Arbitration is a legal process that resolves bi or multi party disputes without taking them through the formal court system.

In the UAE and Middle East it is an alternative dispute resolution method highly considered in light of its advantages over the particularities of the national estate courts and legal system.

Below the most recent developments on this field in the Middle East.


WHAT? The Dubai International Arbitration Centre ("DIAC") has announced being preliminarily approved to set office in the Dubai International Financial Centre ("DIFC").
DEFINITIONS DIAC is an arbitral instituion under the auspices of the Dubai Chamber of Commerce & Industry, in Dubai mainland.

DIFC is a federal financial free zone located within the Emirate of Dubai. The DIFC was established pursuant to UAE Federal Decree No. 35 of 2004, UAE Federal Law No. 8 of 2004 and Dubai Law No. 12 of 2004.
WHY IS IMPORTANT? It is important because DIFC made awards are revised under the DIFC Arbitration Law laying out stricter - than UAE procecural references - grounds for challenging an arbitral award.

The grounds for nullification of Dubai mainland awards are spelled out in Article 216 of the the UAE Civil Procedures Code which mainly covers the following reasons for challenge: (a) award based on invalid terms of reference, (b) arbitrator has exceeded limits, (c) issued by arbitrators not appointed in accordance with law or (d) by number of arbitrators not authorised to issue award in absence of others or (e) if based on terms of reference in which the dipute was not specified or (f) if it was issued by person not competent to act as arbitrator or does not satisfy the legal requirements or (g) if the award or the proceedings become void.

In turn the DIFC Arbitration Law No. 1 of 2008 is modeled on the UNCITRAL Model Law (based on Article V of the 1958 New York Convention), reducing the room for potential misfortunate interpretation under Article 216 of the UAE Civil Procedures Code.
WHAT ABOUT ENFORCEMENT? This would not be a novelty. Enforcement of DIAC awards has already been succesfully implemented through the DIFC Courts. On November 2014 the DIFC Court of Appeal re-affirmed the competence of the DIFC Courts to hear the recognition and enforcement of a DIAC arbitration award by a Singaporean based company against a Dubai-based company without known assets in DIFC. The ruling in first instance and newly in November confirmed the competence of the DIFC Courts based on Articles 5(a)(e) of DIFC Law No. 12 of 2004 (as amended and known as the Judicial Authority Law); along with Articles 42, 43 and 44 of the DIFC Arbitration Law.

This decision was newly replicated in a 2015 decision recognizing a DIAC award as binding within the DIFC.

Both matters referred to above involved Singaporean based Banyan Tree Corporation Pte Ltd and a Dubai based entity, Meydan Group LLC.
IMPACT This move by the DIAC should be read positivetly by the arbitration community as an attempt to (a) escape the uncertainties of the to date unmaterialised new UAE Arbitration Law, reducing the grounds for challenge under Article 216 of the UAE Civil Procedures Code; and (b) legitimize the enforcement green ligth given by the DIFC in the precedent instances.

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.