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New Dubai law brings significant changes to DIFC dispute resolution structures

  • Legal Development 4 July 2021 4 July 2021
  • Middle East

  • Commercial Disputes

The Ruler of Dubai, H.H. Sheikh Mohammed Bin Rashid Al Maktoum, recently issued Dubai Law No. 5/2021 (the New DIFC Law), which brings about significant changes to the laws of the Dubai International Financial Centre (DIFC). In this article, we take a look at the New DIFC Law and what it means for the DIFC Dispute Resolution Authority, as well as for the DIFC Arbitration Institution.

The New DIFC Law

The New DIFC Law replaces, in its entirety, the original founding DIFC law issued in 2004 (the 2004 DIFC Law). In keeping with best global practice, the New DIFC Law is essentially aimed at broadening the scope of responsibilities for the DIFC and, according to the official media statement, "it also ensures the centre's operational, financial and administrative independence that is crucial for the continued growth and success of the centre”.   

What does this development mean for the DIFC litigation landscape?

Article 31 deals with the transfer of rights and obligations of the DIFC ‘Dispute Settlement Authority’. As of 27 April 2021, the tasks, powers, rights, and obligations entrusted to the DIFC’s Dispute Resolution Authority will  immediately operate as two separate bodies under the New DIFC Law in the form of the DIFC Courts and the DIFC Arbitration Institution. According to the official media statement, “this will allow each body maximum opportunity for growth and proper allocation of resources in respect of their separate mandates”.  

Article 32 deals with the DIFC Arbitration Institution and states that:

  • The Arbitration Institution (established under the 2004 Dubai Law) shall be considered an establishment independent of the ‘Centre Bodies’ (which are defined as, “the DIFC, the Dubai Financial Services Authority (DFSA), DIFC Courts, and any other body established by the laws of the DIFC)” and shall continue to carry out, without interruption, the tasks assumed under the 2004 Dubai Law;
  • The competencies of the Arbitration Institution, approval of its bylaw, formation of its board of trustees, and the competent authority to approve arbitration rules and proceedings, shall all be determined by the Chairman of the DIFC;
  • The Arbitration Institution shall have juristic personality, financial and administrative independence, and the Government shall allocate necessary financial resources to enable it to perform its functions independently of the ‘Centre Bodies’; and
  • All arbitration agreements subject to the Arbitration Institution shall be considered valid and effective. The Arbitration Institution shall continue to consider and examine all arbitration actions, without interruption, according to the rules and procedures approved, unless otherwise is agreed upon by the parties to arbitration.

Conclusion

The amendments should in our view be considered as positive as they:

  1. Serve to improve the Arbitration Institution’s independence and distance it from that of the DIFC Courts;
  2. Provide the Arbitration Institution with the levers and mechanisms to set prerogatives for the administration of arbitration related initiatives at a decentralized, more focused, level; and
  3. Provide flexibility and agility in a competitive modern dispute resolution world where arbitration centres are many.

The DIFC has been and remains our dispute resolution forum of choice, in this region and beyond.
 

DIFC background snapshot:

  • A specialised economic ‘free-zone’ in Dubai, established in 2004, with an impressive workforce of 25,600 professionals and 2,584 registered companies; 
  • Recognised as a leading financial hub for the Middle East, Africa and South Asia; and
  • Boasts an internationally recognised, independent regulator and a proven judicial system with an English common law framework.

For further information on this topic or the DIFC in general, please contact the authors.

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