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Practice Direction No. 1 of 2017 – Indemnity Costs for Failed Challenges to Arbitral Awards in the DIFC Courts

Practice Direction No. 1 of 2017 – Indemnity Costs for Failed Challenges to Arbitral Awards in the DIFC Courts

February 27, 2017

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IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

PRACTICE DIRECTION NO. 1 OF 2017

Indemnity Costs for Failed Challenges to Arbitral Awards in the DIFC Courts

Citation

This Practice Direction will come into effect on the date of signature. It may be cited as Practice Direction 1 of 2017Indemnity Costs for Failed Challenges to Arbitral Awards in the DIFC Courts – and may be abbreviated to PD 1/2017.

 

  1. Where an application has been lodged with the DIFC Courts pursuant to Part 43 of the Rules of the DIFC Courts (RDC) for ratification of an arbitral award, and the award debtor defends such a request for ratification, the presiding judge reserves the right to take into account the merits of such challenge when deciding whether to require the defendant to an arbitration claim to pay the amount of the award into Court first, as security pursuant to Article 44(2) Arbitration Law (DIFC Law No.1 of 2008).[1]

 

  1. Paragraph 1 above shall apply in the context of all applications for ratification of arbitral awards and is not limited to applications under the New York Convention (see footnote 1 below).

 

  1. When the Court is exercising its discretion as to costs under Part 38 of the RDC, the principle of awarding indemnity costs may also be invoked for other unsuccessful applications to Court relating to arbitration, such as (by way of example only) unsuccessful applications for setting aside of arbitral awards and unmeritorious challenges to remove arbitrators. [2]

 

Dated this 27 day of February 2017

 

 

Michael Hwang

Chief Justice of the DIFC Courts

[1] See Article VI of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“the New York Convention”), which provides as follows: “If an application for the setting aside or suspension of the award has been made to a competent authority referred to in article V(1)(e), the authority before which the award is sought to be relied upon may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security,” reiterated in Article 44(2) of the DIFC Arbitration Law (DIFC Law No. 1 of 2008).

[2] See by way of example the decision of the Hong Kong Court of First Instance in Peter Cheung & Co v. Perfect Direct Limited & Yu Guolin (HCMP 2493/2012) and New Heaven Investments Limited & Rondo Development Limited v. Yu Guolin (HCA 115/2013), judgment of 25 April 2016, where costs were awarded on the indemnity basis where a party had engaged in “unmeritorious” behaviour in attempting to delay the enforcement of an arbitral award; Exfin Shipping (India) Ltd Mumbai v Tolani Shipping Co Ltd Mumbai, [2006] EWHC (Comm): 17 May 2006, where indemnity costs were awarded by the English Commercial Court following a “wholly unmeritorious” application to set aside an arbitral award; and DigiTelCom Ltd. v. Tele2 Sverige AB (1:12-cv-03082), 16 November 2012, where the District Court for the Southern District of New York imposed costs sanctions on a party for making a “frivolous” application to vacate an arbitral award.

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