International Arbitration Insight: DIFC-LCIA abolished in favour of DIAC

In a major change for arbitration in Dubai, the DIFC-LCIA Arbitration Centre has been abolished.

On 14 September 2021, Decree No. 34 of 2021 (Decree No. 34) was issued by Mohammed bin Rashed Al-Maktoom, Ruler of Dubai. It not only dissolves the Dubai International Financial Centre Arbitration Institution (DIFC-LCIA Arbitration Centre), but also the Emirates Maritime Arbitration Centre (EMAC).

The DIFC-LCIA Arbitration Centre was created in 2008, the same year in which it announced a joint venture with the London Court of International Arbitration (LCIA) to create the DIFC-LCIA. Both the DIFC-LCIA and EMAC are referred to in Decree No. 34 as the “Abolished Arbitration Centres.” As a result of Decree No. 34, the Abolished Arbitration Centres will be subsumed into the Dubai International Arbitration Centre (DIAC). Established in 1994 by the Dubai Chamber of Commerce and Industry, the DIAC now stands as the premier arbitral institution in Dubai.

Dubai Decree No. 34 mandates that:

a. all real property, movables, assets, devices, equipment, and other property of the Abolished Arbitration Centres will have their ownership transferred to the DIAC;

b. employees of the Abolished Arbitration Centres will be transferred to the DIAC where the transfer is decided pursuant to a resolution of the Chairman of the Board of Directors of the DIAC;

c. arbitrators, conciliators and experts registered with the Abolished Arbitration Centres will have their memberships transferred to the DIAC.

In respect to the validity of arbitration agreements, the Decree stipulates that:

a. all agreements with resort to arbitration at the Abolished Arbitration Centres, concluded by the effective date of the Decree, are deemed valid. The DIAC will replace the Abolished Arbitration Centres in considering and determining all disputes arising out of the said agreements unless otherwise agreed by the parties thereto; and

b. unless otherwise agreed by the parties to an arbitration, the arbitral tribunals and panels formed by the effective date of the Decree at the Abolished Arbitration Centres and the DIAC will continue, without interruption, to consider and determine all arbitration claims pending with them, in accordance with the rules and procedures they adopt. However, the DIAC and its administrative body will supervise processing these claims.

In a welcome development, a Court of Arbitration will be formed within the DIAC with one of its functions being to supervise the review of draft arbitral awards and decisions in terms of form before their approval by arbitrators, in order to ensure their validity and convenient enforceability.

LCIA Statement

On 20 September 2021, the LCIA made a statement saying that it was aware of the issuance of Decree No. 34 and is in consultations with the government of Dubai to ensure good management of existing and future arbitration cases and mediations under the DIFC-LCIA Rules.

Major Change

The dissolution of the DIFC-LCIA is a major change for arbitration in Dubai, but with reform comes an opportunity for the DIAC to position itself as one of the leading arbitral institutions in the region and beyond.