Historically, the Middle East has been a region where arbitration has played a vital role in resolving disputes. In recent years, international arbitration has seen increasing activity with large infrastructure-related disputes, investor-state disputes, expropriation, and breach of contract as the leading causes of arbitration in the region. The UAE, Saudi Arabia and Qatar made up approximately 6.68% of the 2498 parties involved in cases filed with the ICC in 2019, which is comparable to the USA’s 7.85% share of the proverbial pie.
With almost half of the world’s oil reserves, the largest natural gas reserves globally, as well as an array of significant construction and infrastructure-related projects, the region provides ample opportunity for energy-related disputes that are ripe for arbitration. The COVID-19 pandemic has put immense pressure on the alternative dispute resolution industry as a whole, and the Middle East is no exception. The pandemic has been said to have “triggered profound and systemic changes in international arbitration”. However, it is worth noting that some of the world’s largest construction arbitrations are still ongoing in the region, such as the claim brought by Saudi Aramco against SNC-Lavalin Group Inc. for delays and cost overruns at the Jizan Refinery project
Perhaps the most promising seat of arbitration in the region is Dubai, which has a well-developed legal infrastructure and arbitral institutions, such as the Emirates Maritime Arbitration Centre (EMAC), and the Dubai International Financial Centre-London Court of International Arbitration (DIFC-LCIA) – though Decree No. (34) of 2021 of the Government of Dubai will now see the LCIA administering all existing DIFC-LCIA cases from London while DIFC Arbitration Institute (DAI) will combine forces with the EMAC to form the Dubai International Arbitration Centre (DIAC). This development as well as the continued political stability in the region will work to solidify Dubai’s position as a global arbitration hub.
The 2016 amendment to Article 257 of the UAE Penal Code, essentially criminalizing all arbitral breaches including instances where arbitrators did not maintain ‘integrity and impartiality’, posed a significant challenge to progress. However, in 2018, the UAE repealed Article 257 and put these concerns to rest by excluding arbitrators from the scope of criminal liability. With strong legal systems and arbitral institutions in place, Dubai is well-positioned to continue serving as a key player in the international arbitration arena.
The effects of the COVID-19 pandemic have been felt by arbitral proceedings around the world. March 2020 saw the DIAC announce that it would only receive arbitration requests and supporting documents through its online platform and the Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC) soon followed suit requesting documents via email. The DAI and the DIFC-LCIA have both released COVID-19 Protocols which set out guidance on how to manage arbitral proceedings remotely in the current climate.
The pandemic has also shifted the landscape of how hearings are conducted with many moving to a virtual hearing platform. As of January 1, 2021, the DIFC-LCIA Rules have been updates to include wider provisions for virtual hearings. Article 19.2 states that, “a hearing may take place in person, or virtually by conference call, video conference or using other communications technology with participants in one or more geographical places (or in a combined form).”
It is likely that a hybrid model of virtual and in-person hearings will become the new norm with some already advocating to make virtual hearings a permanent fixture, even after the pandemic has ended. In fact, a pre-pandemic survey conducted by White & Case LLP, found that a large majority of respondents felt that “video conferencing (89%), cloud-based storage (91%) and hearing room technologies (98%) are tools that arbitration users should make use of more often.”
The pandemic has, unquestionably, had a profound impact on the way international arbitration is conducted. However, it is worth noting that the field has been quick to adapt with many of the changes , such as virtual hearings, likely to stay in some form, even in a post-pandemic world. Trial technologies have also evolved as a result, cementing the fact that the pandemic has acted as a catalyst for change in the field of international arbitration. It will be interesting to see how these changes shape the landscape in the years to come. One thing is certain – the Middle Eastern region, and Dubai in particular, has risen to the occasion with a promising future ahead.
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