVR1.5 million.

The MIAC has the power to appoint the arbitrator under the following circumstances:

• if the parties fail to appoint their arbitrators within 30 days of the referral to arbitration;
• if a party to the dispute requests another party to the dispute to appoint an arbitrator and, within 30 days of that request, the other party fails do so;
• if the two arbitrators fail to agree on the appointment of the third arbitrator within 30 days of their appointment; and/or
• if the parties are unable to agree on the sole arbitrator and the parties make a request to the MIAC to appoint the arbitrator.

In appointing an arbitrator or arbitrators, the MIAC shall have due regard to the following:

• the competence required of the arbitrator;
• the qualifications required of the arbitrator;
• the independence and impartiality required to resolve a dispute submitted to arbitration; and
• in circumstance where one arbitrator is appointed, if the parties to the dispute are of different nationalities, appointing an arbitrator of a nationality other than those of the parties.

There are no provisions in the Arbitration Act that allow for judicial intervention in the selection of arbitrators. This is not to say that judicial intervention may not happen where parties request such an intervention, but this proposition has not been tested.

Circumstances for Removal

An arbitrator who has been appointed under the Arbitration Act can be challenged and removed from their post only under the following four circumstances:

• if there are justifiable doubts as to their impartiality or independence;
• if they do not possess the necessary qualifications required of an arbitrator to that dispute;
• if there are unreasonable delays by the arbitrator in the discharge of their duties; or
• if the arbitrator fails to discharge their duties properly.

Procedure for Removal

The parties may decide on a procedure for the challenging and removal of an arbitrator. If the parties fail to agree, the party who wishes to challenge and remove an arbitrator shall submit a challenge to the arbitral tribunal within 15 days of the constitution of the arbitral tribunal or within 15 days of the party becoming aware of a circumstance where an arbitrator may be challenged or removed.

Where an arbitral tribunal receives a statement of challenge, the challenged arbitrator may withdraw from office or, if the other party or parties to the dispute agree, may be removed from office. If the other party does not accept the challenge, a decision on the arbitrator's removal shall be made by the arbitral tribunal. This applies if the arbitral tribunal consists of three or more arbitrators; if the tribunal consists of a sole arbitrator, the determination on a challenge shall be made by the MIAC.

If a challenge is submitted and a decision is made not to remove the arbitrator from office, the arbitral tribunal shall notify the challenging party of its decision within 30 days, and the challenging party may appeal this decision to the MIAC. The parties to the dispute may agree that a decision on such an appeal made by the MIAC shall be final. Until a decision is made by the MIAC, the challenged arbitrator may continue to discharge the duties of their office.

If an arbitrator withdraws from office when a challenge is made against them, it shall not amount to an admission to the subject matter of the challenge.

According to the Arbitration Act, when a person is approached in connection with their possible appointment as an arbitrator, they shall disclose to the requesting party any circumstances that are likely to give rise to any doubts as to their impartiality or independence, and shall recuse themselves from accepting the appointment. If, after the appointment, there is reason to believe that the arbitrator may not be able to discharge their duties with impartiality and independence, the circumstances shall be disclosed to the party that appointed the arbitrator and the arbitrator shall then recuse themselves from the position, after informing the rest of the arbitral tribunal if the tribunal consists of more than one arbitrator.

The Arbitration Act further provides that arbitrators shall maintain ethical conduct in accordance with the standards set out in the Bangalore Principles of Judicial Conduct.

The Arbitration Act does not identify specific disputes that will be excluded from arbitration, but notes that if other legislation sets out that certain commercial disputes are not arbitrable or that certain commercial disputes shall be subject to the mandatory jurisdiction of the court, these matters shall be excluded from arbitration, or if other legislation sets out that certain matters can be subject to arbitration in accordance with procedures set out in that specific legislation, these matters shall be excluded from arbitration unless the procedures in the legislation are fulfilled.

As Maldivian courts tend to follow the principles of international arbitration adopted by other legal jurisdictions, especially England and Wales, it is safe to assume that non-arbitrable disputes in England and Wales would not be arbitrable in Maldives either.

