Abu Dhabi International Arbitration Centre's (ArbitrateAD) New Arbitration Rules: 12 Key Features - Arbitration & Dispute Resolution

We recently reported on the newly launched Abu Dhabi International Arbitration Centre branded as "arbitrateAD" (the "Centre"), which replaced the Abu Dhabi Commercial Conciliation and Arbitration Center ("ADCCAC") on 1 February 2024. The Centre recently published its Arbitration Rules, effective from 1 February 2024 (the "arbitrateAD Rules"), which incorporate international best practices and standards, and provide a modern, cost-effective and flexible arbitration framework.

In this Legal Update, we summarise 12 key features of the arbitrateAD Rules including how they differ from ADCCAC's Arbitration Rules (2013) which they replace for ADCCAC arbitrations filed from 1 February 2024. We also provide useful guidance for parties in the region who have contracts containing arbitration clauses.

Scope and Temporal Application

Subject to party agreement otherwise, the arbitrateAD Rules apply to arbitrations commenced on or after 1 February 2024 where parties agree to refer their disputes to:

the Abu Dhabi International Arbitration Centre (arbitrateAD) or arbitration under the arbitrateAD Rules,
the Abu Dhabi Chamber of Commerce and Industry (the "ADCCI"); or
the ADCCAC or arbitration under the ADCCAC Rules (however, for ADCCAC referrals, the emergency arbitrator and expedited proceedings provisions will only apply if the parties expressly opt in).

A dual regime will remain in the short term since ADCCAC will continue to administer existing cases under ADCCAC's arbitration rules (cases which commenced before 1 February 2024).

arbitrateAD Rules: 12 Key Features

(1) Digital Communications and Electronically Signed Awards

By contrast to the ADCCAC Rules, and in line with other major international arbitration rules, the arbitrateAD Rules adopt a digital approach to communication and case management, thereby promoting greener arbitrations:

The default rule is email (or other digital) communication between the parties, the tribunal and the arbitrateAD Secretariat, unless the parties agree (or the tribunal or arbitrateAD Secretariat direct) otherwise.
The arbitrateAD Rules also expressly allow tribunals to conduct hearings remotely by videoconference or by other modern electronic technologies (amongst other means).
All institutional arbitration cases are administered using docketAD, a secure platform for communicating and sharing documents and relevant information regarding the arbitration.
The arbitrateAD Rules permit awards to be signed electronically by the tribunal, but the tribunal should "take into account all the relevant circumstances, including... the applicable law" when deciding if it is appropriate to do so (sensible guidance in light of some laws requiring wet signatures and the general practice within the UAE).

(2) Emergency Arbitrators

The arbitrateAD Rules allow parties to apply for an emergency arbitrator ("EA") to obtain urgent interim or conservatory measures before the constitution of the tribunal, a feature not present in the ADCCAC Rules. The process is speedy: the Centre endeavours to appoint an EA within one day of receipt of the application and the EA must render a decision within 10 days of appointment (unless extended by the Centre). One novel procedural rule, which is well-suited to situations where urgent relief cannot be obtained from the local courts, is that parties may issue an EA application before filing their Request for Arbitration; however, the latter must be filed within 30 days of the EA's decision.

(3) Expedited Procedure

Another feature distinguishing the arbitrateAD Rules from the ADCCAC Rules is that they provide an automatic expedited procedure for cases where the amount in dispute (all claims and counterclaims) does not exceed AED 9 million (subject to the parties agreeing otherwise or the Centre deciding that the expedited procedure is not appropriate). This is higher than the AED 1 million threshold seen in the Dubai International Arbitration Centre's 2022 Rules ("DIAC Arbitration Rules 2022"), and more aligned with the threshold in the ICC Rules 2021 (USD 3 million, roughly AED 11 million).

Under the expedited procedure:

the case is referred to a sole arbitrator;
any request, answer and counterclaim shall constitute the statement of claim, statement of defence and statement of defence to counterclaim respectively;
there will be no Terms of Reference;
the joinder and consolidation provisions will not apply;
the tribunal may limit the number and length of written submissions and the scope of document production so as to take account of the expedited nature of the proceedings;
the tribunal may decide the case on the basis of documents only; and
the tribunal must render the final award within four months of receiving the file, providing reasons in summary form.

