Arbitration, as a method for resolving disputes, continues to evolve, adapting to the ever-changing landscape of international commerce. The recent introduction of the new Arbitration Rules by the Abu Dhabi Chamber of Commerce marks a significant step forward in enhancing the arbitration landscape in the region. These updated rules promise a more efficient, transparent, and user-friendly arbitration process, positioning Abu Dhabi as a hub for dispute resolution in the Middle East.
In this article, we present our examination of the primary characteristics of the newly implemented regulations.
The updated rules are designed to govern all arbitrations initiated on or after 1 February 2024, provided that parties have consented to arbitration under the ADCCAC rules (Article 1(2)). However, it is important to note that the provisions concerning the appointment of an emergency arbitrator (Article 35) and expedited proceedings (Article 36) will not be applicable unless explicitly agreed upon by the parties. In ad hoc arbitrations, parties may designate the Centre as appointing authority without binding to these Rules, and the Court will appoint the Tribunal accordingly, guided by Article 14(2). Furthermore, the English version of the Rules takes precedence in instances of discrepancy or inconsistency.
The Court, an autonomous administrative body of the Centre, oversees arbitration and dispute resolution services provided under the Rules, operating independently from the Abu Dhabi Chamber of Commerce. While it does not directly adjudicate disputes, the Court facilitates their resolution by the Tribunal under the Rules, executing all assigned functions, including arbitrator appointments, challenge resolutions, and award scrutiny. While generally, the rationale behind the Court’s decisions is not disclosed to the parties, summaries may be provided for decisions concerning arbitrator challenges, except in exceptional circumstances. The Secretariat aids the Court in its duties.
Under Article 4, parties may appoint representatives of their choice for arbitration under these Rules, with each party obligated to promptly notify the other party(ies), the Case Management Office, and the Tribunal (if constituted) in writing of their representatives’ contact details and any changes in representation. Upon receipt of notice of a new representative, the Tribunal holds the authority, after hearing the parties, to take measures to prevent conflicts of interest or procedural delays, inter alia, excluding representatives from participation. Additionally, the Tribunal or the Case Management Office retains the discretion to request proof of authority from party representatives at any time.
A Claimant seeking to commence arbitration under the Rules must submit a Request to the Case Management Office, containing comprehensive information such as the full names, addresses, and contact details of all parties and their representatives, a detailed description of the Dispute, relief sought, legal basis, and initial claim quantification, along with references to relevant Arbitration Agreements and payment proof. Unless otherwise agreed, the arbitration starts upon the Case Management Office’s receipt of the Request. If the filing fee proof is absent initially but provided later, it does not affect the Commencement Date. In cases of incomplete filing, the Case Management Office notifies the Claimant, allowing ten Business Days to rectify. Failure to comply may lead to arbitration termination, though the Claimant can re-initiate proceedings. Upon satisfying all filing requirements, the Case Management Office shares the Request and accompanying documents with the Respondent(s) and confirms the Commencement Date to all parties involved.
The Respondent is required to file an Answer with the Case Management Office, copying the Claimant(s), within 21 days of receiving the Request, unless extended by the Case Management Office upon reasoned request. If multiple Respondents exist, each must file their own Answer, jointly or individually, including detailed information such as their full names, addresses, contact details, and representatives, a response to the relief claimed, any Counterclaims, and proof of payment of filing fees, among other details. Failure to comply prompts notification from the Case Management Office, allowing ten Business Days to rectify, but does not impede arbitration proceedings. If Counterclaims are filed but not in compliance, the Case Management Office may dismiss them, allowing the arbitration to proceed without consideration of the Counterclaims. Upon receipt of a Counterclaim-containing Answer, the Claimant must respond within 21 days, unless extended by the Case Management Office upon reasoned request, including necessary information as specified.
Before the Tribunal is constituted, a party may petition the Court to determine if the Centre holds jurisdiction to administer the arbitration. The Court must provide both parties with a fair opportunity to present their arguments regarding the challenge. If the Court is initially convinced of the Centre’s jurisdiction, the arbitration proceeds. However, if the Court is not satisfied with the prima facie jurisdiction of the Centre, the Request is dismissed, though without prejudice, allowing the Claimant to re-file if necessary. The Court’s decision does not affect the Tribunal’s authority to rule on its own jurisdiction or any party’s Claims. Once the Tribunal is established, it handles jurisdictional challenges. Additionally, the Tribunal has the power to interpret and enforce the Arbitration Agreement independently from the underlying contract’s validity. Challenges to the Tribunal’s jurisdiction must be raised by the Statement of Defence deadline, but the Tribunal can permit later filings. Furthermore, a party’s involvement in arbitrator nomination does not waive its right to challenge jurisdiction.
The Arbitration Rules 2024 explicitly permit the adjudication of multi-party and multi-contract disputes, as well as facilitate joinder and consolidation procedures. Under Article 10, parties are granted the ability to consolidate claims stemming from multiple contracts or arbitration agreements into a single arbitration proceeding. This provision not only streamlines the resolution process but also offers greater convenience and efficiency for all involved parties. The Court, vested with authority under Article 10(2), evaluates whether such consolidation is appropriate, considering factors such as arbitration efficiency and expeditiousness. Additionally, Article 11 delineates the joinder process, empowering the Court to decide on the admission of additional parties. However, such joinder is contingent upon unanimous consent from all parties or the Court’s determination that the new party falls within the Centre’s jurisdiction. Furthermore, Article 12 establishes a structured framework for consolidation, emphasising the importance of arbitration efficiency. In cases where consolidation is approved, the various arbitrations are merged into the initially commenced proceeding, with adjustments made for equitable distribution of costs.
