Agreement for existing DIFC-LCIA arbitrations to be administered by LCIA

1 Apr

Decree No. 34 of 2021 concerning the Dubai International Arbitration Centre (the ‘Decree’) came into force in September 2021 and aimed to streamline arbitration in Dubai by amalgamating it under one institution – the Dubai International Arbitration Centre (‘DIAC’).

A crucial change introduced by the Decree was the abolition of the DIFC Arbitration Institute (‘DAI’) and the Emirates Maritime Arbitration Centre (‘EMAC’) which will now both fall under the remit of DIAC. Notably, DAI was one of the core parties to the joint venture which established the DIFC-LCIA Arbitration Centre (‘DIFC-LCIA’). The DAI was also the entity largely responsible for managing DIFC-LCIA operations. Consequently, one of the key questions that remained outstanding following the introduction of the Decree was the future of DIFC-LCIA arbitration and how existing DIFC-LCIA cases would be dealt with moving forward.

It was announced on 27 March 2022 that DIAC have reached an agreement with the London Court of Internal Arbitration (‘LCIA’), by which LCIA will administer all existing DIFC-LCIA arbitrations that were commenced on or before 20 March 2022 and which have been assigned a DIFC-LCIA designated case number. Additionally, DIAC and LCIA have agreed on a mechanism for the management of funds deposited with the DIFC-LCIA on account of arbitration proceedings, whereby DIAC shall transfer such funds to LCIA to distribute as required.

DIAC and LCIA have highlighted that the transition of these existing arbitrations between the two institutions may take some time but have emphasised that the LCIA will contact the relevant parties and tribunals as soon as the necessary arrangements have been put in place.

In relation to DIFC-LCIA cases commenced after 20 March 2022 or those commenced on or before 20 March 2022 which have not been formally registered and received a DIFC-LCIA case number, arbitrations will be administered by DIAC under the recently published revised DIAC arbitration rules. For further information on the revised DIAC arbitration rules, please see our previous article here. Payments in respect of these DIFC-LCIA arbitration proceedings will be paid into a DIAC bank account.

Ultimately, the announcement of this agreement between DIAC and LCIA should provide some reassurance to parties involved in existing DIFC-LCIA arbitrations as it clarifies under which rules their cases shall be administered and should reduce further delays in such proceedings.

For parties who may be subject to future DIFC-LCIA arbitrations under existing contracts, the announcement that such arbitrations will be administered by the DIAC also provides welcome clarity but simultaneously gives rise to important questions regarding how the DIAC’s administration of DIFC-LCIA arbitrations will operate in practice.

If you have any questions, please do not hesitate to contact us.