On 1st of February 2024, the Arbitration Rules of the new Abu Dhabi International Arbitration Centre (Rules) came into force. The Rules replace arbitration under the ADCCAC Rules (2013) and bring arbitration at the Abu Dhabi Chamber of Commerce in line with international best practices.
Background
As from 1st of February 2024, the Abu Dhabi International Arbitration Centre (Centre) has replaced the Abu Dhabi Commercial Arbitration and Conciliation Centre (ADCCAC) that in the past administered arbitration proceedings at the Abu Dhabi Chamber of Commerce. Setting up the new Centre, branded arbitrateAD, is part of the efforts to reorganize arbitration at the Abu Dhabi Chamber of Commerce and to promote Abu Dhabi as regional and global dispute resolution hub. The Rules replace the ADCCAC Rules (2013).
Scope of Application
The Rules apply to any arbitration where the parties have referred to the Rules, to the Abu Dhabi International Arbitration Centre, or to the Abu Dhabi Chamber of Commerce (Article 1.1). They apply to any arbitration commenced after 1st of February 2024 (Article 1.3), unless the parties agree otherwise. Pending arbitrations continue to be governed by the ADCCAC Rules (Article 53.2).
Court of Arbitration
The Rules provide that a Court of Arbitration (Court) is established at the Abu Dhabi International Arbitration Centre, that is independent from the Abu Dhabi Chamber of Commerce (Article 3). The Court of Arbitration has supervisory authority over the arbitration proceedings administered by the Centre. The Court’s competencies inter alia include deciding on challenges to arbitrators and arbitration clauses, as well as scrutinizing draft awards (Article 40).
Enhancing Efficiency
The Rules introduce several measures that are designed to increase procedural efficiency.
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- The arbitral tribunal can decide, upon its own volition or the application of a party, to issue terms of reference (ToR), hereby defining the subject matter in dispute (Article 24).
- The arbitral tribunal is bound to hold an initial case management conference within 21 days after the case file was transmitted to the tribunal (Article 25).
- New claims and amendments to claims cannot be brought after the statement of claim respectively the statement of defense. In the event ToR are issued, new claims are limited to the dispute as delineated in the ToR (Article 30).
- Unless the parties have expressly agreed otherwise, the rules on expedited procedures apply to all arbitrations with an amount in dispute not exceeding AED 9,000,000 (approx. USD 2,500,000) (Article 36).
- The tribunal has the power to order an early dismissal of claims in the event such claim is manifestly without legal merit, inadmissible, or outside the tribunal’s jurisdiction (Article 45).
- The tribunal may appoint a secretary (Article 19). This would conform to common practice in more complex proceedings (and under many rules would not be regulated but left to the parties).
These principles by and large reflect more recent international trends.
Multiparty Arbitration
The Rules for the first time regulate multiparty arbitrations in more detail (Articles 9 sequitur). This is welcome, given that the bulk of arbitration work in the UAE are construction disputes, often involving multiple parties.
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- A party may bring a single arbitration under multiple contracts (Article 10).
- The Court may join a third party to the arbitration, if all parties so agree or the court is prima facie satisfied that the additional party is subject to the Centre’s jurisdiction (Article 11).
- The Court further has the powers to consolidate proceedings, in the event the parties so agree, the proceedings are based on the same arbitration agreement, or where the dispute is based on interrelated contracts and the arbitration agreements are compatible.
This gives the parties and the Court far reaching powers to consolidate multiparty proceedings. It remains to be seen how often these options will be used in practice.
Emergency Arbitrator
The Rules provide for an emergency arbitrator who can issue urgent preliminary measures, before the arbitral tribunal has been constituted (Article 35). This is in line with more recent international practice and addresses a party’s need to obtain quick interim relief in arbitration, without involving the state courts and without waiting until the arbitral tribunal has been constituted.
Language and Seat
The language of the arbitration is determined by the tribunal, without explicitly determining a default language (Article 23). In the past, the ADCCAC Rules provided for Arabic as default language, as does the UAE Arbitration Law. In view thereof, it is recommendable for international parties to explicitly agree on the language of the arbitration in the arbitration agreement.
The default seat of the arbitration is Abu Dhabi Global Marked (ADGM, Article 22.2). ADGM is a financial free zone with a separate court and legal system, based on the English common law.
Exclusion of Arbitrators’ Liability
The arbitrators’ liability for negligence in connection with an arbitration, as well as the liability of the Centre and of its personnel, is excluded (Article 46.1). The Rules hereby respond to the trend that parties who lost a case hold arbitrators (and the arbitration institution) liable. Whether the provision in Article 46.1 reliably fixes this issue remains to be seen. First, the exclusion is far reaching, also extending to fraudulent, intentional and gross negligent breaches. This is not in line with the principles of Emirati contract law. Second, given that consent is the basis of any arbitration, the exclusion of liability will presuppose that the parties have consented to the application of the Rules and the arbitration. This will not always be the case, e.g. if a party contested the arbitration clause and did not participate in the proceedings.
Third Party Funding
The Rules provide for an obligation to disclose third party funding (Article 48), in line with more recent best practices.
Digitalization
In line with the international standard, the Rules provide for electronic submissions as default position (Article 5.2) and explicitly permit to hold hearings virtually (Article 33).
If you would like more information about this topic then please contact us.
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