Two Disputes, Two Outcomes
A main contractor in a DIAC construction arbitration recovers full payment for variations, plus interest and costs. The award is enforced onshore within weeks.
Meanwhile, another company spends over a year fighting a jurisdictional challenge. Their contract referenced the DIFC-LCIA — an institution abolished in 2021. The dispute over which rules apply delays everything.
The difference wasn't the merits. It was the arbitration clause.
Why Arbitration Matters in the UAE
Enforceability across borders. UAE court judgments are difficult to enforce outside the GCC. Arbitration awards are enforceable in 172 contracting states under the New York Convention. If your counterparty has assets in Singapore, London, or New York, arbitration is the practical route.
Confidentiality. Court proceedings are public record. Arbitration is private.
Speed. DIAC's rules target a final award within six months of file transmission. Expedited cases can close in three months. Complex disputes typically resolve in 12–18 months — faster than working through the UAE court system and its appeals.
Choice of decision-maker. In court, you get whoever's assigned. In arbitration, you select arbitrators with relevant expertise.
The 2021 Consolidation
Decree No. 34 of 2021 abolished the DIFC-LCIA Arbitration Centre and the Emirates Maritime Arbitration Centre (EMAC), consolidating both into DIAC.
Contracts still referencing DIFC-LCIA create risk. UAE courts have generally upheld these clauses under Decree 34's transitional provisions. Foreign courts have been less predictable.
In Baker Hughes Saudi Arabia Co. Ltd v. Geoservices Co., a Louisiana district court initially refused to compel arbitration, finding the DIFC-LCIA no longer existed. The Fifth Circuit reversed in January 2025 — but only after extended litigation over which forum applied.
The practical step: Review existing contracts. Amend any DIFC-LCIA or EMAC references to specify DIAC or another active institution before a dispute arises.
DIAC vs. arbitrateAD
DIAC (Dubai International Arbitration Centre)
The primary institution for Dubai-seated arbitrations. DIAC registered 355 cases in 2023, with construction and real estate disputes comprising approximately 59% of the caseload.
- Initial default seat: DIFC (where parties have not agreed otherwise)
- Expedited procedure: Available for claims under AED 1 million
- Emergency arbitration: Available for urgent interim relief
- 2022 Rules modernised procedures and addressed prior gaps around joinder, consolidation, and costs
arbitrateAD (Abu Dhabi International Arbitration Centre)
Launched February 2024, replacing the ADCCAC.
- Default seat: ADGM
- Expedited procedure: Claims up to AED 9 million — significantly higher than DIAC
- Early dismissal: Procedure for manifestly meritless claims (DIAC lacks this)
- Award scrutiny: Reviews awards before issuance, similar to ICC practice
For most Dubai-based disputes, DIAC remains the default. arbitrateAD is worth considering for Abu Dhabi-centric matters or where the higher expedited threshold matters.
Costs
DIAC revised its fee schedule effective 1 January 2025 — the first update since 2011.
Institutional fees (DIAC):
Additional costs to budget:
- Legal fees (often the largest component)
- Expert witnesses for technical disputes
- Hearing costs — though virtual hearings have reduced this
- VAT at prevailing rates
Cost recovery: In November 2024, the Dubai Court of Cassation confirmed that tribunals in ICC arbitrations have the power to award legal costs under Article 38 of the ICC Rules, reversing an earlier restrictive position.
Timelines
Drafting an Effective Arbitration Clause
More disputes are complicated by defective clauses than by the underlying facts.
Five Red Flags in Your Arbitration Clause
☐ References DIFC-LCIA or EMAC — both abolished in 2021
☐ Specifies "UAE" as the seat without naming a city or free zone
☐ Calls for two arbitrators — UAE law requires an odd number
☐ Gives only one party the right to choose arbitration — Dubai courts have found these clauses non-binding
☐ Signed by someone without documented authority to bind the company to arbitration
If any of these apply to your contracts, fix them before a dispute arises.
The Seat Problem (A Quick Illustration)
Your contract says: "The seat of arbitration shall be the UAE."
A dispute arises. You file with DIAC. Your counterparty argues the seat is onshore Abu Dhabi, not DIFC, and that the Abu Dhabi courts — not the DIFC courts — should supervise the arbitration. Now you're arguing about which court system has jurisdiction instead of arguing the merits.
This happens. Specify the seat precisely: "DIFC, Dubai" or "ADGM, Abu Dhabi" or "Dubai, UAE" (onshore).
A Workable Model Clause
Based on DIAC's recommended wording:
"Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the Arbitration Rules of the Dubai International Arbitration Centre, which Rules are deemed to be incorporated by reference into this clause.
The number of arbitrators shall be [one/three].
The seat of arbitration shall be [DIFC, Dubai / Dubai, UAE / ADGM, Abu Dhabi].
The language to be used in the arbitration shall be [English/Arabic].
The governing law of the contract shall be the substantive law of [specify jurisdiction]."
Optional additions:
- Confidentiality undertakings
- Arbitrator qualifications for technical disputes
- Multi-tier provisions requiring negotiation before arbitration
Recent Developments
Award signatures (2025). The Federal and Local Judicial Principles Unification Authority clarified that arbitrators need only sign the final page of an award — not every page. This resolves conflicting court positions and aligns UAE practice with international norms.
Anti-suit relief. Recent Dubai Court decisions have supported tribunal-ordered anti-suit relief in UAE-seated arbitrations in appropriate cases, though this remains a developing area.
Interim measures enforceable (2024). In Neal v Nadir, the DIFC Court of Appeal ruled that interim awards can be enforced under the DIFC Arbitration Law, consistent with the New York Convention.
Legal costs in ICC arbitrations (November 2024). The Dubai Court of Cassation confirmed that tribunals have the power to award legal costs under Article 38 of the ICC Rules, reversing its earlier position.
Enforcement
In the UAE:
Domestic awards are enforced under the Federal Arbitration Law (Federal Law No. 6 of 2018). Foreign awards are enforced under the New York Convention.
The process: file with the competent court (recognition and enforcement applications are handled at the Court of Appeal level), submit the authenticated award and arbitration agreement with Arabic translation, and await the court's decision. The law contemplates a 60-day window for the court to rule, subject to the usual grounds for refusal.
Grounds for refusal are limited and mirror the New York Convention:
- Invalid arbitration agreement
- Lack of proper notice or opportunity to present the case
- Award exceeds scope of the arbitration agreement
- Tribunal improperly constituted
- Award not yet binding or set aside at the seat
- Violation of UAE public policy
For a detailed look at how UAE courts handle cross-border enforcement, see our guide on Enforcement of Foreign Judgments in the UAE.
Outside the UAE:
Arbitration awards rendered in the UAE are enforceable in 172 New York Convention contracting states. UAE court judgments, by contrast, depend on bilateral treaties — which are limited.
When Litigation May Be Preferable
Arbitration isn't always the right tool.
Straightforward debt collection with UAE-based assets may be faster through the courts. Low-value claims where arbitration costs exceed the amount in dispute don't make sense. Matters requiring appeal rights on the merits — arbitration awards are generally final. Certain injunctive relief may require court powers beyond what a tribunal can order.
Related Reading
- Shareholder Agreements in UAE: Key Clauses and Enforcement — includes guidance on dispute resolution provisions
- How FIDIC Claims Work in the UAE — arbitration is the default mechanism under FIDIC contracts
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