United Arab Emirates: Choosing A Forum For International Dispute Resolution? Fifteen Facts About The Dubai Based Dispute Resolution Authority

The Dispute Resolution Authority (DRA) is the dispute resolution body of the Dubai International Centre (DIFC). In our latest alert, we set out fifteen facts about the DRA to consider when drafting an international contract.

Background

The DRA encompasses the DIFC Courts, the DIFC-LCIA Arbitration Centre, the Wills and Probate Registry and the Academy of Law.

The DIFC Courts were established just over ten years ago, to provide global investors into Dubai with an international commercial dispute resolution forum within the DIFC. Today, the DIFC Courts invite users from any jurisdiction.

The DIFC-LCIA Arbitration Centre, a partnership with the London Court of International Arbitration (LCIA), was re-launched in November 2015 and offers both arbitration and mediation dispute resolution forums.

Although it is a comparatively young establishment, the DRA has been clear about its goal to become a global commercial dispute resolution forum, with a stated aim of being one of the world's leading commercial courts by 2021. The DRA has gained ground quickly and its most recent innovations (particularly in the area of enforcement) may not be well known outside of international dispute resolution circles.

So, here are fifteen facts about the DRA that you may wish to consider when drafting an international contract.

Global

  1. Choice. Businesses located in a civil law region have the ability to opt for a common law, English language jurisdiction modelled on the English commercial courts.
  2. Flexibility. Parties are free to choose the governing law of their contracts. For example, contracting parties may choose to have their contract governed by the civil law based jurisdictions of another country in the Gulf, while taking advantage of the comparative efficiency of a common law set of dispute resolution procedures.
  3. Global Reach. Parties do not need to have a connection to the DIFC, or to Dubai, to elect to solve their disputes within its jurisdiction. The DIFC Courts and DIFC-LCIA arbitration centre can hear cases from anywhere in the world (Article 5A (2) of Dubai Law No 16 of 2011).
  4. International and experienced judiciary. DIFC Court judges originate from the UAE, UK, Singapore, Malaysia and Australia and have held offices in the High Court of London, the Supreme Courts of Singapore, the Dubai Courts, the Supreme Court of New South Wales and the Superior Courts of Malaysia.
  5. Credibility. The CEO of the DIFC Courts has been named as the next President of the International Association for Court Administration. The DIFC Courts have stated that the new President will seek to use his experience gained in the DIFC Courts to help raise global standards of court governance, management and operations, particularly in emerging judiciaries.
  6. Internationally recognised arbitration law and rules. The Arbitration Law No 1 of 2008 is based on the UNCITRAL (United Nations Commission on International Trade Law) Model Law, and will be applicable to proceedings in the DIFC-LCIA arbitration centre (unless the parties choose otherwise). The arbitration will be governed by arbitration rules aligned with those of the LCIA.
  7. Choice of arbitration forums being established. Dubai International Arbitration Centre (DIAC) has announced that it is opening a centre in the DIFC. DIAC arbitration (which the Dubai construction and real estate industries have historically preferred) will soon be available, with all the benefits of seating the arbitration in the DIFC.
  8. Dubai's geocentric location. Dubai Airports state that their airports are within four hours' flying of one third of the world's population and within eight hours of two thirds of the world's population.

Enforceable

  1. DIFC Courts judgments - enforceable in five continents. The DIFC Courts have entered into formal Memoranda of Understanding and Memoranda of Guidance with a number of jurisdictions to increase the enforceability of their judgments. Currently, DIFC Court judgments should be enforceable in the whole of the Gulf region, the UK, France, India, Singapore, Australasia, South Korea, Southern District of New York, the United States District Court and large parts of North Africa. The DIFC Courts have stated that their aim is to build the strongest enforcement regime in the world, with the possibility of the UAE signing the Hague Convention on Choice of Court Agreements.
  2. DIFC-LCIA arbitration awards - enforceable in over 150 countries. The UAE is a signatory to the 1958 New York Convention, meaning that DIFC-LCIA arbitration awards should be enforceable in most of the world.
  3. DIFC Court money judgments can be converted into DIFC-LCIA arbitration awards. Further to DIFC Practice Direction No 2 of 2015, DIFC Court judgments can be converted into an arbitral award of the DIFC-LCIA Arbitration Centre, giving parties access to New York Convention signatory states for the purpose of enforcement.
  4. DIFC Court judgments - a mechanism for recovery of assets located in the rest of Dubai. DIFC Court judgments are automatically enforceable in the Dubai Courts by virtue of mutual understanding between the two courts (Article 7 Dubai Law No 16 of 2011) and it is now standard for DIFC Court awards to be recognised and enforced by the Dubai Courts.

Innovative

  1. 'Conduit courts'. Recent cases have indicated that DIFC Courts are becoming 'conduit courts' for the enforcement of foreign court judgments and non-DIFC arbitration awards:
    • In the case of Banyan Tree Corporate Pte Ltd v Meydan Group LLC [2014], the DIFC Court of Appeal held that DIFC Courts have jurisdiction to enforce any arbitral award, irrespective of its origin, even where parties have no connection to the DIFC. The decision also established that DIFC Courts can be used as conduit courts to ratify non-DIFC arbitration awards. In principle, the DIFC Court ratification award should then be enforceable in mainland Dubai through the Dubai Courts, by virtue of Article 7 of Dubai Law No 16 of 2011 (see point 12 above).
    • The case of DNB Bank ASA v (1) Gulf Eyadah Corporation and (2) Gulf Navigation Holding PJSC [2015] addressed the enforcement of foreign court judgments and the recovery of assets based in Dubai, but outside of the DIFC.

      The DIFC Court of Appeal ruled that it had jurisdiction to recognise and enforce a foreign judgment under Article 24(1) of DIFC Court Law No 10 of 2004 and Article 5(A)(1)(e) of Dubai Law No 16 of 2011. In making this decision, it relied upon a 2013 Memorandum of Understanding with the English Commercial Court. In its judgment, the DIFC Court of Appeal also stated that "case law shows that when the DIFC Courts recognise and enforce a foreign judgment, the product is itself a judgment of the DIFC Courts". Essentially, the result was to convert the English judgment into a DIFC judgment. Again, this opened up an avenue for enforcement under Article 7 of Dubai Law No 16 of 2011 (see point 12 above).


    While it remains to be seen how the Dubai Courts will react to the DIFC judgments when it comes to enforcement, these decisions illustrate how the DIFC Courts appear to be committed to jurisdictional innovation.
  2. Because the world changed again today. The DIFC Courts state that they are open to adopting the most effective options from common and civil law procedures and from litigation, arbitration and mediation practices with the aim of developing a more modern set of procedures and 'creating a transnational and trans-systemic approach to dispute resolution'.
  3. Dubai Government entities may opt in to the jurisdiction of the DIFC Courts. In 2015, the Secretary General of the Supreme Legislation Committee considered whether Dubai government entities may elect to submit to the jurisdiction of the DIFC Courts, with particular reference to Article 83 of Law No 6 of 1997 on Contracts of Government Departments in Dubai. Article 83 stipulates that the 'Dubai Courts' shall have jurisdiction to hear disputes involving a government entity.

    In his formal Opinion of 21 September 2015, the Secretary General stated that, as the DIFC Courts are an integral part of the Dubai Court system, Dubai government entities may submit to the jurisdiction of the DIFC Courts in relation to commercial disputes.

Clearly, as an international dispute resolution forum, the DRA intends to have a significant impact within the international commercial community. We will keep you updated on key developments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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