Dubai is committed to becoming a leading global hub for arbitration services in the Emirate and regionally. Accordingly, it has in recent years introduced a robust new framework of legislative and strategic developments aimed at positioning itself as a global hub for international arbitration and other dispute resolution services.
Dubai benefits from a strategic location which spans key time zones. It also offers a modern and streamlined infrastructure and has a business-friendly approach to regional and international commerce. As global corporations and internaional investors increasingly use arbitration and other forms of alternative dispute resolution services as part of their business strategies, Dubai is committed to providing an internationally recognised framework of arbitration services to users.
Dubai’s has introduced a broad arbitration-friendly legislative framework which combines civil and common law and which follows international best practice. Furthermore, it has centralised its arbitration institutes to ensure procedural efficiency and to ensure that arbitration and other forms of alternative dispute resolution (‘ADR’) are easily accessible to the growing international business and investor communities in the jurisdiction.
This guide offers a brief overview of the arbitration services available in Dubai. It explains the roles of the key arbitration institutions and considers several practical considerations for businesses seeking alternative dispute resolution (ADR) in Dubai.
Arbitration Insitutions
Dubai International Arbitration Centre (‘DIAC’)
The DIAC is a global arbitration institution. It is one of the largest arbitration centers in the Middle East following the consolidation of several institutions in the Emirate under Decree No. 34 of 2021 as a result of which, the DIAC took over cases previously handled by the DIFC-LCIA Arbitration Centre in the DIFC and the Emirates Maritime Arbitration Centre in onshore Dubai – thereby extending its international scope.
The DIAC Arbitration Rules 2022 introduced significant procedural reforms aimed at improving procedural efficiency and the integration of technology. Key features of the new rules include:
Expedited Arbitration: allowing lower value cases to be resolved more efficiently and encouraging shorter procedural timetables;
Multi-Party and Multi-Contract Disputes: complex arbitrations involving multiple parties and interconnected agreements;
Emergency Arbitration: provisions for interim relief allowing parties to resolve time-critical issues before a tribunal is appointed.
Dubai International Financial Centre (‘DIFC’ Courts
The DIFC Courts are a key ‘conduit jurisdiction’ for arbitrations in the UAE . They provide an efficient and internationally recognise path to the recognition and enforcement of international arbitration awards in the jurisdiction. As part of Dubai’s dual legal system, the DIFC Courts operate under the common law and act to rule on litigation arising from arbitrations in a neutral forum in a way that is familiar to global businesses – including those from common law jurisdictions. The authority of the DIFC Courts as a conduit jurisdiction is set out in Dubai Law No. 12 of 2004 (as amended). The UAE Arbitration Law (Federal Law No. 6 of 2018) formally recognises domestic and foreign arbitration awards in the context of local enforcement. This means that DIFC approved awards are enforceable across the civil law jurisdictions of the Dubai under reciprocal arrangements with the Dubai Courts. This effectively permits users to avoid procedural hurdles that might otherwise arise on enforcement of international awards outside the DIFC.
The UAE has ratified the New York Convention and accordingly, the DIFC Courts have international reputation as a way of ensuring that international arbitration awards are enforceable throughout Dubai including onshore. The DIFC Courts conduct proceedings in English and further take a pro-arbitration approach thereby enhancing Dubai’s appeal to international business and global investors as a regional hub for alternative dispute resolution generally and for arbitration in particular. The DIFC Courts are therefore a key foundation that supports Dubai’s position as a leading arbitration center in the Middle East and in the wider region.
DIFC-LCIA Arbitration Centre
Decree No. 34 of 2021dissolved the the DIFC-LCIA with ongoing cases transferred to DIAC.
The UAE Arbitration Law
Arbitrations in the UAE are governed by the UAE Arbitration Law (Federal Law No. 6 of 2018). The law is modeled on the UNCITRAL Model Law on International Commercial Arbitration and provides a comprehensive framework in alignment with global best practice standards.
Key features of the Arbitration Law include:
Party Autonomy: Parties are free to select arbitrators and have a choice of procedural rules;
Judicial Support: The UAE Courts may assist in arbitrator appointments and with interim measures.
Enforcement of Awards: Arbitration awards are enforceable subject to certain procedural objections and under certain public policy exceptions.
The New York Convention
The UAE ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitration Awards in 2006. This means that arbitration awards issued in Dubai are enforceable in all other signatory jurisdiction. This provides international business with confidence in cross-border dispute resolution by way of arbitration or by way of other means of alternative dispute resolution.
DIFC Courts
The Dubai International Financial Centre (DIFC) Courts play a pivotal role in arbitrations in Dubai. The DIFC is effectively a common law jurisdiction and the DIFC Courts facilitate litigation of issues arising from arbitrations and from the enforcement of awards. Therefore, the DIFC Courts act in judicial support of arbitration in Dubai and offer businesses a reliable and internationally recognised forum for the enforcement of their awards throughout the jurisdiction.
