International arbitration law and rules in Dubai International Financial Centre (DIFC)

The DIFC’s legal framework is based on principles of English law. This has made it an attractive forum for dispute resolution in the UAE and the wider region and has given it an international appeal as an arbitration seat.

1.1 The Dubai International Financial Centre (DIFC) is a free zone located in the Emirate of Dubai, in the United Arab Emirates (UAE) and was established under Dubai Law No. 9 of 2004 to provide a global financial hub in the region for international investors to operate free of local UAE ownership rules and restrictions. The DIFC has its own set of commercial laws which include an arbitration law (Law No.1 of 2008) (as amended by DIFC Law No.6 of 2013) (Arbitration Law), which is based on the UNCITRAL Model Law of 1985 and may apply to arbitrations seated both in and outside of the DIFC. 

2.1.1 The Arbitration Law applies generally to arbitrations where the seat of the arbitration is the DIFC. 1 Arbitration Law, article 7(1) Certain provisions will also apply where the seat is located outside the DIFC, such as provisions relating to the staying of court proceedings, confidentiality and interim measures from the Court, 2 Any competent court of any State or jurisdiction, including the DIFC Court where applicable. as well as the recognition and enforcement of awards. 3 Arbitration Law, article 7(2)

2.2.1 The following are some general principles drawn from the Arbitration Law.

Party autonomy 

2.2.2 The Arbitration Law provides that:

• parties may agree to submit to arbitration certain disputes between them in respect of a defined legal relationship, whether contractual or not; 4 ibid, art 12(1)
• the parties are free to agree on the procedure to be followed by the tribunal in conducting the proceedings; 5 ibid, art 26(1) and
• the parties are also empowered under the Arbitration Law to choose the law that will apply to the substance of the dispute. 6 ibid, art 35(1)

Fairness 

2.2.3 The Arbitration Law expressly states that the parties shall be treated equally 7 ibid, art 25 and that they shall be given a full opportunity to present their cases. 8 ibid

Non-intervention by the courts

2.2.4 The Arbitration Law expressly provides that in matters which it governs, the DIFC Court shall not intervene except to the extent that the Arbitration Law provides. 9 ibid, art 10 The Arbitration Law also permits the DIFC Court to perform various functions to assist or supervise the arbitration process. 10 ibid, art 11

3.1.1 The Arbitration Law specifies the requirements applicable to arbitration agreements. Arbitration agreements must be in writing, 11 ibid, art 12(3) and this requirement will be satisfied by the arbitration agreement being recorded in any form, whether or not an agreement has been concluded by conduct or other means. 12 ibid, art 12(4) Furthermore, the requirement for an arbitration agreement to be written will be met where it is:

• recorded in an electronic communication where the information contained therein is accessible so as to be usable for subsequent reference; 13 ibid, art 12(5)
• contained in an exchange of statements of claim and defence in which the agreement is alleged by one party and not denied by the other; 14 ibid, art 12(6) or
• contained in a separate document which is incorporated by reference into the contract, provided that the reference is such as to make the arbitration agreement part of the contract. 15 ibid, art 12(7)

3.1.2 The Arbitration Law specifies that an arbitration agreement referring to certain future disputes, for example, arising in connection with a contract of employment within the meaning of the DIFC Employment law, or a contract for the supply of goods and services (other than residential property) to a consumer made by a supplier, cannot be enforced against the employee or consumer except: 

• with their written consent after the dispute has arisen; 
• where they have submitted to arbitration proceedings commenced under the arbitration agreement; or 
• where the DIFC Court has made an order disapplying this article. 16 ibid, art 23(1)  

3.2.1 The Arbitration Law states that, for the purposes of a tribunal ruling on its own jurisdiction, an arbitration clause forming part of a contract shall be treated as an agreement independent of the other terms of the contract. 17 ibid, art 23(1) This means that a decision by the tribunal that the contract is null and void shall not by itself determine the invalidity of the arbitration agreement. 18 ibid

3.3.1 The Arbitration Law prescribes that, unless otherwise agreed by the parties, all information relating to the arbitration shall be kept confidential except where disclosure is required by an order of the DIFC Court. 19 ibid, art 14

