Dubai International Arbitration Centre

Promoting and strengthening business in the Middle East

The ability of the country to attract foreign investment plays a key role in promoting its economic growth and development. Whereas, the existence of a transparent and understandable international judicial institution that provides a due protection for investors’ rights is one of the principal conditions for making a decision on investing in one or another country.

In 2017, according to the World Investment Report by the United Nations Conference on Trade and Development, the United Arab Emirates, the UAE was ranked as 12th largest foreign investment destination by having attracted more than US$9 billion of direct investment in 2016.

This being said, the presence of the Dubai International Arbitration Centre (DIAC), with its internationally recognised rules and standards, its professional pool of experienced arbitrators, and transparent and efficient arbitral process, assures the inter­national investors of a due recognition and protection of their rights within the UAE and Middle East.

The DIAC is the largest arbitration centre in the Middle East, and was established in 2004 by Decree of His Highness the Ruler of Dubai. The DIAC is a non-governmental, independent, permanent, non-profit institution offering a high standard of arbitration and other dispute resolution services in the UAE and abroad.

Since 2007 the DIAC has been administering more than 2,500 cases with a total value of claims at more than US$12 billion.

The DIAC from the inside

The DIAC, first created in 1994 as the Centre for Commercial Conciliation and Arbitration under the initiative of the Dubai Chamber of Commerce and Industry, was ultimately established as an autonomous, non-profit international arbitral institution in 2004, providing the regional and international business with sophisticated arbitration services and facilities at competitive price.

The DIAC is composed of the board of trustees, represented by prominent local and international practitioners and currently chaired by Dr Habib Al Mulla.

The DIAC’s executive committee consists of five members from different jurisdictions elected by the board of trustees from among its members. The executive committee is composed of the following prominent arbitration practitioners: Professor Dr Tarek F Riad (chairman), Professor Dr Filip De Ly, Dr Antonio Parra, Mr Jeppe Skadhauge and Mr Abdul Moneim Bin Suwaidan.

The secretariat of the DIAC comprises staff of multicultural backgrounds who are conversant with all major legal systems and traditions and can handle cases in seven major languages. The Secretariat is responsible for administering and overseeing cases on a daily basis and is committed to understand the needs of the DIAC’s users and meet their expectations.

From 2010 until 2017, the average number of cases registered with the DIAC reached 300 cases per year.

Currently, the DIAC is administering a caseload of approximately 800 cases involving disputes related to real estate (62 per cent), construction (21 per cent), corporate and commercial (16.4 per cent) and oil and gas (0.6 per cent) sectors of the economy.

The DIAC’s number of outstanding cases as of 31 December 2017 is 780 cases, as of 31 December 2016 it was 720 cases. On 31 December 2015 it was 708 cases and on 31 December 2014 it was 696 cases.

Being an international institution, almost 80 per cent of the cases handled by the DIAC involve foreign parties, whereas the rest of the cases are disputes between the UAE nationals or UAE established legal entities. Recognising that for parties in dispute time is of the essence, the DIAC is aimed at swift administration of arbitration proceedings and efficient resolution of disputes under its auspices. As a result, the DIAC’s average timeline from registration of the case to constitution of the Tribunal is 120 days; and from a transfer of the file to the Tribunal until rendering the final award is 12 months.

The DIAC is also proud of its developed pool of professional and
well-experienced arbitrators from different nationalities and legal backgrounds residing in the UAE and abroad. In recent years the DIAC has observed an increase in demand for the executive committee’s direct appointments of arbitrators rather than appointments upon parties’ nomination. The above signifies the DIAC’s users trust and confidence in the centre’s utmost diligence in appointing the most suitable candidate for resolution of their dispute.

From 2010 until the beginning of 2018, the DIAC made more than 930 appointments (both direct and upon nomination of the parties) of arbitrators from amongst different national backgrounds. Thus, 22 per cent of the arbitrators appointed by the DIAC are arbitrators from Europe, 17 per cent from the United Kingdom, 48 per cent from the MENA Region, 10 per cent from North America and 3 per cent from Asia, Australia, New Zealand, Latin America and Africa.

Additionally, adhering to worldwide arbitration initiatives, the DIAC is committed to promoting the appointment of young and qualified arbitrators as well as to achieving gender balance in arbitrator appointments. As the result of the DIAC’s endeavours, 54 per cent of the appointments made by the executive committee of the DIAC were young arbitrators below the age of 45, and 35 per cent were female arbitrators.

