The DIAC / LCIA joint statement 

Middle East, UAE

Introduction

As reported previously (here), as a result of Decree No. 34 of 2021 (the “Decree”) the DIFC-LCIA[1] Arbitration Centre was abolished as part of the consolidation of DIAC[2] as the sole arbitration centre in Dubai.

The Decree provided that going forward, DIAC would assume the role of the supervising institution in respect of any arbitrations arising from DIFC-LCIA agreements (unless otherwise agreed). This led to concerns over how DIAC would administer its role in practice – particularly in respect of ongoing DIFC-LCIA arbitrations, considering that (at the time), the DIAC Rules were significantly different to those of the DIFC-LCIA.

In a much awaited and welcomed development, DIAC and the LCIA issued a joint statement (available here) clarifying the issue.

The joint statement

In summary, the joint statement provides that DIAC and the LCIA have agreed terms consistent with the Decree, in that:

  1. The LCIA will administer all existing DIFC-LCIA cases (i.e., those commenced and registered by the DIFC-LCIA with a designated case number on or before 20 March 2022) from London.

  2. Any arbitration subject to a DIFC-LCIA arbitration clause that is commenced on or after 21 March 2022 (or commenced before 21 March 2022 but which has not been assigned a DIFC-LCIA case number) shall be administered by DIAC under its procedural rules.

Comment

The joint statement offers a welcome development in offering clarity and certainty as to the operation of arbitrations arising from existing DIFC-LCIA arbitration agreements. This is particularly true for parties with ongoing DIFC-LCIA arbitartions; prior to the issueance of the joint statement, the ultimate fate of those arbitrations (and the funds on deposit with the DIFC-LCIA in relation to them), in certain instances were uncertain.

Of course, arbitral parties remain free to agree to opt out of the DIAC regime if they so choose. As such, now that the joint statement has clarified the issues, any parties whose contracts currently refer to DIFC-LCIA arbitration should assess their positions in respect of future disputes, to determine whether any contractual amendments need to be made.



[1] Dubai International Financial Centre – London Court of International Arbitration.

[2] Dubai International Arbitration Centre.