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As business becomes increasingly global, international commercial arbitration [1] has concomitantly become a preferred method for resolving disputes between parties to cross-border transactions. On Sept. 1, the Emirate of Dubai in the United Arab Emirates passed a new arbitration law within one of its free zones that will not only improve international commercial arbitration in the Middle East and Arabian Gulf region generally, but that will also make Dubai a favored venue for hosting those arbitrations. This article highlights some of the salient features of that new arbitration law and points out some practical considerations that New York practitioners should bear in mind before opting for arbitration under it. THE EMIRATE OF DUBAI While Dubai is renowned for its opulent hotels and world class beaches, it is also a hub of global commerce. Strategically located on the gulf near the Straights of Hormuz in the heart of the Middle East, Dubai boasts progressive commercial initiatives, a favorable tax regime and numerous free zones that offer a range of advantages to foreign investors. In short, Dubai is becoming an extremely attractive location from which to do business in the gulf region and beyond. THE DUBAI INTERNATIONAL FINANCIAL CENTRE Dubai has a number of economic free zones, which are areas within the emirate that are afforded special or preferential treatment under Dubai and/or UAE law. The Dubai International Financial Centre (DIFC), which caters primarily to financial service sector companies, is one such free zone that enjoys an even greater degree of autonomy under local law than other free zones, because it has been granted the right to pass its own commercial laws. As a result, the 110-acre DIFC has attracted a range of multinational companies that have been drawn to it by its favorable and transparent regulatory environment, which permits 100 percent foreign ownership, which does not tax income or profits, and which does not restrict foreign exchange or the repatriation of profits. As alluded to above, the DIFC is governed by its own common-law legal regime, which is separate and apart from Dubai’s civil law structure, and which is overseen by a court system that is based on the English model (DIFC Court). Many well-respected judges from a variety of jurisdictions serve on the DIFC Court. Consequently, the DIFC offers a business-friendly environment that is regulated by a legal system which is both accessible and familiar to common-law lawyers. THE NEW LAW The new arbitration law was enacted within the DIFC [2] (DIFC Arbitration Law) that promises to make Dubai a focal point for international arbitration in the gulf region and surrounding environs. The new DIFC Arbitration Law is based on the UNCITRAL model law and, therefore, incorporates all of the features that international arbitration practitioners would expect to find in a progressive international arbitration law. By way of illustration, the DIFC Arbitration Law permits both present and future disputes to be submitted to arbitration,[3] requires the DIFC Court to refer disputes subject to arbitration clauses to arbitration upon the request of a party,[4] restricts the DIFC Court from interfering with arbitrations,[5] permits both the DIFC Court[6] and arbitrators[7] to grant interim measures, and importantly, makes all arbitral proceedings presumptively confidential.[8] The law also affords the arbitral tribunal authority to rule on its own jurisdiction,[9] permits the parties to determine the number of arbitrators and the manner in which they are appointed,[10] allows the parties to structure the arbitral procedure,[11] authorizes the DIFC Court to provide assistance with the taking of evidence,[12] and requires arbitrators to issue a reasoned award.[13] Notably, awards issued under the DIFC Arbitration Law will also be deemed to be awards of the United Arab Emirates, which ratified the New York Convention in 2006.[14] Consequently, awards issued under the DIFC Arbitration Law will enjoy the ease of recognition and enforcement that has made international arbitration so attractive. Accordingly, the DIFC Arbitration Law provides a comprehensive regime for conducting arbitrations that is wholly consistent with most national arbitration laws and the major institutional procedures. Nevertheless, there are, potentially, certain differences concerning challenges to awards, as well as other practical considerations, about which practitioners should be aware before opting for arbitration under the new law. CHALLENGES TO AWARDS Under the DIFC Arbitration Law, the parties are free to seat their arbitration[15] either within or outside the DIFC.[16] There are ramifications for confirmation purposes, however, to seating the arbitration within the DIFC which U.S. practitioners should consider. Under Article 41 of the DIFC Arbitration Law, if the parties seat their arbitration within the DIFC, then they may only move within the DIFC Court to vacate an award.[17] While the DIFC Arbitration law provides grounds for vacature that are identical to those enumerated in Article V of the New York Convention for refusing recognition,[18] it remains an open question in the wake of decisions such as Hall Street Associates whether those grounds are the exclusive ones upon which confirmation of an award subject to Chapters 2 or 3 of the Federal Arbitration Act can be challenged in the United States.