Dubai arbitration centre aims high as caseloads surge

July 18, 2023

The DIAC metaverse initiative is increasing its international arbitration cases, which can now be staged in its metaverse

Director says DIAC aims to be global destination for dispute resolution
44% of cases last year involved foreign entities
Dubai was ranked 10th in a 2021 international arbitration survey

Dubai International Arbitration Centre (DIAC) aims to become the top global destination for settling corporate disputes after the revamped institution reported a six-fold rise in the value of cases filed there last year.

Before the creation of DIAC in 2004, arbitration in the emirate was conducted mostly through a division of Dubai Chamber of Commerce and Industry.

DIAC’s remit expanded in 2021 following a decree which abolished the rival Emirates Maritime Arbitration Centre (EMAC) and the arbitration operations of Dubai International Finance Centre, according to a note from law firm Pinsent Masons.

DIAC aims to become the “ultimate global destination for dispute resolution”, Jehad Abdulrazzaq Kazim, DIAC’s executive director, told AGBI.

Dubai was ranked 10th in a 2021 international arbitration survey conducted by law firm White & Case and Queen Mary, University of London.

The top five were London, Singapore, Hong Kong, Paris and Geneva.

Last year, 340 cases with a combined value of $3.1 billion were registered at DIAC, according to its inaugural annual report.

That compares with 276 new cases worth a total of AED 1.86 billion ($507 million) in 2021.

Dubai arbitration — Jehad Abdulrazzaq Kazim, DIAC executive director, aims to raise the global profile of arbitration in Dubai

Of last year’s new cases, 44 percent involved disputes in which either the claimant or respondent was a foreign entity.

Overall, 10 percent of cases had both foreign claimants and defendants.

Parties involved in last year’s caseload – either claimants or respondents – were from 48 countries worldwide.

The UAE is a signatory to the New York convention on arbitration, which enables its judgements to be enforced in all jurisdictions which have also signed up to the code.

The coronavirus pandemic led to a surge in cases filed at DIAC. Most cases end with an arbitration award, whereas in some cases the parties agree on a settlement of the dispute.

“Covid-19 caused a lot of disruptions when it comes to parties honouring their obligations as part of contracts and transactions,” said Kazim.

The largest case registered last year was for AED1.5 billion ($409 million). In total, 312 cases were seeking up to AED50 million and 28 were for more than that amount.

Of DIAC’s 2022 new cases, 49 percent relate to construction, 16 percent to real estate, 27 percent to commercial, 4 percent to corporate and 2 percent to maritime.

Construction will remain the leading sector in terms of DIAC’s caseload, said Kazim. Other common disputes surround enforcement of the terms of mergers and acquisitions deals, she added.

Digital economy cases on the up

DIAC expects to handle more cases relating to the digital economy, blockchain, cryptocurrencies and artificial intelligence, said Kazim.

The process and concept of arbitration is becoming more widely known among Middle East companies, which are increasingly including arbitration clauses into contracts, said Kazim.

“They feel it’s the best method of resolving disputes outside the courts,” she said.

“In the past, only the high-value claims went for arbitration, but we’ve seen recently even small claims where parties agree to arbitration.”

From date of the transmission of the file to the arbitration tribunal by DIAC, the final award must be rendered in six months, however, participating parties can ask for extensions and cases often take a year or so to complete..

Third-party funding

DIAC implemented various reforms in 2021 that it says incorporate best global practices.

Third-party funding is now recognised and must be disclosed. Such funders are usually specialist financial institutions which pay some or all of a claimant’s costs on condition of receiving a share of any compensation award.

“Third-party funding is gaining popularity,” said Kazim.

“This mechanism allows parties with limited resources to pursue justice without bearing the financial burden. It’s also a risk management tool.”

Proceedings at DIAC can be staged in its metaverse, which launched in March.

“There are a lot of benefits when it comes to the usage of technology,” said Kazim.

“It can really enhance arbitration proceedings and procedures in terms of efficacy and efficiency, and therefore cut a lot of time and costs.”

Innovations

By the end of 2023, DIAC aims to introduce regulations enabling it to offer mediation services, which are cheaper and quicker than arbitration.

“It also gives parties a lot of control over the outcome and therefore helps in maintaining and preserving their relationships,” said Kazim.

“Mediation is a more amicable way of resolving disputes compared to arbitration.”

A DIAC-appointed mediator facilitates communication between the parties so that they themselves reach an agreement. The mediator does not impose a judgement.

“We’ll be exploring and implementing a lot of tech-based solutions that will simplify procedures, improve case management, and facilitate remote hearings,” said Kazim.

“Our plans also include expanding our team to support our growing operations.”