Introduction to DIAC Arbitration Rules 2022
The new DIAC Arbitration Rules meet the generated expectations following a 15 year gap since the DIAC Arbitration Rules 2007.
As arbitration practitioners and arbitration lovers will recall in 2018 the UAE released a new Federal Arbitration Law and a few months ago by Executive Decree 34 of 2021 we learned that the DIFC-LCIA was to close operations and such operations were to be transferred to the DIAC within 6 months.
The DIAC Arbitration Rules 2022 enter into force on the 21 February 2022 and will be applicable to arbitration registered after this day.
Our initial reading of the DIAC Arbitration Rules 2022 reveal significant improvements which we have gathered in 4 groups:
- COVID Impact
- Time Impact
- 21st Century Complexity of Parties in an Arbitration
- Impact to Arbitration Practitioners
These sections follow below:
Impact of the DIAC Arbitration Rules 2022
We can observe the practical modifications motivated by COVID times. Such implications can be observed in the support of electronic filings, documented possibility to conduct hearing virtually or the option to sign awards digitally:
- Article 3.1 makes a reference to a new Electronic Case Management System in parallel to indicating that notifications and communications from the parties or arbitrators will need to be made in writing by email or via any electronic case management system to be implemented.
- Article 4.3 also confirms that Requests for Arbitration will be filed electronically or via any electronic case management system to be implemented.
- Articles 20.2, 23.2 and 26.1 opens up the possibility to conduct hearings on the merits and preliminary meetings virtually.
- Awards – in reference to Article 20.3 – can be signed electronically via an authenticator software method, in the alternative they will need to be signed by ink and physically delivered to the DIAC.
- Electronic Oaths – Article 27.6 when addressing witnesses – likewise enables Tribunals to accept oaths by telephone or any appropriate means of virtual communication
The New DIAC Arbitration Rules 2022 set a clear time boundary and cut the 2007 timings. Examples:
- Tribunals should get the ball rolling and contact parties with the aim to fix a time to convene for Preliminary Meeting not later than 15 days from obtainin the transfer of the file (Article 23.1). Before Tribunals were to reach out to parties within 30 days.
- Counterclaiming parties will have 7 days to make payment of counterclaim fees, else the counterclaim will be stricken out. The inexistence of a time limit before used to drag the ultimate withdrawal of the counterclaim with an unrecovered loss of time for the overall arbitration.
- Claims that are not consolidated (we will go about this novelty below) will need to re re-registered within 15 days, else they will be deemed as withdrawn. Reference to Article 8.3 of the DIAC Arbitration Rules 2022.
- Replacement Tribunals have 20 days from the transfer of the file to inform which parts of the process occurred prior to his/her/its taking over will need to be repeated. Reference to Article 16.4 of the DIAC Arbitration Rules 2022.
- There is no pre-fixed timings for the filing of the Statement of Claim and Statement of Defence. The 2007 Rules fixed a 30 day timings. The timings under the new rules are to be fixed by Tribunals who are to take into consideration the circumstances of the case and the Parties’ proposals.
- Article 32 set the ground for expedited proceedings. In very brief: sole arbitrators could be in place within 5 days and awards made within 3 months. Parties may agree to this expeditious process or they may fall on it if the claim figures are below AED 1,000,000 (or if the Arbitration Court does deem of urgency the circumstances).
- Awards are to be rendered within 6 months and extensions of time will need to be approved by the Parties or the Arbitration Court.
21st Century Complexity of Parties in an Arbitration
The new DIAC Arbitration Rules 2022 take into account the common complexities that arbitration practitioners often face.
It is not rare to find parties disputes relating to different contracts or parties disputes relating to a number of Parties. Entirely new Section III (Articles 8 and 9) of the Rules deals with Multiple Contracts and consolidation with possibility to seek such consolidation before and after the transfer of the file to the Tribunal. It is also possible for Parties to opt out of the consolidation mechanism.
New Section III also covers the possibility of joinders in which case it would need to be consented in writing by parties or the Arbitration Court needs to be prima facie satisfied that any other party may be a party under the arbitration agreement.
The new DIAC Arbitration Rules also consider the new arbitration realities and as such the possibility that parties obtain third party funding (under Article 22) and plus Tribunals may consider third-party adverse cost liability.
These new realities also include the complexities in selecting arbitrations. The new Rules include alternative appointment process (Article 13 of the Rules for appointment or arbitrators or chairs.
We also mentioned the expedited proceedings as part of the time impact above.
Lastly, we deem very positive two additions:
- The express mention that references of disputes to DIAC or the Dubai Chamber of Commerce and Industry will be deemed as submitted to the application of the Rules 2022.
This is welcomed because it is extremely common to continue to come across arbitration agreements making a reference to arbitration at the Dubai Chamber of Commerce and Industry.
- Legal fees are included within the definition of Costs of Arbitration putting to a final end the uncertainties with respect to the possibility to recoup in full the costs of an arbitration.
Impact to Arbitration Practitioners: Counsel and Arbitrators
Evidently the impact on arbitrators is comprehensive when new rules see the light. We deem however of interest to highlight the following Arbitration Court’s powers. The Arbitration Court can:
- revoke arbitrators if the later do not conduct the arbitration expeditiously (16.2 (c))
- communicate to the professional body any attempt by Parties representatives to unfairly obstruct the arbitration or actions that constitute misconduct. Reference to Article 17.5 of the 2022 Rules.
- Arbitrators need to submit not less than 30 days prior to the expiry of the time limit to render the final award a draft of the document for the Arbitration Court to handle formalities inspection and costs fixing.
We trust that the above is of assistance in catching up with the arbitration developers. We will miss the Executive Committee of the DIAC (and welcome the empowered Arbitration Court of the DIAC) and the seat of arbitration being Dubai as default (now DIFC).
Full text of the DIAC Arbitration Rules 2022 can be accessed here.
We look forward to new updates in line with upcoming new practice. Stay tuned!
In the interim at disposal to assist with arbitration needs following arbitration support within our main areas of expertise.
*This publication is for general use not intended as legal advice.