December 4, 2022

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Decree 34 and its impact on arbitrations in Dubai

On 14 September 2021, in his capability as the Ruler of Dubai, Vice President and Prime Minister of the UAE, His Highness Sheikh Mohammed bin Rashid Al Maktoum, issued Decree No. 34 of 2021 regarding the Dubai Intercontinental Arbitration Centre (“DIAC”) (“Decree 34”). 

In summary, Decree 34 abolished the Dubai Intercontinental Monetary Centre Arbitration Institute (“DAI”) alongside with the Emirates Maritime Arbitration Centre (“EMAC”) (collectively, the “Cancelled Arbitration Centres”) and transferred the Cancelled Arbitration Centres to the Dubai Intercontinental Arbitration Centre (“DIAC”). 

The dissolution of the DAI and EMAC is efficient at the publication date of Decree 34 however, DIAC has a six-thirty day period grace period in which to coordinate and control by itself in accordance with Decree 34. DIAC will preserve its headquarters in ‘onshore’ Dubai, but will also open up a branch in the Dubai Global Economic Centre (“DIFC”).

By way of history, EMAC was founded in 2016 to offer a specialised maritime arbitration and mediation centre in the Middle East. Conversely, the DAI was set up beneath the umbrella of the DIFC Dispute Resolution Authority. DAI entered into a joint venture with the London International Court docket of Arbitration (“LCIA”) which formed the DIFC-LCIA Arbitration Centre in 2008. 

It appears, although not crystal clear, that Decree 34 has abolished the DIFC-LCIA Arbitration Centre. On 20 September, the LCIA verified that it has entered into session with the Govt of Dubai to be certain the orderly administration of latest conditions getting conducted (Click here for LCIA assertion). 

The intent of Decree 34 is to consolidate the posture of Dubai as a trusted global hub for resolving disputes by way of choice dispute resolution (“ADR”). This is realized, in section, by centralising arbitration and mediation proceedings underneath the purview of DIAC. With the passage of Decree 34, DIAC is now completely charged with all facets of ADR in Dubai. 

Needless to say, Decree 34 is a monumental instant in Dubai arbitration and there is probably to be a substantial quantity of confusion and queries to arise in the coming months. In the speedy expression, the query is what occurs to ongoing scenarios before the Cancelled Arbitration Centres. In the longer expression, what really should parties do with regard to agreements that have incorporated one particular of the Cancelled Arbitration Centres as their discussion board for dispute resolution?

An intriguing facet of Decree 34 is the transform to the default seat of arbitrations. Presently, the DIAC Arbitration Procedures point out that, exactly where get-togethers to an arbitration settlement do not point out the seat of the arbitration, the default seat would be ‘Dubai’ – which is to mean that the Dubai Courts would have supervisory authority around the arbitration. Decree 34 now states that the default seat of arbitration shall be the DIFC – which is to imply that the DIFC Courts would have supervisory authority in excess of the arbitration. Decree 34 does specifically condition the DIAC Arbitration Procedures “shall proceed to be used to the extent that they do not conflict with the provisions of [Decree 34]”. 

There is a wonderful deal of uncertainty with regard to ongoing and/or contemplated situations just before the Cancelled Arbitration Centres. In this regard, we are in consistent communication with these centres to recognize what outcome Decree 34 will have on ongoing scenarios. 

Similarly, an vital thing to consider is what impact will Decree 34 have on already executed agreements which incorporate an arbitration settlement before one of the Cancelled Arbitration Centres. Every single agreement and scenario is different and it is essential for companies to re-consider their existing agreements to be certain the validity and enforceability of their arbitration agreements.

You should come to feel totally free to contact Raymond Kisswany ([email protected]) if you require information on the impression of this substantial adjust to ongoing arbitrations and/or whether arbitration agreements in current contracts really should be amended.