In December 2023, the Abu Dhabi Chamber of Commerce and Industry heralded a new chapter in international arbitration in the GCC with the launch of the Abu Dhabi International Arbitration Centre, succeeding the Abu Dhabi Commercial Conciliation and Arbitration Centre. Alongside this transition, arbitrateAD introduced its arbitration rules on 1 February 2024 (available at: https://www.arbitratead.ae/files/arbitration-rules.pdf) (the Rules), replacing the existing rules of the ADCCAC.

This article outlines the key features of the arbitrateAD Rules and examines potential considerations stemming from the emergency of a new arbitration centre in the region.

A. The arbitrateAD Rules

1. Scope of Application (Article 1) & Transitional Provision (Article 53): 

The Rules govern all new cases registered from 1 February 2024 onwards, where parties agree to refer their disputes to arbitration under the Rules, to the arbitrateAD, or the Abu Dhabi Chamber of Commerce. The 2013 ADCCAC Arbitration Rules continue to apply to pending arbitrations administered under those rules.

2. Court of Arbitration (Article 3):

The Centre establishes a Court of Arbitration, an independent administrative body exercising supervisory authority over the dispute resolution services offered by the Centre. The Court handles arbitrator appointments and replacements, resolves challenges to arbitrators or arbitration agreements, considers requests for joinder and/or consolidation, and scrutinises awards.

3. Default Seat (Art. 22):

Consistent with the approach of the DIAC Rules, if the parties have not stipulated a seat, the Abu Dhabi Global Market (ADGM) serves as the default seat of arbitration. The ADGM is an offshore free-trade zone (same the Dubai International Financial Centre) with its own laws, regulations and court system (common law jurisdiction).  It co-exists and operates in parallel with both the DIFC and the civil law UAE onshore courts.

4. Multiple Parties, Multiple Contracts, Joinder & Consolidation (Articles 9-12):

The Rules come with provisions addressing situations where more than two parties are involved in an arbitration (Article 9), and/or where a party brings a single arbitration asserting claims arising out of or in connection with more than one contract or more than one arbitration agreement (Article 10).  Additionally, they allow for the joinder of additional parties to an arbitration (Article 11) and the consolidation of two or more arbitrations pending under the Rules into a single arbitration, enhancing the efficiency of resolving complex disputes involving multiple parties and/or contracts.  Notably, these provisions were absent in the ADCCAC Rules.

5. Terms of Reference (Article 24):

Under the Rules, the issuance of a Terms of Reference is not mandatory, with the tribunal being empowered to decide whether it is appropriate to issue a Terms of Reference.

6. New Claims and Amendments to Claims (Article 30):

Where the Tribunal has decided not to issue Terms of Reference, parties may not amend their claims or assert new claims after the submission of the Statements of Claim and Defence.  Similarly, parties may not assert new claims which fall outside of the limits of the Terms of Reference once issued.  These limitations apply unless parties have been authorised to do so by the Tribunal.  In making these decisions, the Tribunal takes into account all relevant circumstances, including the nature of the new or amended claims, considerations as to the efficiency and expeditiousness of the proceedings, and any prejudice to the other party(ies).

7. Emergency Arbitrator (Article 35) and Expedited Proceedings (Article 36):

The Rules introduce emergency arbitration (Article 35) and expedited proceedings (Article 36) features which were absent from the previously applicable ADCCAC Rules.  A party seeking urgent preliminary measures before the tribunal’s constitution may apply for the appointment of an emergency arbitrator following the procedure outlined in Article 35.  In turn, Article 36 stipulates that, unless parties expressly agree otherwise, expedited proceedings apply automatically to any case where the total amount in dispute (i.e., the aggregate of all claims and counterclaims) does not exceed AED 9 million (i.e., approximately EUR 2.25 million and USD 2.5 million).  The final award shall be issued within four months from the tribunal’s receipt of the case file, and provide a summary of the reasons underlying the decision.

8. Time Limits for Issuing an Award (Article 38):

Awards must be rendered within nine months from the date of the initial case management conference. Such time limit shall be extended by the Court upon the joint request of the parties.  The provision does not explicitly grant the Tribunal to power to extend the time limits for rendering the final award, in the absence of a relevant request by the parties.  

9. Waiver (Article 41(12):

Parties are deemed to have waived their rights to any appeal, recourse or defence against the award, including before any state court or other judicial authority, to the extent that such waiver can be validly made.  

10. Early Dismissal (Art. 45):

The Rules allow for the early dismissal, in whole or in part, of claims, defences, counterclaims, or replies to counterclaims, if they are: (i) manifestly without legal merit; or (ii) manifestly inadmissible or outside of the Tribunal’s jurisdiction. An Order or Award granting or denying an application for early dismissal shall be issued within 30 days and shall be reasoned.

11. Scrutiny of Awards (Art. 40):

Awards are subject to scrutiny by the Court. Without impeding the Tribunal’s discretion in deciding the merits of the dispute, the Court may suggest modifications, including drawing the Tribunal’s attention to any required changes to the form of the award, apparent clerical errors, inconsistencies or omissions or to matters addressed in the Award Checklist.  This is a limited scope of review compared to the ICC Rules which entitle the ICC Court to also draw the tribunals’ attention to points of substance.