4.1.1 The Arbitration Law sets out that the parties are free to agree upon the number of arbitrators that make up the tribunal provided that it is an odd number. 20 ibid, art 16(1) Where no agreement is reached, the Arbitration Law provides that the number of arbitrators shall be one. 21 ibid, art 16(2)

4.1.2 The parties are also permitted to agree on the procedure by which the arbitrators are appointed. 22 ibid, art 17(2) It is also expressly stipulated that, (unless otherwise agreed by the parties), no person shall be precluded from acting as an arbitrator due to his nationality. 23 ibid, art 17(1)

4.1.3 If the parties have not agreed the procedure by which the tribunal will be appointed, the Arbitration Law specifies the following procedures. 24 ibid, art 17(3)

• In an arbitration with three arbitrators, each party shall appoint one arbitrator and the two appointed arbitrators shall then appoint the third arbitrator. If a party fails to make its appointment within 30 days of a receipt of a request to do so or if the two appointed arbitrators fail to appoint a third within 30 days of their appointment, the appointment shall be made (upon the request of a party) by the DIFC Court of First Instance. 25 ibid, art 17(3)(a)  
• In an arbitration with a sole arbitrator, if the parties do not agree upon the arbitrator within 30 days of one party requesting the other to do so, the arbitrator shall be appointed by the DIFC Court of First Instance upon the request of either party. 26 ibid, art 17(3)(b)  
• Where the arbitration agreement entitles each party to nominate an arbitrator, the number of the parties is more than two and the parties have not all agreed in writing that they represent two separate sides (ie claimant and respondent) for the formation of the tribunal, the DIFC Court of First Instance shall appoint the tribunal without regard to any party’s nomination. 27 ibid, art 17(3)(c) In such circumstances, the arbitration agreement shall be treated as a written agreement for the appointment of the tribunal by the DIFC Court of First Instance. 28 ibid, art 17(3)(d)

4.1.4 The Arbitration Law also prescribes that where, under an agreed appointment procedure, a party fails to act in accordance with the procedures, the parties or two arbitrators fail to reach an agreement expected of them or a third party (including an arbitral institution) fails to perform any function under such procedure, then any party may request the DIFC Court of First Instance to take necessary measures (unless the agreed procedure provides for other means of securing the appointment). 29 ibid, art 17(4)

4.1.5 A decision taken by the DIFC Court of First Instance in respect of the above shall not be subject to appeal. 30 ibid, art 17(5)

4.2.1 The Arbitration Law provides that an arbitrator may be challenged only if circumstances give rise to justifiable doubts as to their impartiality or independence or if they do not possess the qualifications agreed upon by the parties. 31 ibid, art 18(2) An arbitrator may be challenged by the appointing party only for reasons which become known after the appointment was made. 32 ibid  

4.2.2 The parties are free to agree on the procedure for challenging an arbitrator. 33 ibid, art 19(1) Where no agreement exists, the challenging party must (within 15 days of the constitution of the tribunal or becoming aware of the circumstances above) send a written statement of the reasons for the challenge to the tribunal. Unless the challenged arbitrator withdraws, or the other party agrees to the challenge, the tribunal shall decide on the challenge. 34 ibid, art 19(2)

4.2.3 Where the challenge is unsuccessful, the challenging party may request (within 30 days of receipt of notice of the decision to reject the challenge) that the DIFC Court of First Instance decides the challenge. The Court’s decision in this regard will not be subject to appeal. Whilst the issue is being determined, the tribunal may continue with the proceedings and issue an award. 35 ibid, art 19(3)

4.2.4 The Arbitration Law also provides for arbitrators to be removed where, as a matter of fact or law, they are no longer able to perform their functions or fail to act without undue delay. Such arbitrator’s mandate will terminate if they withdraw or if the parties agree. Failing this, any party may request the DIFC Court of First Instance to decide on the termination, which shall not be subject to appeal. 36 ibid, art 20(1)  

4.3.1 Where the mandate of an arbitrator is terminated for the reasons set out above, a substitute shall be appointed according to the rules under which the replaced arbitrator was appointed, unless otherwise agreed. 37 ibid, art 21(1)

5.1.1 The Arbitration Law empowers the tribunal to rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. 38 ibid, art 23(1)

