DIAC PUBLISHES NEW RULES TO COME INTO FORCE ON 21 MARCH 2022

The wait is finally over: the updated DIAC Arbitration Rules 2022 (“2022 Rules”) were published last week and enter into force from 21 March 2022. The 2022 Rules will apply to all new requests for arbitration and exceptional procedures submitted after 21 March 2022, unless the parties agree otherwise.

DIAC published draft rules in 2017 (the "2017 Draft Rules"), which aimed to revise and improve its rules to meet the needs of practitioners and end users. However, these rules have awaited approval since then and the DIAC Arbitration Rules 2007 (the "2007 Rules") have remained in effect. The 2007 Rules unsurprisingly lag significantly behind those of other leading institutions. However, the amendments in the 2022 Rules aim to address a number of important recent changes in arbitration practice: most notably in relation to third-party funding, virtual hearings and expedited and emergency proceedings. In this update, we summarise the key features. Our full analysis of the 2022 Rules can be found here.

Background

In September 2021, Decree No. 34 of 2021 concerning the Dubai International Arbitration Centre (the "Decree") was issued, taking many in the UAE and international arbitration community by surprise. The Decree had the effect of dissolving the Dubai International Financial Centre Arbitration Institute ("DAI"), the DIFC entity that operated the DIFC-LCIA arbitration centre ("DIFC-LCIA") in a joint venture arrangement with the London Court of International Arbitration ("LCIA"), and the Emirates Maritime Arbitration Centre, and transferred the assets, rights and obligations of those centres to the Dubai International Arbitration Centre ("DIAC").

DIAC, the DIFC-LCIA and the DAI (and any other relevant authorities) were granted six months from the entry into force of the Decree to comply with its terms, and practitioners and end users have been awaiting an update from DIAC as we approach the end of this six-month period (due to expire on 20 March 2022).

The Decree therefore presented an opportunity for DIAC to issue new rules which not only put into place the changes originally envisaged by the 2017 Draft Rules, but also the important changes in arbitration practice that have occurred since then. In addition, DIAC has announced the appointment of its Arbitration Court in line with the Decree. The Arbitration Court replaces the Executive Committee of DIAC and will supervise the management of all cases administered by DIAC.

Comment

The changes in the 2022 Rules represent a significant, long-awaited departure from the DIAC Rules that have been in force since 2007 and align with the international standards of other leading institutions such as the ICC and LCIA. Rather than a revised version of the current rules, the 2022 Rules represent a total overhaul of DIAC proceedings. The 2022 Rules are therefore an important step in securing Dubai’s reputation as the leading regional hub for commercial arbitration, following a period of uncertainty following the release of the Decree in September 2021 and the abolition of the DIFC-LCIA Arbitration Centre. These changes will no doubt be welcomed by the international arbitration community and help to establish DIAC as a leading institution for arbitral proceedings.

Importantly, the 2022 Rules do not address whether or not they would apply to arbitration agreements which provide for the DIFC-LCIA Rules. Practitioners and end users will therefore need to await further updates in this regard from the DIAC and the LCIA in the coming weeks. It would be prudent for parties with contracts that currently provide for the DIFC-LCIA Rules to consult their legal advisers for specialist advice.

The updated Rules can be downloaded from the DIAC website (http://www.diac.ae/idias/).

[1]        Although the Tribunal has the power to determine the seat having due regard to any observations from the parties and any other relevant circumstances.

For more information please contact Nick Oury, Partner, Stuart Paterson, Partner, Anna Wren, Senior Associate, Patrick O'Grady, Associate, or your usual Herbert Smith Freehills contact.