[19] Consequently, by seating an arbitration within the DIFC, parties may be limiting the bases upon which an award could be challenged in the United States, but will nevertheless have identical grounds to those provided by Article V of the New York Convention for vacating awards. OTHER PRACTICALITIES In addition to considerations about vacating awards, U.S. practitioners must also take into account other practical issues presented by the new DIFC Arbitration law. First, while the DIFC Court does apply common law and operate under a procedural system that is not completely foreign to U.S. practitioners, the court is nevertheless based on the English model, and its judges are not American. Consequently, if there is a need to appear before the DIFC Court (and if the practitioner is admitted to do so), the practitioner should consider enlisting the assistance of someone familiar with English procedures. Second, the nature of the interim measures a party might obtain, as well as the basis for obtaining them, might be surprising to some U.S. practitioners. Moreover, applications to the DIFC Court for interim measures will be decided under the DIFC Court’s procedures,[20] with which the practitioner must be familiar, and while arbitral proceedings in the DIFC Arbitration Law are presumptively confidential, proceedings in the DIFC Court are not. Therefore, a sealing order might be required in appropriate circumstances. Lastly, while the DIFC Court has the power under Article 34 of the new law to assist with the taking of evidence, that court is of limited physical jurisdiction, and any interim orders rendered by it that require enforcement outside the physical boundaries of DIFC may necessitate the assistance of a local court. Consequently, practitioners should anticipate that local counsel in Dubai or the UAE counsel may be necessary. CONCLUSION The new DIFC Arbitration Law provides an attractive avenue for U.S. companies doing business in Dubai and the greater region to resolve their disputes in a neutral forum and in a familiar manner while still maintaining the nexus with the region (which is something upon which many Middle Easterners will insist when contracting). Accordingly, practitioners should strongly consider advising clients to provide for DIFC arbitration in their contracts that involve the gulf region and surrounding areas. Claudia T. Salomon is co-chair of DLA Piper‘s international arbitration practice and James P. Duffy is an associate in the litigation practice group in New York. Tom Canning, a member of the litigation and arbitration group in the firm’s Dubai office, assisted in the preparation of this article. ENDNOTES: 1. For a general explanation of the benefits of international commercial arbitration for the resolution of cross-border disputes, see “How to Arbitrate Internationally: A Guide to the Dispute Resolution Process Emerging In Cross-Border Commercial Matters,” New York Law Journal (June 26, 2006). 2. See Arbitration Law, DIFC Law No. 1 of 2008. 3. See id., Art. 12(1). 4. See id., Art. 13(1). 5. See id. Art. 10. 6. See id., Art. 15. 7. See id., Art. 24 8. See id., Art. 14. 9. See id., Art. 23. 10. See id., Arts. 16-17 11. See id., Art. 27 12. See id., Art. 34. This power has potentially interesting consequences because of the nature of the DIFC Court’s jurisdiction. Because that court’s jurisdiction is limited to the confines of the DIFC itself, assistance from other courts might well be necessary to enforce the powers granted in Article 34. 13. See id., Art. 38(2). 14. The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, commonly known as the New York Convention, provides a relatively simply mechanism for enforcing foreign arbitral awards issued in a signatory state. As of the publication of this article, there were 142 countries that had acceded to the treaty. See United Nations Commission On International Trade Law – Status of the New York Convention, available at http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html. 15. Generally, the seat of an arbitration is location where the arbitration has been deemed to have been conducted. See Fouchard, Gaillard & Goldman On International Commercial Arbitration, §1239 (Kluwer Law International 1999). Once the seat of an arbitration has been determined, it does not change, regardless of where hearings or other matters might occur. See A. Redfern & M. Hunter, Law and Practice of International Commercial Arbitration, 2-14 – 2-16 (4th ed. Sweet & Maxwell 2004); see also Arbitration Law Art. 27(2) (providing that the arbitral tribunal may meet at any location without regard to the seat chosen). 16. See Arbitration Law Art. 27(1). 17. See id. Art. 41(1)-(2) (stating in Art. 41(1) that “[r]ecourse to a Court against an arbitral award made in the Seat of the DIFC may be made only by an application for setting aside in accordance with paragraph[] (2) … of this Article,” and further stating in Art. 41(2) that “[s]uch application may only be made to the DIFC Court”); see also Art. 44(3) (providing that parties may not move to vacate awards made at the seat of the DIFC if the application could have been made pursuant to Article 41(1). 18. Compare Arbitration Law Art. 41(2)(a)-(b) with New York Convention Art. V.1-2. 19. For a more comprehensive discussion of this topic, see “Hall Street: The End of Manifest Disregard Challenges to International Arbitral Awards in the U.S.?,” 5 Transnational Dispute Management (2008). 20. See Arbitration Law Art. 24(3).

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