The arbitrateAD Rules are flexible in this regard since parties can: (i) opt out of the expedited procedure (although for arbitration agreements referring to ADCCAC, the expedited procedure will only apply if the parties opt in); (ii) ask for the standard expedited procedure and timelines to be modified in line with their requirements; or (iii) ask the Centre to apply the procedure where higher amounts are at stake.

(4) Seat and Language

If parties fail to agree a seat, but specify the "place" of arbitration, this will be deemed to be the seat. Failing agreement on either the seat or place of arbitration, the default seat under arbitrateAD Rules is the offshore Abu Dhabi Global Market ("ADGM") - unless arbitrateAD's Court of Arbitration ("arbitrateAD Court") decides otherwise. The ADGM follows the English common law tradition and so may be attractive to users despite the low levels of jurisprudence on arbitration matters which have been issued by the ADGM courts to date. Parties who decide to make a choice of (Middle Eastern) seat should always be clear and precise in their drafting to ensure the right courts (offshore versus onshore courts) have supervisory jurisdiction.

The ADCCAC Rules provide certainty of language (Arabic, unless the parties agree otherwise) but there is less certainty in the arbitrateAD Rules if the parties have not agreed the language of the proceedings. In this case, arbitrateAD's Case Management Office will determine the initial language of the arbitration and final determination will lie with the tribunal once appointed. To counter this unpredictability, parties should specify their chosen language in their arbitration agreement.

The arbitrateAD Rules also confirm that the English version of the arbitrateAD Rules prevail over any other language version – a provision which may be useful should there be any discrepancies with translations.

(5) Joinder and Consolidation

The arbitrateAD Rules contain very detailed provisions dealing with multiple parties, multiple contracts, joinder and consolidation, unlike the ADCCAC Rules which are silent on this topic. These issues are common in construction arbitrations in the region, where claims are passed up and down the construction supply chain, so are welcome improvements. The provisions enable parties to bring a single arbitration asserting claims under multiple contracts or arbitration agreements. Joinder is permitted but requires agreement from every party and the additional party's acceptance of the constitution of the tribunal if the tribunal is already in place. However, joinder without consent is also possible before the tribunal has been constituted where the arbitrateAD Court is satisfied that the additional party is prima facie subject to its jurisdiction.

The arbitrateAD Rules also contain wide-reaching consolidation provisions, which have similar conditions to those in the LCIA Rules (2020), and confirm that arbitrations will be consolidated in the arbitration that was first commenced, that the arbitrateAD Court may revoke prior arbitrator appointments and that a party who has not participated in the nomination of the tribunal shall be deemed to have waived such rights.

(6) Third Party Funding

In line with the DIAC Arbitration Rules 2022 and other recently revised institutional rules, parties are required to disclose the existence and identity of any third party funder involved in their arbitration as soon as is reasonably possible (in the Request for Arbitration if the arrangement was in place before that date). Such provisions aim at limiting conflicts of interest and challenges and should be welcomed by parties and practitioners in the region as well as litigation funders seeking to invest in such disputes.

(7) Early Dismissal

Another feature of modern arbitrations not enshrined in the ADCCAC Rules is the power of early dismissal aimed at promoting the efficiency and cost-effectiveness of the arbitration. The arbitrateAD Rules empower a tribunal to order early dismissal of a claim/defence/counterclaim/reply to counterclaim which is (i) manifestly without legal merit or (ii) manifestly inadmissible, or outside the jurisdiction of the tribunal, within 30 days of the application. The decision may take the form of an award or an order and shall be reasoned.

(8) Broad Tribunal Powers, including Option to Issue Terms of Reference

Tribunals are given broad powers to administer arbitrateAD proceedings and have full discretion to set an appropriate case timetable since there is no default timeline under the arbitrateAD Rules from the Statement of Claim onwards.