Procedural Aspects of Arbitration in Dubai
Starting Proceedings
A party will typically begin arbitration proeedings by filing a request for arbitration (the ‘RFA’) with the relevant arbitration institution. The RfA will summarise the dispute; relief sought; governing law of the dispute and the applicable procedural rules.
Appointment of Arbitrators
The UAE Arbitration Law and most institutional rules allow parties to select arbitrators with relevant expertise. The rules of the DIAC and of most other arbitration insitututes govern the appointment of arbitrators in the absence of agreement between the parties.
Conducting Proceedings
Arbitration is a consensual process governed by the principles of fairness and impartiality. Arbitration proceedings may be conducted virtually or in person, or through a hybrid form.
Enforcement of Arbitration Awards
Arbitration awards are enforceable under the UAE Arbitration Law and the New York Convention. Enforcement is through the local courts which will check that the relevant award complies with local procedural requirements.
Advantages of Arbitration in Dubai
Neutral Forum
Arbitration provides a neutral forum in which cross-border disputes can be resolved in an efficient and equitable manner.
Confidentiality
Arbitration proceedings are private and confidential which ensures that the confidentiality of sensitive or confidential business information remains intact.
Cost and Time Efficiency
Arbitration offers parties an expedited way of resolving disputes under the rules of various arbitration instutions including the DIAC’s expedited arbitration provisions.
Technological Integration
Arbitration in Dubai incorporates the use of advanced technologies including e-case filing; online document management systems and virtual hearing platforms. These online dispute resolution options create efficiencies and cost-savings that are attractive to users.
Arbitration Services
The judiciary in the UAE is generally supportive of arbitration. Interventional is relatively minimal and Awards and generally upheld and enforced subject to procedural and public policy exceptions.
Mediation in Dubai
Mediation is an alternative dispute resolution (ADR) method in which a neutral third party facilitates communication between disputing parties to help them reach a mutually acceptable resolution. Mediation is seen as a cost-effective and efficient method for resolving commercial and civil disputes which aligns with the UAE’s aim of providing business-friendly dispute resolution solutions.
In parallel to the developments in arbitration described above, the UAE has also introduced developments and legislative changes with the aim of establishing itself as a regional hub for mediation. The introduction of the Federal Law No. 6 of 2021 on Mediation (the ‘Mediation Law’) is a further key legal milestone. The Mediation Law offers a robust legal framework to govern mediations and to enforce mediated settlement agreements. The Mediation Law recognises the voluntary nature of mediation whilst legislating to ensure the enforceabililty of mediated agreements.
Both the Dubai International Arbitration Centre (DIAC) and the Dubai Chamber of Commerce have established mediation centres in support of ADR in the region. The DIFC Courts also provides mediation via the DIFC-LCIA Mediation Centre and also via the Small Claims Tribunal which focusses on amicable resolution in preference to litigation.
Further initiatives like the Mediation Hub are evidence of the UAE’s commitment to not only reduce litigation burdens but also to foster cooperation by positioning the UAE as a leading center for ADR in the region.
Practical Considerations for Businesses Considering Arbitration
Drafting Effective Arbitration Clauses
Businesses and investors should confirm that all material agreements contain, where appropriate, clearly drafted arbitration clauses specifying the:
- seat of arbitration (e.g., DIFC or onshore Dubai);
- governing rules (e.g., DIAC Rules 2022) applicable to the proceedings; and
- the language of the arbitration.
Selection of Arbitrators
Parties nominating arbitrators should ensure they have the relevant expertise to ensure equitable and informed deliberations and Awards.
Engaging Experienced Legal Counsel
Experienced counsel can guide parties through the complexities of arbitration and ensure compliance with procedural and substantive requirements throughout the proceedings. This will ensure that any Final Award issued is enforceable.
Challenges and Mitigation Strategies
Language Barriers
English is the language most widely used in business in Dubai. Arbitration proceedings may be conducted in English or Arabic but parties must ensure that all submissions are accurately translated and understood by all parties.
Jurisdictional Complexities
Dubai effetively has a dual legal system (civil law onshore and common law in the DIFC) which may create judicial complexities particularly relating to enforcement. Parties should take care to ensure that the appropriate seat or procedural jurisdiction is chosen.
Enforcement Delays
Despite the UAE judiciary’s general pro-arbitration approach, enforcement proceedings may take time. Parties are advised to use experienced counsel and to select the DIFC Courts for enforcement (if appropriate) to mitigate enforcement delays.
Conclusion
The UAE is well-established as a global leader in arbitration. Dubai is an excellent choice as a dispute resolution forum for investors and businesses operating in the Middle East as it offers a modern, neutral, confidential, and technologically advanced environment for dispute resolution generally and for arbitration in particular. As Dubai continues to evolve its ADR platforms, its role will strenghten as a leading global arbitration hub.