Inside Arbitration Issue 17: Perspectives on cross-border disputes

We are delighted to share with you Issue 17 of Inside Arbitration from Herbert Smith Freehills’ Global Arbitration Practice.

In this issue, we delve into two critical topics facing many of our clients: the energy transition and digitalisation, and the growing overlap between the two as the world intensifies its efforts to develop innovative technologies to produce clean energy. We also explore global big-picture trends and highlight regional developments, taking a look at the investment of Korean companies in clean energy projects across the world, the new PRC Foreign State Immunity law and Madrid’s emergence as an attractive arbitration hub. In addition, this issue casts a spotlight on our Middle East practice, with articles and videos that showcase the expertise of Dubai-based Disputes partners Stuart Paterson and Nick Oury.

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arbitrateAD: A STEP FORWARD FOR ARBITRATION IN ABU DHABI

The Middle East has recently seen a surge in the development of arbitration rules and institutions, with the launch of the Oman Commercial Arbitration Centre (2018) and updated rules for the Dubai International Arbitration Centre (2022), the Saudi Centre for Commercial Arbitration (2023), and the Cairo Regional Centre for International Commercial Arbitration (2024). These developments have significantly enhanced the arbitration offering in the region, providing parties with sophisticated and efficient institutions and procedures for resolving their disputes.

It is therefore not surprising that, as reported in our previous blog post, the Abu Dhabi Chamber of Commerce, which has until now offered dispute resolution services in the form of the Abu Dhabi Commercial Conciliation and Arbitration Centre (“ADCCAC“), has chosen to establish a new institution, the Abu Dhabi International Arbitration Centre (branded as “arbitrateAD“), and the publication of its new set of arbitration rules on 1 February 2024.

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Cairo Regional Centre for International Commercial Arbitration: A Step Into The Future

The Cairo Regional Centre for International Commercial Arbitration (CRCICA) has announced its plans to implement the revised CRCICA Arbitration Rules (Rules), marking the first set of comprehensive amendments to the Rules since 2011. The Rules, available here, have been formally adopted by the CRCICA Board of Trustees and are due to take effect on 15 January 2024.

The Rules are based on the UNCITRAL Arbitration Rules and introduce a raft of changes aimed at enhancing efficiency and flexibility in the arbitral process. Notably, the Rules introduce mechanisms for the use of electronic means to exchange communications, remote hearings, early dismissal of claims and emergency arbitration, among other substantial changes. These changes bring the Rules in line with the approaches followed by other major arbitral institutions such as SIAC, LCIA, ICC, ICSID and HKIAC, cementing CRCICA’s international reputation as a leading arbitration centre in Africa, the Arab World and the MENA region.

In this post, we summarise the key changes introduced by the Rules and consider their potential practical impact.

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ABU DHABI CHAMBER OF COMMERCE AND INDUSTRY ANNOUNCES THE ‘ABU DHABI INTERNATIONAL ARBITRATION CENTRE’ TO REPLACE THE ABU DHABI COMMERCIAL CONCILIATION AND ARBITRATION CENTRE FROM FEBRUARY 2024

On 20 December 2023, the Abu Dhabi Chamber of Commerce and Industry announced that the Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC) will be shut down in early 2024, to be replaced with the Abu Dhabi International Arbitration Centre (styled as arbitrateAD).

The Chamber of Commerce has stated that all existing arbitrations under the ADCCAC will continue to be administered by ADCCAC, with new cases from 1 February 2024 to be brought under the governance structure and rules of arbitrateAD.

While the rules of the new Abu Dhabi International Arbitration Centre are yet to be published, the Abu Dhabi Chamber of Commerce and Industry has announced an experienced governance team responsible for the Centre, led by His Excellency Abdulla Mohamed Al Mazuri (chairman of the Abu Dhabi Chamber of Commerce), who will serve as Chairman of the Board.

