Quarterly Update Arbitration & Litigation 04/2021
The new 2022 DIAC arbitration rules and the administration of DIFC-LCIA arbitrations old and new
Legal Development 21 March 2022 21 March 2022
The Dubai International Arbitration Centre (the “DIAC”) has issued new arbitration rules (the “2022 DIAC Rules”). The new rules will apply to all arbitrations referred to DIAC after the rules come into effect on 21 March 2022. The 2022 DIAC Rules embrace modern features of arbitration and, for the first time, include provisions on consolidation of multiple arbitration proceedings, joinder of third parties, expedited proceedings, and emergency arbitration. In this article, we provide an overview of some of the key features of the new rules and the administration of DIFC-LCIA arbitrations old and new.
The revisions to the rules follow in the wake of Decree No. 34 of 2021 (Concerning the Dubai International Arbitration Centre) (the “Decree”) (see our press release on the Decree here). In accordance with the Decree, as of 21 March 2022, DIAC will accept the filing of new arbitration cases subject to a DIFC-LCIA arbitration agreement. Such cases shall be administered by DIAC under the new 2022 DIAC Rules. Ongoing cases under the DIFC-LCIA Rules will continue to be administered under the DIFC-LCIA Rules, with procedural adjustments available to allow an award to be issued as an LCIA award (with DIAC remaining responsible for financial aspects of case administration).
The new features of the 2022 DIAC rules include:
- Multiple contracts and consolidation: A party can now submit a single request for arbitration in respect of claims arising out of multiple arbitration agreements provided all parties agree to such consolidation, or that the tribunal is satisfied that the arbitrations involve the same parties, the agreements to arbitrate are compatible, and (i) the dispute arises out of the same legal relationship(s), or (ii) the underlying contracts consist of a principal contract and its ancillary contract(s), or (iii) the claims arise out of the same transaction or series of related transactions . Multiple arbitration proceedings can also be consolidated into a single arbitration (including after the constitution of the tribunal) .
- Joinder: Third parties can now be joined to proceedings as additional claimants or respondents (including after the constitution of the tribunal) where (i) all parties (inclusive of any party to be joined) have consented in writing to the joinder, or (ii) the tribunal is satisfied that any such party to be joined may be a party to the agreement to arbitrate referred to in the Request for Arbitration .
- Expedited proceedings: Proceedings can be expedited where (i) the sums claimed and counterclaimed are equal to or less than AED1,000,000 (exclusive of interest and legal representation costs), (ii) the parties agree in writing, or (iii) in cases of exceptional urgency . In such cases, the award must be issued within three months of the date when the tribunal received the file (unless otherwise determined by the Arbitration Court) . Importantly however, provisions relating to expedited proceedings only apply to arbitration agreements made after the Effective Date (unless the parties agree otherwise) .
- Emergency arbitration: A party can now apply for the appointment of an emergency arbitrator and seek emergency interim relief .
- DIFC as the default seat of arbitration: As anticipated by Article 4 of the Decree, the default seat under the 2022 DIAC Rules is the Dubai International Financial Centre (the “DIFC”) . This means that unless parties specify a different seat in their arbitration agreement, the common-law DIFC Courts will have jurisdiction over the supervision of DIAC arbitration proceedings, as well as the ratification and annulment of arbitral awards. The arbitral tribunal does however retain the power to determine that a seat other than the DIFC applies after considering any observations from the parties and other relevant circumstances.
- Legal fees can be recovered: Settling a previous debate on the issue of the recoverability of legal fees which saw the Dubai Courts annul the award of legal fees in several cases, the 2022 DIAC Rules make it clear that legal fees can be awarded by the tribunal. The 2022 DIAC Rules also expressly provide for and permit the use of third-party funding in arbitration provided that the funded party discloses that fact, the identity of the funder, and whether the funder has committed to an adverse costs liability .
Decree 34 and the 2022 DIAC Rules usher in a new age for international arbitration in Dubai. With much of the initial concerns regarding the implementation of Decree 34 now behind us, and a modern set of arbitration rules set to be administered by a single institution, the stage is set for Dubai’s ambitions as a leading international arbitration hub to continue to flourish.
A full set of the 2022 DIAC Rules can be found here.