The Changing Arbitration Landscape in Dubai

On 14 September 2021, Decree No. 34 of 2021 concerning the Dubai International Arbitration Centre (the “Decree”) was issued and it took effect on 20 September 2021.

By Candida Pinto

On 14 September 2021, Decree No. 34 of 2021 concerning the Dubai International Arbitration Centre (the “Decree”) was issued and it took effect on 20 September 2021.

Before the Decree

Prior to the Decree coming into force, there were three arbitration centres in Dubai:

a) The Dubai International Arbitration Centre (the “DIAC”);

b) The Dubai International Financial Centre Arbitration Institute (the “DIA”), which administered the DIFC-LCIA Arbitration Centre; and

c) The Emirates Maritime Arbitration Centre (the “EMAC”).

What’s new?

The Decree sets in motion the following principal changes:

a) It consolidates the DIAC, DAI and EMAC into a single arbitration centre under the DIAC umbrella, but with a “new look and feel”.

b) Immediately abolishes the EMAC and DAI (the “Abolished Centres”) and transfers all their real estate, assets, equipment, rights, obligations and, potentially, the employees to the DIAC.

c) Restructures the functions, objectives and organizational structure of the DIAC.

d) Instructs and empowers the DIAC to publish new arbitration rules.

e) Note:

a. The DIAC’s new arbitration rules have not yet been published. It is not clear yet when they will be published and implemented.

b. It is not clear yet whether the DIFC-LCIA Arbitration Centre itself will remain or be abolished.

New DIAC Structure

Following the restructure of the DIAC, its headquarters will remain located where they currently are but will have a complementing “offshore” branch in the Dubai International Financial Centre (the “DIFC”) and will have the following:

a) A board of directors;

b) A new arbitration court in the DIAC (the “Court”); and

c) An administrative body.

It is the intention that the Court and the DIAC administrative body will manage and supervise all arbitration proceedings under the new DIAC arbitration rules. The Court will have overall supervision of alternative dispute resolution procedures and the power to review any arbitral award before it is issued.

The DIAC has been given six months to give effect to the Decree and completely replace the Abolished Centres.

What do I have to do now?

No need to do anything – just wait:

a) Existing cases being heard by tribunals formed in the Abolished Centres will continue to be heard and resolved without interruption in those centres in accordance with the rules and procedures adopted by them (to the extent said rules do not conflict with the Decree) until the new DIAC arbitration rules are published. However, the reformed DIAC will have overall supervision of those cases.

b) Clauses in current agreements providing for arbitration in the Abolished Centres remain valid and effective and, in the interim, should a dispute arise, it would be administered by the DIAC.

However, to minimize ambiguity, the parties to an agreement or existing cases referring to the Abolished Centres may at any time agree to amend the dispute resolution clauses to incorporate or refer their cases to another centre to administer their arbitration proceedings, such as the International Chamber of Commerce (“ICC”) or the London Court of International Arbitration (“LCIA”).

Going forward - What Law, Seat and Arbitration Rules?

Once the new regime is clear, it is understood that:

a) the parties will remain free to choose the governing law of their agreement; and

b) the DIFC will continue to exist as a seat where arbitration proceedings may be held. If an agreement does not specify a seat of arbitration then, under the reformed DIAC, the DIFC will be the default seat. The Parties’ chosen seat will determine which supervisory courts will have jurisdiction to consider ratification and enforcement of or challenges to arbitral awards. Note: If the seat of arbitration is the DIFC, then the DIFC Courts will have jurisdiction regarding ratification and enforcement of arbitral awards, but if the seat of arbitration is Dubai, then the Dubai Courts will have jurisdiction regarding ratification and enforcement of arbitral awards.

c) going forward, should a dispute arise under agreements where DAI or EMAC is the parties’ chosen arbitration centre and those clauses are not amended, then the rules of the Abolished Centre specified in the agreement will apply to the extent they do not conflict with the Decree but the reformed DIAC will automatically replace the Abolished Centres in administering the hearing and resolving those disputes.

This is a developing area; we will keep you updated as more information is released, and our understanding deepens.

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