The arbitral tribunal constituted in accordance with the Arbitration Act has the power to rule on its own jurisdiction with respect to the dispute submitted to arbitration, including the power to rule on any objections regarding the existence or validity of the arbitration agreement or regarding the jurisdiction of the arbitral tribunal to preside over the matter in dispute. The principle of competence-competence is enshrined in the Arbitration Act itself.

If a party raises a plea that the arbitral tribunal is exceeding the scope of its authority, the arbitral tribunal has the discretion to suspend proceedings related to the dispute and rule on the plea. The arbitral tribunal may also continue the proceedings and include a ruling on the plea in the award issued.

Jurisdiction of the Tribunal

The Arbitration Act does not provide for any circumstance where a court may address issues of jurisdiction of an arbitral tribunal as a preliminary question. It may, however, look at this following the final arbitral award as a ground to set aside the award or as a ground for refusing enforcement of an award.

The Scope of Authority of the Tribunal

Where an arbitral tribunal has ruled as a preliminary question that it has not exceeded its jurisdiction, any party not satisfied with the ruling shall have the discretion to submit the matter to a court of law for review within 30 days of the tribunal’s ruling.

The Court’s Attitude/Approach to Intervention

There are cases currently pending before the courts that might give an initial indicator on this, but it is currently difficult to comment on this as these matters have not yet been widely tested in the Maldivian courts.

A plea that the arbitral tribunal does not have jurisdiction shall be raised no later than within the time given for the submission of the respondent’s statement of defence. A party is not precluded or restricted from raising such a plea by the fact that they have appointed or participated in the appointment of an arbitrator.

A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised by a party to the dispute at the time of occurrence of the matter alleged to be beyond the scope of its authority. Where the arbitral tribunal rules on this as a preliminary question, parties may submit it to a court of law for review within 30 days from that ruling.

Due to the nascent nature of arbitration in Maldives, a standard of judicial review for questions of admissibility and jurisdiction has not yet been established.

A sensible and likely view is that such matters would be determined in the same way that appellate divisions of the local courts dispense with appeals in local litigation. If this view is correct, a judicial review for questions of admissibility and jurisdiction would be on a deferential basis.

The approach of the courts in Maldives is to uphold any agreement that calls for dispute resolution through alternative methods. Prior to the enactment of the Arbitration Act in 2013, the courts recognised arbitration agreements as an application of the doctrinal rule of pacta sunt servanda – ie, the rule that agreements must be kept. The position has now been written into statute under the Arbitration Act.

Courts uphold arbitration agreements and dismiss court proceedings commenced in breach of an arbitration agreement, as is clearly evident from the established precedents.

As a general rule, the privity of an arbitration agreement will prevent arbitrators from allowing a joinder of parties who have not signed the arbitration agreement.

The Arbitration Act does not provide for any circumstances where the arbitral tribunal may assume jurisdiction over individuals or entities that are neither party to an arbitration agreement nor signatories to the contract containing the arbitration agreement.

The joinder of a party to an arbitration for convenience with parties opposing that joinder has yet to take place in Maldives. It is, of course, possible for joinders or consolidation to take place with unanimous party consent. All of this is presently untested, and positions relating to this will develop as cases arise and questions land before the court for determination.

Unless otherwise agreed by the parties to a dispute subject to arbitration, the arbitral tribunal has the power, at the request of a party, to grant interim measures. Any such interim measures become binding once they are recognised and enforced by a competent court – ie, the Civil Court.

Types of Relief

The arbitral tribunal has the power to make an order at any time prior to the issuance of the award, in order to:

• maintain or restore the status quo of the relationship between the parties to the dispute submitted for arbitration, pending determination of the dispute;
• prevent an action that is likely to cause or prejudice the arbitral process itself;
• provide a means of preserving assets out of which a subsequent award may be satisfied; and/or
• reserve evidence that may be relevant and material to the resolution of the dispute.

The arbitral tribunal also has the power to grant an ex parte order for interim measures, if an application is made by the party and if notifying the other party will frustrate the purpose of the interim measures.