5.1.2 In respect of challenges by the parties.

• Any challenge to the tribunal’s jurisdiction must be made no later than the submission of a defence in the case of a responding party, or no later than the first written statement in the proceedings, in the case of any other party. A party shall not be precluded from raising such an objection by the fact that they have appointed or participated in the appointment of an arbitrator. 39 ibid, art 23(2)
• A plea that the tribunal has acted or is acting outside the scope of its authority shall be raised as soon as the matter arises in the proceedings. 40 ibid

5.1.3 In either case the tribunal can admit a late plea as to its jurisdiction if it considers the delay was justified. 41 ibid

5.1.4 The tribunal may rule on a plea on jurisdiction as a preliminary question or in the final award. Where the tribunal makes a preliminary ruling then, subject to any agreed process, any party may (within 30 days of receipt of notice of the tribunal’s ruling) refer the matter to the DIFC Court of First Instance. The Court’s decision cannot be appealed and, whilst the request is pending, the tribunal may continue with the proceedings and issue an award. 42 ibid, art 23(3)

5.2.1 Unless otherwise agreed in writing by the parties that the tribunal shall not have the power to order interim measures, the tribunal may, at the request of a party, order any party to take such interim measures of protection as the tribunal may consider necessary. Further, the tribunal may order any claiming party to provide appropriate security in relation to the measure sought. 43 ibid, art 24(1)(a)

5.2.2 Interim measures are stated as being temporary measures, whether in the form of an award or in another form, that are made by the tribunal prior to the issuance of the final award and include (without limitation) orders to maintain or restore the status quo pending determination of a dispute, preserve assets or evidence, take action to prevent or refrain from taking action that would cause prejudice to a party or the arbitration or to preserve evidence. 44 ibid, art 24(1)(b)

5.2.3 The party requesting the interim measure (aside from that relating to the preservation of evidence unless the tribunal considers it appropriate) 45 ibid, art 24(1)(c) and 24(1)(d) must satisfy the tribunal that:

• harm will likely occur which will not be adequately reparable by the awarding of damages and that such harm will substantially outweigh the harm that is likely to be caused to the party opposing the measure if the measure is ordered; and
• there is a reasonable possibility that the requesting party will succeed on the merits of the claim. 46 ibid, art 24(1)(c)

5.2.4 The party requesting the interim measure may be liable for costs and damages if the tribunal later determines that, in the circumstances, the measure should not have been granted. The tribunal can award such costs and damages at any point in the proceedings. 47 ibid, art 24(1)(e)

5.2.5 Upon being granted an interim measure, the successful party, with the written permission of the tribunal, may apply to the Court for an order enforcing the measure, in whole or in part, and may be awarded the associated costs unless otherwise directed by the tribunal. 48 ibid, art 24(2)

5.3.1 The Arbitration Law provides that, the arbitrators or any officer of an arbitral institution or appointing authority shall not be liable for any act or omission in connection with an arbitration unless they are shown to have caused damage by conscious and deliberate wrongdoing. This does not affect any liability incurred by an arbitrator by reason of their resignation. 49 ibid, art 22  

6.1.1 The overarching procedural principle stipulated by the Arbitration Law is that the parties are to be treated with equality and shall be given a full opportunity to present their case. 50 ibid, art 25

6.1.2 The parties are free to agree upon the procedures the tribunal must follow in the conduct of the proceedings. 51 ibid, art 26(1) Where no agreement has been made, the tribunal may conduct the proceedings in such a manner as it considers appropriate. 52 ibid, art 26(2)

6.2.1 Unless otherwise agreed, the proceedings commence on the date upon which the respondent receives the request for the dispute to be referred to arbitration. 53 ibid, art 28

6.3.1 The parties may agree upon the seat of the arbitration. However, where no agreement has been made and the dispute is subject to DIFC law, the seat of the arbitration shall be the DIFC. 54 ibid, art 27(1)

6.3.2 In any event, the tribunal may (unless otherwise agreed) meet at any place it considers appropriate for consultation amongst its members; hearing witnesses, experts or the parties; or for the inspection of goods, property or documents. 55 ibid, art 27(2)

6.3.3 The Arbitration Law permits the parties to agree on the language(s) to be used in the proceedings. Where no agreement is reached, the tribunal shall decide the issue 56 ibid, art 29(1) and may order that documentary evidence be accompanied by translations in the language determined. 57 ibid, art 29(2)

6.4.1 The Arbitration Law contains no provisions expressly allowing third parties to be joined to or to intervene in the proceedings. Any requirements in this regard will need to be assessed by reference to the institutional rules applicable to the proceedings (if any) and/or the parties’ agreement. 