Parties retain the freedom to agree on the number of arbitrators and the appointment procedure, with the total number of arbitrators mandated to be uneven. Unless otherwise stipulated, arbitrations are decided by either one or three arbitrators, with the term “Tribunal” encompassing either a sole arbitrator or all arbitrators collectively. In cases where the parties have not agreed on the number of arbitrators, a sole arbitrator is typically appointed, unless the Court deems it suitable to appoint three arbitrators after considering various factors. All arbitrators nominated by the parties are subject to Court appointment, with the Court having the discretion to deny appointment and provide reasons after consulting the nominating party. Additionally, the Court directly appoints arbitrators not nominated by the parties, considering various factors such as the arbitrator’s disclosures, impartiality, qualifications, expertise, availability, nationality, and connections relevant to the case.
Article 22 stipulates that if the arbitration seat is not agreed upon by the parties, the Abu Dhabi Global Market (ADGM) will serve as the seat. It further specifies that any mention of the place of arbitration refers to the seat, and regardless of the physical location where the proceedings occur, the Award will be considered as rendered in the seat of arbitration. Notably, the Arbitration Rules 2024 do not establish a default language and delegate the determination of the initial language to the Case Management Office until the Tribunal is constituted, as outlined in Article 23. While this adjustment seems practical, it prompts inquiries into the criteria the Case Management Office will consider when selecting the initial language for the arbitration proceedings.
Parties in need of urgent Preliminary Measures before the Tribunal’s constitution can seek the appointment of an Emergency Arbitrator through the Case Management Office, regardless of whether they have already submitted their Request. If the Request is not filed concurrently, it must be submitted within 30 days of the Emergency Arbitrator’s decision, failing which the decision becomes non-binding. The application for an Emergency Arbitrator must detail the relief sought, relevant facts, agreements, and comments on procedural aspects. A non-refundable fee is payable alongside the application, which the Court may adjust. Upon satisfying itself of the Centre’s jurisdiction, the Court appoints the Emergency Arbitrator promptly. The Emergency Arbitrator operates within the agreed or default seat, discloses any conflicts, and follows a fast-track procedure. Their decisions, rendered as Orders or Awards, may include Preliminary Measures, subject to subsequent review by the Tribunal. The Emergency Arbitrator’s authority ceases upon the Tribunal’s constitution, and their decisions become non-binding under specified conditions. The Tribunal holds the power to review and modify any Emergency Arbitrator’s decision as deemed fit.
If the dispute amount does not surpass AED 9,000,000, Expedited Proceedings outlined in Article 36 automatically apply unless the parties agree otherwise. These proceedings involve streamlined procedures: the Request serves as the Statement of Claim, the Answer as the Statement of Defence, and any Counterclaim reply as the Statement of Defence to Counterclaim. A sole arbitrator, appointed promptly, manages the case, with certain rules not applying. The arbitration is conducted with expedience, and the final Award is issued within four months, extendable by the Case Management Office for two additional months upon a reasoned request. Parties can request exceptions to these procedures, and modifications to the timeline and procedures can be agreed upon before or after filing the Request, with corresponding fee adjustments.
Article 38 of the Arbitration Rules 2024 sets a nine-month time limit for issuing the final award, starting from the initial case management conference. This limit can be extended by the Court or upon reasoned request by the parties. Article 41 allows for single or separate awards for different issues or parts of claims/counterclaims. Article 40 mandates the Tribunal to submit the draft form of the Award for scrutiny by the Court, which may suggest modifications. Articles 42 and 43 outline the timeframe for applications to correct, interpret, or request an additional award, requiring them to be made within 14 days of receiving the final award. These provisions aim to enhance the enforcement of awards in the UAE by addressing potential technicalities that could lead to nullification in onshore courts, thereby promoting efficiency and clarity in arbitration proceedings under the Arbitration Rules 2024.
The Tribunal, upon providing the parties with a fair opportunity to present their arguments, may issue an early dismissal, either fully or partially, of one or more Claims, defences, Counterclaims, or replies to Counterclaims through an Order or an Award. Such dismissal may occur at the Tribunal’s discretion or upon the request of a party, if the Claim, defence, Counterclaim, or reply is evidently lacking legal merit or falls outside the Tribunal’s jurisdiction. Any application for early dismissal must include factual and legal justifications and be served to all relevant parties, the Case Management Office, and the Tribunal as per Article 5. The Tribunal is required to render a decision on the application within 30 days of its filing, unless an extension of up to 15 days is deemed necessary. Reasons for the decision on early dismissal must be provided, and the Case Management Office may extend the time limit upon a reasoned request by the Tribunal to ensure fairness in the proceedings.
The Arbitration Rules 2024 represent a significant step forward in enhancing the arbitration landscape in the UAE. By providing comprehensive procedures for fair and efficient arbitration proceedings and ensuring the enforceability of awards, these rules contribute to fostering confidence in the arbitration process. With their careful consideration of the local context and alignment with international standards, the Arbitration Rules 2024 serve as a valuable framework for resolving disputes and promoting a robust and reliable arbitration framework in the UAE.
The complete legislation governing arbitration procedures can be accessed via the following link: arbitration-rules.pdf (arbitratead.ae).
For more information in this regard, please contact:
Zijad Hanic
Counsel
[email protected]