Conditions to be Satisfied

Parties requesting an interim measure must satisfy the arbitral tribunal of the following conditions:

• if the measure not being ordered would result in the damages provided by the Arbitral Award not being paid;
• if the harm that is likely to result if the measure is not granted substantially outweighs the harm to the party against whom the measure is directed; and
• if there is a reasonable possibility that the requesting party will succeed on the merits of the claim (this shall not be reason enough to necessitate the arbitral tribunal determining the merit of the dispute in that manner).

The arbitral tribunal can determine the extent to which these conditions apply.

Once an arbitral tribunal issues an interim measure, the parties shall make an application to the competent court (ie, the Civil Court) to recognise and enforce the interim measure. An order for the recognition and enforcement of an interim measure shall be issued by the competent court after considering the appropriate factors that are not detailed in the Arbitration Act and that are yet to be tested in the court.

A good starting point for this is to consider whether conditions for granting such an interim measure were appropriately met and whether there are any grounds for refusing the recognition and enforcement of such a measure under the Act. Following that consideration, given the wide discretion under the Act, it is likely that a court will consider all circumstances of the case in making this determination.

The Arbitration Act specifically provides that provisions therein relating to the recognition and enforcement of interim measures and provisions relating to grounds for the refusal of enforcement do not apply to any such measures or awards rendered in foreign-seated arbitration. This poses the question as to whether interim measures issued in a foreign-seated arbitration can be recognised and enforced by the Civil Court. The likely answer is that those measures can be recognised and enforced, following the general trend of cases that have answered indirectly related questions and cases that are similar to the ones posed. This precise question has yet to be tested in the Maldivian courts.

Provision of Security

The arbitral tribunal has the power to require the party requesting an interim measure to provide appropriate security. The arbitral tribunal shall issue such an order without security only if it considers that obtaining security would be inappropriate and unnecessary.

The provision of security is a deposit paid to the arbitral tribunal of an adequate amount by the party requesting an interim measure for costs that the party against whom the interim measure is directed may incur or damages that may be awarded to that party. This can be in the form of a guarantee issued from an institution acceptable to the arbitral tribunal.

Costs and Damages

The party requesting an interim measure or applying for a preliminary order shall be liable for any costs and damages caused by the measure or the order to any party if the arbitral tribunal later determines that, in the circumstances, the measure or the order should not have been granted. The arbitral tribunal may award these costs and damages at any point during the proceedings.

The MIAC has published its own rules of arbitration to govern the arbitration procedure in Maldives, which reflect similar provisions in the Arbitration Act.

Parties are free to determine the procedure to be followed by the arbitral tribunal in the conduct of the proceedings. If parties are unable to come to an agreement, the arbitral tribunal has the power to determine the procedure to be followed in conducting proceedings, including the power to determine the rules of admissibility, relevance and the weight that is to be given to the evidence presented.

The Arbitration Act covers most of the procedural steps of arbitration proceedings, including the commencement of arbitration, the arbitration procedure, the appointment and composition of the arbitral tribunal, and the powers of the arbitral tribunal. The MIAC Rules have incorporated almost exactly the same provisions as those stipulated in the Arbitration Act.

The arbitral tribunal has the following powers:

• to decide on the merits of the case;
• to decide on the enforceability and validity of the arbitration agreement;
• to decide on the arbitrability of the dispute;
• to decide on its own jurisdiction and authority;
• to decide on the conduct of the proceedings and rules of procedure where there is no agreement among the parties;
• to decide on the admissibility of evidence, and to determine its relevance, materiality and weight;
• to issue orders for interim relief; and
• to determine the place, language and governing law of arbitration where there is no agreement among the parties.

The arbitrator has a duty to treat the parties with equality and fairness, and to give the parties full opportunity to present their case. The arbitrator also has the duty to remain independent and impartial throughout the arbitration, and has an ongoing obligation to disclose any circumstances that may call their independence or impartiality into question.

