Historic changes to the UAE’s arbitration landscape
While the UAE passed Federal Law No. 6 of 2018 (the UAE Arbitration Law), which is based largely on the UNCITRAL Model Law – bringing it into line with international best practice – DIAC’s hotly anticipated revamped rules for 2018 did not follow.
Fast forward to September 2021 when the Emirates Maritime Arbitration Centre (EMAC) and DIFC-LCIA Arbitration Centre (DIFC-LCIA) were closed, with cases being transferred to the DIAC in accordance with Decree No. 34 of 2021.
The last major update to the DIAC’s arbitration rules was made in May 2007 (Old Rules). Since then, there have been many changes to the practice of arbitration, which have sought to encourage efficiencies and greater cost-effectiveness of arbitration. The changes introduced by the New Rules follow suit and are timely, following its absorption of EMAC’s and the DIFC-LCIA’s caseloads.
Game changers
The main aim of the New Rules is to better reflect the needs of the business community that the DIAC serves, by streamlining existing processes and introducing new ones.
Examples include the ability to serve the Request for Arbitration and the Answer by email or by use of an electronic case management system – gone are the days of arriving at the Chamber of Commerce building with numerous hard copies, hoping you arrived in time to submit in person. Use of an electronic case management system is reflective of the DIFC-LCIA’s approach to case management. It also takes cognizance of the (almost) post-COVID era in which we now find ourselves.
There are a number of new provisions included too, many of which were previously heralded for introduction in the hotly anticipated 2018 update to the rules. For example, consolidation, joinder, expedited proceedings, access to an emergency arbitrator and conciliation are now included.
The New Rules will take effect from March 21, 2022 and will apply to all new requests for arbitration submitted after this date, with the exception of expedited proceedings, which will only apply to agreements to arbitrate made after March 21, 2022 unless the parties agree otherwise. By default, for all ongoing arbitration cases the current rules will continue to apply.
Administrative oversight of cases will now be managed by the DIAC’s new Arbitration Court (replacing the Executive Committee).
Inclusivity
Historically, the DIAC was a part of the Dubai Chamber of Commerce and Industry (DCCI).
The New Rules will apply to an arbitration that refers to either of the DIAC or the DCCI, to resolve the anomaly and provide certainty.
Change in default seat
As previously intended under the 2018 updated rules the New Rules provide that:
- In the absence of the parties’ agreement on the seat of the arbitration and in the absence of any reference to an agreed location/venue, the default seat shall now be the Dubai International Financial Centre (DIFC). This is a major departure from the Old Rules, which established onshore Dubai as the default seat.
- Any award shall now be deemed to have been issued at the seat of the arbitration, regardless of where it was actually signed by the arbitrator(s) and regardless of whether it has been signed by hand or electronically. This is reflective of DIFC law and ought to be sufficient to overcome challenges to DIAC awards seen in the past, made on the basis that an award was not physically signed in onshore Dubai (causing unnecessary expense and delay to the closure of proceedings).
Greater flexibility
The Old Rules required that, once appointed, the tribunal notify the parties of the date and venue for the preliminary meeting within 30 days from the date of transmission of the file to the tribunal. However, the New Rules require only that the tribunal contact the parties within 15 days of receiving the file, with a view to setting the date for a preliminary meeting. This gives the tribunal and parties greater flexibility to schedule the preliminary meeting at a mutually convenient time and place.
The New Rules introduce mechanisms for the consolidation of proceedings and joinder of a party or parties, each by way of application to the DIAC Arbitration Court or by reference to a tribunal once constituted. This is in keeping with international best practice, with both measures affording greater time and cost-efficiencies for parties to a DIAC arbitration.
Innovative approach to appointments
A perennial issue in international arbitration proceedings is disagreements between the parties on the choice of a sole arbitrator or chairperson to a panel of arbitrators.
Ordinarily, such disagreements have routinely delayed proceedings from the outset, particularly where the arbitration agreement is unclear or fails to include a mechanism for the appointment. The New Rules seek to prevent such delay, with the introduction of prescriptive steps (including timeframes) for the appointment of a sole arbitrator or chairperson.
Third party funding
Parties are now required to disclose the fact that they have entered into a third party funding arrangement, from the outset.
Moreover, after constitution of the tribunal, the parties are not permitted to enter into such arrangements if it will or may give rise to a conflict of interest between the funder and a member of the tribunal.
Expedited proceedings
Another time-saving development under the New Rules is the introduction of the process of expedited proceedings, where the parties agree to it, for relatively straightforward disputes or where the value in dispute is small and a drawn-out procedure would be inefficient and cost-prohibitive.
Time for, signature and publication of the award
The time for rendering the Final Award remains six months from transmission of the file to the tribunal, but it may be extended at any time by written agreement of the parties, by the DIAC Arbitration Court on its own initiative or by application of the tribunal.
While an award may now be signed electronically, in the event it is signed by hand (in ink) it must be signed on each and every page. Awards may now be published with the consent of the parties.
Costs of the arbitration
While the Old Rules obliquely referred to an award for costs being granted, the extent of what ‘costs of the arbitration’ included was cause for dispute and frustration. The New Rules provide welcome clarity on the matter, with costs including not only the DIAC’s administrative fees and the fees and expenses of the tribunal, but also expert fees and legal representatives’ fees.
The New Rules also stipulate that the Final Award shall fix the costs of the arbitration and its final apportionment between the parties.
Comment
In conclusion, the New Rules will encourage businesses to retain arbitration clauses in their contracts and to continue to refer disputes to the DIAC. This is another positive development for Dubai as an arbitration hub both regionally and globally.
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Client Alert 2022-075
