Exclusive: Dubai Arbitration Week heralds positive future for DIFC-LCIA

With the launch of 2019’s Dubai Arbitration Week, the fifth event of its kind, arbitration in the Middle East is in the spotlight – for all the right reasons. With over 40 events making up the week, the event has become somewhat of a model of its kind – with delegate attendance, audience participation, law firm contributions, and networking opportunities all to the fore.

In part, the success of the Week lies in the organization and structure provided by the DIFC-LCIA Arbitration Centre, itself an arrangement between the Dubai International Finance Centre Arbitration Institute (DIFC Arbitration Institute) and the London Court of International Arbitration (LCIA).

When founded, in 2008, it was described by the (then) DIFC Chief Justice Sir Anthony Evans as "essentially a joint venture between the DIFC and the LCIA".

The latter body supplies casework support for the DIFC- LCIA secretariat, and appoints, via the LCIA court, arbitrators under the DIFC-LCIA’s arbitration rules, as well as appropriate training; the LCIA director-general, Jacomijn van Haersolte-van Hof, is one of the centre’s trustees, along with LCIA board chairman, Audley Sheppard QC of Clifford Chance.

Leadership is provided by both Essam Al Tamimi, senior partner of Al Tamimi & Company, who acts as chairman, and independent arbitrator, Alec Emmerson, who acts as chief executive of the Arbitration Institute, with Three Crowns partner, Reza Mohtashami QC, acting as an independent trustee. Between them, the trustees have seen a period of considerable growth, an expansion in the centre’s staffing and services, and a firm commitment to supporting arbitration both inside and outside the United Arab Emirates.

Emmerson noted, in a statement: “With an impressive line-up of events Dubai Arbitration Week has attracted more than 200 attendees and is firmly established as one of the region’s annual international arbitration highlights.”

STRONG EVIDENCE OF GROWTH

Growth, in casework terms, can be seen as both steady and spectacular, with the launch of a report summarising the centre’s progress, particularly over the last two years. Steady in the sense of a 17% increase to the total number of cases referred to the centre in 2018, as opposed to 2017, with 68 disputes as compared to 48; itself, a far cry from 2015, when it recorded 13 cases, not long after the DIFC-LCIA was relaunched.

With exponential growth in the number of administered arbitrations, and a steady minority of mediations and occasional ad hoc appointments, such progress may not seem spectacular – that is, until one takes the combined figure for the last two years, showing an increase of 64% as compared to 2016/2017, in which a total of 77 disputes were referred to the DIFC-LCIA – and an increase of 350% as compared to 2015.

That has meant consequential changes in personnel; by common consent, the arrival of Robert Stephen, who acts as registrar at the DIFC-LCIA, and who spoke at CDR’s recent Arbitration Symposium in London, and new counsel, Matthew Harley and Katy Hacking, with the secretariat doubling in size, and enhanced administrative support –as well as the need for DIFC-LCIA to find new physical premises in the DIFC, which – of itself – is also expanding as new offices, and hotels, go up in readiness for Dubai hosting the World Expo in 2020.

That makes the DIFC-LCIA one of the world’s fastest growing arbitral institutions – at least according to Al Tamimi and Emmerson, in a statement released to celebrate Dubai Arbitration Week, and the progression seen in 2018 seems to have carried through to end October 2019, with 62 new arbitrations, mediations and associated ADR - an increase of 27% over the first 10 months of 2018.

Much of what the secretariat administered was conventionally handled - 87 appointments were to three-member tribunals in 29 arbitrations under the rules, and only 30 were of sole arbitrators; much on a par with industry wisdom.

59 arbitrators (or 50.4%) were selected by the LCIA, 49 (or 41.8%) were nominated by the parties, and 9 (or 7.7%) were selected by the co-arbitrators.

22 (or 18.8%) of those selected were of female arbitrators, with 68% selected by the LCIA Court; 22% nominated by the parties; and just two nominated by the co-arbitrators; marking a threefold increase to the total number of female arbitrators appointed by the LCIA court, and an increase of 3% in the number of female arbitrators appointed in all arbitrations in 2018. 

CONSTRUCTION LAW BOOM

While Dubai’s booming construction industry and associated infrastructure needs, making up the bulk of cases – some 37.5% of them in 2018, and cases in the closely-linked property sector making up a further 10%, the diversity of work shows other sectors were also quietly growing – the hotelier sector making up nearly 10% of cases, while transport cases were also a shade fewer than 10% of the total.

