THE DRAFT DIAC RULES

Following changes brought in by a number of other arbitral institutions including the DIFC-LCIA Arbitration Centre, the Dubai International Arbitration Centre is to amend its Arbitration Rules to bring them in line with modern arbitration practice and to ensure its offering remains competitive

The Draft DIAC Rules 2016

As part of its new strategy to develop its international standing, in August 2016, the Dubai International Arbitration Centre ("DIAC") issued for public consultation a draft of proposed amended arbitration rules (the "Draft DIAC Rules") which are, once finalised, intended to replace the existing 2007 DIAC Rules. Under DIAC's Statute Rules, DIAC's Board of Trustees meets twice a year, one of which meetings will take place in December 2016. We would therefore hope to see the finalised rules published in early 2017.

The Draft DIAC Rules follow in the wake of amendments to the arbitration rules of several other arbitration centres, including the sixth edition of the Arbitration Rules of the Singapore International Arbitration Centre ("SIAC") (the "SIAC Rules"), which entered into force on 1 August 2016 and the DIFC-LCIA's new arbitration rules, issued on 1 October 2016 (the "DIFC-LCIA Rules") (reported on previously here). Both of these new rules introduced measures designed to make arbitration more efficient and cost-effective, in each case by including new provisions, or clarifying existing ones, relating to: (i) the urgent appointment of emergency arbitrators; (ii) multi-party arbitration; (iii) consolidation; and iv) third party joinders / interventions. In addition, the SIAC Rules (discussed previously here) established a new procedure for the early dismissal of claims or defences that are obviously without merit, similar in nature to the summary judgment procedure available in certain court systems. Although it remains to be seen how effective such proposals will be in practice, i.e. how willing arbitrators will be to engage these provisions and risk the enforceability of their award, SIAC's clear desire to legislate to address some of the problems associated with arbitration has been welcomed by practitioners.

The Draft DIAC Rules seek to address the disparity between DIAC's rules and the rules of other arbitration centres, both domestic and international. The similarity of many of the proposed changes to the Draft DIAC Rules to the recent amendments to the DIFC-LCIA 2016 Arbitration Rules perhaps also reflect the new cooperative approach agreed between the DIFC and DIAC, heralded by the inauguration of a new DIAC office in the DIFC and the memorandum of understanding between the institutions (discussed previously here).

DIFC-LCIA 2016 Arbitration Rules perhaps also reflect the new cooperative approach agreed between the DIFC and DIAC, heralded by the inauguration of a new DIAC office in the DIFC and the memorandum of understanding between the institutions (discussed previously here).

What are the most significant proposed changes?

Many of the proposed amendments are intended to make arbitration under the DIAC Rules more efficient and userfriendly.  By way of example, the Draft DIAC Rules embrace a greater use of technology - the tribunal will have the power to interview witnesses via telephone conference. In addition, there are several amendments designed to streamline the procedure, for example, the revised Article 23 provides that the tribunal is to notify the parties of the date of the preliminary meeting within 10 days (rather than 30 as previously). In other instances, the Draft DIAC Rules allow parties greater flexibility, for example, the new proposed Article 2.1 removes the express requirement for agreements submitting to DIAC arbitration to be "in writing", in line with SIAC's approach. The Draft DIAC Rules also amend the previously troublesome provisions relating to extensions of the time limit for the tribunal to render its decisions, the subject of numerous disputes (for example, previous Dubai Courts' decisions on the extensions in DIAC proceedings discussed here), by allowing the parties to extend the time limit "by explicit or implicit agreement".

However, more importantly in terms of DIAC's status as a modern, sophisticated arbitration centre, the Draft DIAC Rules contain detailed provisions relating to (i) expedited proceedings; (ii) alternative appointment of arbitrators; (iii) conciliation proceedings prior to arbitration proceedings with a mediator to be appointed by the DIAC Executive committee; and (iv) appointment of an emergency arbitrator for dealing with interim relief. Finally, as under the ICC Rules, all awards, prior to signature, are to be submitted to DIACs Secretariat for scrutiny and comment before the award is released to the parties.

Each of these proposed amendments is likely to be welcomed by practitioners and parties. Many of these proposals, such as the emergency arbitrator provisions, have proved successful in other institutions and, provided they enjoy sufficient support from the onshore Dubai Courts, which will tend to have supervisory jurisdiction, are likely to enhance DIAC's offering. The incorporation and use of technology within proceedings is a clear advantage for any arbitration centre seeking to promote itself as international. One novel proposal is the amendment preventing claimants from withdrawing their claim without the permission of all parties to the proceedings. This should provide defendants with additional protection, discouraging parties from pursuing unmeritorious or vexatious claims.

We have set out the most significant changes in this link.

Are the proposed changes sufficient?

The Draft DIAC Rules, if implemented in accordance with the draft circulated for comment, bring DIAC in line with other arbitral institutions worldwide and will certainly strengthen DIAC's offering to the arbitration market. However, one criticism that could be levelled is that the Draft DIAC Rules do not go far enough. The Draft DIAC Rules do not include a power to consolidate proceedings, something the majority of other arbitration institutions offer. The Draft DIAC Rules also remain silent on whether arbitrators are required to sign each page of DIAC awards and be physically present in Dubai to sign the award. This has been the subject of much comment and, although a clarifying amendment was anticipated, the position appears to be unchanged. In addition, while the Draft DIAC Rules bring DIAC in line with certain institutions, others have continued to modernise and innovate. For example, the sanctions for poor conduct provided under the DIFC-LCIA Arbitration Rules and the early dismissal procedure under the SIAC Rules. Perhaps most importantly, in light of the recent developments, i.e. the Memorandum of Understanding between the DIFC and DIAC, signalling closer cooperation between the institutions, DIAC may further amend its rules in the final revision to include a provision permitting DIAC arbitrations to be seated in the DIFC. This would allow parties to a DIAC arbitration to be supervised by the DIFC Courts, which enforce a modern arbitration law based on the UNCITRAL model.

Conclusion

Ultimately, the proposed changes in the consultation draft of the Draft DIAC Rules are to be welcomed as they will benefit both practitioners and contracting parties located in the region. Taking into account the recent tie-in with the DIFC, the Draft DIAC Rules indicate a renewed enthusiasm by DIAC to promote its services and attract commercial parties on the global stage.

For further information, please contact Caroline Kehoe, Partner, Joseph Bentley, Associate or Michael Hartley, Associate or your usual Herbert Smith Freehills contact.