In Brief:
- The wording of Decree No. 34 of 2021 Concerning the Dubai International Arbitration Centre was expressly clear in respect of the transfer of arbitrations to DIAC. The wording was however not expressly clear in respect of mediations.
- The DIAC Arbitration Rules 2022 provide for a two-month conciliation process by agreement of the parties.
- Parties may have been in the unenviable position of attempting to mediate a dispute (pursuant to the DIFC-LCIA Mediation Rules) by requesting DIAC to administer their mediation pursuant to these rules.
- However, from 1 October 2023, the new DIAC Mediation Rules 2023 came into effect, and as a result all new mediations registered by DIAC after this date will now be administered pursuant to these new rules, regardless of the date on which the agreement to mediate was entered into.
Abolition of the DIFC-LCIA Arbitration Centre
As is widely known, on 20 September 2021, Decree No. 34 of 2021 Concerning the Dubai International Arbitration Centre (“DIAC Decree”) abolished both the DIFC Arbitration Institute (“DAI”) and Emirates Maritime Arbitration Centre. In the Dubai International Financial Centre (“DIFC”), the ‘DIFC-LCIA Arbitration Centre’, which had existed as a joint venture between DAI and the London Court of International Arbitration (“LCIA”), was therefore abolished.
Transfer of arbitrations and mediations to DIAC
Following enactment of the DIAC Decree, arbitrations as per clauses which referenced the DIFC-LCIA Arbitration Centre were instead to be registered with DIAC, and administered pursuant to DIAC’s own rules.
The wording of the DIAC Decree was expressly clear in respect of the transfer of arbitrations to DIAC. The wording was however not expressly clear in respect of mediations. Article 6 of the DIAC Decree specifically referred to the effect on arbitration agreements. Whilst the DAI was unequivocally abolished, the effect on mediations was not mentioned in the text of the DIAC Decree.
Mediations were referenced in the ‘Statute of the Dubai International Arbitration Centre’ (“DIAC Statute”), which was published with the DIAC Decree. The DIAC Statute defines ‘ADR Method’ as “Any method, other than litigation, for the resolution of local or international Disputes. This includes any type of arbitration, conciliation, mediation, negotiation, and any other alternative Dispute resolution method approved by the Board of Directors.”
That definition splits out conciliation and mediation, but they are defined together as an ‘ADR Method’. Throughout all relevant provisions of the DIAC Statute, reference is consistently made to “arbitration, conciliation, and any other ADR Methods”.
Article 3.8 of the DIAC Statute, on the ‘Functions of DIAC’, notes that DIAC is to “provide the rules of arbitration and conciliation and the bylaws governing the ADR Methods in various languages, and publish the same on the DIAC website and its approved digital channels”.
DIAC Arbitration Rules 2022
Further to enactment of the DIAC Decree, DIAC introduced its new arbitration rules: the DIAC Arbitration Rules 2022 (“DIAC Arbitration Rules”) on 21 March 2022. The DIAC Arbitration Rules include, at Appendix II ‘Exceptional Procedures’, Article 3 ‘Conciliation Proceedings’, thirteen provisions on conciliation, which provide for a two-month conciliation process by agreement of the parties.
The two DIAC-LCIA joint press releases, issued on 7 October 2021 and 29 March 2022, refer to both arbitrations and mediations, stating that after 20 September 2021 contracts which referred disputes to mediation would be administered by DIAC in accordance with the DIAC Rules.
Whilst there can be no confusion as to the intention of the DIAC Decree to transfer the administration of all ADR methods to DIAC, until now there were no rules specific to mediations to be administered by DIAC.
DIAC Mediation Rules 2023
On 1 October 2023, the DIAC Mediation Rules 2023 (“DIAC Mediation Rules”) came into effect, and as a result all new mediations registered by DIAC will now be administered pursuant to these new rules. The DIAC Mediation Rules apply to all mediations registered with DIAC after 1 October 2023, regardless of the date on which the agreement to mediate was entered into.
The time limits set out by the DIAC Mediation Rules are deliberately swift: providing a responding party only 15 days (with a possible extension of 7 days) by which to submit its reply. Failure to submit a reply will be deemed as non-consent to the dispute being submitted to mediation, and will therefore extinguish the mediation.
Where the mediation proceeds, costs of the mediation are to be agreed between the parties, and DIAC will fix a deposit for these costs, which is to be paid by the parties in equal shares.
A suitable mediator may be agreed upon and nominated by the parties, and where a mediator cannot be agreed on, the DIAC Arbitration Court will nominate and appoint the mediator. Once a mediator has been appointed, the mediator is to approach the parties within only 7 days with a view to setting the date for a preliminary meeting.
The mediator must, of course, remain impartial and independent of the parties. The parties and the mediator are also bound to keep all information confidential, and private communications between a party and the mediator cannot be disclosed to the other party without the express consent of the prior party. Statements made during the mediation are specifically protected from being raised as evidence against a party’s interest in any subsequent arbitration or court litigation.
Should your contract provide for pre-action steps involving mediation pursuant to DIFC-LCIA Mediation Rules, or pursuant to DIAC, please contact James Harbridge or Alexander Wagg for further information.