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A new set of regulations seeks to promote arbitration in Abu Dhabi

Richard Bell and James Fox
Richard Bell and James Fox

The Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC) recently announced a new set of Procedural Regulations of Arbitration, which took effect from 1 September, 2013. The regulations represent a clear intention to streamline the ADCCAC procedures and bring clarity to what used to be a vague and opaque procedure.

There are now clear rules on how arbitration proceedings are to be commenced and served, how arbitration panels are appointed and what the parties must include in their pleadings.

The regulations set out rules as to how the procedure for the arbitration is to be determined and give arbitration panels significant freedom to run an arbitration as they see fit (subject to procedures the parties agreed in contracts and the mandatory provisions of the new rules).

These modifications potentially offer a more streamlined service and should mean arbitration proceedings are dealt with more efficiently, which should also reduce costs.

The new rules allow a panel to order that goods that are at risk of being disposed of by one party are entrusted to a third party for safe keeping, or that perishable items are sold and sums deposited with ADCCAC pending settlement of a dispute.

They also specifically permit a panel to make provisional (interim) awards. This is a welcome change and brings ADCCAC in line with international arbitration centres.

The old regulations were also silent on the matter of confidentiality. This was a concern for businesses who wished to preserve commercially-sensitive data or who did not want a dispute aired in public.

The rules expressly provide that the award, all materials and documents, expert reports and witness statements, records and all procedures will be held confidential unless agreed upon in writing by the parties or required by law.

The old regulations also left it up to the parties to agree on a panel’s costs. This often caused delays as parties argued about what a panel should be paid.

The new rules contain a table of fees similar to that of the International Chamber of Commerce, which runs the International Court of Arbitration. This change will be welcomed by parties and arbitrators alike as fees are now calculated from a set formula.

One issue which the new regulations do not clarify, though, is whether lawyer-client costs are recoverable. The regulations are completely silent as to whether the arbitration panel can award lawyer-client costs to the successful party. This is, accordingly, likely to be an ongoing point of contention in ADCCAC arbitrations.

The panel is to deliver its award in Arabic in addition to any other language adopted in the conduct of the arbitration proceeding. This was the case under the old rules, but they were not entirely clear.

If a party is aware that a provision of the regulations has not been complied with but continues the arbitration without objecting, he will have deemed to have waived his right to object.

This is a significant and welcome change. Under the old system, it was not uncommon for a party to wait until after an award had been issued to raise procedural objections.

Typically, these objections are raised by a losing party when the successful party submits the award to the Abu Dhabi Courts for ratification and enforcement.

These nullification applications often add significant cost to the enforcement of an award and can delay enforcement for months – sometimes years. This had been a major bugbear for businesses seeking to enforce arbitration awards in the UAE.

Whether the new regulations will reduce these applications in practice remains to be seen, but it is a step in the right direction. If the Abu Dhabi Courts enforce the new rules, a lot of the cost involved in ratifying and enforcing awards will be avoided.

The regulations became effective on 1 September and apply to all arbitrations after that date, even where arbitration is currently in process.

Richard Bell is a partner and James Fox a senior associate at law firm Clyde & Co

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