Dubai and UAE to see massive jump in arbitrations in 2009

Arbitration is a legal technique for dispute resolution outside of the court system, where the arbitrator(s) (who effectively act as judges) are selected by the parties themselves and by whose decision the parties in dispute agree to be bound.

To date, arbitration has been a relatively underused option for settling disputes in the regional market due to court enforcement problems, distrust of the method and a paucity of local venues.

Ben Knowles, an international arbitration lawyer at Clyde & Co explained the recent change, "With regard to international investments there has been a move towards arbitration to resolve disputes over the last 10-15 years. That change has been less pronounced in the GCC but recent local developments such as the new DIAC [Dubai International Arbitration Centre] rules and the establishment of the DIFC-LCIA [Dubai International Financial Centre - London Court of International Arbitration] collaboration, in the current climate, are now contributing to an upswing towards arbitration as an option across the region."

Clyde & Co LLP, one of the world's top Dispute Resolution law firms and the largest international law firm in the GCC is currently running an 'Arbitration Roadshow' over four nights in Sana'a in Yemen, Dubai and Abu Dhabi in the UAE, and in Doha, Qatar. A show of hands across the 300 lawyers, CEOs and business managers participating in Dubai last night indicated that the overwhelming majority anticipate being involved in arbitrations in 2009.

The speakers at the Dubai seminar included Alec Emmerson, a dispute resolution specialist, member of the Chartered Institute of Arbitrators and a CEDR accredited mediator; Ben Knowles, who has recently completed a $10bn arbitration on behalf of the Govt of Yemen; Sapna Jhangiani, a Dubai-based arbitration expert; and Mark Blanksby, a leading GCC construction lawyer.

Alec Emmerson commented, "It is increasingly clear that dispute resolution is very much at the forefront of the minds of businesses as a result of worldwide economic conditions."

Arbitration is seen to benefit companies in a number of ways: it allows for the appointment of highly technical industry specialists as arbitrators; it is often faster than court litigation; usually the outcomes are confidential as they are outside of a public court system; and awards can be easier to enforce in foreign jurisdictions. However the process also needs to be tightly managed and the company involved in the arbitration needs to be actively involved; they can't just take a passive role while lawyers debate issues.

Key messages of the Dubai seminar were to get early legal advice in order to develop the strategy for handling disputes whether in Dubai, the UAE or overseas, and that clients in Dubai have good arbitral institutions on their doorstep such as DIAC (Dubai International Arbitration Centre) and the DIFC-LCIA Arbitration Centre.

Dubai-based arbitration also will also benefit from the UAE's accession to the New York Convention (for the enforcement of international awards) and the new DIFC Arbitration Law (based on the Uncitral Model Law) in the case of arbitrations in the DIFC.