In last year’s Annual Review, we provided an update on arbitration in the Middle East, following the introduction of the Saudi Centre for Commercial Arbitration (the “SCCA”) and amendments to the UAE arbitration law, Federal Law No. 6 of 2018.[1]
As Shahed Ahmed and Leonie Sellers explain, the arbitration landscape in the Middle East has continued to develop throughout 2024, with the Abu Dhabi Chamber of Commerce and Industry’s launch of the Abu Dhabi International Centre (branded as “arbitrateAD”), in December 2023 and the subsequent publication of the rules in February 2024 (the “arbitrateAD Rules”).
arbitrateAD replaced the Abu Dhabi Commercial Conciliation and Arbitration Centre (“ADCCAC”), Abu Dhabi’s previous principal arbitration centre that was established in 1993. From 1 February 2024, all new cases registered with the centre are administered under the arbitrateAD Rules, with existing ADCCAC cases continuing under the ADCCAC Rules until conclusion.
The arbitrateAD Rules reflect international best practice and, it is anticipated, will boost the efficiency, cost-effectiveness, and the expeditious resolution of disputes. arbitrateAD and the arbitrateAD Rules are yet another welcome development to the arbitration framework in the Middle East, enhancing the arbitration offering in the region and the UAE’s profile as a regional and global hub for arbitration.
For the purposes of this article, unless the context requires otherwise, all capitalised terms are as defined in the arbitrateAD Rules.
Key Provisions
Existing arbitrations (Article 1) and Transitional Provision (Article 53)
As noted, current arbitrations will continue to be administered by ADCCAC. Article 53(2) provides:
“After the date of entry into force of these Rules, the 2013 ADCCAC Arbitration Rules shall continue to apply to any pending arbitrations being administered under those rules.”
However, any new arbitrations commencing on or after 1 February 2024, for which the parties to a contract have agreed to submit a dispute to ADCCAC, will be administered by the Centre in accordance with the arbitrateAD Rules. Article 1(3) of the arbitrateAD Rules provides:
“These Rules shall come into force on 1 February 2024 and, unless otherwise agreed by the parties, shall apply to any arbitration which is commenced on or after that date.”
Multiple Parties, Multiple Contracts, Joinder and Consolidation (Articles 9-12)
As was the case with both the introduction of the SCCA Arbitration Rules in 2023 and the updated Dubai International Arbitration Centre (“DIAC”) Rules in 2022, the arbitrateAD Rules introduce the concept of both joinder and consolidation.
The arbitrateAD Rules permit a party to the arbitration or a third party to request the Court to join one or more additional parties to the arbitration. In addition, the Court has discretion to admit an additional party to join if (a) all parties, including the additional party, agree, or (b) the Court is satisfied that the additional party is prima facie subject to the Centre’s jurisdiction.
Further, under the arbitrateAD Rules, a party may now request the Court to consolidate two or more arbitrations into a single arbitration, subject to meeting certain criteria.
Seats of arbitration (Article 22)
In the event the parties have not agreed to a seat of arbitration (or a place, which shall, under the arbitrateAD Rules, be the seat), the default seat shall be the Abu Dhabi Global Market (“ADGM”). Article 22(2) states:
“Failing agreement by the parties on either the Seat or the place of the arbitration, the Seat shall be the ADGM, unless the Court, after giving the parties a reasonable opportunity to be heard, decides otherwise, considering all the relevant circumstances.”
This approach is similar that as adopted under the DIAC Rules 2022, which provides for the DIFC (being an offshore jurisdiction) as the default seat unless otherwise designated.
Terms of Reference (Article 24)
The Tribunal has discretion to decide whether to issue Terms of Reference either on its own volition or upon the application by a party. The arbitrateAD Rules specifies the issues the Terms of Reference are to include unless otherwise directed by the Tribunal. Like the DIAC Rules 2022, the previous ADCCAC Rules did not make provision for Terms of Reference.
Emergency Arbitration (Article 35)
A party may seek urgent Preliminary Measures before the Tribunal is constituted and irrespective of whether it has filed a Request. This is a positive step to see the arbitrateAD Rules embrace such measures which aligns with other major institutional rules providing a party to obtain interim measures to prevent irreparable harm.
Expedited Proceedings (Article 36)
A further change in approach under the arbitrateAD Rules is the introduction of the concept of expedited proceedings, which was not previously included in the ADCCAC Rules. Broadly in line with the expedited procedure provisions provided for under the DIAC Rules 2022 (as well as the ICC Rules), pursuant to Article 36 of the arbitrateAD Rules, unless the parties agree otherwise, where the aggregate amount of all Claims and Counterclaims do not exceed AED 9 million, the expedited proceedings apply. This is a welcome inclusion, with lower value claims benefiting from streamlined proceedings which, amongst other things, shall be heard by a sole arbitrator, can be decided on the basis of documentary evidence, and with the final Award being issued within four months from the date the case file is submitted to the Tribunal.
Scrutiny of Awards (Article 40)
In line with the ICC and DIAC Rules 2022, Article 40 provides that the Tribunal shall issue a draft Award to the Court for scrutiny. The powers granted to the Court are not as broad as those provided under the ICC Rules; however, they do provide that the ICC Court are entitled to draw attention to points of substance. The Court’s power of scrutiny under the arbitrateAD Rules are more in line with the DIAC Rules 2022 and relates to Court scrutinising the form of Award, apparent clerical errors and any inconsistencies in the Award.
Confidentiality (Article 47)
The arbitrateAD Rules provide for prescriptive provisions around confidentiality in comparison to the ADCCAC Rules. The provisions provide for a broader group of parties to whom confidentiality applies and sets out clear exceptions. In addition, the Tribunal is empowered to enforce the confidentiality obligations and issue an order or award imposing sanctions, damages or costs and take measures to protect confidentiality.
Third Party Funding (Article 48)
Unlike the ADCCAC Rules which were silent on the point of third-party funding, Article 48 of the arbitrateAD Rules requires the parties to disclose the existence of third-party funders which includes, where relevant, an obligation on a Claimant to include such information in its request for arbitration. This approach follows in the steps of other major institutional rules, such as ICC and DIAC, and provides much needed clarity in light of the increasing interest in third-party funding in the region.
Legal Costs (Article 50)
The issue of whether a Tribunal has the power to apportion costs that include a parties’ legal costs and expenses has been the subject of much discussion and contest, with a number of arbitral rules, including the ADCCAC Rules being silent on this issue. Whereas the arbitrateAD Rules provide some much welcomes clarity on this issue, noting that, unless otherwise agreed and at the request of a party, the Tribunal shall apportion the parties’ legal costs and expenses between the parties, having regard to the outcome of the case, each party’s contribution to the efficiency and expeditiousness of the arbitration and any other relevant circumstances.
Conclusion
The introduction of arbitrateAD and the arbitrateAD Rules signifies yet further development of the arbitration landscape in the UAE. The arbitrateAD Rules are modern, in line with international standards and further provide transparency and clarity on issues that were not addressed in the previous ADCCAC Rules. Whilst it remains to be seen how the changes impact arbitration practice in Abu Dhabi and the UAE as a whole, arbitrateAD and the arbitrateAD Rules have, so far, been positively received.
[1] https://www.fenwickelliott.com/knowledge-hub/annual-review/ar-2023/arbitration-in-the-middle-east-an-update/