The Dubai International Arbitration Centre (DIAC) is one of the largest arbitration institutions in the Middle East. It was originally established in 1994 by the Dubai Chamber of Commerce and Industry as the Centre for Commercial Conciliation and Arbitration.[1] The same year, the 1994 DIAC Conciliation & Arbitration Rules were released. They were subsequently revised in 2007 (2007 DIAC Arbitration Rules). In 2017, during Dubai Arbitration Week, a second revision of the rules was announced. However, except for some doctrinal commentaries,[2] no official version of the new arbitration rules has been released to date.
How to Ensure a Contract Allows the Parties to Initiate DIAC Arbitration
The easiest way to ensure that a contract allows the Parties to initiate a DIAC arbitration in case of a dispute is to insert a Model DIAC Arbitration Clause into a contract. Such a clause typically reads as follows:
Following the principle of separability of the arbitration clause, Article 6.1 of the 2007 DIAC Arbitration Rules stipulates that “[u]nless otherwise agreed by the parties, an Arbitration Agreement which forms or was intended to form part of another agreement shall not be regarded as invalid, non-existent or ineffective because that other agreement is invalid, or did not come into existence or has become ineffective, and the Arbitration Agreement shall for that purpose be treated as a distinct agreement.”
DIAC Arbitration Costs
The costs of DIAC arbitration are governed by the Appendix to the 2007 DIAC Arbitration Rules (the “Appendix”). Costs are divided into three categories:
- the registration fee;
- administrative fees; and
- arbitrators’ fees.
Pursuant to Article 1 of the Appendix, the registration fee is fixed at AED 5,000.00. It is a non-refundable fee that must accompany each “request to commence an arbitration, or to introduce a counterclaim”.
In conformity with Article 2 of the Appendix, administrative costs typically include “the Centre’s administrative Fees for the claim and any counterclaim and the fees and expenses of the Tribunal”, but they can also encompass “the fees and expenses of any experts appointed by the Tribunal”. They are fixed on the basis of the amount in dispute, claims and counterclaims combined.
Regarding the arbitrators’ fees, Article 3.1 of the Appendix stipulates that, when fixing them, the Centre usually takes into consideration “the diligence of the Tribunal, the rapidity of the proceedings, and the complexity of the dispute”.
The administrative and arbitrators’ fees are payable in equal shares by the Claimant and the Respondent in the form of an advance on costs (Article 2.4 of the Appendix). It is further stipulated that if one party fails to make the required payment, the other party shall effectuate the payment by substitution “in cash or by providing an unconditional bank guarantee”.
As provided for in Article 2.9 of the Appendix, when a request for payment is not complied with, “the Administrator shall refer the matter to the Executive Committee for a decision on whether to suspend the Tribunal’s work and to set a time limit, which must not exceed 15 days, on the expiration of which the relevant claims (or counterclaims) shall be considered as withdrawn.”
Parties wishing to initiate a DIAC arbitration can estimate their arbitration costs using the cost calculator available on the official website of the institution.
It is to be noted that legal fees are to be paid by each party in addition to the arbitration costs, should they decide to retain counsel.
How to Initiate a DIAC Arbitration
Any party wishing to initiate an arbitration under the 2007 DIAC Arbitration Rules is required to submit a written request for arbitration to the Centre (“Request for Arbitration“). Together with the Request for Arbitration, the initiating party, i.e., the Claimant, shall pay the registration fee (Article 4.4 of the 2007 DIAC Arbitration Rules).
Pursuant to Article 4.1 of the 2007 DIAC Arbitration Rules, the Request for Arbitration must contain the following information:
- The name in full, description and address, including telephone, fax number, email address and other communication references of each of the parties to the arbitration and of the representative of the Claimant;
- A copy of the Arbitration Agreement invoked by the Claimant, together with a copy of the contractual documentation in which the Arbitration Agreement is contained or in respect of which the arbitration arises;
- A brief description of the nature and circumstances of the dispute giving rise to the claim;
- A preliminary statement of the relief sought and, to the extent possible, an indication of any amount(s) claimed; and
- All relevant particulars concerning the number of arbitrators […] and if the Arbitration Agreement calls for party nomination of arbitrators, the name, address, telephone and facsimile numbers and email address (if known) of the Claimant’s nominee.
Although the Request for Arbitration is supposed to be a mere summary document containing only the most important information regarding the claim, Article 4.2 of the 2007 DIAC Arbitration Rules provides that the Claimant can opt for a more elaborate submission and include in its Request for Arbitration a detailed Statement of Claim, as well as any proposal regarding the place and language of arbitration or any comments as to the applicable law.
The Procedure Following the Request for Arbitration
Once the Request for Arbitration is submitted to the Centre, along with all accompanying relevant documents, the Centre will dispatch them to the Respondent.
Then, according to Article 5 of the 2007 DIAC Arbitration Rules, the Respondent has 30 days as of the receipt of the Request for Arbitration from the Centre to submit its Answer to the Request. Upon the Respondent’s application, the 30-day deadline can be extended by the Administrator by 14 days, provided that the application contains “the Respondent’s comments concerning the number of arbitrators, their choice and the nomination of an arbitrator” (Article 5.7 of the 2007 Arbitration Rules)
The Answer shall contain the following mandatory information (Article 5.1 of the 2007 DIAC Arbitration Rules):
- Its name in full, description and address, telephone, fax numbers, email address and other communication, reference for itself and its representative;
- Its preliminary comments as to the nature and circumstances of the dispute giving rise to the claim(s);
- Its preliminary response to the relief sought by the Claimant;
- Any objection concerning the validity or applicability of the Arbitration Agreement;
- Any comments concerning the number of arbitrators and their choice in light of the Claimant’s proposals and in accordance with Articles 8 and9, and if the arbitration agreement calls for party nomination of arbitrators, the name, address, telephone facsimile, numbers and email address (if known) of the Respondent’s nominee; and
- Any comments as to the place of arbitration, the applicable rules of law and the language of the arbitration.
