09/23/2021 | News release | Distributed by Public on 09/23/2021 08:47
By Decree 34 of 2021, Dubai has abolished the DIFC-LCIA Arbitration Centre, along with the Emirates Maritime Arbitration Centre, and transferred their property, staff and cases to the Dubai International Arbitration Centre - DIAC.
The 10-article decree took effect on the 20 September after appearing in the Dubai Government's official Gazette on 14 September. It seems to have taken everyone by surprise - including the LCIA and DIAC.
Article 4 abolishes the Maritime Centre and "the DIFC's Arbitration Institute" i.e. the DIFC-LCIA.
Article 5 provides for the transfer to DIAC of the "properties, moveable assets, devices, equipment and funds" belonging to the abolished centres, as well their financial allocation from the Government of Dubai, their employees and their lists of arbitrators, conciliators and members. Further, DIAC will take over all the "rights and obligations" of the abolished centres.
Article 6 provides that all arbitration agreements referring disputes to the abolished arbitration centres will be "deemed valid and effective" and DIAC will replace those centres in considering and determining disputes that arise under the agreements, unless otherwise agreed by the parties.
What this means is that unless the parties agree otherwise, ongoing DIFC-LCIA arbitrations (there are about 140 currently active) will be administered and supervised by DIAC. The Tribunals currently appointed will remain in place - just operating under the auspices of DIAC as opposed to the DIFC-LCIA.
Arbitral tribunals formed within the abolished centres will continue to determine all cases pending before them without interruption, using the "applicable rules and procedures" (unless otherwise agreed by the parties). DIAC and its administrative body will, however, supervise the cases. Current DIAC cases will proceed as normal.
Article 10 puts the onus on DIAC to implement the decree within six months of it taking effect. Essentially, by 19 March, 2022.
In light of this, DIAC will most likely open a branch in the DIFC freezone in addition to its existing premises in mainland Dubai, as permitted by Article 2 of the decree.
This seems to be a move to support DIAC which was a key player in international arbitration in Dubai, particularly during the financial boom of 2004 to 2008. However, in recent years it has attracted mostly UAE parties with the international arbitrations gravitating towards DIFC-LCIA.
The Dubai Government has, for some time now, been pursuing a modernising agenda, updating laws and regulations as evidenced by the demise of the much criticised JJC. Some view this as merely a step in the overall ambition to a modernise and rationalise the current structures and to "bring arbitration in the Emirate" under one roof.
The key question is: what next?