The enactment of a new arbitration law enhances the attractiveness of the Dubai International Finance Centre to the global business community as a venue for international arbitration.
On 1 September 2008 Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and the Ruler of Dubai signed the Arbitration Law 2008 of the Dubai International Financial Centre (the “DIFC”). The new law repeals the previous legislation in this area. It largely reflects the provisions of 1985 UNCITRAL Model Law, as amended in 2006. The adoption of the new arbitration law which conforms to internationally accepted practice will enable the international business community to arbitrate in a convenient and easily accessible legal environment.
DIFC is an economic free zone, located in Dubai City, is the world’s fastest growing financial centre and a new, autonomous jurisdiction of the UAE. It was established in July 2004 in order to attract foreign investors and promote Dubai as a regional hub of commerce. With its own two-tiered courts system and a sensibly tailored commercial code, modelled on English law, the DIFC provides a stable and investment friendly setting for multinational companies. The DIFC enjoys the benefits of all international conventions ratified by the UAE, including New York Convention on Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) to which the UAE formally acceded on 19 November 2006.
The sophisticated set of DIFC regulations is now enhanced by the new DIFC Arbitration Law 2008. Contrary to the previous regulation on arbitration of 2004, the new law makes it clear that the DIFC as an arbitration forum is open to all, not only to entities registered in the free zone. It also confirms that DIFC courts are bound by the New York Convention and that accordingly awards made within the jurisdiction of the DIFC are to be enforced by the Dubai Courts without further review of the tribunal’s decision.
The new regulation covers all stages of the arbitral process, from the form and content of the arbitration agreement to the recognition and enforcement of arbitral awards. It adopts a broad approach to the issue of arbitrability, with employment disputes expressly identified as capable of settlement by arbitration. Another important aspect of the new law is that unless otherwise agreed by the parties, arbitral proceedings are to be entirely private and confidential.
The new law sets out thorough provisions for the constitution of an arbitral tribunal in multiparty disputes. It provides that the DIFC Court of First Instance shall appoint the Arbitral Tribunal in the absence of the parties’ agreement. This provision is expected to be of particular importance in the engineering, construction, energy and commodity sectors for which Dubai is undeniably a regional hot spot and where the number of multi-party disputes is high.
Under the DIFC Arbitration Law 2008 arbitrators are widely empowered to order prohibitive and mandatory injunctions in relation to arbitration proceedings, which may be enforced by the DIFC Court of First Instance. It is noteworthy that the new DIFC Arbitration Law allows interim measures to be granted by the DIFC Courts in support of the arbitral process, even if the arbitration is not located (or seated) in the DIFC.
The 2008 law preserves a high degree of party autonomy by limiting the power of the DIFC court to intervene in the arbitral proceedings. However, when requested by either party and/or by the arbitral tribunal the DIFC court may support arbitrations, for instance by issuing orders with relation to evidential matters. The law clearly emphasises the intention of the DIFC law-making authority to position DIFC court as a supportive body providing assistance to the arbitral process.
With the introduction of the Arbitration Law 2008 DIFC now offers a neutral legislative platform for international arbitration. The combination of civil and common law approaches and availability of highly regarded arbitration professionals in a thoroughly modern city should enable parties from around the world to resolve arbitration cases effectively.
In addition, newly established joint venture, DIFC-LCIA Arbitration Centre, provides reliable, efficient and cost-effective dispute resolution services. In conjunction with the Arbitration Law 2008 the DIFC has managed to create a new promising venue for the conduct of international arbitration in the Middle East.