7 December 2023
The US District Court in Louisiana has refused to enforce an arbitration award from the Dubai International Arbitration Centre (DIAC).
This is unusual because, under the New York Convention of 1958, countries typically uphold arbitration awards. However, the Louisiana Court's decision is noteworthy, particularly after a 2021 decree by the Dubai government merged DIAC with the Dubai International Financial Centre (DIFC).
The court ruled that DIFC-LCIA is not equivalent to DIAC, and the London Court of International Arbitration entities at DIFC are distinct from DIAC. Despite the claimant's efforts based on UAE laws, the court maintained their differentiation.
The defendant argued that the arbitration agreement was valid until the 2021 decree, which cancelled DIFC-LCIA and transferred assets to the DIAC Foundation. The court upheld the defendant's position, emphasizing the inability of the US court or Dubai government to alter the arbitration agreement.
This case highlights that government decisions can impact arbitration, making it less reliable compared to traditional legal systems in countries.
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