Perhaps unsurprisingly, the vast majority of cases were contract claims – with disputes on shareholder agreements, joint ventures, and the messy aftermath of failed business partnerships next most prevalent, and agency and distribution agreements the next most common, all outliers of an emerging market with opportunities and risks to hand.

Evidence for this could be seen in a recent Clyde & Co survey which showed that the Middle Eastern deal market – which acts as a precursor to disputes – was “buyer-friendly” with increase in deal volumes and value, albeit with an air of caution, with pockets of opportunities in a number of key sectors such as healthcare, education and increasingly technology.

While the DIFC Courts retain their attractions, DIFC/LCIA arbitrations gained ground to become more established and reliable for resolving disputes in the region, according to Clyde & Co’s survey.

The survey said: “Arbitration has gained ground with DIFC-LCIA rules being the most popular form of dispute resolution for both mergers and acquisitions, and joint ventures”, adding that along with DIFC Courts, DIFC-LCIA were seen as “typically among the most predictable and reliable for resolving disputes.”

Arbitration was used in 70% of disputes – and 71% of respondents said they opted for DIFC-LCIA rules, with just 3% choosing Dubai International Arbitration Centre, and 14% the parent body in LCIA itself. While this revealed a gap – 84% of respondents had plumped for DIFC-LCIA rules in 2017 – it marks a strong improvement from 55% when the DIFC-LCIA was reformed.

As one practitioner, attending Dubai Arbitration Week, told CDR: “The advent of DIFC-LCIA arbitration has facilitated the registration and enforcement of awards in the DIFC and in the onshore courts thereafter”, thus helping generating its success. 

SEEKING REGIONAL LEADERSHIP

Increasingly, such disputes are also more valuable – as the DIFC-LCIA report showed - the value of cases had also increased, rising to total values excess of AED2 billion (USD 600 million) during 2018 alone.

English law remained the law of choice – at 53% but there is gradual, and continuing, take-up of DIFC law, now in 18% of transactions. Perhaps unsurprisingly, that meant, as the DIFC-LCIA report also showed, the majority of arbitrators appointed were British, although other nationalities were also present, from 117 appointments of 82 different arbitrators, with arbitrators hailing from 14 different countries, in 2018, with Canadian, French, Egyptian and Lebanese arbitrators also appointed.

At its heart, the DIFC-LCIA’s work remains a regional success story. UAE nationals made up 55.7% of the parties to DIFC-LCIA arbitrations in 2018, with Saudi parties the next most common at just below 8% - with many other nationalities, including African and Asian, also involved.

Nassif Boumalhab, who leads Clyde & Co’s Middle East arbitration practice, commented there was limited confidence in local courts, outside the DIFC, and parties wanted to use English law, “under rules locally administered to an international standard of excellence (DIFC-LCIA) with awards that can be readily enforced (DIFC seat).” 

LEADING THE WAY

That comes as no surprise to Stephen, who told CDR: "We feel that the DIFC-LCIA is leading the way. In part, this is thanks to the work done by Dubai and the UAE in promoting dispute resolution and Dubai and the UAE’s commitment to becoming a world-class dispute resolution hub, but it is also down to the quality of case administration that the team in Dubai is now delivering."

Dubai and the UAE is an attractive place to resolve disputes for a number of reasons. The development of financial centres such as the DIFC and ADGM, together with institutions such as the DIFC-LCIA and the common law DIFC and Abu Dhabi Global Market courts mean there is now a compelling infrastructure in place for parties doing business in and through the region.

He added: "In addition, there is an ever more sophisticated legal market with both international firms and a growing number of local and regional firms operating in Dubai and the UAE. The DIFC- LCIA has certainly benefitted from the growth and development of the legal market and the support that these firms provide by marketing the DIFC-LCIA to corporates in the region.".

Al Tamimi himself noted, “With statistics showing year-on-year growth, the DIFC-LCIA is one of the world’s fastest growing arbitral institutions. I am confident it will continue to contribute to Dubai’s growth as a financial hub.”

For his part, Emmerson said: “The DIFC-LCIA strives to be a trusted service provider with the highest of standards, operating with an international outlook, as well as working within a local context.”

“I am grateful to the secretariat for their diligence and hard work, in maintaining the high service levels that they provide to parties, counsel and arbitrators. Thanks to their efforts, we are on course to become the leading centre for commercial arbitration in the Middle East and Africa.”

-Ends-

© Press Release 2019