RECENT UPDATES IN THE ARBITRATION SECTOR IN UAE- DIAC RULES 2022
With every new year comes a clean slate and that is how the government of the U.A.E. has at the beginning of the year 2022 bought in enormous changes in its prevailing laws and procedures in practice. As part of its efforts to cement Dubai’s position as a global alternative dispute resolution hub, the Dubai International Arbitration Centre (DIAC) has finalized its new 2022 Arbitration Rules[i] and has thereby completely abolished the DIFC-LCIA Arbitration Centre. This humongous change was mainly executed in order to intensify DIAC’s position and to synthesize Dubai’s position as a reliable international centre for dispute resolution. The new Rules reflect the latest developments in the field of international arbitration, as well as the evolving needs of the business community, and are aimed at improving the efficiency of the arbitration procedures and ensuring that the users would benefit from a wide range of additions[ii]
The key factors in the newly implemented DIAC Rules are noteworthy as it addresses claims consolidation, third‑party funding, joinder of third parties, expedited procedures, alternative means of appointing arbitrators, emergency arbitration, conciliation proceedings and interim measures. The new rules will also allow virtual hearings and communication through email It also provides that henceforth the cost of expenses incurred by a party for appointing their legal representatives shall also be included in the costs of arbitration thereby enabling the parties to recover such costs so incurred.
ARTICLE 2- EMERGENCY ARBITRATOR.
Parties seeking appointment of an emergency arbitrator may before the forming of the Tribunal may upon request to the Centre may seek emergency interim relief. The request should include
- the grounds for requiring the appointment of an Emergency Arbitrator; and
- the nature of the relief sought and the reasons why the applying party considers it is entitled to such relief
Upon review of the Centre, if it is satisfied that all grounds are met, the Centre shall appoint an arbitrator within 1 day of receipt by the Centre of the application for emergency interim relief.
ARTICLE 3- CONCILIATION PROCEEDINGS (EXCEPTIONAL PROCEDURES)
The DIAC with its new effective rules as of 2022 introduced conciliation proceedings. Any party wishing to refer their dispute to conciliation can do so by submitting an application for conciliation by email or through the electronic case management system implemented by the Centre. Once the application is received by the Centre the same shall be notified to the other party and if no objection is raised, such other party will be required to submit a reply to the conciliation application within 15 days following the notification. The Centre shall then appoint a sole conciliator unless the parties agree on a panel of three conciliators.
ARTICLE 8- CLAIMS CONSOLIDATION
With the new rules of 2022, parties with multiple claims arising out of or in connection with more than one agreement can consolidate it in a single application by raising a request to the Arbitration Centre. This was mainly introduced to ascertain the reality that parties may often face wherein they enter into overlapping contracts pertaining to the same transaction or deal particularly in the construction sector. In such circumstances, determining the issue and thereby opening multiple suits for claims arising out of such contracts mainly executed for such related transactions would be difficult thereby overloading the Centre with multiple suits at the same time. Therefore the provisions on consolidation will limit such suits giving in a wider approach to both the parties and the tribunal at the same time. This grants the tribunal the powers to determine if the criteria for such consolidated requests are met and to thereby avoid any requests from the defendants challenging the jurisdiction of the Tribunal. However, the approval of such a request is subject to certain criteria as enlisted below[iii]
- all claims in the arbitrations are made under the same agreement to arbitrate
- the arbitrations involve the same parties and the agreements to arbitrate are compatible and
- the disputes arise out of the same legal relationship(s); or
- the underlying contracts consist of a principal contract and its ancillary contract(s); or
- the claims arising out of the same transaction or series of related transactions.
In circumstances where a tribunal has already been constituted for a claim, alternative claims can also be consolidated with a such claim subject to the condition that no tribunal has been constituted for such alternative claims and they meet the set criteria.
ARTICLE 9 – JOINDER OF PARTIES.
With the new rule on Joinder, parties are at liberty to request the Centre to add parties to the arbitration if such party has consented in writing even whilst such party is not a party to the arbitration agreement.
ARTICLE 12- APPOINTMENT OF ARBITRATORS
With the new rules, the parties shall have the liberty to choose and nominate the arbitrators of their choice to the arbitral tribunal. In case the tribunal is to be presided over by a sole arbitrator, the parties may jointly nominate a such arbitrator and if they cannot amicably nominate a single arbitrator in such circumstances the sole arbitrator shall be nominated by the Arbitration Court. In the case of a three-member tribunal, each party shall nominate a co-arbitrator and can mutually agree on the appointment of selecting a chairperson. However, if they are unable to conclude on the such appointment of the chairman in such circumstances the so appointed co arbitrators shall appoint the chairperson. In case of multiple Claimants and Respondents, they shall jointly appoint an arbitrator (s) failing which the Arbitration Court shall appoint the respective arbitrator(s).
ARTICLE 13- ALTERNATIVE APPOINTMENT OF ARBITRATORS.
The alternative appointment process of arbitrators provides for that if the parties fail to appoint a sole arbitrator or if the co-arbitrators so nominated by each party fail to appoint a chairperson in such event DIAC provides the Parties with alternative mechanism wherein parties are given the liberty to nominate the names of 3 suitable arbitrators of their choice and submit it in their preferred rank or order to DIAC within 7 days without copying failing which all candidates on the list shall be deemed to be equally acceptable to that party. Depending on the mutual preference of both parties indicated on the list DIAC shall invite the candidates, in turn, to serve as arbitrators until one accepts. If they fail to approve, the Arbitration Court shall repeat the process or directly appoint the concerned arbitrators.
ARTICLE 32- EXPEDITED PROCEEDINGS
A party may submit an application for the arbitration to be conducted on an expedited basis if
- unless the parties agree otherwise in writing if the total of the sum(s) claimed and counterclaimed is below or equals AED 1,000,000 (exclusive of interest and legal representation costs) or any other threshold amount as may be determined by the Board of Directors of DIAC from time to time; or[iv]
- if, the parties agree in writing; or
- in cases of exceptional urgency as determined by the Arbitration Court upon an application by a party,
The application so made shall be notified by the centre to the remaining parties as prescribed and the parties so notified shall have 7 days to comment on it failing which the application shall be considered to be unopposed. If the Tribunal is of the opinion that all the criteria set forth for expedited proceedings have been met and that it is reasonable to allow such proceeding, the Centre shall appoint a Tribunal consisting of a sole arbitrator within 5 days of the Arbitration Court’s decision. The time limit within which the Tribunal must issue the Final Award is 3 months from the date of the transmission of the file to the Tribunal by the Centreiii
Keeping in terms with modernisation and globalization U.A.E has been adapting to the evolving times thereby regulating their prevailing laws and procedures to upkeep with the fast-paced world and transforming times. DIAC has become an imperative and one of the leading arbitration institutions in the Middle East with their modernised approach to arbitration.
[i] DIAC Arbitration Rules 2022
[ii] ‘UAE: Dubai International Arbitration Centre Introduces New Rules’ (HKTDC Research, 1st April 2022) < https://research.hktdc.com/en/article/MTAyNDEwMTM0MQ> accessed on 24th May 2022