New DIAC Decree aims to streamline arbitration in Dubai

Insights / / Dubai

On 14 September 2021 the Government of Dubai issued Decree No. 34 of 2021 concerning the Dubai International Arbitration Centre (the “Decree”), together with the Statute of Dubai International Arbitration Centre (the “Statute”). The Decree, which has potentially far reaching implications for arbitration in Dubai, aims to streamline arbitration and alternative dispute resolution within Dubai while the Statute implemented in order to update and reorganise the operations and structure of the Dubai International Arbitration Centre (“DIAC”).

The first and most impactful change effected by the Decree is to abolish the previously established DIFC Arbitration Institute (“DAI”) and Emirates Maritime Arbitration Centre (“EMAC”), with both effectively absorbed by DIAC. Assets, employees, financial allocation and any lists of arbitrators, conciliations and experts of the abolished centres are now transferred to DIAC. In addition, DIAC will replace the abolished centres in any existing arbitration agreements in which reference to those centres is made. The supervision of existing proceedings will likewise transfer to DIAC.

Our colleagues Rania Tadros and Natalie Jensen will be commenting on the impact with respect to EMAC.

In respect of the DAI, this is a significant change in the arbitration landscape. The DAI was one of the core parties involved in establishing the DIFC-LCIA Arbitration Centre (“DIFC-LCIA”), having entered into a joint venture with the LCIA, and it is not clear what the future of the DIFC-LCIA will be moving forward. The logical outcome is that the DIFC-LCIA will be absorbed by DIAC, though this has not been formally confirmed as of the time of writing and the Decree allows for a 6 month transition period. We understand that for the moment the DIFC-LCIA continues to supervise and handle the day-to-day operation of cases proceeding under its rules.

As to the structure and operation of DIAC, there are a number of important changes contained in the Statute. Pursuant to Article 4(b) of the Statute, the default seat of arbitration where there is no agreement between the parties is now the DIFC and accordingly the default supervising court of arbitration proceedings referred to DIAC is now the DIFC Court. This means that the default seat in the case of the vast majority of institutional arbitration proceedings in Dubai, assuming that the DIFC-LCIA is indeed absorbed by DIAC, will be the DIFC as opposed to Dubai Courts.

Article 5 of the Statute establishes a Board of Directors (the “Board”), Court of Arbitration (the “Court”) and Administrative Body. The Board will undertake overall supervision of DIAC, and its tasks include approving general policy and strategic plans, approving arbitration and conciliation rules, approving fees and approving regulations concerning membership of DIAC and registration on lists of arbitrators, conciliators and experts. We understand the Board has not yet been established.

The Court is tasked with overall supervision of alternative dispute resolution services provided by DIAC, and operates in a similar fashion to the ICC International Court of Arbitration. The Court’s tasks will include appointment of arbitral tribunals and conciliators, deciding on requests for recusal or dismissal of arbitrators and conciliators, scrutiny of draft arbitral awards to ensure their quality and enforceability, and fixing the costs and expenses of arbitration, conciliation and other services.

The Administrative Body includes an Executive Director, who will manage the DIAC and supervise day to day works, and broadly will provide administrative support in the running of arbitration and conciliation proceedings.

Finally, the Decree (together with the Statute) serves to annul and supersede a number of prior legislative decrees, the full list of which is set out in Article 8 of the Decree. In addition, the arbitration and conciliation rules of DIAC shall remain in force to the extent they do not contradict the provisions of the Decree and Statute. In effect, therefore, the DIAC Arbitration Rules 2007 currently in force are now amended by the terms of the Statute.

Moving forward, DIAC has 6 months from the entry into force of the Decree to implement the changes contained in the Decree and Statute. This will necessarily include modification of its conciliation and arbitration rules, as well as its operational structures.

In the long term, the above changes have the potential to benefit users of arbitration in Dubai by streamlining matters under the one roof whilst maintaining the judicial know how and experience of the DIFC Courts. In the short term, however, it remains to be seen how the Decree will be implemented and much will no doubt rest on the ultimate makeup of DIAC’s Board and Court.

If you have any questions, please contact Rabih Tabbara or Faris Shehabi.

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