The opening of the DIFC/LCIA Arbitration Centre – a historic day

“Historic”, “revolutionary” and “exciting” were among the words used at the launch of the DIFC (Dubai International Financial Centre) / LCIA (London Court of Arbitration) Arbitration Centre, presided over by the Crown Prince of Dubai on Monday 17 February 2008. The significance of the event was abundantly clear from the attendance of many distinguished international and leading local practitioners and representatives from many institutions both from within and outside the DIFC.

The LCIA is one of the leading commercial arbitration and mediation administrative institutions in the world. Established for over 100 years, it has never before been associated with an arbitration centre outside its home base in London. The decision by LCIA to enter into a joint venture with DIFC to establish an international arbitration centre in DIFC is a clear sign of LCIA’s confidence in the future development of arbitration in Dubai and the unique legal system underpinning the DIFC. That legal system comprises laws unique in the Arab world and in any non English speaking jurisdiction, drafted in English, published for consultation before an enactment and heavily influenced by English common law -a system of choice amongst international companies and commercial institutions for their transactions and disputes.

When the decision was made to set up the DIFC, the constitution of the UAE was amended to allow the DIFC to have its own system of Civil Law. By statute none of the Civil and Commercial Laws of the UAE apply within the DIFC (though it is subject to the “Criminal Laws” of the UAE and its Money Laundering and Anti Terrorist Funding Laws). To administer its system of justice, DIFC set up its own Courts to operate in the English language. Sir Anthony Evans, a former Commercial Court and Court of Appeal judge in England, is the Chief Justice supported by a team of experienced commercial judges and arbitrators.

The UAE is no stranger to exciting projects based on the ideas of visionary leaders. This began more than 30 years ago with the building of the world’s largest manmade port at Jebel Ali and surrounding Free Zone area. As a resident in the UAE, you only have to look around to see the scale of development to see what is going on. What is exciting about the DIFC/LCIA Arbitration Centre (and the DIFC itself) is that it represents investment in a project in the “ideas” or “services” side of the economy. Although you can see the physical location of the DIFC being built and you can visit the state of the art new court room and arbitration centre and the conference centre at the DIFC Gate, the real investment is in attracting the financial services sector to operate from the DIFC.

So much for the vision, but how will it work?

The DIFC/LCIA Arbitration Centre will employ staff, who will provide institutional support for arbitrations in the Centre of the same quality as in London, i.e. at the top of the range. To facilitate this, the DIFC has recently sent out for public consultation its revised arbitration law, which is very much based on the UNICTRAL Model Law (an accepted world standard for arbitration laws) and most importantly will allow parties anywhere in the world to choose to have disputes resolved in the Centre.

It is an essential feature of modern arbitration that the arbitration shall be final and binding and that it is respected by the Courts in whose jurisdiction the arbitration takes place. The DIFC Court is expected to be highly supportive of the arbitral process and not to interfere in that process except in limited circumstances provided for in the proposed new DIFC Arbitration Law.

Questions have been asked about how an award of the DIFC/LCIA Arbitration Centre will be enforced?

The position should be straightforward. There is already machinery in place whereby DIFC Court judgments will be enforced through the execution department of the Dubai Court. The decisions of the DIFC Court will be presented (with an Arabic translation) to the execution judge who will, without interference convert the DIFC judgment into a judgment of the Dubai Court, which is enforceable not only in Dubai, but throughout the rest of the UAE (and in the GCC). It should therefore, only be necessary to obtain a DIFC Court judgment based on any DIFC/LCIA Arbitration Centre award, in order to present it to the local Dubai Court which would enter it as a judgment as a matter of procedure.

Internationally outside the GCC, DIFC awards should be enforceable under the New York Convention.

For the DIFC/LCIA Arbitration Centre to be successful, companies and businessmen from the region and around the world will need to agree to put DIFC/LCIA Arbitration Centre dispute resolution clauses into their contracts or agree to use the Centre after disputes have arisen. I and many legal practitioners believe that this will happen – a bit like Jebel Ali Port, if you build an excellent infrastructure people will come.

Alec Emmerson is a partner of the international law firm, Clyde & Co LLP. He has been based in Dubai for 9 years and is a member of the DIFC Court Users Committee and the DIFC Legislative Sub Committee involved in reviewing its Arbitration Law.

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