Dubai International Arbitration Centre issues its new Arbitration Rules

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. For a summary of the Decree’s contents, please see our articles here, here and here. Whilst a number of questions remain, the wait for the new Dubai International Arbitration Centre (“DIAC”) Rules is finally over and with that, a major layer of uncertainty in relation to arbitration in Dubai is removed.

DIAC announced the publication of its new rules, the DIAC Arbitration Rules 2022 (the “Rules”) on 2 March 2022, together with the appointment of its Arbitration Court, which has now replaced the Executive Committee. The Rules have been published in advance of their coming into force on 21 March 2022 and they have been eagerly awaited by the arbitration community.

The Rules are a complete update on the 2007 version and they appear to have been drafted with the best modern practices in mind and an objective of delivering flexibility and choice to the parties. Whilst it remains to be seen how the Rules will work in practice, the Rules appear to reflect DIAC’s vision and desire to position itself as one of the world’s top five arbitration centres in the next three years. We are pleased to see that a number of areas which we considered in our Dubai International Arbitration Week panel discussion have been addressed by DIAC and brought in line with the other major international arbitration centres in the world.

The update to the Rules is quite general. Among other things, they now confirm that the DIFC is the default seat (as provided for by Decree), and they take into account modern day arbitration developments, such as third party litigation funding. The essential overall approach to the procedure of arbitral proceedings remains, but some key changes have been introduced aimed at increasing efficiency and suitability of the use of the Rules to the business community.

The previous version of the DIAC rules did not contain any provisions dealing with multiple contracts and, therefore, did not reflect the increasingly complex and multi-layered commercial transactions particularly common to the Middle East region. This shortcoming has been dealt with in the Rules, with detailed provisions dealing with disputes arising out of multiple contracts as well as joinder of parties and consolidation of arbitration proceedings being included.

As far as urgent relief is concerned, the previous expedited formation of the Tribunal process has been replaced with the ability to apply to an emergency arbitrator. There are also detailed provisions dealing with interim measures, including the ability to apply for security for costs, which is something that will no doubt appeal to the maritime community. In addition, the Rules also introduce expedited proceedings for instances where (i) the parties so agree in writing, (ii) there is exceptional urgency as determined by the Arbitration Court or (iii) the claim and counterclaim amount does not exceed AED 1,000,000. The expedited process envisages that the award is handed down within three months from the date of transmission of the file to the Tribunal, as opposed to the usual six-month period, and that period can only be extended by the Arbitration Court on exceptional grounds.

Last, but definitely not least, the Rules have also settled the uncertainty surrounding recoverability of legal fees in DIAC arbitration proceedings. Whilst the previous rules were silent on the question, there was scope for some argument, following the change in the default seat from onshore Dubai to the DIFC pursuant to the Decree, that legal fees could be recoverable. It is, therefore, very helpful that the Rules now address this expressly so that legal costs will be recoverable by default in any arbitration proceedings conducted pursuant to the Rules. This development brings DIAC in line with the internationally accepted approach to recoverability of legal costs.

The publication of the Rules prior to them coming into force is positive and will provide an opportunity to the users of DIAC to familiarise themselves in advance with the revised Rules. The drafters of the Rules appear to have seized the opportunity to bring DIAC in line with modern international best practice and have prepared a set of Rules allowing DIAC to deliver flexible and efficient arbitration services to the business community. It remains to be seen in practice how the Rules work, but any moratorium on including DIAC arbitration clauses in contracts due to uncertainty over the amendments to the Rules is now over.

For more information and advice, please contact Rabih Tabbara or Natalie Jensen.

Authors

Rabih Tabbara, Partner

Natalie Jensen, Partner