Has the pendulum swung back in favour of the DIFC courts? Two new decisions of the Judicial Tribunal

We recently reported on three decisions of the Judicial Tribunal (please click here) following our commentary on the Judicial Tribunal’s controversial first decision in Daman v Oger and the effect on the Banyan Tree jurisdiction (click here). We concluded that, notwithstanding the absence of detailed reasoning in individual decisions, it was possible to piece together the Judicial Tribunal’s approach from its decisions taken as a whole. The two new decisions shine further light on that approach. Continue reading

New Arbitration Law in Qatar

Introduction

The Emir of Qatar, Sheikh Tamim bin Hamad al Thani, issued Law No 2 of 2017 on 16 February 2017 (the "New Arbitration Law"). The New Arbitration Law has not yet been published in the Official Gazette and implementing regulations are yet to be issued, but the New Arbitration Law will come into force 30 days after this occurs.

Overview

The New Arbitration Law replaces Articles 190 to 210 of the Qatari Civil Code, which previously governed arbitration proceedings seated in Qatar. In a positive step, it is substantially based on the UNCITRAL Model Law, which is the benchmark for arbitration legislation, and will apply to all ongoing and future disputes. Although other jurisdictions in the region (such as the UAE) have considered adopting or have adopted the UNCITRAL Model law (for example, the 2005 Arbitration Regulations are heavily based on the Model Law), Qatar will be the first in the region to implement them onshore. Nevertheless, it remains to be seen how these provisions will be applied in practice and the courts' approach when asked to exercise their supervisory jurisdiction.

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The DIFC’s conduit jurisdiction under attack? The Dubai Court attempts to reverse Banyan Tree

Following on from our reporting on the controversial first decision of the Judicial Tribunal in Daman Real Capital Partners Company LLC v. Oger Dubai LLC, Cassation No. 1 of 2016 (JT) (click here), there has been significant commentary on the possible implications for the DIFC's status as a conduit jurisdiction, particularly in connection with the enforceability in the DIFC of Dubai-seated arbitral awards, commonly referred to as the 'Banyan Tree' jurisdiction. 

At best, the Judicial Tribunal's decision seemed to provide yet another forum for onshore award debtors to use guerrilla tactics to frustrate and delay satisfaction of awards and, at worst, appeared to rule out enforcement of onshore seated DIAC arbitral awards in the DIFC, effectively overturning Banyan Tree.

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THE DRAFT DIAC RULES

Following changes brought in by a number of other arbitral institutions including the DIFC-LCIA Arbitration Centre, the Dubai International Arbitration Centre is to amend its Arbitration Rules to bring them in line with modern arbitration practice and to ensure its offering remains competitive

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Onshore Dubai partners with Offshore: DIAC looks to develop “closer ties” with the DIFC

The Dubai International Arbitration Centre (“DIAC”) is now implementing its new strategy, designed to develop its international presence and dispel any notion that it is an 'onshore' only institution.

On 27 September 2016, DIAC, arguably the leading arbitration centre based in onshore Dubai, inaugurated a new office in offshore Dubai, situated within the Dubai International Financial Centre (“DIFC”), cementing its new strategy of cooperation with the DIFC Dispute Resolution Authority (“DRA”). Prior to the move, on 20 September 2016, DIAC entered into a memorandum of understanding (the “DIAC-DIFC Memorandum”) with the DRA, the purpose of which is stated as being to “execute, consult, cooperate and exchange information….in areas of mutual interest that will further enhance their respective strategic interests and objectives”.

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Abu Dhabi Global Market Courts secure co-operation arrangements with UAE Ministry of Justice and Federal Courts

Following on from our previous post on the enactment of the Abu Dhabi Global Market Arbitration Regulations 2015 and the creation of a new seat of arbitration in the Middle East, the Courts of the Abu Dhabi Global Market (“ADGM”) have entered into a memorandum of understanding with the United Arab Emirates Ministry of Justice (the “MoU”).

The ADGM Courts are frequently compared to the Courts of the Dubai International Finance Centre (“DIFC”) as they both operate as autonomous common law jurisdictions, operating with an independent judiciary (largely made up of experienced common law justices), carved out from the civil law jurisdictions in which they are situated, the Emirates of Abu Dhabi and Dubai respectively. However, one key difference between the ADGM and DIFC Courts is that, rather than merely applying common law principles, the ADGM directly incorporates English common law rules and principles into its legal system.

The MoU marks an important step for the integration of the ADGM Courts into the UAE legal system. The Preamble to the MoU states that the ADGM Courts “form part of the judicial system of the UAE” and, importantly, should therefore be considered UAE Courts for the purposes of international treaties.

The MoU also provides for judicial cooperation between the Federal Courts of the UAE. Clause (2)5 of the MoU states that the Federal and the ADGM Courts are to “take all necessary measures that will ensure that enforcement of the ADGM Courts’ judgments and arbitration awards issued in the ADGM” can be sought before the Federal Courts of the UAE. Importantly, ADGM judgments and arbitral awards should be enforced by the Federal Courts “without examining the substance of the dispute”.

However, given that the three Emirates with arguably the most commercial activity – Dubai, Ras Al Khaimah and Abu Dhabi itself – have elected to opt out of the UAE’s Federal judicial system (and are therefore not Federal Courts), the practical benefits of the MoU may be limited. Similar memoranda will be required to institute the same relationship with the Courts of these Emirates.

Nonetheless, what the introduction of the MoU does clearly demonstrate is the political support the ADGM enjoys from the UAE authorities and the overriding intent that the ADGM be promoted as an accommodating and arbitration friendly forum. Judging by the development of the DIFC’s relationship with the Courts of Dubai and with other courts across the globe, the MoU is likely to be the first of many such memoranda.

For further information, please contact Caroline Kehoe, Partner, Stuart Paterson, Partner, Craig Shepherd, Partner, Joseph Bentley, Associate or your usual Herbert Smith Freehills contact.

Caroline Kehoe
Caroline Kehoe
Partner
+971 4 428 6302
Stuart Paterson
Stuart Paterson
Partner
+ 971 4 428 6308
Craig Shepherd
Craig Shepherd
Partner
+971 4 428 6304
Joseph Bentley
Joseph Bentley
Associate
+971 4 428 6350