In our previous article, we examined some of the highlights arising from the arbitration rules of the newly launched Abu Dhabi International Arbitration Centre (ADIAC Rules). The ADIAC Rules were unveiled on 1 February 2024 and supersede those of its predecessor, the Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC Rules).
We previously looked at how the ADIAC Rules’ new “early dismissal” procedure, expedited procedures and procedure for awarding costs, compared with the rules of its UAE counterpart, the Dubai International Arbitration Centre (DIAC Rules).
Following on from that article, James Baldwin now examines some of the other features of the ADIAC Rules which are important for any party considering if ADIAC measures up to other arbitral institutions in the UAE and globally. They include powers to consolidate arbitrations, join third parties, assign the Abu Dhabi Global Market (ADGM) as the default seat, recognise third party funding arrangements and scrutinise the tribunal’s draft awards.
Consolidation
The former ADCCAC Rules were silent as regards the possibility of consolidating multiple claims involving the same parties arising from related contracts or transactions. Unless the parties agreed otherwise, the claims would need to be brought in separate arbitrations resulting in a duplication of cost and potentially producing inconsistent awards made by multiple tribunals.
Under Article 10 (for new arbitrations) and Article 12 (for existing arbitrations) of ADIAC’s Rules multiple claims may now be heard in a single arbitration thereby streamlining the potential cost and arbitral procedure. The considerations are similar to those of the other institutions including that the arbitration agreements must be compatible, and the relief sought arises out of the same transaction or a series of related transactions.
Joinder
The former ADCCAC Rules were silent about joining a third party to the proceedings. Under Article 11 of ADIAC’s Rules, the joinder of third parties is now permitted where all parties, including the third party, consent. Alternatively, it is possible if the third party is deemed to be subject to the ADIAC’s jurisdiction, for example, it is a party to the arbitration agreement.
Joinder is particularly useful in projects or transactions involving multiple entities where the respondent being sued may allege that a third party is liable. Equally, that third party might have an indemnity or contribution claim against the respondent. Where joinder is a viable option, this will allow the same tribunal to resolve all claims in one award, thereby, avoiding the time, cost and potential inconsistencies arising from separate arbitrations.
Default seat
Under the former ADCCAC Rules, the emirate of Abu Dhabi was considered the default seat of the arbitration if the parties had not agreed otherwise, thereby granting supervisory jurisdiction to the original onshore, Arabic language courts of Abu Dhabi.
The ADIAC Rules make the bold move of assigning Abu Dhabi’s financial freezone, the Abu Dhabi Global Market or ADGM, as the default seat of an ADIAC arbitration if the parties have not agreed otherwise. The arbitration agreement and procedures will therefore be governed by the ADGM Arbitration Regulations 2015 (as amended) (ADGM Arbitration Regulations) and the ADGM Courts will have supervisory jurisdiction.
The DIAC Rules made a similar move in 2022 by replacing onshore Dubai as the default seat with the Dubai International Financial Centre (DIFC) resulting in the supervisory courts of onshore Dubai being ousted in favour of the English language, common law courts of the DIFC.
The move will generally be seen as attractive for international parties as the ADGM Courts offer significant advantages over the onshore Abu Dhabi Courts in supporting an arbitration. Parties can, for example, benefit from interim orders including urgent provisional or conservatory measures familiar in common law jurisdictions as well as a speedy ratification and enforcement process.
Modern technology
Having seen its last update in 2013, it’s no surprise that the ADCCAC Rules were outdated and therefore silent regarding the use of modern technology to help a tribunal manage the arbitral procedure.
As expected, and following DIAC Rules’ example, the ADIAC Rules now introduce the tribunal’s power to conduct case management conferences and hearings by telephone, video conference or any other appropriate means of virtual communication. These also align with the helpful 2020 amendments to the ADGM Arbitration Regulations in relation to the use of modern technology.
Third party funding
Aligned with changes to the ICC Rules in 2021 and the DIAC Rules in 2022, Article 48 of the ADIAC Rules also recognises another feature of modern arbitration; the use of third-party funding arrangements to fund any claims or defences subject to the arbitration.
Previously, third party funders may have overlooked claims falling under ADCCAC’s regime, however, the ADIAC Rules may inspire third party funders to look again at the jurisdiction. For arbitrations seated in the ADGM, in which the legislation and Courts already recognise third party funding, there should be less concern about enforcing awards within the ADGM if a third-party funding arrangement is in place.
Unfortunately, for arbitrations seated in onshore Abu Dhabi, as there is currently no legislation that governs litigation funding in cases before the onshore UAE courts, the risk of an award being nullified may continue to be off-putting for most third party funders.
Scrutiny of Draft Awards
The ADCCAC Rules did not contain any powers for ADCCAC to review an arbitrator’s award prior to its release to the parties. In the UAE’s onshore courts where unsuccessful parties often raise every possible procedural point to avoid enforcement, some prior scrutiny of awards might have avoided technical errors seized upon to nullify awards in this jurisdiction.
Article 40 of the ADIAC Rules, in common with DIAC Rules, has sought to address this problem. The ADIAC’s newly appointed arbitration court shall now review a tribunal’s draft arbitration award before it is issued to the parties. The court can suggest that the tribunal consider modifications including “any required changes to the form of the Award, apparent clerical errors, inconsistencies or omissions in the Award or to matters addressed in the Award Checklist”.
For enforcement of awards against assets in onshore UAE, this review process should hopefully lessen the potential for procedural irregularities resulting in a more streamlined enforcement process in the onshore UAE Courts.
Conclusion
The ADIAC Rules mark a significant improvement on the ADCCAC Rules and will align Abu Dhabi’s arbitration centre with Dubai’s offering, the DIAC, and other notable arbitration centres around the globe. It is hoped that these changes will also lead to a quicker enforcement process in the UAE’s onshore courts in order to further inspire confidence in the UAE as a destination for resolving commercial disputes in arbitration.
If you require further advice regarding the institutional rules of the ADIAC or the DIAC, please contact James Baldwin or any other member of our Dubai office’s disputes team.
