The DIFC Arbitration Law 2008 came into effect on 1 September and opens up the Dubai International Financial Centre as a possible seat (or juridical place) of arbitration to all parties looking to seat their arbitrations in the Middle East. This briefing explains the background to the new law and the services it makes available to users of arbitration in the region.

On 1 September 2008, HH Sheikh Mohammed Bin Rashid Al Maktoum, vice president and prime minister of the United Arab Emirates (UAE) and ruler of Dubai, enacted the DIFC Arbitration Law 2008.

The Arbitration Law, which took effect upon enactment, opens up the Dubai International Financial Centre (DIFC) as a possible seat (or juridical place) of arbitration to all parties looking to seat their arbitrations in the Middle East, notwithstanding the absence of any links to the DIFC. The enactment of the Arbitration Law follows the establishment of the DIFC-LCIA Arbitration Centre earlier this year, and enables the DIFC to offer users a complete suite of dispute resolution services in a neutral and English-speaking forum.

The DIFC as an autonomous jurisdiction within the UAE

The DIFC is an ‘onshore’ financial centre established by the Dubai government in 2004. It is intended to become a global hub for institutional finance and the regional gateway for capital and investment. During its brief existence to date, the DIFC has attracted an impressive list of global financial institutions and so-called ‘ancillary’ service providers, such as law firms, actuaries and consultants. It is also home to the Dubai International Financial Exchange, which provides a platform for the trade of equities, bonds and other financial products.

Following an amendment to the UAE constitution and enactment of Federal Law No. 8 of 2004, the DIFC was established as a ‘financial free zone’, which means that it is exempt from all civil and commercial laws within the UAE. The DIFC is, therefore, empowered to create its own legal and regulatory framework for all civil and commercial matters. To foster a stable and investmentfriendly environment that would attract foreign investors, the DIFC has established a first-rate statutory and regulatory regime, in line with international best practice. Its legal system is modelled on common law (and in particular English law). English is the official language of the DIFC.

The application of DIFC laws and regulations is, in turn, supervised by the DIFC courts, which are separate from and independent of other UAE courts. Established under Dubai Laws Nos. 9 and 12 of 2004, the DIFC courts have exclusive jurisdiction over civil and commercial disputes in which the DIFC or any of its bodies is a party, contracts executed or transactions concluded within the DIFC and disputes about incidents occurring in the DIFC. Now in their fourth year, the DIFC courts are presided over by the chief justice, Sir Anthony Evans PC (a former lord justice of appeal in England), and enjoy an active docket of cases.

The DIFC as a neutral seat of arbitration

The DIFC’s sophisticated legal landscape now includes the Arbitration Law, which opens up the DIFC as a seat of arbitration to all. The Arbitration Law is closely based on the UNCITRAL model law, which forms the foundation of the arbitration laws of many countries and has come to represent the accepted international standard for a modern statutory arbitration regime. Parties looking to seat their arbitrations in the Middle East now have the option of selecting the DIFC as a neutral, Englishspeaking, common law jurisdiction with a modern arbitration law, backed by an experienced judiciary, based in what has become one of the most important commercial and financial centres in the Middle East.

Particularly significant is the fact that, under Dubai Law No. 12 of 2004, arbitral awards rendered by tribunals seated at the DIFC (and recognised or ratified by the DIFC courts) may be enforced in the UAE provided that they are final and appropriate for enforcement and have been translated into Arabic. The Dubai courts have no jurisdiction to review the merits of DIFC awards before their enforcement in Dubai. Once an execution order is obtained from the Dubai courts, DIFC awards are automatically enforceable throughout the UAE and can be enforced in the other Gulf Co-operation Council (GCC) states (Saudi Arabia, Bahrain, Qatar, Oman and Kuwait) under the GCC Convention for the Execution of Judgments, Delegations and Judicial Notifications.

The DIFC is bound by the international conventions ratified by the UAE, which means that DIFC awards are also enforceable in all 140-plus states party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Prospects for arbitration at the DIFC

The DIFC-LCIA Arbitration Centre was established earlier this year as a joint venture between the DIFC and the London Court of International Arbitration (LCIA). It administers a slightly modified version of the LCIA’s tried and trusted arbitration rules under the supervision of the LCIA Court. The Centre’s secretariat, which is responsible for administering cases submitted to the Centre, functions with the assistance and guidance of the LCIA Registrar in London, but is based at the DIFC and is therefore readily accessible to users based in the Middle East and the wider region. It is intended that the close involvement and support of the LCIA, with its hardwon reputation for quality and integrity, will enable the Centre to establish its own favourable reputation at a rapid pace.

The establishment of the Centre and the enactment of the Arbitration Law are seminal developments for users of arbitration in the region, for they enable the DIFC to offer arbitration users a complete suite of arbitration services, comprising a neutral, Englishspeaking jurisdiction, a favourable statutory regime with the support of an experienced and arbitrationliterate judiciary, modern and reputable arbitration rules overseen by a locally established secretariat with assistance from the LCIA and advanced and accessible facilities to host arbitration hearings with the all-important prospect that the final award will be readily enforceable both in the UAE and elsewhere.