Once in a decade update for DIAC Rules
In a rare case of good news for UAE arbitration in 2017, the Dubai International Arbitration Centre (“DIAC”) announced during the Dubai Arbitration Week in November 2017 that its new set of arbitration rules would be enacted in 2018, replacing the current 2007 rules.
A pre-release version of the 2018 DIAC Rules (the “Proposed 2018 Rules”) has now been circulated, and they look pretty good. Despite recent controversies for arbitration in the UAE, DIAC remains one of the busiest international arbitration centres in the world and, provided the new rules are enacted as promised, they should be welcomed by arbitration users and practitioners in the region.
The Proposed 2018 Rules include all of the expected revisions for a modern set of international arbitration rules, including emergency arbitrator, expedited procedure, and consolidation provisions. However, they also include a number of significant new provisions that are clearly designed to address the specific issues currently affecting arbitration in the UAE. The key new provisions are highlighted below.
The default seat of the arbitration is DIFC (Article 25.1)
The default seat has been moved from Dubai to the Dubai International Financial Centre (“DIFC”). DIFC is a separate jurisdiction within the Emirate of Dubai that is common-law based, and is seen as more arbitration-friendly than the civil-law based Dubai courts.
"The Proposed 2018 Rules include all of the expected revisions for a modern set of international arbitration rules, including emergency arbitrator, expedited procedure, and consolidation provisions."
If the seat of the arbitration is DIFC then the DIFC courts, and not the Dubai courts, will be the competent court to rule on issues arising from the arbitration; for instance interim measures, jurisdiction and other objections, and the enforcement of the award. Parties may of course choose an alternative seat; however, making DIFC the default signals an intention from DIAC to align itself with the procedural laws of other major arbitration centres.
Parties may be represented by persons of their choice (Article 7.1)
Parties’ ability to choose their representatives is seen as a fundamental right in international arbitration. However, this has recently come into question in the UAE following the passing of Ministerial Resolution No. 972 of 2017 (“Resolution 972”), which prohibits anybody who is not a registered UAE lawyer from representing parties before arbitral tribunals. As registered lawyers in the UAE must be UAE nationals, this law on its face excludes not only non-lawyers but also anybody who is not a UAE national from representing parties in UAE arbitrations.
The ultimate effect of Resolution 972 within Dubai is still unclear. However, the Proposed 2018 Rules expressly permit parties to be represented by persons of their choice “irrespective of their nationality or professional qualifications”, and if accepted in the enacted Rules it will resolve the issue for DIAC arbitrations.
Power to sanction (Article 50)
Another new provision that seems to be a response to a controversial new law (Article 257 of the Penal Code), Article 50 of the Proposed 2018 Rules empowers the arbitral tribunal to impose sanctions on either party when there is an attempt to unfairly obstruct the arbitration, jeopardise the award, make false statements and so on. This will no doubt be welcomed by arbitrators in dealing with frivolous allegations of wrongdoing against experts and tribunal members.
Other notable provisions
- A new power for arbitral tribunals to suspend (Article 6.2), which will allow objections for failure to comply with pre-arbitral requirements (such as the DAB procedure in a FIDIC Contract) to be resolved within the arbitration and without having to go to court.
- Arbitral Awards may now be signed by tribunal members overseas rather than having to be signed in the UAE (Article 42.2).
- Legal costs can be awarded (Article 2).
- Parties may choose Shariah-compliant arbitration, in which case the arbitrators must be Islamic Law qualified (Article 52).
The Proposed 2018 Rules are an ambitious set of rules that provide an update in line with current international arbitration practice while also addressing a number of issues unique to arbitration in the UAE. The new rules should be welcomed, and we will keep you updated as to their enactment.