arbitrateAD: A STEP FORWARD FOR ARBITRATION IN ABU DHABI

The Middle East has recently seen a surge in the development of arbitration rules and institutions, with the launch of the Oman Commercial Arbitration Centre (2018) and updated rules for the Dubai International Arbitration Centre (2022), the Saudi Centre for Commercial Arbitration (2023), and the Cairo Regional Centre for International Commercial Arbitration (2024). These developments have significantly enhanced the arbitration offering in the region, providing parties with sophisticated and efficient institutions and procedures for resolving their disputes.

It is therefore not surprising that, as reported in our previous blog post, the Abu Dhabi Chamber of Commerce, which has until now offered dispute resolution services in the form of the Abu Dhabi Commercial Conciliation and Arbitration Centre ("ADCCAC"), has chosen to establish a new institution, the Abu Dhabi International Arbitration Centre (branded as "arbitrateAD"), and the publication of its new set of arbitration rules on 1 February 2024.

The publication of the new arbitrateAD rules has been eagerly awaited, with practitioners keen to assess how they will compare with the rules of other leading arbitration centres. In this post, we set out our analysis of the key features of the new rules.

Key Features of the New Rules

The new arbitrateAD rules introduce several innovative features that align with international best practices in arbitration.  From our review of the new rules, we have set out some key features to note, including the transitional provisions relating to the phasing out of ADCCAC:

1. Transitional provisions: The new rules are intended to apply to all arbitrations commenced on or after 1 February 2024 where parties have agreed to submit their disputes to arbitration under the ADCCAC rules (Article 1(2)), with the exception that the provisions relating to the appointment of an emergency arbitrator and expedited proceedings will not apply unless expressly agreed between the parties (Article 1(3)). For any parties which agree to submit their disputes to the arbitrateAD rules specifically, those provisions will automatically apply. The 2013 ADCCAC Arbitration Rules will continue to apply to any pending arbitrations being administered under those rules (Article 53). Parties with existing contracts referring disputes to ADCCAC should carefully consider the effect of these transitional provisions.
2. Default seat: In the absence of an express agreement between the parties as to the seat of the arbitration, the default seat of the arbitration shall be the Abu Dhabi Global Market (ADGM), Abu Dhabi's free zone (Article 22(2)). This mirrors the approach under the DIAC rules which imposes the DIFC as seat in such circumstances. However, no further details of any formal association between the ADGM and arbitrateAD are provided in the rules.
3. Emergency arbitration: The inclusion of emergency arbitration provisions in the new rules (Article 35) will no doubt be a welcome improvement given the difficulties of obtaining interim relief from the local courts in certain jurisdictions in the region. The rules of many key arbitral institutions now include emergency arbitrator provisions to allow parties to obtain urgent interim relief prior to the constitution of the tribunal to help preserve their rights or to prevent irreparable harm.
4. Expedited procedure: In a similar vein, the inclusion of an expedited procedure for smaller disputes up to AED 9 million (Article 36) may encourage parties to select arbitrateAD, with the prospect of a quicker, and more cost-effective, dispute resolution process. This threshold roughly aligns with that of the ICC rules (USD 3 million) and is significantly higher than DIAC's (AED 4 million). abitrateAD's expedited procedure streamlines the process by, amongst other things, limiting the tribunal to a sole arbitrator, and removing the need to file further statements of claim and defence beyond the parties' initial submissions. The need for oral evidence and a final hearing can also be dispensed with if appropriate.
5. Consolidation and joinder: A feature glaringly absent in the ADCCAC rules, and now present in the new arbitrateAD rules, was the possibility to consolidate multiple arbitration into a single arbitration and the joinder of additional parties (Articles 9-12). In a business landscape with increasingly complex contractual frameworks, avoiding parallel proceedings and improving the efficient resolution of complex multi-party and multi-contract disputes is paramount.
6. Tribunal powers: The rules emphasise that the tribunal has the "broadest of powers" when it comes to administering proceeding and taking evidence (Article 31(1)). These will give tribunals more power over proceedings, allowing them to ensure that they remain efficient and cost-effective. For example, Article 31(3) sets out, amongst other things, that the tribunal has the power to direct the timetable and procedure of the arbitration, bifurcate proceedings, exclude cumulative or irrelevant evidence, decide to hear witnesses, expert witnesses appointed by the parties or any other person(s), appoint one or more experts, after consulting with the parties, and direct the parties to focus the presentation of their case on issues that are deemed by the tribunal to be relevant. Article 33(2) also provides that the tribunal has full authority over the conduct of the hearing which will allow for hearings to be conducted virtually, in-person or in hybrid format as appropriate.
7. Scrutiny of awards: The process of finalising the award will involve the Centre's Court of Arbitration ("Court") scrutinising the tribunal's award for any apparent clerical errors, inconsistencies or omissions in the awards or to matters addressed in the "Award Checklist" issued by the Centre to arbitrators (Article 40(1)-(2)). Importantly, however, the Court will not be allowed to review and comment on the merits of the underlying dispute (Article 40(2)). In contrast, under the DIAC rules, the role of the Centre is limited to reviewing the draft award to ensure that the formalities required by the DIAC rules have been complied with – the parties are in this case given the right to ask the tribunal to give an interpretation of the award and ask for corrections of clerical, typographical, computational or other similar errors. At the opposite end of the spectrum, under the ICC rules, the ICC Court can not only suggest modifications to the form of the award but can also make comments as to points of substance.
8. Use of technology: arbitrateAD's eagerness to promote the use of technology in its new rules is clear. Awards can be signed electronically by the tribunal using an advanced software which allows for the digital verification of the individual's identity (Article 41(4)). Similarly, as mentioned at point 6 above, the tribunal has broad powers to conduct the hearing in the format it deems appropriate which could involve the use of cutting-edge technologies (Article 33(2)). Just as the ADGM has recently launched the world's first "mediation in the metaverse" service, it is possible that a future arbitration hearing could be conducted in the metaverse under the arbitrateAD rules.
9. Express waiver of rights to appeal, recourse or defence: Notably, and in alignment with the UNCITRAL rules, the new arbitrateAD rules also provide that the parties shall have waived their rights to any appeal, recourse or defence against the Award save as to circumstances where there may be clerical or computation errors or where there may the tribunal failed to address certain claims asserted during the arbitration (Article 41(12)).

Conclusion

The new arbitration rules issued by the Abu Dhabi Chamber of Commerce represent a significant step forward for arbitration in Abu Dhabi, the UAE and the region as a whole. While only time will tell how the new arbitrateAD institution will fare in comparison with the other major regional centres, there is every reason to believe that it will have a positive impact on the arbitration landscape by offering improved efficiency and modernised procedures for its users.

For more information, please contact Nick Oury, Partner, Stuart Paterson, Partner, Tania Forichon, Associate, or your usual Herbert Smith Freehills contact.