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The Future for Arbitration in Dubai

The Future for Arbitration in Dubai

December 31, 2008


Address by Chief Justice Sir Anthony Evans

(a) The DIFC/LCIA Arbitration Centre

The Dubai International Financial Centre (DIFC) is a defined area of about 110 acres which has its own legal system, administered by the DIFC Courts and applying the common law.

It now offers an arbitration service, the DIFC/LCIA Arbitration Centre, which was launched on 17 February this year. As the name implies, this essentially is a joint venture between the DIFC and the London Court of International Arbitration (LCIA), one of the leading players in the arbitration world.

The first and most important point to note is that the scope of the service offered by the Centre is worldwide. The original version of the DIFC Arbitration Law (DIFC Law No.8 of 2004, now repealed) effectively limited the scope of the projected Disputes Resolution Service to DIFC-related matters. Now, the new Law (DIFC Law No.1 of 2008), which was enacted on 1 September 2008, applies to all Arbitration Agreements regardless of where they were made. The Agreement must be in writing and there is a limited exclusion of employment and consumer contracts in Article 12(2). But there is no other restriction on the subject-matter or as to the identity of the parties, and no geographical limits of any kind.

The new Law was drafted with the assistance of the LCIA and many leading international arbitration practitioners. It is based on the UNCITRAL Model Law. The Arbitration Rules for the Centre are closely modelled on the LCIA’s own Rules, though with modifications reflecting the fact that this is a new and independent body.

It is independent also from the DIFC Courts, as any arbitration institution must be, but the Law recognises that the DIFC Courts will exercise the ‘curial’, or supervisory, role which in all systems of law is exercised by the relevant national Court.

This is a significant development for the DIFC Courts, whose own jurisdiction under the existing Laws is limited, broadly speaking, to DIFC-related disputes. Because the new arbitration centre will administer all arbitrations which the parties bring to it, the DIFC Courts will exercise the limited jurisdiction of a supervisory Court over disputes submitted to DIFC/LCIA Arbitration, regardless of where the disputes arose and where the parties to the arbitration agreement are situated.

In one sense, this is not inconsistent with the geographical limit placed on the DIFC Courts’ own jurisdiction, because an arbitration which takes place or has its seat in the DIFC is on any view a transaction or event which takes place within that area. However, in practical terms it means that the DIFC Courts will have a limited jurisdiction over a much wider range of disputes.

(b) DIFC Courts Rules (“RDC”)

A new Part 43 for the RDC is ready in draft and will be enacted when a consultation process is complete. The new Rules will regulate the Courts’ exercise of the supervisory powers given to them by the 2008 Arbitration Law.

(c) Standing and enforcement of DIFC/LCIA Arbitration Awards

This is an extensive topic and only an outline can be attempted here. First, it must be remembered that Dubai is a Federal State, one of seven Emirates which since 1971 have formed the United Arab Emirates (UAE). For the purposes of international enforcement, therefore, the UAE is the relevant national State, and it adhered to the New York Convention in 2006.

Secondly, there is express provision in Dubai law for the enforcement of DIFC Awards, both within the DIFC and throughout Dubai, and in UAE Federal Law for enforcement in other Emirates forming part of the UAE. There are corresponding provisions regarding the enforcement within the DIFC of awards from Dubai outside the DIFC, or from other Emirates, or from other States.

(d) DIAC (Dubai International Arbitration Centre) and Dubai outside the DIFC

DIAC is already well established as a centre for international arbitration in Dubai, and domestic arbitration also. It is sponsored by the Dubai Chamber of Commerce & Industry and its Board of Trustees includes many leading international practitioners. When its arbitrations have their seat in Dubai, or take place in Dubai, the role of the curial or supervisory Court necessarily falls on the Dubai Courts, whose jurisdiction extends throughout Dubai except, in civil and commercial matters, in the DIFC. Except, possibly, when a DIAC arbitration takes place in the DIFC – an interesting question which may arise for decision, but only if the parties to a DIAC arbitration so agree – the DIFC Courts will have no jurisdiction, supervisory or otherwise, in the case of a DIAC reference.

The Dubai Courts conduct their business in Arabic and they apply Dubai Law, which is based on civil law principles rather than derived from the common law. They will also apply, in due course, a new UAE Arbitration Law, which is in the course of drafting and which may or not be based on the UNCITRAL Model Law.

The DIFC/LCIA Arbitration Centre and DIAC have a common aim, which is to attract international arbitrations to Dubai, as well as to regulate to the highest contemporary standards all arbitrations which arise in Dubai and in the DIFC. One essential difference between them will be the identity of the supervisory court. How significant that difference proves to be will depend, in my view, on a number of factors, the cumulative effect of which may be that the two Centres find themselves less in competition with each other than otherwise one might expect. The services they offer will complement each other, for the benefit both of Dubai and of parties who bring their arbitrations to Dubai. This is because each Centre will have what may be called its core activity – for the DIFC/LCIA, contracts linked to the DIFC or arising out of financial and commercial transactions, where the language will be English. The same considerations may apply, though to a lesser extent, where the contract or the subject matter are from outside Dubai. Insofar as parties may be influenced by the identity of the supervisory courts, some will gravitate towards the Dubai Courts and some to the DIFC. Again, language and subject matter inevitably will influence their choice.

Finally, although the language will be different, it must not be overlooked that both Courts will apply legislation derived from the same source, namely, the UNCITRAL Model Law. Looking forward, we can hope that they will adopt a harmonious, even a uniform approach.

Sir Anthony Evans
Chief Justice of the DIFC Courts


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