In this article, BLP partner, Charles Lilley discusses the introduction of new arbitration rules in Abu Dhabi, highlights the key provisions of these new rules and potential transitional difficulties that might arise.
There has been much recent discussion - and quite a bit of confusion - concerning the introduction of the new Abu Dhabi Commercial Conciliation and Arbitration Centre’s (“ADCCAC”) Procedural Regulations of Arbitration (the “New Rules”).
The New Rules were distributed to a number of interested parties in late August this year and were due to take effect from 1 September 2013. The New Rules were then rescinded in order that certain amendments could be made, but a number of commentators erroneously went to press on 1 September as if the New Rules took effect from that date. The reality is that the New Rules were published only last week and take effect from 20 October 2013.
A welcome update
The old ADCCAC regulations, which had not been updated since coming into force over 20 years ago, have long been viewed by UAE arbitration practitioners as inadequate. The old rules fell well short of the standard of the rules of other local (and international) arbitration institutions, including ADCACC’s regional competitors, the Dubai International Arbitration Centre (“DIAC”) and the Dubai International Financial Centre-London Court of International Arbitration (“DIFC-LCIA”). Given the increasing number of disputes arising out of Abu Dhabi based projects which routinely specify ADCCAC rules as the governing institutional rules, and hence ADCCAC’s rising caseload (with 116 arbitrations registered in 2013 as at the start of September), the outdated rules were placing an increasing and unnecessary burden on ADCCAC to help manage the procedure.
The introduction of the New Rules will be greeted warmly by arbitration practitioners and the Abu Dhabi business community alike, as it is apparent that the New Rules address a number of the perceived omissions and deficiencies in the old rules which often led to delay and frustration on the part of those involved. We highlight a number of the new provisions below.
Key new provisions
The New Rules contain a number of provisions which address issues absent from the old ADCCAC rules. For example:
- a clear list of what must be included in a request for arbitration and the response to the request is now set out;
- the ADCCAC Committee now has express authority to conduct an early preliminary review of the arbitration agreement if one of the parties objects to the validity of it, and may determine that the arbitration should not proceed;
- details concerning the appointment process of the arbitrator(s), with deadlines, are now set out. Under the old rules, which did not contain such deadlines, formation of the Tribunal could take a considerable amount of time, particularly if the Respondent chose to drag its feet;
- there is now an express recognition of the confidentiality of the arbitral proceedings. This provision essentially mirrors that set out in other institutional rules such as the DIAC and ICC rules;
- the power of the Tribunal to grant (either of its own volition or on application of one of the parties) interim measures of protection relating to the dispute have now been addressed. The New Rules additionally state that any application to the UAE Courts concerning interim measures shall not be construed as contrary to, or a waiver of, the arbitration agreement - this is a welcome clarification; and
- the New Rules include a schedule of costs to determine the arbitrator(s) fees based on the amount in dispute. No such guidance was given in the old rules which led to debate amongst the parties, arbitrators and Centre which had the potential to cause significant delay to the process.
All new ADCCAC arbitrations issued from 20 October onwards must comply with the New Rules. However, the New Rules must also be followed in all on-going ADCCAC arbitrations i.e. those commenced before 20 October and which, until 20 October, followed the old rules.
Whilst the attraction of a ‘clean’ change in rules as from 20 October is obvious, it seems inevitable that conducting an arbitration which changes procedural rules part way through will cause practical difficulties. We therefore foresee a difficult transition period for those involved in live ADCCAC arbitrations commenced before 20 October 2013, but hope that this does not detract from what is otherwise a very positive development for arbitration in Abu Dhabi.