Four years after being formed and two years after opening, the Abu Dhabi Global Market (ADGM) has announced the establishment of the ADGM Arbitration Centre on Al Maryah Island, Abu Dhabi, which will include the Middle East and North Africa (MENA) representative office of the International Chamber of Commerce (ICC) International Court of Arbitration. The centre is forecast to be fully operational by January 2018.

Background

The ADGM was established in February 2013 and opened in October 2015. It is a financial free zone for local, regional and international institutions, consisting of three authorities:

  • the Registration Authority;
  • the Financial Services Regulatory Authority; and
  • the ADGM courts.

These authorities operate independently of the UAE financial, administrative and legal system(1) with the aim of creating an attractive business environment for investments, and therefore developing the Abu Dhabi economy.(2) The ADGM legal system is based on common law and directly applies English law, subject to some ADGM-specific legislative amendments.

Over the past two years, the ADGM has taken steps to place itself onto the arbitration map, starting with the 2015 enactment of its Arbitration Regulations.(3) The regulations are based on the United Nations Commission on International Trade Law Model Law with the 2006 amendments, but contain a number of modifications and enhancements to reflect international arbitration best practice and address areas that the Model Law does not.(4)

In 2016 the ADGM focused on the question of enforcement of its judgments and arbitral awards. On May 15 2016 the ADGM courts signed a memorandum of understanding with the UAE Ministry of Justice in order to strengthen judicial cooperation between the ADGM courts and the onshore courts of the United Arab Emirates.(5) The memorandum provided for judicial cooperation with respect to the onshore UAE enforcement of judgments and arbitral awards rendered in the ADGM. It also suggested that further legislation, protocols and guidelines would be implemented for the requirements of reciprocal recognition and enforcement.(6)

Against this background the ADGM Arbitration Centre was launched, which was the next welcome step taken by the ADGM to establish itself as a credible seat of arbitration.

ADGM Arbitration Centre and ICC representative office

On July 26 2017 the ADGM announced the establishment of the ADGM Arbitration Centre located on Al Maryah Island, Abu Dhabi. The centre is not an arbitral institution but a state-of-the-art hearing venue to be used by parties seeking to have their arbitration hearings in a purpose-built facility, irrespective of whether their arbitration is seated in the ADGM or elsewhere, or is taking place under the auspices of the ICC Court.

The ADGM Arbitration Centre will house the ICC's MENA representative office, which will have on-site staff available to accept the registration of cases under the ICC Arbitration Rules. The cases will then be administered by existing case management teams within the ICC Court's network. The ICC's MENA representative office will be one of only three ICC representative offices worldwide (joining Sao Paulo and Shanghai) – its choice of the ADGM is a clear recognition of the importance of the Middle East to the international arbitration landscape.

The ICC's reputation as one of the world's leading arbitral institutions will likely boost the confidence of potential users in the ADGM arbitration system and could lead to the ICC rules becoming the default arbitral rules selected by parties which designate the ADGM as the seat of their arbitration. In March 2017 the ICC launched its new and revised arbitration rules, which seek to establish and reflect international arbitral best practice.

The most significant change to the ICC Arbitration Rules is the introduction of an expedited procedure.(7) The procedure is available where the arbitration agreement was concluded on or after March 1 2017. It will apply automatically unless otherwise agreed by the parties where the disputed amount falls below $2 million, and is available on an opt-in basis for higher-value disputes. The key features of the expedited procedure are as follows:

  • The ICC Court will appoint a sole arbitrator, regardless of the stipulations of the arbitration agreement.(8)
  • The parties may nominate an arbitrator within a fixed time set by the secretariat – if they fail to do so, the court will make the appointment as soon as possible.(9)
  • Once the arbitrator is appointed, parties may not raise new claims without the arbitrator's authorisation.(10)
  • The case management conference must take place within 15 days of the file having been transmitted to the arbitrator.(11)
  • There are no terms of reference.(12)
  • After consulting with the parties, the arbitrator has the discretion to decide the case on a document-only basis.(13)
  • Awards must be rendered within six months of the date of the case management conference.(14)

Other key amendments include the following:

  • The reasons for the ICC Court decisions concerning the appointment, confirmation, replacement or challenge of arbitrations will not be confidential – they may be communicated on the request of any party.(15)
  • The court may appoint directly as arbitrator any person whom it regards as suitable, where one or more of the parties is a state or may be considered to be a state entity. This amendment was introduced to encourage states to use the ICC as a forum to resolve disputes.(16)
  • The arbitral tribunal must transmit the signed terms of reference to the ICC Court within 30 days of the file being transmitted to it, which differs from the two months previously required under the 2012 rules.(17)
  • A request for arbitration will require a filing fee of $5,000 (instead of $3,000, as previously).(18)

Comment

The launch of the ADGM Arbitration Centre and the ICC's decision to establish a MENA representative office within the ADGM mark an important development for arbitration in the region and provide users of arbitration in the Middle East with greater choice. However, while drafting arbitration agreements, parties must remember that the ADGM Arbitration Centre is not an arbitral institution (nor is it the ADGM-ICC Arbitration Centre). Therefore, those wishing to have their arbitration seated in the ADGM under the auspices of the ICC must ensure that they make a clear designation of the seat of the arbitration as the ADGM and the rules governing the arbitral procedure as the ICC Arbitration Rules.

For further information on this topic please contact Sami Tannous or Samantha Lord Hill at Freshfields Bruckhaus Deringer LLP by telephone (+971 4 5099 100) or email (sami.tannous@freshfields.com or samantha.lord@freshfields.com). The Freshfields Bruckhaus Deringer LLP website can be accessed at www.freshfields.com.

Endnotes

(1) Section 10 of Law 4/2013 Concerning Abu Dhabi Global Market.

(2) Section 3, ibid.

(3) ADGM Arbitration Regulations 2015.

(4) For more information on the ADGM Arbitration Regulations, please see "Arbitration in Abu Dhabi Global Market – another common law jurisdiction in the Middle East".

(5) Preamble A, memorandum of understanding between the Ministry of Justice and the ADGM courts.

(6) Clause 3(3), ibid.

(7) Article 30 and Appendix VI, ICC Rules 2017.

(8) Article 2(1), ibid.

(9) Article 2(2), ibid.

(10) Article 3(2), ibid.

(11) Article 3(3), ibid.

(12) Article 3(4), ibid.

(13) Article 3(5), ibid.

(14) Article 4(1), ibid.

(15) Article 11(4), ICC Rules 2017.

(16) Article 13(4), ibid.

(17) Article 23(2), ibid.

(18) Article 1(1), Appendix II, ICC Rules 2017.

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