If the Claimant has submitted a Statement of Claim with its Request for Arbitration, then the Respondent can also submit a full Statement of Defence with its Answer to the Request (Article 5.2 of the 2007 DIAC Arbitration Rules). Also, in its Answer, the Respondent can raise any counterclaim “arising out of the same contract” against the Claimant (Article 5.4 of the 2007 DIAC Arbitration Rules), provided that the Respondent pays the registration fee for such a counterclaim (Article 5.5 of the 2007 DIAC Arbitration Rules).
It is to be noted that if the Respondent fails to submit the Answer within the deadline, such failure “shall not prevent the arbitration from proceeding” (Article 5.6 of the 2007 DIAC Arbitration Rules).
Appointment of the Arbitral Tribunal and the Subsequent Procedure
Once the DIAC Arbitration has been initiated, and the Request for Arbitration and the Answer to the Request exchanged between the Parties, the proceedings will continue with the appointment of the arbitral tribunal in conformity with Article 9 of the 2007 DIAC Arbitration Rules. Upon its constitution and payment of the advance on costs, the Centre will transmit “a copy of the file” to the arbitral tribunal (Article 18 of the 2007 DIAC Arbitration Rules).
The arbitral tribunal will then hold a preliminary meeting with the Parties, scheduled within 30 days as of the date of the transmission of the file (Article 22 of the 2007 DIAC Arbitration Rules). The purpose of this preliminary meeting is to discuss and fix a further procedural “timetable for the submission of documents, statements and pleadings”.
Regarding the procedural timetable, if the Statement of Claim and Statement of Defence were not submitted by the Parties along with their respective Request for Arbitration and Answer to the Request, the 2007 DIAC Arbitration Rules specify that:
- the Statement of Claim shall be served “within 30 days of receipt of notification from the Centre of the establishment of the Tribunal or such later time limit as the Tribunal may allow” (Article 23.1 of the 2007 DIAC Arbitration Rules); and
- the Statement of Defence shall be served “within 30 days of receipt of the Statement of Claim or within 30 days of receipt of notification from the Centre of the establishment of the Tribunal, whichever occurs later” (Article 24.1 of the 2007 DIAC Arbitration Rules).
The 2007 DIAC Arbitration Rules do not specify any time limits for further written submissions, such as the Reply or the Rejoinder. Article 25 of the 2007 DIAC Arbitration Rules, however, stipulates that “[t]he Tribunal may, in its discretion, allow or require further written statements in addition to the Statement of Claim and Statement of Defence and shall fix the periods of time for submission of such statements.”
Regarding the final hearing, Article 28 of the 2007 DIAC Arbitration Rules provides that it can be held “[i]f either party requests so”. If no such request is made, “the Tribunal shall decide whether to hold such a hearing or hearings and establish the time limits thereof.” If no hearing is held, “the proceedings shall be conducted on the basis of documents and other materials alone.”
Finally, the arbitral tribunal shall render the final award within “six months from the date the sole arbitrator (or the Chairman in the case of three arbitrators) received the file” (Article 36.2 of the 2007 DIAC Arbitration Rules).
This time limit can be extended by the arbitral tribunal, “on its own initiative”, by another six months (Article 36.3 of the 2007 DIAC Arbitration Rules). Any further extension of time to render the final award must be approved by the Executive Committee, however (Article 36.4 of the 2007 DIAC Arbitration Rules).
Once rendered, the final award “shall be final and binding on the parties” (Article 37.2 of the 2007 DIAC Arbitration Rules).
Recovery of the Costs of a DIAC Arbitration
Pursuant to Article 4.2 of the Appendix, “The final Award shall fix the costs of the arbitration and decide which of the parties shall bear them or in what proportion they shall be borne by the parties.” Therefore, a successful party may potentially recover the costs of the arbitration it incurred during the proceedings, although the decision is left to the tribunal’s discretion.
However, an important nuance must be made for DIAC arbitrations with their seat in Dubai – Article 4 of the Appendix only explicitly references the costs of arbitration, i.e., administrative and arbitrators’ fees, and not legal fees incurred by the parties. In this respect, the Dubai Court of Cassation restrictively ruled in 2013 (Case No. 282/2012 – Real Estate Cassation, Judgment of 3rd February 2013 of the Dubai Court of Cassation) that the 2007 DIAC Arbitration Rules do not grant arbitrators the power to award legal fees.[3] Therefore, should the Parties wish to grant the arbitral tribunal the power to award legal fees and other party costs, they would be wise to specify it, for example, in their arbitration clause, until new arbitration rules addressing this issue are released.
[1] “Why Arbitrate at DIAC?” , website of the DIAC (last accessed on 7 May 2021).
[2] See, e.g., T. Raid, “Overview about the DIAC Arbitration Rules of 2018”, International Journal of Arab Arbitration (2017), Vol. 9, Issue 2, pp. 41-46.
[3] Dubai Court of Cassation, Case No. 282/2012, Real Estate Cassation, judgment dated 3 February 2013, in N. Kohne, E. Delgato, “Cost Reallocation in Arbitration”, the Oath (2014); see also G. Blanke, “Dubai Court of Cassation finds against recoverability of Counsel fees in DIAC arbitration”, Kluwer Arbitration Blog, 23 June 2013.