6.5.1 Within the period of time agreed between the parties or determined by the tribunal, the claimant shall state the facts supporting the claim, the points in issue and the relief sought and the respondent shall state its defence in respect of those submissions, unless the parties have otherwise agreed as to the required elements of the statements of case. 58 ibid, art 30(1) The parties are permitted to submit supporting evidence with their statements or to include a reference to the documents they will submit. 59 ibid, art 30(2)

6.5.2 Unless otherwise agreed, the parties are permitted by the Arbitration Law to amend or supplement their claims during the arbitration unless the tribunal considers it inappropriate to allow such amendment, having regard to the delay in making it. 60 ibid

6.5.3 The Arbitration Law specifies that, unless otherwise agreed, if (without showing sufficient cause):

• the claimant fails to communicate its statement of claim in accordance with Article 30(1), the tribunal shall terminate the proceedings; or
• the respondent fails to communicate its statement of defence in accordance with Article 30(1), the tribunal shall continue the proceedings without treating the failure as an admission of the claimant’s allegations. 61 ibid, art 32  

6.6.1 Subject to the parties’ contrary agreement, the tribunal shall decide whether to hold oral hearings for the presentation of evidence or oral argument. However, unless the parties have agreed that no hearing shall be held, the tribunal must convene one at the request of a party. 62 ibid, art 31(1) The parties shall be given sufficient advance notice (as the tribunal shall decide) of any hearing, or meeting for the purposes of inspecting goods, property or documents. 63 ibid, art 31(2)  

6.6.2 All statements, documents, expert reports or evidentiary documents supplied by a party to the tribunal, or upon which the tribunal relies in making its decision must be communicated to all parties. 64 ibid, art 31(3)

6.6.3 Unless otherwise agreed, if, without showing sufficient cause, any party fails to appear at a hearing or to produce documentary evidence, the tribunal may continue the proceedings and make an award on the evidence before it. 65 ibid, art 32(c)  

6.7.1 The tribunal may appoint its own expert(s) and require the parties to co-operate with them (unless otherwise agreed). 66 ibid, art 33(1) Unless otherwise agreed, at the request of a party or if the tribunal considers it necessary, the expert shall participate at a hearing to give evidence on their oral or written report. 67 ibid, art 33(2) The experts’ expenses and costs will be borne by the parties as determined by the tribunal. 68 ibid, art 33(3)

6.8.1 The Arbitration Law specifically empowers the tribunal, or a party with the approval of the tribunal, to request assistance from the DIFC Court for the taking of evidence. 69 ibid, art 34  

7.1.1 If during the proceedings the parties settle the dispute, the tribunal shall terminate the proceedings and if requested by the parties and not objected to by the tribunal, record the settlement in the form of an award on agreed terms. 70 ibid, art 37(1) An award on agreed terms shall conform with the requirements of the Arbitration Law in terms of the form and contents of an award and shall state that it is an agreed award. Such an award shall have the same status and effect as any award made on the merits of the case. 71 ibid, art 38

7.2.1 The Arbitration Law states that the proceedings shall be terminated by the final award or where: 72 ibid, art 39(1)

• the claimant withdraws its claim, unless the respondent objects and the tribunal recognises a legitimate interest for the respondent to obtain a final settlement of the dispute;
• the parties agree to the termination of the proceedings; or
• the tribunal considers that the continuation of the proceedings has for any other reason become unnecessary or impossible. 73 ibid, art 39(2)

7.3.1 Where the tribunal is comprised of more than one arbitrator, any decision shall be made (unless otherwise agreed by the parties) by a majority of its members. Questions of procedure may be decided by the presiding arbitrator if so authorised by the parties or all members of the tribunal. 74 ibid, art 36

