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Decree No. (34) of 2021 Concerning the Dubai International Arbitration Centre

23 September 2021

On 14 September 2021, Decree No. (34) Concerning the Dubai International Arbitration Centre was issued. It came into effect on 20 September 2021. The decree abolishes two of Dubai's arbitral institutions, including the DIFC-LCIA, and replaces them with the Dubai International Arbitration Centre. We consider the Decree and its impact.

On 14 September 2021, Decree No. (34) of 2021 Concerning The Dubai International Arbitration Centre ("DIAC") ("Decree") was issued by His Highness Sheikh Mohammed bin Rashid Al Maktoum. The Decree took effect on 20 September 2021.
 
The Decree is aimed to enhance the efficiency of Dubai's alternate dispute resolution institutions and promote the Emirate of Dubai as a global arbitration hub. These changes follow-on from Federal Law No. (6) of 2018 on Arbitration ("Arbitration Law").

The Decree annuls and supersedes various laws and has the practical effect of abolishing: (i) the Emirates Maritime Arbitration Centre ("EMAC"); and (ii) the Dubai International Finance Centre's ("DIFC") arbitration institute, which was a joint venture with the London Court of International Arbitration ("DIFC-LCIA").
 
Under the Decree, all cases currently being heard, or, that would have been heard, by EMAC or the DIFC-LCIA Centres will be administered by DIAC. Pursuant to the Decree, DIAC will have its headquarters in Dubai and open a branch in the DIFC. The DIAC Statute has also been amended by the Decree.

Impact

Cases already underway in the DIFC-LCIA will continue under DIFC-LCIA Rules, but will be administered and supervised by DIAC, unless the parties agree otherwise.
 
Where parties have arbitration agreements that refer disputes to the DIFC-LCIA, these remain valid. However, should such an arbitration agreement be commenced, DIAC will automatically replace the DIFC-LCIA as the arbitration centre. The DIAC Rules will replace the DIFC-LCIA Rules unless the parties agree otherwise. This is significant as the current version of the DIAC Rules is 14 years old. While the DIAC (2017) Rules have been promulgated, they are yet to be adopted by DIAC.
  
We suggest that parties and their counsel consider any existing arbitration agreements in light of this new regime and make amendments if necessary.

If parties are drafting new arbitration agreements we recommend they immediately cease referring disputes to the DIFC-LCIA. Parties should bear in mind, however, that the transition to DIAC's new DIFC branch may take some time and cause some uncertainty.

The Decree also provides guidance for those drafting arbitration agreements:

  • unless the parties agree otherwise, where they have selected the Emirate of Dubai as the seat or place of arbitration, the Arbitration Law shall govern the arbitration agreement and procedures. The Courts of Dubai shall have jurisdiction over any case, request or challenge concerning the arbitration award or procedure issued by a DIAC arbitral tribunal;
  • unless the parties agree otherwise, where they have selected the DIFC as the seat or place of arbitration, DIFC Law No. 1 of 2008 (or substitute legislation) shall govern the arbitration agreement and procedures. The DIFC Courts shall have jurisdiction over any case, request or challenge concerning the arbitration award or procedure issued by an arbitral tribunal in DIAC;
  • where the parties fail to agree a place or seat of arbitration, the DIFC will be deemed as that seat or place of arbitration. The above bullet point will then apply; and
  • parties may agree that hearings can be held electronically, allowing them to participate remotely in proceedings.   

Further to the Decree and amendments to DIAC Statute, the selection of the seat of the arbitration becomes critically important. Parties should be alert to the fact that reference to Dubai as the seat of arbitration does not mean the DIFC and vice-versa.
 
It is also likely that the Decree is an indication that the new DIAC Rules (2017), or other new rules, will soon be implemented.

 

If you require any further information, please contact Slava Kiryushin, Joshua Coleman-Pecha and James Fox.

Further Reading