Comparisons will inevitably be drawn between the arbitrateAD handover provisions and the similar handover provisions issued in Dubai effecting the transition of the DIFC-LCIA to the Dubai International Arbitration Centre (‘DIAC’) in 2021. Parties with existing contracts referring disputes to ADCCAC should carefully consider the effect of the handover provisions.

In advance of the publication of the rules, it is not known whether arbitrateAD will include Abu Dhabi (or perhaps ADGM) as its default seat of arbitration in the event no seat is agreed between the parties – in the same way as the DIAC rules provide for a DIFC seat in such circumstances. It also remains to be seen whether there will be any formal association between arbitrateAD and the ADGM Arbitration Centre.

The launch of arbitrateAD is the latest in a recent string of changes to the landscape of arbitration in the Middle East, following the UAE Federal Arbitration Law (2018), the launch of the Oman Commercial Arbitration Centre (2018) and updated rules for both DIAC (2022) and the Saudi Centre for Commercial Arbitration (2023). The ADCCAC rules were last updated in 2013, and so this latest move provides an exciting opportunity to promote arbitration in Abu Dhabi.

For more information, please contact Stuart Paterson, Managing Partner Middle East and Head of Middle East Dispute Resolution, Nick Oury, Partner, Sam Hunt, Associate (Australia) or your usual Herbert Smith Freehills contact.

Stuart Paterson
Stuart Paterson
Partner
+971 4 428 6308
Nick Oury
Nick Oury
Partner
+971 4 428 6385
Sam Hunt
Sam Hunt
Associate (Australia)
+971 4 428 6317

GENERAL ASSEMBLY OF THE DUBAI COURT OF CASSATION HAS PROVIDED NEEDED CLARITY REGARDING THE VALIDITY OF ARBITRATION AGREEMENTS

The General Assembly of the Dubai Court of Cassation has recently issued a judgment in its Decision No. 10 of 2023 (the “2023 Decision“), in which it considered the legal principles regarding the validity of arbitration agreements. The General Assembly has directed that the principle established by the Dubai Court of Cassation in Contestation No. 379 of 2013 (the “2013 Decision“) – that an arbitration agreement should be deemed abandoned upon closure of the arbitration file by an arbitration centre for the parties’ non-payment of advance costs – should be disregarded. In the 2023 Decision, the General Assembly also reiterated the principles set out in Federal Law No. 6 of 2018 on Arbitration (the “UAE Arbitration Law“) regarding the validity of arbitration agreements. Continue reading

New SCCA Rules: strengthening the case for arbitration in the KSA

On 1 May 2023, the Saudi Centre for Commercial Arbitration (“SCCA“) announced the publication of its revised SCCA Arbitration Rules (the “new Rules“).  The new Rules apply to all arbitrations filed on or after 1 May 2023.  The new Rules replace the first edition of the Rules, which were published in 2016.

One of the main driving factors behind the new Rules is the SCCA’s aim of becoming not only a major arbitration centre, but the preferred choice in the region by 2030.  Indeed, the new Rules are intended to demonstrate that the KSA is an arbitration-friendly jurisdiction, with a centre and set of Rules that is on a par not only with other centres in the Middle East, but also those around the world.

To this end, the new Rules include a number of significant changes.  In particular, the new Rules introduce the new SCCA Court, include new provisions to ensure that the new Rules are aligned with international best practice, and act to streamline the arbitration procedure.

We discuss the most important of these changes below.

The SCCA Court

Probably the most important change is the introduction of the new SCCA Court, which brings the SCCA into line with other institutions such as the ICC and LCIA.

The SCCA Court is responsible for making key administrative decisions in relation to SCCA administered arbitrations, including the appointment, challenge and removal of arbitrators, reviewing draft awards, and fixing the SCCA’s administrative cost, and arbitrator fees.  Its decisions are expressly stated to be final and binding and not open to appeal or review.

The SCCA Court itself is made up of 15 experienced international arbitration practitioners, led by Jan Paulsson as President, adding a further international element to SCCA arbitration.