7.4.1 The Arbitration Law mandates a number of requirements applicable to an award, including that:

• the award be made in writing and signed by the majority of the tribunal, provided that the reason for any omitted signature is stated; 75 ibid, art 38(1)
• the award must also state the reasons upon which it is based, unless the parties have agreed otherwise, or the award is an award on agreed terms; 76 ibid, art 38(2)
• the award shall detail its date and the seat of the arbitration; 77 ibid, art 38(3) and
• the tribunal may refuse to deliver a final award or an order for the termination of the arbitration until its fees and expenses are paid in full. 78 ibid, art 39(4)

7.5.1 Within 30 days of receipt of the award (unless another time period has been agreed):

• a party, with notice to the other, may request corrections to the award regarding computation, clerical or typographical errors; and
• if agreed by the parties, a party, with notice to the other, may request the tribunal to interpret a specific point or part of the award. 79 ibid, art 40(1)

7.5.2 If the tribunal considers the request to be justified, the correction or interpretation shall be given within 30 days of receipt of the request and the interpretation shall form part of the award. 80 ibid Further, the tribunal may make any corrections on its own initiative within 30 days of the date of the award. 81 ibid, art 30(2)

7.5.3 Where an award has failed to consider claims presented in the proceedings, unless otherwise agreed, a party may (upon notice to the other) request within 30 days of receipt of the award that an additional award be issued. If the tribunal considers the request to be justified it shall make the additional award within 60 days. 82 ibid, art 40(3)

7.5.4 The tribunal is also empowered to extend, if necessary, any of the time periods in which it shall make a correction, interpretation or an additional award. 83 ibid, art 40(4)

7.6.1 The tribunal shall fix the costs of the arbitration in its award. The Arbitration Law sets out an exhaustive list of what can be considered as the costs of the arbitration, including: the fees and expenses of the tribunal; the costs of expert advice; disbursements necessary for the conduct of the proceedings and the costs of legal representation if such costs were claimed in the arbitration and the tribunal considers such costs to be reasonable. 84 ibid, art 38(5)

7.6.2 The Arbitration Law does not address the awarding of interest by the tribunal, but there is no preclusion against it and the payment of interest is generally permissible in the DIFC (and the wider UAE) and is also allowed under institutional rules. 85 E.g. Article 26.4, DIFC-LCIA Rules 2016

8.1.1 The courts have a supervisory function in relation to arbitrations conducted under the Arbitration Law and may only intervene in the proceedings where the Arbitration Law permits. 86 Arbitration Law, art 10 However, the DIFC Court may become involved in certain instances, set out in the Arbitration Law including (without limitation) in respect of: challenges to arbitrators, enforcement of interim relief and the taking of evidence. 87 ibid, art 11

8.2.1 The Arbitration Law mandates that where a matter subject to an arbitration agreement is brought before the DIFC Court, it shall dismiss or stay such action if a party so requests. The request must be made no later than when such party submits its first statement on the substance of the dispute. The DIFC Court will not be required to dismiss or stay the action if it finds that the arbitration agreement is null and void, inoperative or incapable of being performed. 88 ibid, art 13(1)

8.2.2 Where an action has been commenced in the DIFC Court as referred to above, arbitral proceedings may nevertheless be commenced or continued and an award made whilst the issue is pending before the DIFC Court. 89 ibid, art 13(2)

8.3.1 The Arbitration Law stipulates expressly that it is not incompatible with an arbitration agreement for a party to request from a Court, and for a Court to grant, an interim measure of protection. 90 ibid, art 15 Furthermore, the Court can assist with interim measures, by enforcing those which the tribunal has awarded in the proceedings. 91 ibid, art 24(2)

8.4.1 The Arbitration Law allows the parties to apply to the DIFC Court for assistance in the taking of evidence, provided the tribunal’s approval has been obtained. The Arbitration Law further states that the DIFC Court may execute such a request within its competence and in accordance with its own rules of taking evidence. 92 ibid, art 34

9.1.1 A party wishing to set aside an award issued in the DIFC must make the application within three months of receipt of the award (or such longer period as agreed in writing) or the date upon which the tribunal disposed of an application for the correction/interpretation of the award or the issuance of a further award. 93 ibid, art 41(3)

9.1.2 Pursuant to the Arbitration Law, the award may only be set aside by the DIFC Court on the basis of one of the prescribed grounds which include: 

