“Historic” and “revolutionary” were among the words used at the launch of the DIFC/LCIA Arbitration Centre on February 17.

The significance of the event was clear from the attendance of many international and leading local practitioners and representatives from institutions both from within and outside DIFC (Dubai International Financial Centre).

The LCIA (London Court of International Arbitration) is a leading commercial arbitration and mediation institution in the world. Established over 100 years ago, it has never before been associated with an arbitration centre outside London. The decision by LCIA to enter into a joint venture with DIFC to establish an international arbitration centre in it is a clear sign of its confidence in the development of arbitration in Dubai and in the legal system underpinning the DIFC.

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That legal system comprises laws unique to the Arab world and in any non-English speaking country, drafted in English, published for consultation before enactment and influenced by English common law – a system of choice amongst international companies and commercial institutions for their transactions and disputes.

When the decision was made to set up the DIFC, the constitution of the UAE was amended to allow the it to have its own system of Civil Law. By statute, none of the Civil and Commercial Laws of the UAE apply within the DIFC (though it is subject to the Criminal Laws of the UAE and its Money Laundering and Anti Terrorist Funding Laws). To administer its system of justice, DIFC set up its own courts to operate in the English language and has appointed a panel of experienced commercial judges.

Nuts and bolts

So much for the vision, but how will it work?

The centre’s staff will provide institutional support for arbitrations of the same quality as in London, i.e at the top of the range. To facilitate this, the DIFC recently sent out for public consultation its revised arbitration law, which is based on the UNICTRAL Model Law (an accepted world standard for arbitration laws), and which will allow parties anywhere in the world to choose to have disputes resolved in the centre.

The awards in arbitrations should be final and binding and respected by the courts in whose jurisdiction the arbitration takes place.

The DIFC Court will be supportive of arbitration and not interfere except in limited circumstances provided for in the proposed new DIFC Arbitration Law.

How will awards of the centre be enforced? This should be straightforward locally and internationally. There is already machinery in place for DIFC Court judgments to be enforced through the execution department of the Dubai court.

It should therefore only be necessary to obtain a DIFC Court judgment based on a centre award in order to present it to the local Dubai Court to enter as a judgment as a matter of procedure, which can then be enforced throughout the UAE.

Internationally, centre awards should be enforceable under the New York Convention as well as regionally under the Riyadh Convention.

For the centre to be successful, businesses from the region and around the world will need to insert the centre’s dispute resolution clauses into their contracts or agree to use the centre after disputes have arisen.

The existence of the DIFC Court coupled with a new DIFC Arbitration Law (shortly) should provide good reasons for this to happen.

The writer is a partner of the international law firm, Clyde & Co LLP.