Appearance at Arbitral Proceedings

The Arbitration Act contains no requirements or qualifications for representatives in arbitral proceedings, and no restrictions regarding the nationality and qualification of the representatives. In fact, parties are free to appoint an authorised person with no formal legal training to appear on their behalf. There is no restriction on the arguments an authorised person may present at the arbitral proceedings.

Appearance at Court Proceedings Related to Arbitration

The Bar Council of Maldives (BCM) issues licences to practitioners, which enable them to appear as counsel at court. The licences are graded, with the basic licence allowing appearances at the Civil Court level. An enhanced licence will be required in order for a practitioner to appear at the High Court and the Supreme Court; these are issued based on the lawyer's experience.

Unlicensed persons are not allowed to appear as legal counsel, but they may appear as a party representative. A party representative will be unlikely to raise arguments in relation to points of law but may speak on factual points.

Lawyers admitted in foreign jurisdictions will have to apply for leave from the BCM, which may be granted after appropriate vetting by the BCM.

Parties are to submit all supporting or relevant documents or add a reference to a document with the statement of claim and statement of defence. Parties must also submit all the written evidence and a summary of all other evidence they wish to present for consideration by the arbitral tribunal.

The arbitral tribunal may determine whether to have hearings for the presentation or whether proceedings are to be conducted on the basis of documents and other materials.

If the parties decide to hold oral hearings, the arbitral tribunal shall determine the procedure for the parties to be given opportunities for oral arguments, presentation of evidence, rebuttals and cross-examination of evidence. Where parties wish to conduct proceedings on the basis of documents and other materials, the arbitral tribunal will determine a procedure on how the hearings should be conducted (if at all).

The arbitral tribunal may also appoint one or more experts or direct one or more parties to produce a report on a specific issue to be determined by the arbitral tribunal – ie, to provide a specific piece of information, a specific document, to give access to a place, or to facilitate the examination of documents.

Unless otherwise agreed by the parties or if one of the parties so requests or if the arbitral tribunal considers it necessary, the expert shall, after delivery of their written or oral report, participate in a hearing where the parties have an opportunity to put questions to them and/or to present additional evidence.

There are no procedures on discovery, disclosure or privilege in the Arbitration Act or the MIAC Rules. However, guidance could be sought from the IBA Rules on the Taking of Evidence in International Arbitration, as the arbitral tribunal has the power to determine the rules of procedure where parties are unable to agree on such.

There are no rules of evidence recognised in Maldives that apply to arbitral proceedings. However, the arbitral tribunal has the power to determine the rules of procedure where parties are unable to come to an agreement, and may use established evidential rules such as the IBA Rules on the Taking of Evidence in International Arbitration as a guide to govern their arbitration in terms of taking evidence.

There are evidential standards that apply to litigation in local courts. Neither the Arbitration Act nor case law has extended these to arbitrations. This is, however, an untested point and one on which developments can be expected as questions are put before the courts.

The arbitral tribunal or a party with the approval of the arbitral tribunal may request assistance from a competent court (ie, the High Court) in taking evidence. Evidence should be taken according to the procedures of the court.

Arbitrations are implicitly confidential under the Arbitration Act, which stipulates that, unless otherwise agreed by the parties to a dispute, all information, records, evidence and the Arbitral Award shall be confidential and must not be disclosed to any third party, except in the following two circumstances:

• with the agreement and consent of the parties; and
• to the extent required to review a matter related to an arbitral award duly submitted to a court or other institution – in reviewing a matter related to an ongoing or completed arbitration and in making a determination, the court will undertake measures to keep documents and information related to the dispute confidential.

So far, the court has not sealed the court file, nor heard matters in closed proceedings and redacted/anonymised judgments relating to arbitral proceedings. This approach seems to be an implicit extension of the exception in the second circumstance described above to the general cover of confidentiality under the Act.

However, this been raised in the Supreme Court on one occasion, pursuant to which the court, prior to making a finding on this point, agreed to hear the proceedings in a closed manner and to discontinue the normal process of streaming the hearing live online. Prior to the court making a finding, and as a first point in the closed hearing in question, all parties involved agreed to waive confidentiality. The court thereafter opened proceedings and restored the streaming of the proceedings live online.

