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International arbitration is no longer an alternative form... especially in Dubai

Introduction

For years there were those who talked of arbitration as being a form of ADR and there were of course the arbitration purists, for whom there was nothing alternative about this form of dispute resolution. On the global commercial stage, the purists have now surely won this argument.  International commercial contracts often include parties drawn from numerous jurisdictions and when it comes to the resolution of any resulting disputes, almost all of these contracts will make reference to arbitration, albeit now often following on from negotiation and mediation.  Therefore, for lawyers involved, to any extent, in contracts relating to international commerce, the concept of arbitration, both in theory and in practice is unavoidable.

This global approach to both commerce and dispute resolution has led to the establishment of arbitration centres all over the world.  For Asia it is Singapore, for Europe, London and Paris and for the Middle East and surrounding geographical area, it is unquestionably Dubai. 

Dubai as a place to arbitrate

Dubai is the home of two leading international arbitration centres, the Dubai International Arbitration Centre (DIAC) and the partnership between the Dubai International Financial Centre (DIFC) and the London Court of International Arbitration (LCIA).  There are currently literally hundreds of claims registered across these two bodies, the majority of which in some shape or form related to the collapse in the real estate development market in late 2008 onwards.

Opportunities for UK based lawyers

Dubai represents a number of opportunities for UK based arbitration practitioners and arbitrators.  Firstly (and this is important if you are the one involved) Dubai is a far easier place to fly to than Asia.  Just over 7 hours from London there are numerous flights to Dubai every day from several UK airports including Glasgow, Newcastle, Birmingham, Manchester and London.  For half the year there is only a 3 hour time difference and for the other half 4 hours – both ahead of the UK.  This is a very manageable location to both travel to and then work in upon arrival.  Busy lawyers don’t have the luxury of getting over jetlag before starting work.  Clients are not in the present market in the business of paying for pre-work holidays as well.

But of course as many will think so what?  Most of these countries have plenty of arbitration practitioners on the ground and so there is no need to either instruct external counsel from the UK or nominate UK based arbitrators.

To an extent this is true but there is a steady and regular stream of UK based barristers who are plying their trade in the sun kissed desert kingdom, which is Dubai.

Indeed there are many firms of solicitors who are being asked to advise UK based clients about arbitration in Dubai.  At Hardwicke we have been involved in a number of such claims and there are many hundreds of people in the UK who have been adversely affected by the downturn in the real estate market in Dubai and who are now realising that their only recourse is arbitration in Dubai.

Opportunities for UK based arbitrators

It is perhaps those UK based arbitrators who are seeking to benefit from appointments as arbitrators who are likely to see an increase in demand for their services.  Whilst there are many capable arbitrators who live and work in Dubai they are often objected to on the basis of perceived conflicts of interest.  Some very experienced and impartial Dubai based arbitrators have found themselves cold shouldered on the basis that they have either been sponsored by a company with a slender link to one of the parties in an arbitration, or they have been involved in an arbitration involving one of the parties or more likely one of their subsidiaries.  This is more common in Dubai than you might think as many of the developers have links to other developers.   Therefore being an arbitrator based in the UK is no bad thing for disputes in Dubai and across the GCC Region.  Indeed, conflicts aside, the old definition of an expert, ‘being somebody from abroad’ is perhaps very apt in post-crash Dubai. 

Dubai is however not just about failed real estate projects and indeed, before the 2008 crash, there was a developing international arbitration market and many of the large capital projects contained aspects which led to arbitrations in both the DIAC and DIFC/LCIA.  In addition to construction related disputes, there have also been a growing number of financial arbitrations relating to disputes pertaining to investment and hedge funds as an example of the variety of work which Dubai has to offer.

Enforcement of awards

Of course, ultimately you can marshal the finest team of arbitrators and lawyers known to man in any town or city in the world and there is often nothing to differentiate Dubai from London or Singapore in this regard.  Where of course the sheep are finally separated from the goats is in respect of post award enforcement.

Dubai is without doubt an ideal and indeed key place to arbitrate and those who request arbitrations, usually do so with an eye to fact that they want to (and believe they can) win.  Having done so, however, can they enforce any award?  For the past few years there has been a slight question mark over the enforcement of arbitral awards in Dubai by the local Dubai Courts.  Would they enforce or would they fail to do so, on the basis of some esoteric point of law or procedure which no one had actually thought of prior to the local courts being seized of the process?

The uncertainty in this regard has been significantly reduced, indeed even taken away altogether by the fact that the local courts in Dubai have recently approved the execution of a DIFC-LCIA arbitration award that had been ratified by the DIFC Courts in terms of the highly regarded DIFC Arbitration Law (Law No 1) of 2008.  This recent result is testament to the success of the Joint Committee set up in 2008 by the DIFC Courts and Dubai Courts, which committee meets regularly to develop and enhance procedures between the two courts.  The local courts in Dubai fully recognise the need to have an effective and streamlined procedure in place for parties seeking to enforce an arbitral award in their favour.  The omens in this regard are therefore good.

The future

So with disputes aplenty, good transport links, unparalleled facilities (not to mention the weather) and a well-structured and now proven enforcement procedure in place there is much to be done in the Middle East.  In that regard many feel that within the next few years, much of what is said above will also be true of Qatar, which is without question, next on the list in terms of the future of “go to” places for international arbitration.

So even if the purists are wrong, then even in the alternative, Middle Eastern based arbitration still sound an attractive prospect for the legal community in the UK, both now and in the years ahead.