As reported in the first part of this blog, the new Rules of Arbitration of the Dubai International Arbitration Centre 2022 (DIAC Rules 2022) have entered into force with effect from 21 March 2022. Part 1 discussed in some detail the virtual conduct, the revision of time-limits and the introduction of expedited proceedings, as well as party representation under the DIAC Rules 2022. This part continues the discussion, focusing on the balance of procedural novelties introduced by the new Rules.
Availability of arbitrators
Apart from confirming their impartiality and independence from the parties and their counsel, arbitrators must demonstrate their availability under the new Rules (article 14.3), that is, that they have sufficient time to serve the mandate in question with the requisite measure of procedural efficiency and expedition.
Alternative appointment process
A new article 13 introduces a novel, so-called alternative process for the default-appointment of a sole arbitrator or a chair. This process is based on a list system whereby the DIAC submits a list of three suitable arbitrator candidates to serve as sole arbitrator or chair to each party or co-arbitrator. Each party or co-arbitrator will then be allowed seven days from receipt of the list to add three further candidates they consider suitable, arrange all six candidates in order of preference and return the re-ordered list to the DIAC. The candidates will then be invited to serve by order of mutual preference and in the event that no one accepts to serve, the DIAC Court has the power to repeat the process or to decide to make a direct appointment. This new list system will lend a welcome measure of transparency to the default-appointment process and allow the parties some informed participation in that process.
Seat of arbitration
The new Rules provide for the DIFC as an “initial” default seat of the arbitration (article 20.1). The choice of the DIFC as a default seat, no doubt, seeks to assuage those arbitration users that would, historically, have opted for DIFC-LCIA arbitration in combination with a DIFC seat. For the avoidance of doubt, DIFC-seated arbitration imports the application of the DIFC Arbitration Law to the arbitral procedure and the DIFC Courts as the curial courts of the arbitration. That said, the default designation of the DIFC seat being “initial” only and as such subject to the final determination by the tribunal once constituted, following consultation with the parties (article 20.1) might cause unanticipated procedural challenges where, for example, a party were to have applied for interim relief under the DIFC Arbitration Law prior to a change of seat.
Importantly, echoing the approach taken under the UAE Federal Arbitration Law (FAL), an award under the DIAC Rules is deemed to be rendered at the seat, irrespective of its place of signature, whether domestic or abroad. This chimes well with the electronic signature of the award, tribunal members being at liberty to sign the award in or outside the seat (without this producing any effect on the qualification of the award as domestic or international).
Costs of arbitration
Unlike the position under the old Rules, the new Rules adopt a wide definition of “costs of the arbitration”, including, apart from the DIAC registration and administrative fees and the tribunal’s fees and expenses:
“[…] the fees of the legal representatives and any expenses incurred by those representatives, together with any other party’s costs as assessed and determined by the tribunal.” (Article 36.1, DIAC Rules 2022.)
This reflects, in relevant part, the recoverability of legal costs under the LCIA Rules and dispenses with the need for an express reference (whether in the underlying arbitration agreement or in terms of reference) to the tribunal’s power to award party costs in DIAC arbitration (as required by the Dubai Court of Cassation’s stricter interpretation of article 2.1, Appendix to Costs, DIAC Rules 2007 in Case No 282/2012).
Further, under the new Rules, a counterclaim is defined as “any claim or defence by way of set-off submitted by the Respondent” (article 1.1). This means that a counterclaim that is tantamount to a set-off defence, irrespective of whether that set-off properly qualifies as a contractual, statutory or judicial, will attract the DIAC registration fee and will be taken into account for the determination of the DIAC advance on costs.
A new article 22 addresses the issue of third party funding, requiring the disclosure of third-party funding arrangements, prohibiting the appointment of third-party funders that create a conflict with a member of the tribunal after the tribunal’s constitution and empowering the tribunal to pay deference to third-party adverse cost liability in apportioning the costs of arbitration under the Rules.
Consolidation and joinder
A new article 8 lays down a detailed regime for the consolidation of arbitration proceedings into a single proceeding where either:
- All claims in the arbitration proceedings arise from the same arbitration agreement.
- The arbitration proceedings involve the same parties, the underlying arbitration agreements are compatible and the disputes arise out of the same legal relationship, or related contracts or transactions.
A new article 9 allows the joinder of a party to an ongoing arbitration irrespective of whether or not that party is a party to the arbitration provided that all parties, including the party to be joined, agree to the joinder, and the DIAC Court or the tribunal (if already constituted) is prima facie satisfied that that party is a party to the arbitration agreement. Like under the FAL, only parties that are ultimately party to the underlying arbitration agreement may be joined to the arbitration.
Importantly, both articles 8 and 9 are without prejudice to the tribunal’s power to determine its own jurisdiction.
A new Appendix II to the Rules proposes a number of “exceptional procedures” for use in DIAC arbitration. This includes:
- Detailed guidance on the adoption of interim measures by DIAC tribunals (article 1, Appendix II), expounding a harm or success-based test to the application for and of interim measures.
- A procedure for the award of emergency interim relief by an emergency arbitrator (article 2, Appendix II), modeled on the emergency arbitrator regime of the LCIA and ICC Rules.
- Conciliation proceedings (article 3, Appendix II), aiming for the adoption of a formal settlement agreement following the appointment of a conciliator.
- The DIAC’s role as an appointing and challenging authority in arbitral proceedings that are not conducted under the auspices of the DIAC Rules (article 4, Appendix II).
The DIAC Rules 2022 are off to a promising start. They do show encouraging similarities to other leading sets of institutional rules, in particular the LCIA and the ICC Rules. To what extent they will be able to live up to the ambition of turning DIAC into one of the world’s leading international arbitral institutions over the next five years remains to be seen. At first blush, however, it looks highly unlikely for the new Rules to be blamed should DIAC fail to achieve that lofty goal.