The question of the extent of the extension of the confidentiality of arbitration proceedings to related court proceedings therefore remains unanswered. While an implied extension has been seen, as observed in the foregoing, no direct question on confidentiality has been addressed in the courts to date.

In an arbitral proceeding with more than one arbitrator, any decision of the arbitral tribunal shall be made by a majority of all its members, unless otherwise agreed between the parties.

The following requirements need to be fulfilled in an arbitral award.

• The arbitral award shall be in writing and signed by the arbitrator or arbitrators constituting the arbitral tribunal. In an arbitration with more than one arbitrator, the signatures of the arbitrators forming the majority decision by the arbitral tribunal shall suffice. If the award lacks the signature of an arbitrator in an arbitration with more than one arbitrator, the reasons for omitting the signature must be stated.
• The award shall state the decision and reasons upon which it is based, unless the parties have agreed that no reasons are to be given or it is an award given pursuant to a settlement.
• The award shall state its date and the place of arbitration. The award shall be deemed to have been made at that place.
• After the award is made, a copy shall be delivered to each party.

There are no time limits on the delivery of the award.

There are no limits on the types of remedies that an arbitral tribunal may award, except for the requirement that the award should not result in any form of illegality.

The principle of cost-shifting to the losing party is not recognised in local litigation and, as such, the principle is not applied in the Arbitration Act. However, the tribunal has appropriate discretion, which may allow for such cost-shifting to take place.

The cost of arbitration, including the arbitrators’ fees and all other fees and expenses, is to be shared among the parties as agreed by those parties as a first port of call. If there is no such agreement, the arbitral tribunal will decide on how the costs are to be shared among the parties. The arbitral tribunal is therefore free to follow cost-shifting, cost-apportionment or equal costs-sharing approaches.

A party to the arbitration may make an application to the High Court to set aside an award.

An arbitral award may be set aside by the court in one of the following instances.

• The party making the application furnishes proof that:
1. a party to the arbitration agreement was under an incapacity that prevented them from entering into an agreement;
2. a party to the arbitration agreement was under an incapacity as defined in law;
3. the arbitration agreement is not valid under the Maldivian law to which the parties are subject;
4. the party making the application was not given proper notice of the appointment of the arbitrator;
5. a party was not given adequate opportunity to present their case;
6. the award deals with a dispute that was not presented during the proceedings;
7. the award contains decisions on matters beyond the scope of the submission;
8. the composition of the arbitral tribunal or the arbitral proceedings was not in accordance with the agreement of the parties; or
9. the arbitrator is found guilty of corruption or fraud while the proceedings were ongoing.
• The court finds that:
1. the subject matter of the dispute is not capable of settlement by arbitration under Maldivian law; or
2. the award contravenes public policy.

Any such application should be made within three months from the date of the award or the date of the correction of an award.

In setting aside an arbitral award, the High Court will first look at the grounds allowed by the Arbitration Act. The Act is silent as to whether parties may exclude or expand the scope of an appeal, but it is likely that parties can by unanimous consent exclude or expand the scope of appeal. Nevertheless, this is not a question that has been tested in the courts yet, so taking a definitive stance on this is difficult at present.

A standard of judicial review for questions of admissibility and jurisdiction has not yet been established. Currently, the prevailing view is that an application to set aside an arbitral award would be looked at in the same way that a standard appeal in litigation is reviewed. Given this view, the standard of judicial review is likely to be on a deferential basis.

Maldives became a member state of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards in 2019 with the approval of the Maldives’ Parliament, whereby the Convention is now ratified. Maldives has not made any reservations with respect to this treaty.

The Arbitration Act largely mirrors the positions under the Convention, and provides that foreign arbitral awards made in accordance with the Act shall be recognised and enforced in Maldives.

A request for the recognition and enforcement of an award in Maldives must be made to the relevant court, which is the Civil Court, as established in Hilton International Manage (Maldives) Pvt Ltd v Sun Travel and Tours Private Limited (High Court Case No 2017/HC-A/91).

