Interim Remedies in Dubai Based Arbitration, Part 2

As many involved in dispute resolution in the UAE, and in international arbitration generally, will be aware, recently there was a significant shake up of the arbitration landscape in Dubai, following the issuance of Decree No. (34) of 2021 (the “Decree”), on 14 September 2021.

The most eye-catching aspect of this legislation, Article 4, was the abolition of the DIFC-LCIA Arbitration Centre’s administering body, and of the Emirates Maritime Arbitration Centre (“EMAC”), in an effective merger with the Dubai International Arbitration Centre (“DIAC”).

This series of two blogposts seeks to explore some known, as well as some speculative, consequences of the Decree in respect of certain discrete issues relevant to interim remedies. This second post considers the effects of the Decree on interim remedies before the courts. The previous post commented on the effects on interim remedy procedures before arbitral tribunals.

Interim Remedies in the Courts (If seat is specified and if no seat specified)

The applicable court for interim remedies in respect of onshore Dubai seated arbitrations is the onshore Dubai Court, whereas the applicable court in respect of DIFC seated arbitrations is the DIFC Court. This remains the case and the Decree reaffirms this (Article 4(a)).

Article 7 of the Decree also confirms that both the Dubai Court and DIFC Court, in accordance with each court’s respective procedures, will continue to consider claims, applications and appeals in respect of awards or arbitration measures issued by arbitration tribunals of the DIAC and DIFC-LCIA (and EMAC).

But one of the tricky questions that may arise is: which is the applicable court (for interim measures and otherwise) in respect of contracts which do not specify the seat, but which specify one or other of the arbitration centres?

Previously, this was easy to answer:

• Under DIAC’s current rules (Article 20.1), if the seat is not agreed by the parties, it was automatically onshore Dubai.
• Similarly, under the DIFC-LCIA Rules (Article 16.2), and EMAC Rules (Article 20.1), if not agreed between the parties, the seat was automatically the DIFC.

Article 4(b) of the Decree now provides that where the seat is not agreed, the DIFC is deemed to be the seat. This in itself is a significant development within the Dubai arbitration landscape, as the DIFC Court and its applicable rules and arbitration law have effectively become the default.

This is of course specifically relevant to the issue of interim remedies. Parties to a Dubai based contract with an arbitration agreement, but no specified seat, will now prospectively be subject to the wide range of interim measures available within the DIFC Court (e.g. freezing injunctions).

One significant point to note is that Article 4(b) appears to directly conflict with Article 20.1 of DIAC’s Rules. However, DIAC has been given six months to implement the Decree, and it is anticipated that a new set of rules will be promulgated, so any conflict should be short-lived.

Nevertheless, there may well be some confusion as to the applicable court for interim remedies for arbitrations which are currently ongoing in respect of agreements where DIAC is the specified centre, but no seat was specified.

For arbitrations in which the tribunals/panels were formed before the effective date of the Decree, as confirmed by Article 6(b), the centres which were abolished, and DIAC, will continue in accordance with the rules and procedures they adopt. As such, for DIAC arbitrations without a specified seat, it would appear that the onshore Dubai Court is still likely to be the applicable court for interim remedies.

However, where tribunals/panels were only formed after the Decree was promulgated, or have not yet been formed/arbitration has not started, it is not clear which court would have jurisdiction. Though this issue is likely to depend upon the wording of the arbitration clause and when the agreement was entered into.

For example, the arbitration agreement may be argued to have effectively selected the seat of arbitration, through reference to DIAC. In particular, if an agreement was entered into before the Decree, and the clause provides for the DIAC 2007 rules, it could be argued that, as the parties had agreed to these rules before the Decree, even though the contract did not expressly specify the seat, the parties had still implicitly agreed to Dubai being the seat, due to Article 20.1 of DIAC Rules. Though such an argument would, however, directly conflict with Article 4(b) of the Decree.

Conversely, if the agreement was entered into after the Decree, even if this specified DIAC, because of the known effects of the Decree at time of entry (i.e. Article 4(b) clarifying that if no seat specified, DIFC is automatically the seat), it is likely to be more difficult to argue that the parties had implicitly agreed Dubai as the seat.

Ultimately, resolution of this issue in any particular case may depend upon how far the courts wish to exert their respective jurisdictions. As this Decree is so fresh, it still remains to be seen as to how courts will address the issue of their jurisdiction for issuance of interim measures (and generally), in circumstances where the contract was agreed before the effective date of the Decree, DIAC was specified, but no seat was specified. If parties to contracts pre-dating the Decree, which contain an arbitration agreement with reference to DIAC, but no express seat, have concerns about the certainty implications, it may be advised that they try and agree a seat before any dispute arises.