DIFC-LCIA Arbitration Centre subsumed in DIAC

In an article in September 2021 from our blog, Collective Thoughts, Grace Lee-Tuck, provided an update on reforms to streamline arbitration in Dubai.

In a move to strengthen Dubai’s position as a global centre for alternative dispute resolution, on 14 September 2021, the Ruler of Dubai issued Decree No. 34 of 2021 to abolish the DIFC-LCIA Arbitration Centre and Emirates Maritime Arbitration Centre, and to transfer all property, employees and cases from these centres to the Dubai International Arbitration Centre (“DIAC”).

To ensure a smooth transition for disputes from the abolished arbitration centres over to DIAC, the Decree has provided the following directions:

Arbitration agreements that refer disputes to the abolished arbitration centres will remain valid and effective and are eligible to be considered and determined by DIAC, unless otherwise agreed by the parties.

Arbitral tribunals and committees formed under the abolished arbitration centres will be able to continue to consider and determine the disputes pending before them. However, this will be under the supervision of DIAC, unless otherwise agreed by the parties.

Dubai Courts and the DIFC Courts will continue to consider cases, requests and challenges relating to any arbitration award or procedure issued by an arbitral tribunal within the abolished arbitration centres or DIAC.

Under the Decree, parties to a DIAC arbitration may choose whether they want the arbitration to be seated “onshore” in the Emirate of Dubai, or “offshore” in the Dubai International Financial Centre (“DIFC”) free zone. If an arbitral seat is not explicitly chosen by the parties, then the default seat will be DIFC. To accommodate for this option, DIAC has been permitted by Article 2 of the Decree to open a branch in the DIFC free zone in addition to its existing premises in mainland Dubai.

A Court of Arbitration will also be established within DIAC, which will determine the application of the Decree and the arbitration rules and procedures, supervise DIAC arbitrations, including the appointment of arbitral tribunals and fixing of arbitration costs and expenses, and propose policies for the management of DIAC, DIAC arbitrations, and other training and education to be provided by DIAC within Dubai. The Court of Arbitration forms part of a wider restructuring of DIAC, which also includes a new board, a new administering body, and new rules to be published within six months.

DIAC was established in 2004 and is a popular choice for UAE based parties, particularly parties from Dubai. DIAC cases are overseen by the Dubai Courts, which are Arabic speaking and operate under UAE Law.

By contrast, the DIFC-LCIA Arbitration Centre was intended to attract international parties due to the use of the DIFC free zone, which is a common law jurisdiction. This enables cases to be overseen by English-speaking common law courts, and by arbitration law based on the UNCITRAL Model Law.

The decision to restructure and reform DIAC is well aligned with the recent recognition of Dubai as one of the top ten arbitration destinations globally, and is intended to offer a wider suite of arbitration specialists with a centralised structure.

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