Arbitration has a complicated legacy in the Middle East. Investors have historically been suspicious of arbitration in the region due to perceived judicial hostility to alternative dispute resolution, especially when a state-owned entity is involved. As international arbitration remains a preferred method for resolving disputes in multi-jurisdictional projects, being perceived as arbitration-friendly is critical for any country seeking to attract foreign direct investment. With the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA) competing to attract foreign direct investment and establish themselves as the region’s key commercial hub, both jurisdictions are now increasingly focused on cultivating an arbitration-friendly reputation.
By Sami Tannous, Amani Khalifa, Amr Omran and Noha Elgendy
While the Middle East has historically produced certain unfavorable decisions, a recent spate of positive and well-reasoned decisions, particularly in the UAE and KSA, suggest that courts are now embracing a more pro-arbitration stance.
In this trend, we look at key developments in each of those jurisdictions and set out our predictions for the future of arbitration in the region.
Following the dissolution of the DIFC-LCIA in late 2021 pursuant to Dubai Decree No. 34 of 2021 (Decree 34), DIAC made significant changes to its corporate and administrative structure and took over a large caseload. Changes to DIAC’s administrative structure included forming a new arbitration court and overhauling its case management team. In 2022, DIAC rolled out new arbitration rules emphasizing the use of technology to reduce arbitration’s carbon footprint and including provisions on consolidation, joinder and third-party funding as well as mechanisms for expedited proceedings. The rules designate the Dubai International Financial Centre (DIFC) as the default seat of arbitration. DIAC’s 2023 Annual Report, published in October 2024, shows an increasing caseload and improved gender diversity, with women accounting for 54 percent of the appointments made by the DIAC Arbitration Court in the first half of 2024.
As part of its strategy to strengthen the UAE’s position as an arbitration hub, the Abu Dhabi International Arbitration Centre (arbitrateAD) was launched in early 2024, replacing the Abu Dhabi Commercial Conciliation and Arbitration Centre. ArbitrateAD’s new rules promote green practices, regulate joinder and consolidation and allow for early dismissal of claims, expedited procedures and emergency arbitrations. They provide that the Abu Dhabi Global Market (ADGM) is the default seat, giving users certainty in a supportive judicial environment.
In KSA, the Saudi Center for Commercial Arbitration (SCCA) is key to the Kingdom’s efforts to position itself as another arbitration-friendly jurisdiction. In 2023, the SCCA also adopted new arbitration rules aimed at enhancing transparency and efficiency. The new rules encourage the use of technology for document filing and case management and allow parties to select Online Dispute Resolution Procedure Rules (ODR) for low-value disputes.
The Middle East continues to optimise the arbitration ecosystem and to promote foreign direct investment. Our team of specialists across the MENA region are available to discuss the opportunities and challenges this creates for your business.