Legal framework for international arbitration in the UAE

So far, the UAE legal system consists of three separate arbitral regimes:

• in the UAE itself, special provisions contained in the UAE Civil Procedure Code currently govern the arbitral proceedings. However, it is expected that new arbitration law based on the UNCITRAL Model Law will be enacted in the near future;
• the Dubai International Financial Centre (DIFC), which is an independent free zone located within Dubai and governed by the common law framework has its own arbitration law based on the UNCITRAL Model Law, which applies only to arbitrations seated in the DIFC; and
• the Abu Dhabi Global Market (ADGM), established in Abu Dhabi as a free zone, operates under the common law jurisdiction and has its own arbitration regulations, similar to the DIFC.

Additionally, the UAE is a contracting state to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards since 2006, as well as party to a number of bilateral treaties particularly dealing with arbitration.

Forthcoming DIAC Arbitration Rules 2018

The DIAC’s current Arbitration Rules 2007 were issued upon their approval by His Highness the Ruler of Dubai by Decree No. 11 on 6 May 2007.

Being drafted in line with international standards and functioning effectively since then, in 2016 the DIAC decided to revise its current rules to bring them in line with the latest international trends in arbitration and ensure that its users are constantly benefiting from efficient and comprehensive methods and procedures of dispute resolution under the DIAC Rules.

The new DIAC Rules 2018 reflect the experience and practice acquired by the DIAC over a decade of its successful performance and are aimed at ensuring effective arbitration procedures under the DIAC Rules and to contribute to viable enforcement of its arbitral awards.

The new DIAC Rules are expected to be launched officially by His Highness the Ruler of Dubai in the first half of the year 2018. They will be issued in the form of a decree and will constitute part of the legal corpus of the Emirate of Dubai. Therefore, the DIAC Arbitration Rules are vested with legislative power, which makes them one of a kind.

The most notable provisions of the new DIAC Rules concern efficient case management, multi-contract arbitration, expedited proceedings, effective enforceability of awards and particularly include the following.

Jurisdictional objections

The new DIAC Rules empower the Secretariat to decide whether jurisdictional objections, raised by one of the parties, are meritorious to be referred to the executive committee for a prima facie decision or to be referred directly to the Tribunal, once appointed.

Additionally, under the new rules the secretariat may, on its own motion refer a matter to the executive committee in the absence of any plea on jurisdiction. This provision was introduced to filter out proceedings that lack an objective basis for affirming a jurisdiction of DIAC, at the earliest stage.

Multi-contract arbitration, consolidation and joinder

To ensure the cost and time efficiency of the proceedings, the new DIAC Rules provide for the possibility to initiate a single arbitration under multiple contracts or to consolidate several arbitration proceedings into a single arbitration even in the absence of the parties’ agreement, subject to an existence of specific circumstances.

Furthermore, the executive committee, under the new rules, is entitled to decide on the joinder of an additional party prior to the constitution of the Tribunal. Such decision will be without prejudice to any decision the Tribunal may take at a later stage.

Emergency arbitrator and expedited proceedings

Under the new rules, the parties may apply for urgent interim measures through the appointment of an emergency arbitrator by the Executive Committee. The appointment of the emergency arbitrator shall be made within three days, and the emergency arbitrator within two days shall fix a time schedule for consideration of the emergency relief application.

As opposed to the standard arbitration procedure, the new rules envisage under certain conditions the availability of the expedited proceedings to meet the parties’ demand for a swift dispute resolution. In such proceedings the arbitrator shall be appointed within seven days and the award shall be issued within three months from the transfer of the file to the arbitrator.

Power to sanction counsel

Being aware of the crucial importance to the business community of cost and time efficient dispute resolution, the DIAC, within its new rules, empowers the Tribunal with the right to sanction any obstructive behavior of counsel aimed to delay or jeopardise the proceedings, in order to ensure a smooth progression of the case.

Third-party funding

The financing of an arbitration claim by third parties is not a novel feature in the international arbitration practice. However, considering a significant increase in funding activity within recent years, the new DIAC Rules address the issue by conferring over the Tribunal powers to order a disclosure of the existence of third-party funding arrangement and, if this is the case, then decide on a specific apportionment of the arbitration costs.

Soft Scrutiny of the arbitral award

Under the new rules, the Tribunal shall submit its draft final award for the Secretariat’s comments as to the compliance with applicable formalities and procedural requirements, in order to further strengthen the enforceability of awards rendered under the DIAC Rules.

Default seat of arbitration

In the new DIAC Rules, the default seat of arbitration has been changed from Dubai, with its civil law system, to the DIFC, Dubai’s independent free-zone governed by the common law framework. The applicable curial law will, therefore, be the Arbitration law of the DIFC, which is based on the UNCITRAL Model Law and distinct from the arbitration provisions of the UAE Civil Procedure Code applicable in Dubai. Accordingly, parties will be able to enforce their arbitral awards before the DIFC courts instead of Dubai local courts.

