On 20 December 2023, the Abu Dhabi Chamber of Commerce and Industry announced the Abu Dhabi International Arbitration Centre (presented as “arbitrateAD”). This new international arbitration centre replaces the Abu Dhabi Commercial Conciliation and Arbitration Centre (“ADCCAC”) from 1 February 2024.

The change comes in the wake of Abu Dhabi’s endeavour to become a regional and global hub for dispute resolution. arbitrateAD aims to promote the key principles of international arbitration and supports Abu Dhabi’s ambition to become one of the top locations for business. In this regard, a prominent group of arbitration practitioners was tasked with arbitrateAD’s administration under the leadership of His Excellency Abdulla Mohamed Al Mazrui (Chairman of the Abu Dhabi Chamber of Commerce and arbitrateAD).

A New Era for Arbitration in Abu Dhabi?

In response to the long-awaited modernisation of the ADCCAC rules 2013, the arbitrateAD’s Arbitration Rules in force as of 1 February 2024 (the “Rules”) incorporate provisions that were left out in the 2013 ADCCAD rules, such as joinder of additional parties, consolidation of proceedings, emergency arbitrator and expedited proceedings.

Consolidation and joinder are essential procedural mechanisms that have been incorporated by leading arbitral institutions and permit proceedings to be more efficient while avoiding the risk of inconsistent decisions.  

Allowing these mechanisms into arbitral proceedings provides obvious advantages in that:

·       A single proceeding is more efficient than two parallel proceeding as it permits to save time and costs. This will, of course, depend on legal and factual considerations, as well as the compatibility of the arbitration agreements.

·       The consolidation of two (or more) arbitrations minimises the risk of conflicting outcomes. For example, one party may be found liable in one arbitration whilst, in another arbitration, the same party may obtain a more positive outcome. The risk of inconsistent rulings should not be overlooked since, unlike court decisions, the merits of arbitral awards cannot be re-examined by local courts.

·       Non-signatory issues frequently arise in international arbitration. The new Rules now contain specific provisions regarding proceedings involving multiple parties and contracts.

Since arbitral agreements rarely deal with the question of consolation or joinder, it is fundamental that arbitral institutions contemplate these procedural mechanisms in their rules for the sake of efficiency.

Further, the new Rules incorporates emergency arbitrator provisions for any party seeking urgent preliminary measures before the constitution of the arbitral tribunal. According to the Rules, the emergency arbitrator, who shall have the same powers as a vested arbitral tribunal, must issue a decision within ten days from the date of his appointment.

The emergency arbitrator mechanism enables parties to seek interim relief in the context of arbitration prior to the constitution of the arbitral tribunal, which will rule on the merits of the dispute. The application for an emergency arbitrator is preliminary and dealt with as a matter of urgency. The emergency arbitrator’s mandate is generally limited to interim relief and shall cease once the arbitral tribunal is constituted.

The Rules provide that the emergency arbitrator’s decision may take the form of an “Order” or an “Award”. An “Award” is defined as “any award issued by a Tribunal or Emergency Arbitrator, including, inter alia, interim, provisional, precautionary, partial, final, additional or consent awards” whilst an “Order” is “any decision by a Tribunal or Emergency Arbitrator that is not an Award”.[1] That said, emergency arbitrator’s decisions frequently raise the question of enforceability on the grounds that they are not final awards, which may affect the efficiency of the mechanism.

Another important introduction is Article 36, which provides for expedited proceedings for disputes not exceeding AED 9,000,000 in claims and counterclaims. According to Article 36(2) of the Rules, the following procedure applies to Expedited Proceedings:

·       The claimant shall file a request for arbitration, which will be treated as a statement of claim.

·       The respondent shall file an answer to the request for arbitration, which will be treated as a statement of defence.

·       A sole arbitrator shall be appointed.

·       The provisions related to the joinder of third parties and consolidation are not applicable (Articles 11 and 12). Likewise, the sole arbitrator does not need to issue the terms of reference (Article 24).

·       The sole arbitrator must conduct the arbitration fairly and impartially per Article 20 of the Rules, considering the expedited nature of the proceedings.

·       The sole arbitrator may, in consultation with the parties, decide the dispute on the basis of documentary evidence.

·       The final award shall be rendered within four months from the date the case file is submitted to the sole arbitrator.

·       The final award shall contain the reasons it is issued in summary form.

With the proliferation of arbitral institutions around the globe and the parties’ hope for efficiency, the new introductions provide attractiveness and appeal to the users.

Next Steps and Registration of New Cases

All existing arbitrations administered by the ADCCAC will continue under the ADCCAC’s management, whilst new cases will be administered by the arbitrateAD’s team as of 1 February 2024 under the new Rules. Parties with existing ADCCAC arbitration agreements (which will remain valid) should be mindful of the effects of the transition. Whether the handover will be similar to the transition touching the now-abolished DIFC-LCIA and the Dubai International Arbitration Centre (DIAC) in 2021 remains unknown.

It is worth reminding that a US Court has, in 2023, refused to enforce a DIFC-LCIA arbitration clause on the basis that it could not compel a party to submit the dispute to the DIAC’s administration because it was not the “same forum”. Whereas the decision of the Louisiana Eastern District Court is unprecedented, the judgement raises the question of how other courts would deal with existing ADCCAC clauses. Against this background, parties may consider amending any existing ADCCAC agreement to provide for the new Rules if such an amendment is possible. This would reduce uncertainties and potential challenges before local courts.  

While the practical implications are yet to be seen, the launch of arbitrateAD is a thrilling achievement for arbitration in the UAE, which will foster Abu Dhabi’s success as a leading arbitration hub in the region.

Authors: 

Muhammad Mohsin Naseer

Legal Consultant - Arbitration

+971 4 354 4444

Associate

[1] arbitrateAD’s Arbitration Rules in force as of 1 February 2024, Article 2.