As the GCC and wider Middle East mature into a global hub of business and commerce, an increase in the number of large disputes locally and abroad has prompted significant developments across regional jurisdictions to position themselves as arbitration-friendly.
From adopting expedited procedures and urgent relief and making groundbreaking developments in governing laws, to updating a broad spectrum of arbitral institutes’ rules and exploring ways to integrate artificial intelligence into dispute resolution processes, the United Arab Emirates, Qatar, and the Kingdom of Saudi Arabia are especially poised to consolidate their growing reputation as hubs of international arbitration.
The latest instance of this is the launch of the Abu Dhabi International Arbitration Centre (arbitrateAD) in February this year—reflecting the regional trend of establishing or refreshing arbitral institutions in the UAE, KSA, and wider GCC that provide jurisdictions the confidence to ‘go out on their own’ rather than rely on traditional platforms.
The new arbitration landscape
While these developments are expected to enhance the region’s attractiveness as a hub for dispute resolution, new entrants and established businesses must become familiar with the new rules of regional arbitral institutions, which are increasingly being incorporated into commercial and construction contracts in the region.
Whilst there is a significant degree of commonality between the rules of these arbitral institutions, there are also areas of divergence, especially in the categories of default seat, summary judgment, time limit for jurisdictional challenges, and third-party funding.
With the ICC Arbitration Rules 2021 serving as a point of reference, these parameters are examined more closely across the Saudi Centre for Commercial Arbitration (SCCA) Arbitration Rules 2023, the Dubai International Arbitration Centre (DIAC) Arbitration Rules 2022, and the arbitrateAD Arbitration Rules 2024.
Default seat
Regarding the default seat of arbitration that determines the procedural law governing the arbitration, the SCCA Arbitration Rules mirror those of the ICC with no default seat specified. However, Article 20.1 of the DIAC rules assigns Dubai International Financial Centre (DIFC) as the default seat if the venue of arbitration is not specified. Similarly, Article 22 of the arbitrateAD framework specifies Abu Dhabi Global Market (ADGM) as the seat of arbitration should the parties not expressly agree on one in the arbitration agreement. Parties should therefore expressly state the seat of arbitration in agreements to avoid jurisdictional confusion during the early stage of the proceedings.
Summary judgment
One of the prominent trends reflected in the set-up of the new arbitration centres concerns summary judgment dealing with the early dismissal or disposition of certain claims or defences—indicating the desire for quick and cost-effective arbitration procedures.
Article 22 of the ICC rules does not provide provisions for express summary dismissals, although the ICC’s Practice Note to Parties recognises the tribunal’s power to consider summary dismissal as part of its case management powers provided it is not contrary to the parties’ agreement. The SCCA’s rules are a departure from this norm, adopting the default position that any party may request the tribunal to summarily dispose issues of jurisdiction, admissibility or legal merit—unless the tribunal agrees to hold a hearing.
While DIAC and arbitrateAD rules do not provide express summary dismissal provisions, in the case of DIAC, the tribunal is mandated to ensure that the arbitration is conducted expeditiously, diligently, and in a cost-efficient manner. At arbitrateAD, the tribunal on its own volition or upon application of a party could dismiss any claim, defence, counterclaim or reply to counterclaim that is without legal merit, inadmissible or outside of the tribunal’s jurisdiction. Used wisely by parties, these approaches lead effectively to summary dismissal.
Time limit for jurisdictional challenges
A key area of divergence among the arbitration centres is in the time limits for raising a jurisdiction challenge; while the ICC has no express time limit, DIAC and arbitrateAD require the challenge to be raised in the initial defence to the claim (or counterclaim).
The SCCA is stricter and requires any jurisdictional challenge to be made at the time of the answer to the request to arbitration—which is much earlier than the other arbitral centres.
Third party funding
As the scale and magnitude of businesses become bigger and broader across the GCC, there has been a corresponding rise in third-party funding to increasingly support parties in large-scale arbitrations. Across all four arbitral institutions, the existence of such agreements is disclosable and may lead to increased adverse costs orders for unsuccessful parties.
Conversely, all of the institutions offer expedited arbitration procedures for low-value disputes—although the monetary thresholds for the application of such rules differ as also the time limits for concluding such procedures.
Harmonisation in international arbitration
As the comparison of these key provisions reveals, there is a common goal across all arbitral institutions to achieve harmonisation in international arbitration, with the overall focus on efficiency, cost-effectiveness, and speedy disposal being a testament to their willingness to be at the forefront of global arbitration in partnership with the dynamic growth of the GCC region.
By Arun Visweswaran, partner, and Tom Langsford, managing associate, at Addleshaw Goddard, Dubai.
