03 Nov 2021

A new landscape for commercial and maritime arbitration in Dubai

Enrico Vergani and Lorenzo Melchionda asses the impact of the decision to consolidate the Emirates Maritime Arbitration Centre into a new overarching arbitral body

Cargo container ship and Dubai skyscrapers on a background

Sergey Kelin; Shutterstock

As widely reported, the Dubai Ruler’s Decree No. 34 of 14 September 2021 merged the DIFC Arbitration Institute (DAI), the centre that administers the DIFC–LCIA arbitrations, and the Emirates Maritime Arbitration Centre (EMAC), into the Dubai International Arbitration Center (DIAC).  

 The consolidation of the three centres into one is aimed at reinforcing Dubai’s status as an international arbitration hub for Africa and the Middle East and at attracting foreign investments.   

 The first step in the implementation of this consolidation will be the transfer of the DIFC–LCIA and EMAC assets and experienced personnel to the DIAC. The consolidated DIAC will be headquartered in mainland Dubai (with a branch in the DIFC) and will be operated by a board, which will oversee the DIAC’s activities.  

 A court will assist the board by elaborating rules and policies and will act as appointing and administering body in arbitration and conciliation proceedings. The creation of a separate body akin to the ICC Court is an important development because it will allow the consolidated DIAC’s board and court to focus on their respective tasks. The members of these bodies will be chosen among experienced and highly qualified local and international professionals.  

 Decree No. 34 has introduced further changes. For instance, arbitration hearings can be held anywhere, including remotely thanks to modern technology. The new DIAC Rules will include ‘emergency arbitration’ (a fast-track procedure to obtain urgent interim relief before an arbitral tribunal is constituted) and award scrutiny, both under the DIAC court’s supervision. 

 If the parties do not agree on the seat of the arbitration, the DIFC will be the seat by default and the English-language, specialised business courts in the free zone will oversee and support DIAC arbitrations. 

One of the most sensitive issues is the impact of Decree No. 34 on pending DIFC–LCIA and EMAC arbitrations and existing DIFC–LCIA and EMAC arbitration agreements. Ongoing arbitrations will continue under the supervision of the new DIAC, which will apply the DIFC–LCIA or EMAC rules: thus, the applicable rules will remain the same, but the administering authority will change. 

 In this respect, DIAC recently proposed that the DIFC–LCIA arbitrations be administered by the former DIFC–LCIA staff. Arbitration agreements providing for arbitration under the auspices of DIFC–LCIA or EMAC will remain effective, but the new DIAC will replace the DIFC–LCIA or EMAC in administering future cases.   

The transition to the new system is expected to take six months, and, in the Dubai Ruler’s intention, should be smooth and without incident.     

There is something special about maritime law that sets it apart from other types of legal principle and activity

The impact of the reform on maritime arbitration 

The changes introduced by Decree No. 34 will cause complex maritime disputes previously administered by EMAC to be handled by a larger arbitration body. While parties to shipping disputes have always been free to use the DIAC or the DIFC–LCIA, EMAC was the only arbitration centre in the region specialised in maritime disputes, and its rules were drafted accordingly.  

Although, based on the wording of Decree No. 34, the new centre will retain EMAC’s expertise, it needs to be ensured that focus on shipping arbitration is not lost. 

The DIAC consolidation makes it clear that, if arbitration centres want to demonstrate excellence and competence to serve a specialised market, they need to handle a sufficient number of cases and to develop and maintain expertise through day-to-day work and resolution of practical and often intricate technical issues. 

The recent developments concerning the Lloyd’s Salvage Arbitration Branch (LSAB), which risked closure in July due to lack of a sufficient number of cases, are a clear example. LSAB has since agreed to continue service after strong support from the UK and international maritime communities.  

The message, however, is clear: maritime arbitration chambers can provide top quality services only when they have a consolidated practice and everyday experience, which are a great added value in the shipping industry.  

The view we express about the outcome of the process, as for maritime arbitration in particular is concerned, is that there is something special about maritime law that sets it apart from other types of legal principle and activity, as such Maritime Arbitration calls for its own seats and “liturgy”. 

Having arbitrators experienced in the intricacies of the matters of law, fact and technology commonly involved in shipping arbitration is far more important (and much safer) than having your arbitrators next door. Reaching a quick and sound decision might well avoid disrupting big projects, such as offshore and renewable energy plants, which inevitably overlap with the shipping industry. It might even make the difference between a successful project and the end of a business.  

Technology and remote hearings will certainly help whenever in-person hearings are unnecessary, for example with the cross-examination of key witnesses. Submitting large shipping disputes and related matters such as offshore wind farm projects to specialised chambers will guarantee the required level of excellence and case flow. That is likely to be key to ensuring a high level of expertise and, therefore, an enhanced service quality in maritime arbitrations.  

Enrico Vergani, is a partner at BonelliErede and leader of the shipping and transport Focus Team; and Lorenzo Melchionda is a Dubai-based local partner and member of the international arbitration Focus Team

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