Borrowing the concept from the ICC Rules 2021, the arbitrateAD Rules afford arbitrators the option of issuing Terms of Reference, whether on their own volition or at a party's request, which provide an important framework for the proceedings. The tribunal needs to decide whether or not to do so promptly after its formation. Article 24(2) sets out the specific content for the Terms of Reference, which need to be signed by the parties and tribunal (if any party refuses to participate in the process or sign them, they will be sent for approval by the arbitrateAD Court).

(9) Confidentiality

A key attraction to arbitration for Middle Eastern parties is the confidentiality of the proceedings. Since the arbitrateAD Rules include more stringent provisions on confidentiality than the ADCCAC Rules, they may be particularly attractive to local (as well as international) parties. As well as mandating arbitration participants (the parties, their representatives, witnesses, experts, tribunal and any tribunal secretary), plus the Centre and its staff, to maintain the confidentiality of "any and all aspects" of the proceedings, whether oral or written, the tribunal is also expressly empowered to enforce confidentiality obligations and to take measures to protect confidentiality and trade secrets.

(10) Award Scrutiny

With a view to ensuring the quality and enforceability of awards, all arbitrateAD awards will be scrutinised by the arbitrateAD Court, similar to the process with ICC awards. Specifically, the arbitrateAD Court can (i) ask for changes to the form of the award, (ii) highlight clerical errors, inconsistencies or omissions, and (iii) refer the tribunal to matters listed in the Award Checklist issued to arbitrators acting under arbitrateAD Rules.

(11) Award Publication and Content

Awards must be issued within nine months of the initial case management conference, a deadline which can be extended upon the joint request of the parties. This should encourage arbitrators and parties to adopt an efficient procedural timetable at the outset, and to adhere to it as best as possible.

The arbitrateAD Rules also specify that the award must include a decision on which party(ies) shall bear the costs of the arbitration and any allocation of the parties' legal costs and expenses. This is particularly important for arbitrations seated in onshore UAE as arbitrators are not empowered to make orders as to legal costs under the UAE Federal Arbitration Law (hence such power needs to be in arbitration rules or the parties' arbitration agreement).

(12) Express Waiver of Appeal Rights

Similar to other international rules, like the LCIA Rules and ICC Rules, the arbitrateAD Rules also provide that the parties shall be deemed to have waived their rights to any appeal, recourse or defence against the award (insofar as such waiver can be validly waived). Parties can though still apply to the tribunal to correct/interpret the award or for an additional award to address claims that the tribunal omitted to adjudicate.

Clearly excluded rights of appeal are not a feature of other institutional rules in the Middle East region (including the DIAC Arbitration Rules 2022 and those issued recently by the Saudi Center for Commercial Arbitration ("SCCA") and the Cairo Regional Centre for International Commercial Arbitration ("CRICCA")) and may be attractive as it promotes legal certainty and swift enforcement. However, the effectiveness and conditions of such exclusion will depend on the applicable law. For instance, the waiver will not apply to UAE-seated arbitrations (pursuant to Article 54(5) of the UAE Federal Arbitration Law, an action to set aside is admissible even if the party invoking nullity has waived its right to do so prior to the issuance of the award).

Next Steps for Parties

The launch of arbitrateAD and its new rules goes hand in hand with the rise of arbitration in the Middle East and is the second set of arbitration rules issued by an institution in the MENA region this year (CRCICA published its revised rules in January 2024). It also follows the major transformation of the SCCA and the launch of its rules in 2023, discussed in our prior Legal Update.

Given the scope of application of the arbitrateAD Rules, parties in the region who have existing contracts with arbitration clauses should check to see which institution/body their arbitration agreement refers to. If ADCCI or ADCCAC is referenced, they will need to get familiar with the new arbitrateAD practice and procedure and the authors are well-placed to assist in this regard.

As to future contracts, it will be interesting to see if parties in the Middle East, and internationally, opt for the arbitrateAD Rules over other arbitral rules, particularly since they adopt many elements seen in the world-reputed ICC Rules and LCIA Rules.

Given that the arbitrateAD Rules are clear, efficient and flexible, with key features in line with modern users' expectations, they are likely to boost the attractiveness of the ADGM as a seat of arbitration and the arbitration market in the Emirate of Abu Dhabi and the UAE more generally.

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