Introduction
The much publicised launch of the DIFC (“Dubai International Financial Centre”) / LCIA (“London Court of International Arbitration”) Arbitration Centre (“the Centre”) promises to herald a new chapter in Dubai’s aim to become a leading Arbitration Centre.
In conjunction with the opening of the Centre come amendments to the DIFC Arbitration Law which is currently at the consultation stage and is expected to be enacted in the next few months. This new law will extend the jurisdiction of the Centre from one restricted to DIFC under the old law, to parties anywhere in the world under the new law if they choose the Centre. At the same time the Ministry of Economy has also posted a proposed new UAE Arbitration Law on its website. Together these developments promise to alter the landscape of arbitration in both Dubai and the region and perhaps even beyond. They are certainly geared towards propelling Dubai as a worldwide centre of excellence for arbitration. This could also be important for commodity traders in the region, who may be particularly attracted by the Centre with its ability to conduct arbitration on the doorstep but along the English model with which traders will have become familiar. With the development of Dubai Multi Commodities Centre, the availability of the Centre as a potential forum for dispute resolution could be a mutually beneficial convenience.
The Centre’s Rules
The Centre’s Arbitration and Mediation Rules (“the Rules”) will be a close adaptation of the LCIA Rules, with minor changes to align them with the Centre’s needs. This has the advantage of participants and practitioners being familiar with the framework. It can also be seen as an attempt to develop the rules so that they reflect the best international norms.
In addition, to the Centre there are two crucial pillars which will support the arbitral process, namely the proposed DIFC Arbitration Law and the role of the DIFC Court from which the DIFC Arbitration Law derives its authority.
The scope of the DIFC Arbitration Law
The DIFC Arbitration Law is an adoption of the UNCITRAL Model Law on International Commercial Arbitration, with amendments aimed at improving its provisions. It was circulated for consultation on 16 February 2008 and it is expected to be enacted soon after the consultation period of 30 days has ended.
On that date it will replace the current DIFC Arbitration Law (No 8 of 2004) which will be repealed and replaced in its entirety by the new DIFC Arbitration Law. At present only a limited number of disputes fall within the potential jurisdiction of the current DIFC Arbitration Law, namely disputes arising out of or in connection with the DIFC and it also requires one of the parties to be a person entitled to bring an action before the DIFC Courts. A key feature of the new law is that companies who have no connection to the DIFC will be able to choose the Centre as the seat and/or the place of the arbitration for any dispute, subject to any system of law. This development is designed to help to push the Centre to the forefront of international arbitration in a place at a business and geographic hub.
The role of the DIFC Court
The perceived disadvantage of a number of arbitration jurisdictions in the Middle East (and elsewhere) is that the local courts interfere in the arbitral process. This is a complaint of many businessmen who enter into arbitration agreements so that they do not have to engage extensively with local courts and can resolve any dispute using expert arbitrators of their choice and in confidential, non public proceedings.
The new DIFC Arbitration Law grapples with these issues directly. The Article is short but to the point:
“In matters governed by this Law, no Court shall intervene except where so provided in this Law”
The circumstances in which the Court can intervene are limited broadly to the following, assisting in the appointment of the tribunal (if necessary), determining challenges to the appointment of an arbitrator and his jurisdiction, enforcing the tribunal’s interim orders and dealing with applications to set aside an arbitral award (on very limited grounds).
Where the DIFC Court is permitted to intervene, its role appears to be designed to support the arbitral process rather than provide an alternative forum or an appellate function (for instance, where the DIFC Court is called upon to assist in selecting the arbitrator or to make an order to enforce an interim measure ordered by the arbitral tribunal).
The DIFC Arbitration Law has clear provisions as to the process of obtaining the recognition and ratification of awards. In terms of enforcement, the holder of an award from the Centre will be able to enforce its award through the DIFC Courts with very limited grounds for refusing recognition or ratification such as public policy grounds. Such awards will be recognised internationally through the New York Convention or may be converted into DIFC Court judgments and taken to the local Dubai Court for enforcement in Dubai (without interference under and already determined procedure awards) and thence in the rest of the UAE and GCC.
This ought to give participants confidence that their decision to choose arbitration as a final and binding mechanism will be respected and will boost the Centre’s standing as a hub for arbitration. Furthermore, over the last 5 or 6 years the UAE, and particularly Dubai, has developed much of the support services required for the resolution of disputes. In particular, there are many of the leading UK and US firms in the dispute resolution field here, including the international practice in which we work. The importance of a critical mass of potential advisers recognised as experts in arbitration cannot be understated. In some fields there is already a body of competent arbitrators, but where that is not the case, arbitrators can be chosen from anywhere in the world.
The Future
The DIFC is ranked as the world’s fastest-growing international financial centre. There is a certain logic to the premise that the Centre is likely to capitalise on the success of the DIFC and more generally the success of the UAE as a hub for international trade and financial services and become over a number of years a world ranked international arbitration centre.