Discretionary Powers

Another important change is to the Tribunal’s discretionary powers.  These will give Tribunals more power over proceedings, allowing them to ensure that they remain efficient and cost-effective.

For example, Article 25 sets out the Tribunal’s discretionary powers for conducting the arbitration, which include determining the most effective format for hearings, the ability to encourage parties to attempt mediation, limiting the length of written submissions, deciding preliminary issues, bifurcating proceedings, directing the order of proof and excluding irrelevant testimony or other evidence. In addition, Article 9.3 provides the Tribunal with the ability to reject changes in party representation where necessary to safeguard the arbitration procedure.

Early disposal of claims and defences

In addition, the SCCA has introduced new procedures for the early disposal of claims and defences, which should also ensure that claims can be disposed of efficiently.

The new procedures, contained in Article 26, allow the Tribunal to dispose of jurisdiction, admissibility or legal merit issues raised in a claim or defence without needing to follow every step that would otherwise need to be taken in the arbitration.  This essentially amounts to a form of summary judgment and allows the Tribunal to deal with issues such as claims that lack merit, or those where no award could be issued under the applicable law, to be dealt with in a timely manner.

Consolidation and multi-contract arbitration

The new Rules now include consolidation and multi-contract provisions, which are particularly useful for disputes relating to large construction and infrastructure projects that typically involve a number of related contracts on the same project.

In particular, Article 11 allows for claims arising out of or in connection with more than one contract or arbitration agreement to be referred to a single arbitration.  Article 13 contains provisions in relation to the consolidation of two or more arbitrations commenced under the same arbitration agreement, where the disputes arise from the same legal relationship, or the parties agree to consolidation.

For completeness, Article 12 contains similar joinder provisions to those in the previous Rules.

Removal of reference to Sharia

While the previous Rules provided that parties had to comply with the rules of Sharia in any SCCA arbitration, irrespective of the applicable law chosen by them, the new Rules have removed this provision.

Instead, Article 37 of the new Rules provide that the Tribunal must apply the law designated by the parties, and if none has been designated, that the most appropriate law should be applied.  In terms of the law applicable to the arbitration agreement, which arbitration clauses often omit, Article 37.4 provides that the law of the seat will apply unless the parties expressly agree otherwise.

This change brings the new Rules in line with best practice and will ensure more certainty for international parties looking to include the SCCA in their contracts. Parties will still need to ensure that their arbitration proceedings are conducted so as to minimise the risk of the resulting award not being enforceable due to non-compliance with Sharia principles.

Use of technology

The SCCA has also been keen to promote the use of technology in the new Rules.  Given the increased use of technology that has pervaded the arbitration community in recent years, and the importance of initiatives such as the campaign for greener arbitrations, such encouragement is welcome.

Changes include Article 4.1, which allows notices of arbitration to be served by email, and Article 25.1, which provides the Tribunal with the power to determine the extent to which technology shall be used.  Article 27.1 also allows the Tribunal to require that all written submissions are filed by email or other electronic means.

The SCCA has also updated its Online Dispute Resolution (“ODR“) Procedure Rules (contained at Appendix IV of the new Rules), which are specifically tailored to small disputes where the amount in dispute does not exceed SAR 200,000.  Under the ODR, the SCCA will appoint a sole arbitrator, who will issue a final award within 30 days of appointment.  The award is usually based on written submissions, unless otherwise agreed.

Third-party funding

Article 17.6 of the new Rules provide that a party that is relying on litigation funding must identify the third-party funder.  Given the rise of third-party funding arrangements, the inclusion of such a provision is not unexpected, and is a welcome and proactive approach to promoting transparency in proceedings.

Conclusion

The new Rules are clearly intended to bring SCCA arbitration into line with international best practice and are a significant improvement over the previous Rules.  They provide parties with a greater degree of clarity on the procedure, while also ensuring efficiency.  Combined with the encouraging supervision of arbitration and treatment of awards in the KSA courts, this will continue to enhance the standing of both the SCCA and the KSA in international arbitration. This development is positive news for those doing business in Saudi Arabia since it is expected to become the default dispute resolution option in Saudi Arabian government tendered contracts.

