- Shubham Sharma
2021 DIFC-LCIA ARBITRATION RULES: A BIRD’S EYE VIEW
After a stormy year, the major arbitration centers across the globe kicked off the year 2021 with brand new rules of procedure. Leading at the fore, DIFC-LCIA Arbitration Centre (hereinafter: the Centre) released its new 2021 Rules for any and all arbitration starting from 1st January 2021.
The new Rules served to replace the previous 2016 rules. The changes implemented by the new Rules do not attempt to overhaul the existing procedure but rather provide a light upgrade to bring the existing procedure up to speed with the avant-garde international practices. The article provides a bird’s eye view of the key changes brought in by the new rules.
The Centre is a Dubai based Arbitration Centre established in 2008 as a joint venture between Dubai International Financial Centre and the London Court of International Arbitration. The Centre’s objectives are “to promote and administer effective, efficient and flexible arbitration and other ADR proceedings for parties doing business throughout the Gulf and MENA regions.”
Some years after the Centre’s establishment, several issues arose with respect to its jurisdictional reach to deal with international arbitration disputes. In order to lay rest to the concerns, the Dubai government passed Law 7 of 2014 to amend the original founding law of the Centre. Pursuant to the amendment, the Centre was relaunched and since then, has been one of the fastest and consistently growing arbitration centers in the Middle East.
Virtual Hearings and E-Awards
Clearly reflective of the sign of the times, the 2021 rules embrace new technology and all that it has to offer. Article 19.2 allows the Arbitral Tribunal (hereinafter: tribunal) to conduct hearings virtually by way of the conference call, videoconference or any other communication technology.
Further, Article 4.1 mandates that the parties must submit a Request for Arbitration through an electronic form or a designated electronic filing system. In a similar fashion, Article 4.2 dictates that all written communications must be submitted electronically or through a designated electronic filing system.
Article 26.2 of the rules allows the tribunal to pass electronically signed awards (E-Awards) subject to the parties’ approval. The approval of parties is a condition as there may be enforcement issues in some jurisdictions where the awards are not signed through actual ink.
Considering the paper heavy nature of arbitration disputes and the several environmental concerns it generates, the move the entire arbitral process is as praiseworthy as it is encouraging for other Arbitration Centres that have not followed suit.
The new rules consolidate the tribunal’s powers to expedite the procedure and conduct and reach the final stage of the proceedings. Article 22 adds to the powers of the Tribunal and allows the tribunal to:
1. Make early dismissal of issues manifestly outside the jurisdiction of the Tribunal, inadmissible, or manifestly without merit;
2. Limit the length of pleadings, or dismiss the need for pleadings entirely;
3. Limit the written and oral testimony of any witness; and
4. Dispense with the need for a hearing entirely.
The additional rules provide a greater hand and flexibility to the Tribunal to actively manage the dispute and ensuring a quick resolution. However, the parties must envisage whether the use of the abovementioned powers by the Tribunal could also give rise to enforcement issues on the grounds of violation of natural justice.
Multiple Arbitration and Concurrent Hearings
Article 22A allows the Tribunal (with approval of the LCIA Court) and the LCIA Court to order consolidation of arbitrations and conducting composite arbitrations. Composite arbitration can be conducted where the arbitration is commenced under the same arbitration agreement and it arises out of the same transaction or series of the related transactions.
Article 1.1 and 1.2 provide the procedure for claimants to request for consolidation of Arbitrations. The Rules, however, do not mention whether disputes with different parties can be consolidated.
Confidentiality being one of the fundamental principles of arbitration, security concerns can mar a Centre’s reputation in a big way. Recently, many reports and surveys, including the QMUL Annual Arbitration Survey 2021, emphasized the need to improve the cyber-security infrastructure involved in arbitrations. The 2021 Rules have added Article 30A to take care of the data protection norms.
Article 30.4 provides that any processing of personal data by the Centre will be subject to the appropriate data protection legislation. Article 30.5 further allows the Tribunal, at any stage of the proceedings, to consider any specific information security measures to protect the shared data or any means of processing the data in light of the applicable data protection legislation.
Article 30.4 also provides greater and much needed transparency at the end of the Centre. It states that the Centre’s data protection notice will be published on the Centre’s website.
Other Significant Changes
Apart from the aforementioned broad additions, the 2021 rules add a multitude of small but notable changes which are as follows:
1. To reduce the chances of any confusion, Article 1.1 and 2.1 provide a clearer understanding of the nationality of the parties. In the case of natural persons, nationality is citizenship and for juristic persons, nationality refers to the jurisdiction of incorporation or the jurisdiction where the effective seat of management is located.
2. With greater emphasis on efficiency, Article 5.6 provides that if no response for the appointment of the Tribunal is received after 28 days of the registration of the case, the Centre will itself make the appointment. The time frame of 28 days is reduced from 35 days provided in the 2016 Rules.
3. Article 9 of the new Rules emboldens the powers of emergency arbitrators. Emergency arbitrators can now award costs, including legal costs; and revoke/vary/discharge any order they make, issue additional orders, correct any clerical mistakes in any award rendered by the emergency arbitrator.
4. In the 2016 Rules, the handing down of the final award after deliberation of the submissions was to be done “as soon as reasonably possible”. Article 15.10 under the 2021 Rules provides a strict time frame of three months for the Tribunal to declare and hand down the award after the last submission of the parties.
The conspicuous emphasis on technology is a clear sign that the virtual assistance by way of virtual conference and electronic database were not just a passing trend but a change that is here to stay. Further, the implemented changes reflect the Centre’s attention to the details and the effort to rectify all ambiguities possible.
Broadly, the 2021 rules of the Centre farewell with the international trend. The changes should effectively expedite and strengthen the resolution process in the coming years and should embolden the command of Dubai as one of the leading International Arbitration seats in the world.
 White and Case, QMUL School of International Arbitration, “2021 International Arbitration Survey: Adapting arbitration to a changing world”, available at http://www.arbitration.qmul.ac.uk/media/arbitration/docs/LON0320037-QMUL-International-Arbitration-Survey-2021_19_WEB.pdf