DIAC and LCIA announce agreement regarding existing DIFC-LCIA cases

The Dubai International Arbitration Centre ("DIAC") and the London Court of International Arbitration ("LCIA") have announced in a joint press release that the LCIA will administer all existing cases under the DIFC-LCIA Rules from London.

The announcement follows Decree No. 34 of 2021 (the “Decree“) concerning the Dubai International Arbitration Centre. The Decree had the effect of dissolving the Dubai International Financial Centre Arbitration Institute (“DAI"), the DIFC entity that operated the DIFC-LCIA Arbitration Centre (“DIFC-LCIA“) in a joint venture arrangement with the LCIA and transferred the assets, rights and obligations of those centres to DIAC.

DIAC, the DIFC-LCIA and the DAI (and any other relevant authorities) were granted six months from the entry into force of the Decree to comply with its terms, and practitioners and end users have been awaiting an update from DIAC following the announcement of the updated DIAC Arbitration Rules 2022 (“2022 DIAC Rules”) earlier this month and the expiry of the six-month period specified in the Decree on 20 March 2022.

The press release (issued on 28 March) states that the agreed terms are consistent with the Decree. The result of the agreement reached between DIAC and the LCIA means that the LCIA will administer all cases commenced and registered by the DIFC-LCIA under a designated case number on or before 20 March 2022. Therefore, in order for administration to be transferred to the LCIA, (i) parties are required to have filed a new Request for Arbitration and paid the registration fee (the "Commencement Date" under the DIFC-LCIA Rules) and (ii) the DIFC-LCIA would need to have registered the case and assigned it a case number. The former in itself is not sufficient to ensure transfer to the LCIA.

It is expected that the LCIA will communicate with parties and tribunals in relation to existing cases "as soon as practicable".

In line with the terms of the Decree, all arbitrations, mediations and other alternative dispute resolution proceedings referring to the respective rules of the DIFC-LCIA (including ad hoc proceedings where the DIFC-LCIA is requested to act as appointing authority or administrator) commenced on or after 21 March 2022 shall be registered by DIAC and administered directly by its administrative body in accordance with the 2022 DIAC Rules through DIAC’s own case management systems, unless otherwise agreed by the parties. The same applies to cases commenced before 21 March 2022 but not registered by the DIFC-LCIA under a designated case number. Parties will be required to pay the relevant fees and costs in accordance with the DIAC table of costs and fees, which is available on the DIAC website. Read our full analysis of the 2022 DIAC Rules here.

The Decree expressly states that DIFC-LCIA arbitration agreements entered into before the effective date of the Decree are deemed valid. However, as of 21 March 2022, where a party wishes to commence new proceedings pursuant to a DIFC-LCIA arbitration agreement, such proceedings must be commenced with DIAC unless the parties agree otherwise (either by agreeing to amend the existing arbitration agreement or entering into a new one) and DIAC will accept such cases and administer them under the 2022 DIAC Rules.

The press release further states that DIAC and the LCIA have "agreed a mechanism for the orderly management of funds paid by parties into bank accounts previously held on behalf of DIFC-LCIA and now owned by DIAC, pursuant to which the DIAC shall transfer such casework related payments to the LCIA to be disbursed to the respective beneficiaries by the LCIA directly".

For more information please contact Nick Oury, Partner, Stuart Paterson, Partner, Janine Mallis, Senior Associate, Patrick O'Grady, Associate, or your usual Herbert Smith Freehills contact.