12. Confidentiality (Article 47):

The discussions and deliberations of the Tribunal, the Court, and the Secretariat shall be confidential.  Exceptions to this obligation are allowed provided that the disclosing party can establish that the disclosure was minimized and that it was (i) agreed upon by the parties; (ii)  required under applicable law or regulations binding on the disclosing party; (iii) required by a party to pursue or enforce a legal right or claim; or (iv) required by a party to enforce or challenge an Award in legal proceedings before a national court or other judicial authority.  Under the arbitrateAD Rules, the Tribunal can enforce any obligation of confidentiality on the parties under the Rules, per the applicable law or pursuant to the parties’ agreement, and may issue an Order or Award for sanctions, damages or costs and take measures to protect confidentiality and trade secrets.

13. Third Party Funding (Art. 48):

Unlike the ADCCAC Rules, the arbitrateAD Rules address third party funding by requiring funded parties’ obligation to disclose, as soon as is reasonably possible, the existence and identity of any non-party funding any claims subject to the arbitration.

14. Shortened Deadlines (Article 7):

The Rules provide for streamlined procedural deadlines. The answer to the request for arbitration and the reply to counterclaims must be filed within 21 days of receiving the Request and the Answer, respectively.  

15. Electronic Signature (Article 41(4)):

Awards may be electronically signed by the Tribunal (also by utilizing software that enables digital verification of the signatory’s identity and intent to sign the document).

16. Tribunal’s Powers (Article 31(3):

The Rules grant tribunals the broadest powers to administer the proceedings and the taking of evidence, including by directing the timetable and procedure of the arbitration; bifurcating proceedings; convening meetings, case management conferences, or hearings; directing the taking of, or excluding, evidence; hearing witnesses; and/or appointing experts.

17. Tribunal Secretaries (Article 19):

Introducing clarity absent in the ADCCAC Rules, the Rules delineate the appointment and duties of arbitral secretaries.  The Tribunal may appoint a Tribunal Secretary, subject to the approval of the parties, without delegating any decision-making authority to the Secretary. The Secretary must be impartial and independent, and the Tribunal shall ensure that the Secretary remains impartial and independent at all stages of the arbitration.  Unless the parties agree otherwise, any fee payable to the Secretary shall be paid from the fees of the Tribunal.

B. Potential Implications to Existing and New Contracts.

The creation of the arbitrateAD and the introduction of its Rules represents a substantial advancement in bolstering Abu Dhabi’s arbitration framework, aligning it with global standards and bolstering trust in the region’s dispute resolution mechanisms. However, parties and their counsel shall be mindful of several implications that may arise before, during, and after commencing arbitration.

As previously reported here, recently, a Louisiana Court declined a motion to compel arbitration in a case involving Dynamic Industries and Baker Hughes. The parties had agreed to resolve disputes through arbitration under the Arbitration Rules of the DIFC LCIA. However, Dubai Decree No. 34/2021 abolished the Dubai legal entity that had partnered with the LCIA. Ultimately, through a press release, it was announced that all future DIFC-LCIA cases would be referred to DIAC.

When Baker Hughes initiated legal action in US courts, Dynamic Industries sought to enforce arbitration in Dubai, arguing that under Decree No. 34/2021, DIFC-LCIA’s assets, rights, and obligations had been transferred to DIAC, and all existing DIFC-LCIA arbitration agreements were explicitly deemed to remain valid.

The US Court emphasized that “the parties’ contractual choice of forum was an integral part of the agreement to arbitrate, rather than an ancillary logistical concern,” and courts could not compel arbitration when the agreed-upon arbitral institution was unavailable or ceased to exist. It stressed that the Dubai Government lacked “the authority […] to unilaterally change the forum agreed to by the parties,” and that, despite any resemblances between DIAC and DIFC-LCIA, since DIAC was not the originally agreed-upon forum, the forum selection clause was unenforceable, preventing the Court from compelling arbitration.

Against this background, there is uncertainty regarding how foreign state courts will handle ADCCAC arbitration clauses and awards issued under them, particularly with the advent of arbitrateAD as a separate entity from ADCCAC:

• Is an arbitration agreement referring to the ADCCAC and/or the ADCCAC Rules enforceable?  Foreign courts may deem arbitration agreements referring to the ADCCAC and/or the ADCCAC Rulesunenforceable if parties do not subsequently consent to the arbitration being administered under arbitrateAD Rules.
• Is an award made under the arbitrateAD Rules enforceable when the arbitration agreement refers to the ADCCAC and/or its Rules?  Foreign courts may decline to recognize and enforce arbitral awards made under the arbitrateAD Rules if a party demonstrates that it did not consent to the arbitration being administered under these rules.

Amid Abu Dhabi’s aspirations to become a global arbitration hub, the arbitrateAD initiative is a significant and welcome development in the field of arbitration in the region.  Yet, uncertainties persist regarding the enforceability of arbitration clauses referencing the ADCCAC and awards rendered under them. The resolution of these considerations will inevitably shape the future landscape of arbitration in the region.

By Maria Paschou