A New Dubai Law to Establish a Dispute Resolution Authority in the DIFC

A new Dubai Law (Dubai Law No. 7 of 2014) was enacted by His Highness Sheikh Mohammed Bin Rashid Al Maktoum and has come into force on 21 May 2014 (the Law). A statement was made by His Highness on 27 May 2014 announcing the Law and its objectives although a copy of the Law has just become available. The Law amends certain provisions of the law that established the Dubai International Financial Centre (DIFC) (Dubai Law No. 9 of 2004) by mandating the establishment of a DIFC Disputes Resolution Authority that will be comprised of the existing DIFC Courts and what is referred to as the Arbitration Institute together with any other special purpose DIFC tribunals and dispute resolution bodies.

Background

The DIFC was established in 2004 pursuant to a number of UAE Federal Laws and Dubai Laws as a financial free zone within Dubai. A body called the DIFC Authority was established to oversee the strategic development, operational management and administration of the DIFC. In addition, the DIFC has its own body of law, its own courts and has been granted the authority to issue regulations in certain areas. An arbitration centre was also launched in 2008 as a joint venture with the London Court of International Arbitration (the DIFC-LCIA Arbitration Centre).

Key amendments

The key provision of the new law is an amendment to Article 8 of Dubai Law No. 9 of 2004. The new law mandates the establishment of a Disputes Resolution Authority within the DIFC, which will exist alongside the DIFC Authority and the Dubai Financial Services Authority. The new Disputes Resolution Authority (the Authority) will be headed by the DIFC Courts' Chief Justice (currently Michael Hwang, SC) and will be made up of the existing DIFC Courts, the "Arbitration Institute" and any other special purpose DIFC tribunals or dispute resolution bodies. It will also have a separate legal personality and will function without interference from any of the other DIFC bodies.

The new law does not specifically identify the Arbitration Institute, although it is likely to be the existing DIFC-LCIA Arbitration Centre. The new law also provides that the Arbitration Institute shall function independently according to a Constitution to be promulgated by the DIFC President and will have a Board of Trustees and a Chief Executive appointed by the Head of the new Authority. The functions of the Arbitration Institute will be set out in due course in its Constitution, but shall include:

1. the promotion of the Arbitration Institute as a hub for the settlement of domestic and international disputes, and of disputes arising out of treaties, by arbitration, mediation, and other forms of alternative dispute resolution mechanisms (ADR);
2. the preparation and issuance of rules and procedures required to regulate the administration of arbitration, mediation, and other forms of ADR;
3. the provision of courses and accreditation for arbitrators, mediators and other persons concerned with arbitration, mediation, and other forms of ADR; and
4. entering into co-operation and joint venture agreements with any local, regional, or international centre, society or organisation specialised in arbitration and ADR.

The new Authority will also have the power to form an advisory committee of experts in the law and in dispute resolution, although no details are provided as to what role(s) such committees will undertake.

Comment

The new Law represents an interesting development for the DIFC. In a short space of time both the DIFC Courts and the DIFC-LCIA Arbitration Centre have developed excellent reputations as places to resolve disputes in not only the DIFC but the wider Middle East region. It is not yet clear how the new Authority will function, particularly the new Arbitration Institute, but anything that seeks to build on the successes to date of the DIFC Courts and the DIFC-LCIA Arbitration Centre is likely to be positive. The litigation and arbitration community in the DIFC will await further details of the new Authority with interest.

For further information, please contact Mike McClure, Senior Associate, Anees Naim, Associate, or your usual Herbert Smith Freehills contact.