• the arbitration agreement was invalid under the law it was subject to (or the law of the DIFC if no such law was indicated) or one of the parties to it was under some incapacity; 
• the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitration, or was otherwise unable to present its case; 
• the award deals with disputes outside of the parties’ submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration (provided that if the offending part of the award can be separated, only that part will be set aside); or
• the composition of the tribunal or the procedures of the arbitration were not in accordance with what was agreed between the parties (unless the agreement was in conflict with a mandatory provision of the Arbitration Law) or, where no such agreement was made, were not in accordance with the Arbitration Law. 94 ibid, art 41(2)(a)

9.1.3 Alternatively, an award may be set aside where the DIFC Court finds that the subject matter of the dispute was not capable of being arbitrated under DIFC law, the dispute should have been heard by a different body or tribunal under the Arbitration Law or any provision of DIFC Law, or the award conflicts with the public policy of the UAE. 95 ibid, art 41(2)(b)

10.1.1 Under the Arbitration Law, an arbitration award made in any state or jurisdiction will be recognised as binding within the DIFC and shall be enforced by the DIFC Court upon an application in writing. 96 ibid, art 42(1)

10.1.2 The party relying upon the award shall supply the original award and the original arbitration agreement, although duly certified copies of these will also be accepted. If these documents are not available in English, the DIFC Court may request the submission of a certified translation. 97 ibid, art 42(2)

10.1.3 Where the DIFC accepts the application for recognition it shall issue an order to that effect. 98 ibid, art 43(1) The order shall be issued in English and Arabic (unless otherwise determined by the DIFC Court). Either language version, whether in original form or a certified copy shall constitute proof of recognition. 99 ibid, art 43(2) The Arbitration Law also states that any awards recognised in the DIFC may be enforced outside the DIFC (ie in onshore Dubai) pursuant to the Judicial Authority Law (Law No. 12 of 2004). 100 ibid, art 42(4)

10.1.4 In addition to the grounds for setting aside an award considered above, the Arbitration Law also specifies the grounds on which recognition or enforcement of an arbitral award may be refused (irrespective of the state or jurisdiction in which the award was made). 101 ibid, art 44

10.1.5 The grounds for refusing recognition and enforcement include:

• the arbitration agreement was invalid under the law it was subject to (or the law of the country or jurisdiction in which it was made where no such law is indicated) or one of the parties to it was under some incapacity; 
• the award debtor was not given proper notice of the appointment of an arbitrator or of the proceedings; or was otherwise unable to present its case; 
• the award deals with disputes not contemplated by or not falling within the terms of the submission to arbitration, or it contains a decision on matters beyond the scope of the submission to arbitration (provided that if the offending part of the award can be separated, then the rest of the award may be recognised and/or enforced); 
• the composition of the tribunal or the procedures of the arbitration were not in accordance with the parties’ agreement or, in the absence of such agreement, were not in accordance with the laws of the state or jurisdiction where the arbitration took place;
• where the award has not yet become binding on the parties to it or has been set aside by a court in the country or jurisdiction in which, or under the law of which, the award was made; 102 ibid, art 44(1) or 
• where the Court finds that the subject matter of the dispute was not capable of being settled by arbitration under DIFC law; or the award conflicts with UAE public policy. 103 ibid, art 44(2)

10.1.6 Where the application to set aside relates to the fact that the award has not become binding, or has been set aside or suspended, the DIFC Court may adjourn its decision and, on the application of the award creditor, may order the other party to provide an appropriate security. 104 ibid

10.2.1 The Arbitration Law expressly states that an award will be recognised as binding in the DIFC, irrespective of the state or jurisdiction in which it was made. 105 ibid, art 42(1) The DIFC also has jurisdiction to recognise foreign arbitral awards under Article 24(1) of the DIFC Court Law (DIFC Law No. 10 of 2004). 

10.2.2 In addition, the Arbitration Law expressly states that where the UAE has entered into a treaty for the enforcement of judgments, orders or awards, then the DIFC Court will comply with the terms of such a treaty. 106 ibid In this vein, the UAE acceded to the New York Convention in 2006, which also applies in the DIFC. 

10.2.3 As such, foreign awards generally will be recognised and enforced in the DIFC, subject to any application for refusal of recognition or enforcement as referred to above. 107 ibid, art 44