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New rules boost Dubai’s international arbitration credentials

Out-Law News | 04 Mar 2022 | 4:05 pm | 2 min. read

The modernisation of arbitration rules for the Dubai International Arbitration Centre (DIAC) can help Dubai become a leading hub for international arbitration, an expert has said.

Dubai-based arbitration specialist Nesreen Osman of Pinsent Masons was commenting after the DIAC Arbitration Rules 2022 were finalised. The new rules will take effect on 21 March 2022 and will replace rules which have been in place since 2007.

The introduction of new arbitration rules for the DIAC has been timed to fit with the re-launch of the institution. Last year it was announced that the Emirates Maritime Arbitration Centre (EMAC) and the Dubai International Financial Centre’s Arbitration Institute (DAI) would be abolished and the rights and obligations of those centres would be transferred to the DIAC.

Osman said: “The new rules have gone a long way to bring the DIAC proceedings into line with those in other prominent global arbitration centres such as the ICC, the LCIA and SIAC. These new rules, set against the backdrop of the new DIAC centre, should significantly assist Dubai in achieving its aim of elevating its status as one of the top jurisdictions for arbitrations in the world.”

In a statement, the DIAC said the new rules are “designed to streamline arbitration procedures and facilitate the time efficiency of the proceedings, while maintaining a balance between autonomy of the parties and empowering the arbitrators to manage cases efficiently”.

Osman said there were several notable new provisions within the updated rules that businesses and arbitration practitioners would be interested in.

One of those changes concerns the introduction of an alternative process for appointing arbitrators.

The alternative process can be triggered if parties cannot agree on which arbitrators should be appointed to the tribunal for their case and have not otherwise set a mechanism for their appointment. In those circumstances, under the new rules, the parties can notify the DIAC that they are happy to trigger the alternative process. The alternative process would involve the DIAC suggesting at least three candidates to appoint, inviting the parties to recommend others and to list all the candidates by order of preference, and then inviting candidates to accept appointment, taking into account “the indicated order of mutual preference”.

The new rules also introduce a change to how the seat of DIAC arbitration proceedings is determined. The seat of arbitration is important because it can determine what the governing law applicable to the arbitration proceedings is in cases where the governing law for disputes is not otherwise agreed between parties in dispute, typically under contract.

If there is no agreement on the seat but the parties have agreed a location or venue for the proceedings to take place, then that venue or location will be deemed as the seat of the arbitration unless the parties agree otherwise. If there is no agreement on seat, venue or location, the Dubai International Financial Centre (DIFC) is considered the ‘initial’ seat until tribunal makes a final decision on the matter. This is a change from the previous position where the default seat of DIAC arbitrations was onshore Dubai.

The new rules also include detailed provisions enabling two or more related proceedings to be consolidated in order that they be considered by one tribunal. Further provisions also enable third parties to be joined to arbitration proceedings. No such provision was made for consolidation or joinder under the 2007 rules.

Other notable updates concern the criteria to meet to trigger expedited proceedings, and for the first time the new rules also make provision for the appointment of emergency arbitrators in cases where a party needs emergency interim relief.

The new rules will also enable hearings to take place via videoconferencing, for legal fees to be awarded as arbitration costs by a DIAC tribunal, and for conciliation to be pursued by the parties. None of those provisions were a feature of the 2007 rules.

Parties to DIAC arbitrations will also now be required to disclose third party funding arrangements.

Dubai’s ruler, His Highness Sheikh Mohammed bin Rashid Al Maktoum, hopes “to position DIAC as one of the world’s top five arbitration centres in the next three years”, according to Dr. Tariq Humaid Al Tayer, chairman of the DIAC board of directors, who said the new rules align with that vision.