The Dubai International Arbitration Centre (DIAC) has adopted its amended 2022 Arbitration Rules as part of its efforts to strengthen Dubai’s position as a global alternative conflict resolution center. During a board meeting, the DIAC’s Board of Directors approved the modified rules. After being investigated by the DIAC’s Arbitration Court, the meeting was convened on February 25, 2022. The amended guidelines were established by a professional task group comprised of regional and international arbitration practitioners as well as DIAC Secretariat members. The updated Rules take into account recent developments in the field of international arbitration as well as the growing expectations of the business community. They are designed to improve the efficiency of arbitration procedures while also ensuring that users will benefit from a wide range of improvements.
What exactly is DIAC?
The DIAC was established in 1994 as a non-profit organization that provides arbitration services to regional and worldwide businesses. It is the Middle East’s largest arbitration center. The DIAC’s main objectives are to establish Dubai as a global leader in alternative dispute resolution, promote ADR services, and provide services to the international financial and commercial sectors. Since 2007, it has handled over 3,757 cases. The White & Case law firm and the Queen Mary University of London collaborated on the International Arbitration Survey, which ranked it among the top ten centers in the world.
His Majesty Sheikh Mohammed bin Rashid disbanded the Emirates Maritime Arbitration Centre (EMAC) and the Dubai International Financial Centre Arbitration Institute in 2021, merging their activities and assets into the DIAC.
The Dubai International Financial Centre (DIFC) Arbitration Institute Decree No. 34 of 2021, regarding the Dubai International Arbitration Centre (DIAC) (the Decree), went into force on September 20, 2021, and it dramatically transformed the arbitral institutions in Dubai.
The Decree abolished the Emirates Maritime Arbitration Centre and the Dubai International Financial Centre (DIFC) Arbitration Institute, i.e. the bodies previously responsible for administering arbitrations. Subject to the DIFC-LCIA Arbitration Rules under the purview of the DIFC-LCIA Arbitration Centre in collaboration with the London Court of International Arbitration (LCIA) and transferred all rights and obligations of the abolished centers to DIAC.
The DIAC has approved its long-awaited New Arbitration Rules, which will take effect in 2022.
On February 25, 2022, DIAC’s Board of Directors (Board of Directors) passed its long-awaited new arbitration rules to fulfill these objectives. (From “The New Rules”). Unless the parties agree otherwise, the New Rules will govern any new requests for arbitration and extraordinary processes, such as the appointment of an emergency arbitrator or an application for conciliation, received after March 21, 2022.
The New Arbitration Rules will undergo significant revisions in 2022.
- Consolidation, joinder, expedited hearings, an alternate process for selecting arbitrators, and extraordinary proceedings, such as emergency arbitrator and conciliation, are among the most apparent changes in the updated Rules.
- The parties may now claim the much-anticipated legal expenditures, which are now included in the arbitration costs.
- The updated standards will apply to all new arbitration petitions and special proceedings filed after this date.
- The DIAC has also announced the formation of its Arbitration Court, which was established by the DIAC’s Statute, which was issued by Dubai’s Government Decree No. 34 of 2021.
- The Arbitration Court takes over the Executive Committee’s responsibilities, including general supervision of the DIAC’s ADR services and monitoring of the DIAC’s administration of all proceedings.
Diac’s Structure 2022, under the New Arbitration Rules
DIAC is organized into three levels, according to the statute: a Board of Directors, a newly formed arbitration court (Arbitration Court), and an administrative body.
The Board of Directors consists of:
- It has extensive supervisory control over DIAC and can carry out any tasks or exercise any powers required to achieve the organization’s objectives.
- The Arbitration Court will be in charge of overseeing DIAC’s alternative dispute resolution services and managing all cases it administers. Including appointing arbitral tribunals and conciliation panels, as well as for deciding on challenges to arbitrators and conciliators, in place of the DIAC Executive Committee. The Arbitration Court will oversee DIAC’s alternative dispute resolution services and manage all cases it administers, including establishing arbitral tribunals and conciliation panels and deciding on challenges to arbitrators and conciliators.
- The executive director will lead DIAC’s administrative body, which will be in charge of the organization’s administration and day-to-day activities.
Expedited Arbitration Procedures Provision
The New Rules offer tools for quickly resolving certain types of disputes. Unless the parties agree otherwise in writing when the total of the monies claimed and counterclaimed is less than or equivalent to AED 1,000,000 (roughly US$272,250) exclusive of interest and legal representation fees; All parties agree in writing; or In circumstances of extreme urgency as assessed by the Arbitration Court upon application by a party, expedited processes will take place.
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Arbitrators are appointed.
The standard tribunal nomination and appointment rules are specified in Article 12 of the New Arbitration Rules. Parties may nominate arbitrators, who are then formally established by the Arbitration Court, as is customary. When the tribunal consists of only one arbitrator, the parties may agree to jointly propose an arbitrator; otherwise, the Arbitration Court appoints the sole arbitrator.
Each party must designate a co-arbitrator in a three-member tribunal, and the parties may agree on a mechanism for selecting the chairman. Unless the Arbitration Court picks the chairperson, the co-arbitrators will choose the chairman jointly if there is no defined mechanism.
When There Are Several Claimants and Respondents
When there are many claims or responders, they must all choose an arbitrator at the same time. In the absence of a joint nomination by numerous claimants or respondents, or if the parties cannot agree on a method for constituting the tribunal, the Arbitration Court will select the members of the tribunal.
Parties Joining Forces
The New Rules also include provisions that make it easier for parties to participate in arbitration procedures, such as when a party is not a party to the arbitration agreement referred to in the arbitration request but agrees to participate.
- A party, whether or not a party to the Arbitration, may petition the Arbitration Court, whether or not such party is a party to the Arbitration, to allow one or more other parties to be joined in the Arbitration before the appointment of any of the arbitrators, provided that:
- The joinder has been agreed to in writing by all parties, including any parties that choose to join. It makes no difference whether the agreed party is a party to the arbitration agreement referred to in the request for arbitration; or whether the agreed party is a party to the arbitration agreement referred to in the request for arbitration; or
- Any such party that is to be joined appears to be a party to the arbitration agreement mentioned in the request for arbitration.
- The decision of the Arbitration Court has no bearing on the tribunal’s capacity to decide its jurisdiction or a party’s ability to request joinder.
Remarks at the End
The changes appear to be a major step forward, making DIAC a more tempting option for contracting parties. It will be fascinating to see how the New Rules are implemented in practice, as well as whether this modernization of the DIAC rules would encourage local and regional parties to pick DIAC over other international arbitral institutions.
The information in this article is generic. It is not meant to be used as legal advice and should not be used as such. It is always advisable to seek legal advice from an experienced lawyer on the legal issues that are affecting you before initiating any legal action. Lawyers and legal consultants are skilled in dealing with Arbitration concerns. If you have any questions about the DIAC’s newly established Arbitration Rules or the procedure for filing an arbitration request with the Court or at the Arbitration, please contact us.