For more information, please contact Stuart Paterson, Partner, Nick Oury, Partner, Sean Whitham, Of Counsel, or your usual Herbert Smith Freehills contact.

Stuart Paterson
Stuart Paterson
Partner
+971 4 428 6308
Nick Oury
Nick Oury
Partner
+971 4 428 6385
Sean Whitham
Sean Whitham
Of Cousel
+971 4 428 6312

DIFC Court provides further guidance on anti-suit injunctions in respect of “on-shore” Dubai Court Proceedings

Summary

Nearly two years after the DIFC Court granted an anti-suit injunction in Multiplex Constructions LLC v Elemec Electromechanical Contracting LLC (which we previously discussed here), it is an established principle that the DIFC Courts will grant anti-suit injunctions where the parties are bound by an arbitration agreement and the seat of the arbitration is the DIFC.

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INSIDE ARBITRATION ISSUE #14 PERSPECTIVES ON CROSS-BORDER DISPUTES

Welcome to issue 14 of Inside Arbitration.

We are delighted to share with you the latest interactive issue of this publication from Herbert Smith Freehills’ Global Arbitration Practice.

Despite signs of post-Covid recovery, the invasion of Ukraine has had global ramifications, exacerbating the already challenging cost-of-living crisis, with soaring inflation as energy, food and consumer product prices have spiked. Many of our corporate clients have been faced with closing their Ukrainian operations and supporting staff through enormously challenging circumstances. As trusted advisors to our clients, we need to be able to anticipate and respond to the challenges and opportunities on the horizon as political and financial instability have knock-on effects across regions and sectors.

Incorporating articles, interviews and videos from our practitioners around the network, this edition features articles and interview spotlights from across our global team in addition to recent arbitration news and developments including:

  • The war in Ukraine – implications for investments and contracts: Andrew Cannon, Hannah Ambrose, Olga Dementyeva and Jake Saville-Tucker explore some of the principal considerations in relation to terminating Russia-related commercial contracts and how investment treaties may offer an avenue for recourse if investments in Ukraine or Russia are affected by Russian state action.
  • The future of energy disputes: shocks to the system: Craig Tevendale, Louise Barber and Divyanshu Agrawal discuss how battered supply chains and turbulent geopolitics mean the energy sector should brace for a surge in disputes
  • Cyber disputes – are there borders in the blockchain? With the cyber economy fast emerging, courts are struggling with drawing borders in a decentralised world. Simon Chapman QC and Troy Song highlight one recent case that hints at the path ahead
  • Arbitration in Dubai: wa hala’ la wein (where do we go from here?): Following a busy year, Stuart Paterson, Nick Oury and Patrick O’Grady reflect on how the consolidation of two leading Dubai arbitration centres has radically changed the UAE disputes landscape
  • Whether virtual or physical, we can do more to make arbitration hearings sustainable: Amal Bouchenaki, Craig Tevendale, Maguelonne de Brugiere and Olga Dementyeva present the findings of our study comparing the carbon impact and expense of virtual hearings with in-person equivalents.
  • Investor-state dispute resolution series part II: Reform or rebirth?: With concerns from stakeholders growing, Andrew Cannon and Vanessa Naish consider how ongoing reforms could rebalance the ISDS process.
  • Asia-Pacific private equity disputes to rise as deal volumes grow: Following a period of pandemic-enforced turbulence, private equity deals have rebounded strongly, with disputes likely to grow as a result. Chad Catterwell and Guillermo Garcia-Perrote consider the implications of recent developments for disputes in this sector.
  • Spotlight interviews: Our three new arbitration partners Jonathan Ripley-Evans, Dan Waldek and James Allsop feature in our Spotlight articles, shedding light on their specialisms in their regions (and their story so far)

Previous issues can also be viewed here. We hope that you enjoy reading issue #14 of Inside Arbitration and would welcome any feedback you may have.