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Discuss this article (0 Comments)DIFC arbitration
by Dennis Brand on Sunday, 28 December 2008
On 17th February 2008 the Dubai International Finance Centre ("DIFC") announced the joint venture with the London Court of International Arbitration ("LCIA") being in the launch of the "DIFC - LCIA Arbitration Centre".
The LCIA is based in the United Kingdom and is generally regarded as one of the leading commercial Arbitration and Mediation administrative institutions in the world, with roots going back more than 100 years. The launch of the DIFC - LCIA Arbitration Centre was seen by many as an historic milestone in the development of the DIFC and the Emirate of Dubai as an International Finance and Commercial Centre for the region.
Although the DIFC has since its establishment in September 2004 had the benefit of a range of laws, including DIFC law of 2004, which was based on the United Nations Model Law on International Commercial Arbitration 1985, there was often a feeling within the legal fraternity as to whether an arbitration clause which provided for arbitration under the existing DIFC law was sufficient, was enforceable and if in doubt, what was the risk to a client in finding the dispute or the award at some point being made subject to what would amount to a retrial before the Dubai Courts.
Moreover, if sufficiency and enforceability was not a concern, it was the matter of the existing DIFC law being limited to contracting parties who were based in the DIFC or whether a contract was made in the DIFC.
As a result of the latter the term "Noodle House Contract" came into being where parties would execute a contract in a restaurant or coffee shop in the DIFC in order to ensure that the DIFC had jurisdiction in the event of a dispute.
The announcement of the DIFC - LCIA Arbitration Centre was the first step in bringing to the DIFC, as a seat of arbitration, a well-established set of administrative and procedural rules for conducting an arbitration.
The main benefits of the DIFC-LCIA Arbitration Centre being that the centre has access to the LCIA's International network of arbitrators to appoint highly qualified tribunals; the LCIA rules permit party - nomination of arbitrator(s) for the appointment to the tribunal; the rules also permit the parties to choose the language of the arbitration; and the administration of the DIFC and LCIA arbitrations are closely regulated and monitored by the LCIA.
The second step occurred on 1 September 2008 with the entering into force of the DIFC Arbitration Law (DIFC Law 1 of 2008) ("the 2008 Law"), which replaced the DIFC Law of 2004.
In comparison to the earlier law, the 2008 Law can be described as a more straightforward piece of legislation, which should result in those conducting arbitration proceedings in the DIFC to benefit from a number of advantages over arbitrations being conducted elsewhere.
For me one of the most important advantages of the 2008 law is that as the DIFC laws are based on the substantive laws of England and Wales (as adapted by the DIFC); this means that parties can agree to have not only a dispute resolution clause providing for DIFC Arbitration but also that the substantive law of the contract be based on DIFC law.
The 2008 law will no doubt be subjected to judicial interpretation and in order to avoid potential pitfalls and problems it is recommended that the parties first obtain specific legal advice when drafting arbitration clauses providing for arbitration in the DIFC.
Dennis Brand is senior legal advisor with HBJ Gateley Wareing. Email:
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, Tel: +971 4 321 9999
Advantages
• The 2008 Law specifically provides for parties from outside the DIFC to choose the DIFC as a seat (or place) of arbitration; moreover the 2008 Law will apply to any such arbitration.
• The parties choosing the DIFC as the seat of arbitration may, if they so choose, elect for the arbitration to be conducted under the rule of any Arbitration Centre; they are not limited or required to use the DIFC-LCIA rules, although frankly I cannot immediately see the benefit of electing to use another set of rules.
• Where the parties choose the DIFC as a seat of arbitration they do not have to physically hold their hearings in the DIFC, although I suspect as is often the case in other jurisdictions, the parties will be required to have the award delivered in the DIFC.
• The 2008 Law grants the DIFC Court and Arbitrators wide powers in respect of interim measures of protection. This is important as previously powers for interlocutory and conservatory measures were seriously lacking.
• As every DIFC Arbitration Award is ratified by the DIFC Court, awards can be enforced outside of the DIFC. There is mechanism in place whereby DIFC Court judgments will be enforced by the execution department of the Dubai Court. This is done by presenting the DIFC judgment to the execution judge at the Dubai Court who will convert the DIFC judgement into a judgement of the Dubai Court. Such a judgement is enforceable in Dubai as well as the UAE and the wider GCC.
• A DIFC award is considered an award governed by the New York Convention. The UAE became the signatory to the New York Convention in 2006. So a DIFC award becomes eligible for enforcement in any other states which are signatories to the New York Convention.
• A DIFC Arbitration Award makes adhoc arbitration a viable alternative to the more traditional institutional arbitration.
• The 2008 law incorporates the recognition and enforcement provisions of the New York Convention and the recognition and enforcement provisions as well as the setting aside provisions of the UN Model Law.
• The 2008 Law specifically provides for parties from outside the DIFC to choose the DIFC as a seat (or place) of arbitration; moreover the 2008 Law will apply to any such arbitration.
• The parties choosing the DIFC as the seat of arbitration may, if they so choose, elect for the arbitration to be conducted under the rule of any Arbitration Centre; they are not limited or required to use the DIFC-LCIA rules, although frankly I cannot immediately see the benefit of electing to use another set of rules.
• Where the parties choose the DIFC as a seat of arbitration they do not have to physically hold their hearings in the DIFC, although I suspect as is often the case in other jurisdictions, the parties will be required to have the award delivered in the DIFC.
• The 2008 Law grants the DIFC Court and Arbitrators wide powers in respect of interim measures of protection. This is important as previously powers for interlocutory and conservatory measures were seriously lacking.
• As every DIFC Arbitration Award is ratified by the DIFC Court, awards can be enforced outside of the DIFC. There is mechanism in place whereby DIFC Court judgments will be enforced by the execution department of the Dubai Court. This is done by presenting the DIFC judgment to the execution judge at the Dubai Court who will convert the DIFC judgement into a judgement of the Dubai Court. Such a judgement is enforceable in Dubai as well as the UAE and the wider GCC.
• A DIFC award is considered an award governed by the New York Convention. The UAE became the signatory to the New York Convention in 2006. So a DIFC award becomes eligible for enforcement in any other states which are signatories to the New York Convention.
• A DIFC Arbitration Award makes adhoc arbitration a viable alternative to the more traditional institutional arbitration.
• The 2008 law incorporates the recognition and enforcement provisions of the New York Convention and the recognition and enforcement provisions as well as the setting aside provisions of the UN Model Law.
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