Dubai International Financial Centre brings arbitration laws into line with New York Convention

His Highness Sheikh Mohammed bin Rashid Al Maktoum enacted the changes on 15 December as part of a package of legislative reforms, which also included amendments to company law and international taxation arrangements.

The amendments to the 2008 Arbitration Law were introduced to resolve issues with its compatibility with the New York Convention highlighted by the DIFC Courts in 2012. Under the Convention, of which the United Arab Emirates (UAE) is a signatory, courts must dismiss or stay an action in a matter which is the subject of a valid arbitration agreement on the request of one of the parties to the agreement.

As previously drafted, the DIFC Arbitration Law had only required the DIFC Courts to stay an action on the request of a party if the 'seat' of the arbitration was in the DIFC. This was contrary to the provisions of the New York Convention, which is designed to prevent signatory jurisdictions from discriminating against foreign and non-domestic arbitral awards. The revised DIFC Arbitration Law extends this provision to non-DIFC seats, or when no seat has been determined.

DIFC is a financial 'free zone' located in Dubai. In the UAE, free zones are areas of economic priority with special legal status, allowing companies operating within them to be treated as if they operate outside of the UAE. The DIFC has its own court system which employs English common law principles, which presides over civil and commercial disputes involving entities registered, and disputes arising out of transactions carried out, in the DIFC or elsewhere if the parties explicitly agree to submit to its jurisdiction.

The DIFC Laws Amendment Law also included changes to the 2009 Companies Law, 2004 General Partnership Law, 2006 Limited Partnership Law, 2004 Limited Liability Partnership Law and 2012 Non-Incorporated Organisations Law. The majority of these changes have been made in order to ensure that the DIFC complies with OECD tax transparency requirements; including provisions relating to the availability, access and exchange of information.