Onshore Dubai partners with Offshore: DIAC looks to develop “closer ties” with the DIFC

The Dubai International Arbitration Centre (“DIAC”) is now implementing its new strategy, designed to develop its international presence and dispel any notion that it is an 'onshore' only institution.

On 27 September 2016, DIAC, arguably the leading arbitration centre based in onshore Dubai, inaugurated a new office in offshore Dubai, situated within the Dubai International Financial Centre (“DIFC”), cementing its new strategy of cooperation with the DIFC Dispute Resolution Authority (“DRA”). Prior to the move, on 20 September 2016, DIAC entered into a memorandum of understanding (the “DIAC-DIFC Memorandum”) with the DRA, the purpose of which is stated as being to “execute, consult, cooperate and exchange information....in areas of mutual interest that will further enhance their respective strategic interests and objectives”.

The primary objective of the parties is “the expedited recognition, ratification and/or enforcement of DIAC arbitration awards by the DIFC Courts”. Of course, since the decision in Banyan Tree v Meydan Group LLC (reported on previously here), it has been established that such awards can be recognised and enforced in the DIFC Courts and the resulting DIFC Court orders 'exported' onshore for execution in the Dubai Courts, but there remained uncertainty regarding the procedure. Now, under the DIAC-DIFC Memorandum, DIAC and the DRA have confirmed that position.

They have also agreed that steps should be taken to (i) to publicise to those electing to arbitrate under the DIAC Rules, the options available to them in Dubai when selecting the seat of arbitration i.e. that they can choose DIFC with the benefit of enforcing in the DIFC Courts; and (ii) to discuss the possibility of amending DIAC's Arbitration Rules to include provisions for “the expedited recognition, ratification and enforcement of DIAC arbitral awards by the DIFC Courts”. This would clearly be a novel development and one which would undoubtedly make a DIFC seat the first choice of anyone considering a DIAC arbitration. Whilst parties have long been free to choose the DIFC as the seat of an arbitration under DIAC's Arbitration Rules, that has so far been the exception. That position must surely now change.

The DIAC-DIFC Memorandum also records DIAC and DRA's intention to “develop closer ties”, including as one of its specific objectives an agreement to take various steps aimed at streamlining their respective rules and procedures including exchanging “information to help create awareness about the other Party”, providing “insights into their respective rules and procedures” and even “engaging in joint marketing of their services”. The presence of a new DIAC office within the DIFC serves to underline this new era of cooperation.

A closer relationship with the DIFC and its courts is clearly of benefit to DIAC, making it a more attractive choice to international parties. The fact that DIAC has entered into the Memorandum with the DRA illustrates the attractiveness and international status of the DIFC. For the DIFC Courts, the Memorandum presents a further opportunity to demonstrate that it has, through this and numerous other memoranda, created a stable and leading enforcement regime in the region.

The arbitration community should welcome closer integration between DIAC and the DIFC, which highlights the many dispute resolution options available to parties in the region.

For further information, please contact Caroline Kehoe, Partner or Joe Bentley, Associate.