On September 14 2021, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, issued Decree No. 34 of 2021 (“Decree”) regarding the Dubai International Arbitration Centre (DIAC).
The Decree dissolves Emirates Maritime Arbitration Centre (EMAC) and replaces it with the Dubai International Arbitration Centre (DIAC), the latter having a new Statute, also provided for in the Decree.
From the time of entry into force of the Decree, all assets (movable or immovable), financial appropriations, selected employees and the panels of arbitrators, conciliators and experts of EMAC shall be transferred to DIAC. With regards to the membership and affiliation fees already paid to EMAC, these will continue in the same conditions and fees until their expiry. Post expiry, new rules and membership fees will become applicable, these rules and fees falling under the competency of the DIAC Board of Directors. Conclusively, the legal regime of EMAC shall be novated to DIAC, which shall replace EMAC in all rights and obligations.
The Decree established a transition period of 6 (six) months from its entry into force, whereby DIAC shall coordinate with all competent authorities in Dubai in order to have its new and enhanced status regulated and operational.
We also understand that the above initiative is part of a larger overhaul in the arbitration environment in UAE, aimed at making Dubai one of the most reputable arbitration hubs in the region and in the world and is finally aimed at adding uniformity, procedural and institutional wise, to the arbitral proceedings in the region.
What does it mean for the shipping community in UAE?
(i) Does the Decree imply changes in existing contracts (Example charter parties or commercial agreements in general)?
We are aware that a number of charterparties, as well as commercial agreements, refer to arbitration and to EMAC as dispute resolution mechanisms. These agreements remain valid and are not affected by the dissolution of EMAC.
The Decree provides expressly at Art. 6 that the abovementioned agreements are unaffected, with the only difference that the arbitration centre shall be changed from EMAC to its successor, DIAC.
As well, in case of existing arbitration disputes at EMAC, their course shall remain unaffected, with the only change that the supervisory body of these shall be changed from EMAC to DIAC.
It is important however to double check that the arbitration clause has a clear express choice of seat for the arbitration, as it will be the seat of the arbitration that will dictate whether the supervisory court of the proceedings will be Dubai Courts of the DIFC Courts.
(ii) Is there a possibility to negotiate different arbitration clauses in existing agreements?
Parties to charterparties or other agreements referring to EMAC arbitration retain the liberty to amend their existing contracts and change by themselves the arbitration forum and/or the seat. The parties to the said agreements can therefore choose DIAC or amend their clause to refer to different arbitration rules, as the Decree obviously does not affect the contractual freedom of the parties.
(iii) Will arbitration clauses in existing contracts be rendered incapable of being performed?
The existing arbitration clauses (referring to EMAC as arbitration forum) shall not be affected by the replacement of EMAC with DIAC. The Decree specifically provides at Art. 5 b. that DIAC will replace EMAC in such respect.
While parties may be tempted to try and invalidate existing EMAC arbitration clauses at the time of disputes, it is our view that this is not the case; the legal standing of these clauses emerging with clarity from the text of the Decree.
(iv) What is happening with court proceedings related to EMAC arbitration proceedings?
Ongoing court proceedings related to awards previously issued under EMAC (applications for nullification for example) or petitions, appeals and cases initiated with regards to procedures issued by arbitral tribunals under EMAC will continue to be heard both at Dubai Courts and DIFC Courts as the case may be. The Decree specifically provides so at its Art. 7, therefore the said court proceedings shall be carried out unaffected, according to the existing procedures at Dubai Courts and DIFC Courts, respectively.
In relation to new proceedings to be commenced following the dissolution of EMAC, it is important to double check the choice expressed in the clause on the seat of the arbitration and making sure an express choice is made so to avoid any controversy on the supervisory court.
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We are aware that in UAE, a number of charterparties signed by the shipping community refer to arbitration clauses having EMAC as forum. The said clauses to arbitrate might be revisited, to decide whether DIAC is a suitable (new) forum of arbitration or whether any alternative arrangements should be made in deciding on a new seat of arbitration.
The Decree will be published on the Official Gazette and shall enter into force at the date of publication, shedding even more clarity on the matter. Please be informed that upon the availability of any further developments or information, Fichte & Co. shall ensure to keep you informed and updated.
If you require any further clarification or assistance on this matter, please do not hesitate to reach us at info@fichtelegal.com or call +971 4 435 7577.
