Wednesday, January 26, 2022

Major Changes To Dubai Arbitration Landscape

In recent years, many Oman-based companies have included DIFC/LCIA arbitration clauses in their contracts.  It has been a popular choice for dispute resolution as it combined the certainty of the well-known and trusted LCIA rules, with the convenience of locally administered institutional arbitration within  the  DIFC.    Dubai  Decree  No. 34  of  2021  -  Dubai  International  Arbitration  (the  “Decree”), accompanied by a new statute (the “Statute”), reforms the framework for arbitration in the Emirate of Dubai, and carries important changes for those negotiating and administering contracts. 

The  Decree  dissolves  the  DIFC  arbitration  institution  and  the  Emirates  Maritime  Arbitration  Centre

(“EMAC”), and provides for a framework under which the existing Dubai International Arbitration Centre (“DIAC”) will become the default center for arbitration in Dubai.  This is an important change to note for companies with existing DIFC/LCIA clauses, or those accustomed to including such clauses by default.  The following is a summary of the key changes:

  • Centralisation of Arbitration in the Emirates:  The Decree abolishes the EMAC and the DIFC arbitration institutions.  Both institutions’ operations shall be transferred to DIAC. 
  • Amended Management Structure for DIAC and Introduction of the Court of Arbitration:  DIAC is now composed of three main bodies:  (1) Board of Directors; (2) the Court of Arbitration; and (3) the Administrative Body.  The DIAC Court of Arbitration will consist of 13 members.  The President  of  the  Court  will  be  appointed  by  the  Board  of  Directors.    The  DIAC  Court  of Arbitration is charged with supervising and reviewing draft arbitral awards prior to tribunals issuing the same.  It is hoped that this will reduce any issues faced during enforcement.
  • Supervisory Jurisdiction of the Dubai Courts and DIFC Courts:  Determination of the place or seat of arbitration and the Court with supervisory jurisdiction is intended to be clarified.  There has  been  in  the  past  uncertainty  as  to  whether  the  Dubai  Courts  or  the  DIFC  Court  is  the competent supervisory court with jurisdiction over enforcement and/or nullification of DIAC awards or arbitral awards generally in Dubai.  Article 4 of the Statute clarifies this uncertainty.  The Dubai Courts are bound to accept jurisdiction as a supervisory court if the DIAC arbitration is seated in Dubai, and the DIFC Courts are required to deny jurisdiction in those circumstances (i.e., if the arbitration is not seated within the DIFC).  It should be noted that the DIFC is the default seat of DIAC arbitration proceedings if the parties do not agree otherwise. 
  • Arbitration Funding:  Article 8.4 of the Statute permits the DIAC Board of Directors to establish rules concerning funders of arbitration. 
  • Publication of Revised DIAC Rules:  These have been in the pipeline for some time and, with the expanded and prominent role of DIAC, are expected to be released soon.
In short, now is a good time to review your contracts, and seek legal advice as to how best tailor your arbitration  clauses  to  ensure  that  they  reflect  these  changes,  and  continue  to  meet  the  needs  and intentions of the parties and the subject matter/value of the contract involved.