Place of signing of the arbitral award

Due to the ambiguity existing in the UAE legislation in respect of the requirement of signing an award in the UAE, the DIAC being conscious of such burden and with due regard to the existent international practice, clarified in its new Rules, that the award will be deemed to be rendered in the seat of arbitration without the necessity of physical presence of the Tribunal.

Confidentiality and publication of awards

The DIAC Rules, both current and new, provide for the parties’ duty to keep confidential all awards and orders in their arbitration, together with all other documents produced in the course of arbitration proceedings. At the same time, in order to contribute to a consistent application of law and main legal principles and promote a better understanding of the arbitration process amongst its users, the DIAC envisages in its new rules the right to publish awards upon the consent of the parties or in redacted form. The above will benefit the development of international arbitration, preserving the parties’ fundamental rights of confidentiality of their arbitration proceedings.

Shariah arbitration

With due regard to the differences between Eastern and Western methods and principles of arbitration, the DIAC decided to address the needs of the regional community in effective dispute resolution under shariah law. Under the new rules, the DIAC will maintain a list of arbitrators qualified in Islamic law to ensure effective shariah-compliant arbitration.

Conciliation

In addition to arbitration services, the DIAC also provides conciliation services that allow the parties to resolve their dispute at the earliest stage of a conflict in an expeditious and cost-effective manner.

In its new rules, the DIAC introduces special provisions governing the conciliation proceedings. The said provisions envisage a time limit of 15 days for submission of reply to an application for conciliation and conclusion of the proceedings within two months from the appointment of conciliator by the Executive Committee.

Tax application

Until very recently the UAE was known to be a tax-free country. However, on 1 January 2018, the UAE Federal Decree Law No. 8 of 2017 has come into force, whereby a VAT at a rate of 5 per cent was introduced in the UAE.

In this regard, the DIAC considered it necessary to address the matter and to determine in its new rules a tax application procedure. The new DIAC Rules clarify for its users that the amounts paid to arbitrators do not include any taxes or charges. As such, the recovery of any taxes or charges will be a matter solely between the arbitrators and the parties.

Promoting and enhancing the arbitration services worldwide

The DIAC is regularly present at different local and international events and conferences. On the sideline of global events, the DIAC organises Open Dialogues and Business Lunches in order to create public awareness about the integrated arbitral methods and procedures, as well as successful dispute resolution practices through arbitration under the DIAC Rules in the Middle East.

In the past, the DIAC has organised Dubai Business Lunches all over the world, inter alia Vienna, Moscow, Copenhagen, Shanghai, Washington, Milan, Melbourne, Sydney, Paris and Buenos Aires. Furthermore, the DIAC is regularly holding Arabic and English training courses in Dubai such as DIAC 40 (a young practitioners’ group created in 2015), organising conferences and workshops during the Dubai Arbitration Week and throughout the whole year, sponsoring exclusive arbitration events, receiving delegations and universities’ etc.

The recent events hosted by the DIAC demonstrated a high interest of business communities and legal practitioners in considering Dubai as the leading economic and arbitration hub in the Middle East region.

Being aware of the significance of developing cooperation in order to enhance dispute resolution services globally, the DIAC has entered into a number of strategic cooperation agreements, inter alia, with the Permanent Court of Arbitration, the Dubai Maritime Arbitration Centre and the Korean Arbitration Centre. The above-mentioned agreements provide for different forms of cooperation between the entities for the benefit of private sector, including organisation of joint conferences and seminars, development of training programmes and mutual assistance in resolving disputes.

In September 2016, the DIAC signed a memorandum of understanding with the Dispute Resolution Authority (DRA) of the DIFC for the purposes of facilitating the recognition, ratification and enforcement of DIAC arbitral awards in the DIFC. And in October 2016, the DIAC launched its new representative office in the DIFC to further strengthen its cooperation with the DRA.

Recognition

The DIAC is proud to be the number-one international arbitration centre in the Middle East.

This success is attributed to the fact that the DIAC is in continuous process of streamlining and enhancing its policies to provide the international business community with the highest quality and most efficient services.

A further substantive factor contributing to the effective functioning of the DIAC is the fact that in recent years the UAE has developed into an arbitration-friendly jurisdiction and has demonstrated a progressive approach towards the enforcement of arbitral awards.

As a result, the DIAC, being the reputable international arbitration institution it has become over the recent years, is considered as the first choice for many local and international companies and individuals for resolving their commercial disputes through arbitration.