DIAC Introduces New Arbitration Rules, 2022

As part of its efforts to consolidate Dubai’s position as a worldwide alternative conflict resolution centre, the Dubai International Arbitration Centre (DIAC) has approved its revised 2022 Arbitration Rules. Following examination by the Arbitration Court of the DIAC, the amended Rules were accepted by the DIAC’s Board of Directors during a board meeting held on February 25 2022. The revised rules were written by a specialized task group, including regional and international arbitration practitioners and the DIAC’s Secretariat members. The revised Rules reflect the current advancements in the area of international Arbitration and the increasing demands of the business community. They are intended to enhance the efficiency of the arbitration proceedings and guarantee that the users would benefit from a wide variety of enhancements.

What is DIAC?

The DIAC, a non-profit organization that offers arbitration services to regional and international enterprises, was founded in 1994 and is the Middle East’s biggest arbitration centre. The DIAC’s primary goals are to position Dubai as a worldwide leader in alternative dispute resolution, promote ADR services, and serve the international financial and commercial sectors. It has processed over 3,757 cases since 2007. The International Arbitration Survey, conducted jointly by the White & Case law firm and the Queen Mary University of London, has ranked it one of the top 10 centres in the world.

His Highness Sheikh Mohammed bin Rashid issued a decree in 2021 that dissolved the Emirates Maritime Arbitration Centre (EMAC) and the Dubai International Financial Centre Arbitration Institute, combining their activities and assets into the DIAC.

New Decree Abolished Emirates Maritime Arbitration Centre (EMAC) And The Dubai International Financial Centre (DIFC) Arbitration Institute

Decree No. 34 of 2021, respecting the Dubai International Arbitration Centre (DIAC) (the Decree), came into effect on September 20, 2021, and it significantly altered the arbitral institutions in Dubai. Notably, the Decree abolished the Emirates Maritime Arbitration Centre and the Dubai International Financial Centre (DIFC) Arbitration Institute, i.e. the bodies previously responsible for administering arbitrations subject to the DIFC-LCIA Arbitration Rules under the purview of the DIFC-LCIA Arbitration Centre in a joint effort with the London Court of International Arbitration (LCIA) and passed all rights and obligations of the abolished centres to DIAC.

DIAC Approved Its Long-Awaited New Arbitration Rules, 2022

To achieve these goals, DIAC’s Board of Directors (Board of Directors) passed its much-awaited new arbitration rules on February 25, 2022. (The New Rules). The New Rules shall take effect on March 21, 2022, and will govern any new requests for Arbitration and extraordinary processes such as the appointment of an emergency arbitrator or an application for conciliation received after that date, unless the parties agree differently.

Prominent changes to the New Arbitration Rules,2022

The rules dealing with consolidation, joinder, accelerated hearings, an alternate method for choosing arbitrators, and unusual proceedings, such as emergency arbitrator and conciliation, are among the most noticeable changes to the revised Rules.
The much-anticipated legal expenses are now included in the arbitration costs, and the parties may claim them.
All new petitions for Arbitration and special proceedings made after this date will be subject to the revised guidelines.
In addition, the DIAC has announced the appointment of its Arbitration Court, which was formed in line with the DIAC’s Statute, which was issued by Dubai’s Government Decree No. 34 of 2021.
The Arbitration Court takes over the tasks of the DIAC’s Executive Committee, including overall supervision of the ADR services provided and oversight of the administration of all matters handled by the DIAC.

Structure of Diac Under New Arbitration Rules, 2022

The Statute divided DIAC into three levels:

A Board of Directors,
A newly constituted arbitration court (Arbitration Court), and
An administrative body.

The Board of Directors: It has broad supervisory control over DIAC and can execute any tasks or powers necessary to meet the organization’s goals.

The Arbitration Court: It will take the place of the DIAC Executive Committee, will be in charge of overseeing DIAC’s alternative dispute resolution services and managing all cases it administers, including appointing arbitral tribunals and conciliation panels, as well as for deciding on challenges to arbitrators and conciliators. The Arbitration Court, which will take the place of the DIAC Executive Committee, will oversee DIAC’s alternative dispute resolution services and manage all cases it administers, including appointing arbitral tribunals and conciliation panels as for deciding on challenges to arbitrators and conciliators.
DIAC’s administrative body, headed by the executive director, will be in charge of the organization’s administration and day-to-day operations.

Provision For Expedited Arbitration Proceedings

The New Rules establish mechanisms for settling certain disputes on an expeditious basis. Article 32 of the New Rules states that expedite processes shall take place:

Unless the parties agree differently in writing when the total of the monies claimed and counterclaimed is less than or equivalent to AED1,000,000 (roughly US$272,250) exclusive of interest and legal representation fees;
All parties agree in writing; or
In circumstances of extreme urgency as assessed by the Arbitration Court upon application by a party.

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Appointment of Arbitrators

Article 12 of the New arbitration Rules specify the usual tribunal nomination and appointment rules. Parties may, as is traditional, appoint arbitrators, who are then legally established by the Arbitration Court. When the tribunal consists of a single arbitrator, the parties may agree to propose an arbitrator jointly; otherwise, the only arbitrator is nominated by the Arbitration Court.

In the event of a three-member tribunal, each party must choose a co-arbitrator, and the parties may agree on a procedure for selecting the chairman. Without an established method, the co-arbitrators will choose the chairman jointly unless the Arbitration Court appoints the chairperson.

In the Case of Multiple Claimants and Respondents

When there are multiple claimants or respondents, the claimants or respondents must designate an arbitrator together. In the absence of a combined nomination by multiple claimants or respondents, or if the parties cannot agree on a mechanism for forming the tribunal, the Arbitration Court will choose the appropriate arbitrator (s).

Joinder Of Parties

The New Rules also include provisions that make it easier for parties to join the arbitration procedures, such as where a party is not a party to the arbitration agreement referred to in the arbitration request but agrees to such joinder.

Before the appointment of any of the arbitrators, a party, whether or not a party to the Arbitration, may petition to the Arbitration Court, whether or not such party is a party to the Arbitration, to enable one or more other parties to be joined in the Arbitration, provided that:

All parties, including any party to join, have agreed to the joinder in writing. however, it is irrelevant whether or not the agreed party is a party to the agreement to arbitrate referred to in the request for Arbitration; or
It seems that any such party to be joined may be a party to the arbitration agreement referred to in the request for Arbitration.
The Arbitration Court’s ruling is without prejudice to the tribunal’s authority to determine its jurisdiction or a party’s ability to ask for joinder.

Concluding Remarks

The modifications look to be a significant step forward, making DIAC a more appealing prospect for contractual parties. It will be interesting to examine how the New Rules work in reality and if this modernization of the DIAC rules would encourage local and regional parties to choose DIAC over other international arbitral institutions.

This informative article contains general information. It is not intended to be used as legal advice and should not be relied upon as such. Before taking any legal action, it is always advisable to obtain legal counsel from a knowledgeable lawyer on the legal concerns impacting you. HHS lawyers and legal consultants specialized in dealing with issues relating to Arbitration. Should you want to know more about the Newly introduced Arbitration Rules of DIAC and regarding the procedure for filing an arbitration request before the Court or at the Arbitration centre, don’t hesitate to contact us.