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As of 1 February 2024, the Abu Dhabi International Arbitration Centre (arbitrateAD) replaced the Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC).
This significant step marks the modernisation and development of international arbitration in Abu Dhabi and will help to further solidify Abu Dhabi as a core business hub in the region. It is also the UAE’s second arbitral development in the last few years, following the abolition of the DIFC-LCIA and EMAC in 2021.
In this article, we discuss the highlights of the new arbitration rules (New Rules), along with a comparison to the 2013 ADCCAC Rules (Old Rules).
New and Existing Cases
Any new arbitrations from 1 February 2024 will be administered by arbitrateAD under the New Rules (Article 1(3) of New Rules). Any existing arbitrations that were initiated under the ADCCAC before 1 February 2024 will continue to be administered by ADCCAC (Article 53 of New Rules).
Where parties have agreed to refer their disputes to arbitration under ADCCAC but have not yet filed any proceedings, Article 1(2) of the New Rules states that the arbitrateAD Rules shall apply, save that Articles 35 (Emergency Arbitrator) and 36 (Expedited Proceedings) of the New Rules shall not apply unless expressly agreed between the parties.
Key Changes
General provisions
Court of Arbitration
The Court of Arbitration of arbitrateAD (the Court) has supervisory authority and operates independently of arbitrateAD.
Its functions include:
- the appointment and replacement of arbitrators;
- determining challenges made against arbitrators;
- reviewing final awards; and
- disposition of Requests for Joinder and Requests for Consolidation.
Third-Party Funding
Article 48 of the New Rules now expressly permits third party funding (TPF). The Old Rules made no reference to this, which led to uncertainty, particularly in light of the fact that it is still a relatively ‘new’ mechanism used by a claimant or a respondent with a counterclaim.
A party must therefore ensure that it informs the Case Management Office of the third party that has agreed to fund the expenses of a party to the arbitration. This new provision accordingly seeks to provide greater transparency to the financial interest of parties and formally recognises it as a means of funding in modern times.
New Procedures
Unlike the Old Rules, the New Rules contain entirely new procedures that align with the practices of many modernised arbitral institutions, including the ICC and DIAC, as follows:
- Article 9 covers the procedure for claims involving multiple parties.
- Article 10 allows claims arising out of multiple contracts to be determined in one arbitration.
- Article 11 concerns the rejoinder of one or more additional parties to an arbitration.
- Article 12 sets out the procedure for consolidating two or more arbitrations.
- Article 35 contains the procedure for the appointment of an emergency arbitrator.
- Article 36 sets out the procedure for expedited proceedings for claims worth up to AED 9 million, in which a sole arbitrator issues a Final Award within 4 months of receiving the case file.
These mechanisms are positive steps that will enhance procedural efficiency. In particular, expedited proceedings will be of huge benefit for disputes where ‘time is of the essence’ and will lead to more proportionate costs being incurred for claims up to AED 9 million. ArbitrateAD may be a more ‘attractive’ institution for expedited proceedings in the region compared to DIAC, where the threshold for expedited proceedings is AED 4 million.
The arbitration proceedings
Representation
Article 4 of the New Rules contain more detailed provisions on the appointment and authority of representatives of the parties. Most notably, Article 4(4) of the New Rules expressly requires a party representative to provide a power of attorney (POA) or proof of authority where requested by the Tribunal or the Case Management Office.
Obtaining a POA can be time-consuming, and it is best practice for parties to start the process as soon as their representatives are instructed.
Applicable Law
Article 21 states that if the parties have not agreed on the applicable law, the Tribunal has the power to determine the law or rules that it deems to be appropriate. In doing so, Article 21(2) states that the Tribunal should take into account “any relevant provisions of the contract” and may consider “trade usages”.
Article 21(3) states that the Tribunal shall not decide “ex aequo et bono” meaning the Tribunal must determine cases by applying the applicable law, not according to what s/he considers is ‘fair’ and ‘unfair’ in the circumstances.
Seat of Arbitration
Under Article 22(2), if the parties have not agreed on the seat of the arbitration, the seat shall be the Abu Dhabi Global Market (ADGM) by default. This would mean that ADGM Arbitration Regulations 2015 would apply to the arbitration. It remains to be seen what consequences this will have on any conflicts arising between the offshore and onshore Courts.
Scrutiny of Awards
Before the Award is signed, it must be submitted in draft for scrutiny by the Court (Article 40(1)).
Article 40(2) grants the Court the power to suggest modifications to the Award, including any apparent clerical errors, inconsistencies or omissions arbitrateAD. The Court is not however allowed to make any comments on the merits of the underlying dispute.
In contrast to the Old Rules, issues of correction were simply dealt with by the Tribunal (Article 29) and awards did not need to be submitted before the Committee before they were finalised and signed.
Conclusion
Overall, the New Rules are a significant development in modernising arbitration in Abu Dhabi and brings it in line with many other international arbitral institutions, such as the ICC and LCIA.
It is important for parties to ensure that jurisdiction clauses are drafted clearly in light of the New Rules. Parties are encouraged to refer to the model clauses published by arbitrateAD when drafting new contracts or amending existing contracts.
Insurance and reinsurance
United Arab Emirates