The party requesting the recognition and enforcement must submit an original or an attested copy of the award, along with a translation of the award if the award is not in Dhivehi, the national language of Maldives.

Regardless of the country in which it was made, the recognition or enforcement of an arbitral award may be refused by the court in one of the following instances.

• At the request of the party against whom the award is invoked, if the party proves that:
1. a party to the arbitration agreement was under an incapacity that prevented them from entering into an agreement; 
2. a party to the arbitration agreement was under an incapacity as defined in law;
3. the arbitration agreement is not valid under the Maldivian law to which the parties are subject;
4. the party making the application was not given proper notice of the appointment of the arbitrator;
5. a party was not given adequate opportunity to present their case;
6. the award deals with a dispute that was not presented during the proceedings;
7. the award contains decisions on matters beyond the scope of submission;
8. the composition of the arbitral tribunal or the arbitral proceedings was not in accordance with the agreement of the parties; or
9. the arbitrator was found guilty of corruption or fraud while the proceedings were ongoing.
• If the court finds that:
1. the subject matter of the dispute is not capable of settlement by arbitration under Maldivian law; or
2. the award is in conflict with the public policy of Maldives.

If an application to set aside an award is made in a court, the court has the power to halt the application made for the recognition and enforcement of an arbitral award.

To date, the courts have largely taken a pragmatic approach to recognising and enforcing arbitral awards. Unless a convincing argument is made for the courts not to recognise an arbitral award, they will generally recognise and enforce an arbitral award in Maldives.

The test for the breach of public policy is expected to be set at a high threshold (as the courts do in local litigation). Therefore, the courts are expected to use this ground only rarely to refuse recognition and enforcement. There are matters presently pending before the courts that will add further clarity to the courts' approach in such matters. At present, the aforementioned views are those prevailing.

The High Court has made conflicting decisions as to whether the recognition and enforcement of arbitral awards obtained through foreign-seated arbitrations is a single or double step process. In a recent decision, the High Court determined that the recognition shall be completed through the court ordering a "recognition order" before the court can take actions on the enforcement of the arbitral award.

The Maldivian legal framework does not allow for class action arbitration or group arbitration.

According to the Arbitration Act, a person acting as an arbitrator shall maintain ethical conduct in accordance with the standards set out in the Bangalore Principles of Judicial Conduct.

As Maldives is still establishing its arbitration framework, it is understood that reliance would be placed on ethical codes and guidelines such as the IBA Rules on Conflict of Interest.

Regarding legal professionals, the Legal Profession Act of Maldives and related regulations and guidance published by the Bar Council of Maldives will be relevant. Foreign lawyers seeking temporary admission to appear in Maldives will also, unsurprisingly, be bound by the standards set by the regulator in their home jurisdiction.

The Arbitration Act is silent on third-party funders for arbitration. There are no rules or restrictions on third-party funders.

Third-party funders are not commonly used in litigation and so it is unlikely that they will be used in arbitration in the near future. This is primarily because litigation funders are not present in Maldives. This, of course, presents a market gap for any funding parties that may be interested in arbitration and litigation in Maldives. Furthermore, there are no restrictions on parties seeking litigation/arbitration funding from funders based in other jurisdictions.

The Arbitration Act and the MIAC Rules do not provide for the consolidation of arbitral proceedings. The fact of the Arbitration Act and the rules being silent on this point does not preclude this action if the parties unanimously agree.

Whether a tribunal could seek to do this for convenience where one or more parties oppose it is a question that has yet to be answered, as such a matter has yet to be addressed in court. It is unlikely to be available in instances where the parties are opposed to consolidation. The Act generally gives credence to the fundamental principle of party autonomy, and the courts are likely to approach such questions with doctrines of privity of contract squarely in the forefront of their minds, based on their approaches to such matters in local litigation.

The Arbitration Act is silent on whether third parties can be bound by an arbitration agreement or award. This is a matter that has yet to be dealt with in court proceedings. However, if the courts' approach to such matters in local litigation is taken as a guide, the privity of an arbitration agreement is likely to prevent third parties (including foreign third parties) from being bound by an arbitration agreement or award to which they are not a party.