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The Dubai International Arbitration Centre (DIAC) announced the launch of the new proposed DIAC 2018 Arbitration Rules (the New Rules) during Dubai Arbitration Week in November 2017. The New Rules not only respond to the business needs of the international community but also deal with the common pitfalls in the existing procedural regime. Businesses operating and doing deals in the United Arab Emirates (UAE) will have access to a more effective dispute resolution mechanism and now need to consider how to amend existing contracts or draft new agreements to take advantage of the proposed new regime.

The UAE has long acknowledged the importance of an effective legal framework to support international business and has been investing in this field in recent years. The current DIAC Arbitration Rules came into force in 2007 and are being revolutionised in line with the nation's economic vision and development as a global trade and finance hub. Currently, arbitration rules in the UAE are governed by the Arbitration Chapter of the UAE Federal Law No. 11 of 1992 as amended by Law No. 10 of the 2014 Civil Procedures Code and businesses can turn to one of five institutions across the UAE, with DIAC and the Dubai International Financial Centre (DIFC) being the most popular mainland and free zone systems respectively in UAE-seated arbitrations.

The draft of the New Rules has been approved by the UAE government, apart from the provisions relating to third-party funding, which is subject to further amendment. The New Rules are expected to be promulgated by decree in both English and Arabic, with English being the prevailing language, early in 2018.

The changes introduced in the New Rules are designed to ensure the efficient conduct of DIAC arbitrations not only during the arbitration process but also at the time of ratification and enforcement of DIAC awards - both elements of crucial importance to the international business community. The key objectives of the New Rules are to: (i) maintain the procedural economy of the arbitration process to ensure that the process is conducted in a transparent and cost-efficient manner, and (ii) facilitate and enhance the enforcement of DIAC awards pending the promulgation of the long-awaited UAE arbitration law.

Whilst the bulk of the procedural rules of conducting arbitrations remain the same, the most notable provisions of the New Rules are brand new and seek to fill the gaps in providing extra protections addressing loopholes in the current rules. Particular highlights include:

  • DIFC as the default seat of arbitration;
  • Awards to be deemed to have been issued at the seat whether or not they were signed at the seat of arbitration;
  • Creation of a Secretariat to administer and scrutinize draft awards;
  • Introduction of measures to increase procedural efficiency and avoid delays (e.g., emergency arbitrator, expedited proceedings, power to sanction counsel conduct);
  • Multiple contracts, multiple parties, consolidation and joinder addressed;
  • Confidentiality and publication of the award;
  • Collaboration between parties and/ or co-arbitrators with DIAC in the process of default appointment of a sole arbitrator or the chairperson in cases of three tribunal members;
  • Third-party funding;
  • Recoverability of legal fees;
  • Shari'ah compliant arbitration; and
  • Exclusion of liability of tribunal members and the DIAC.
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