Abu Dhabi-based ICC arbitration under the supervision of the Abu Dhabi Global Markets Court | K&L Gates LLP

The Abu Dhabi Supreme Court has ruled that arbitrations in Abu Dhabi under the International Chamber of Commerce (ICC) Arbitration Rules (ICC Rules) are conducted in the Abu Dhabi Global Market (ADGM) and are therefore subject to the jurisdiction of the regulated ADGM courts, based on the There is an ICC representative office.

background

Established in 2013, ADGM, Abu Dhabi’s free financial zone, is an international financial center and common law jurisdiction with its own courts and legal system. The ADGM courts operate in English, have the competence to handle international cases and have supervisory jurisdiction over arbitrations conducted in ADGM, which has its own arbitration law (Arbitration Regulations 2015).

This case (Supreme Court of Abu Dhabi, Case No. 1045 of 2022) concerned a dispute under a construction contract (contract). The dispute resolution clause in the contract stipulates that the dispute will be resolved by arbitration in Abu Dhabi under the rules of the International Chamber of Commerce.

The appellant filed proceedings in the Abu Dhabi Courts in Abu Dhabi, seeking to set aside the arbitral award relating to the contract. Appellants sought to set aside the award on a variety of grounds, including alleged discrepancies between the signatures of the members of the arbitral tribunal, counsel exceeding their mandate, violation of the rules of objectivity by the arbitral tribunal in relying on evidence, double counting of damages awarded, and violations of the parties’ Agreement on the place of arbitration.

The Abu Dhabi Court of Appeal ruled that it did not have territorial jurisdiction to hear the claim, holding that the ICC representative office located in the Abu Dhabi Financial Free Zone (ADGM) “is deemed to be an ICC representative office for arbitration governed by the above-mentioned ADGM law. ,”¹ and dismissed the challenge. The appellant appealed to the Supreme Court. The appellants argued that the arbitration clause provided for Abu Dhabi as the seat of arbitration, but did not specify any particular geographic location in Abu Dhabi, and that the selection of the ICC Rules did not in itself amount to agreement that the ICC, or any of its branches or offices, should for the location. Therefore, the courts in Abu Dhabi and not the courts of ADGM should have jurisdiction to hear the case.

judge

The Supreme Court dismissed the appeal. The reasons are as follows:

• Firstly, according to Article 1 of Federal Law No. 6/2018 (UAE Federal Arbitration Law), competence to hear cases related to arbitration falls to the federal or local appellate courts agreed by the parties, or within whose jurisdiction the arbitration is conducted.
• According to Article 1 of the ADGM Law (Abu Dhabi Law No. 4/2013), “ADGM Establishment” includes any company, branch, representative office, institutional entity or project registered or authorized to operate or carry out any activity within ADGM.
• The ADGM courts are considered the courts of the Emirate of Abu Dhabi.
• The ICC representative office in ADGM was opened during the arbitration proceedings.
• Accordingly, the ICC Office of ADGM is considered the seat of the arbitration and thus the ADGM Courts are the courts having supervisory jurisdiction over the arbitration.

So, in essence, the Supreme Court reasoned that since the parties had chosen the ICC Rules to regulate the arbitration, and since the ICC was represented in ADGM, ADGM should be considered the seat of arbitration, thus giving the ADGM courts Jurisdiction shall govern any claim or application arising therefrom. The court noted that the arbitration clause providing for arbitration in Abu Dhabi was not specific and that both the domestic court and the ADGM court were courts in the emirate of Abu Dhabi.

analyze

The outcome of the case might be considered surprising. The court appears to have removed the arbitration rules and the place of arbitration. The judgment also stated that the ICC’s office in ADGM was open during the arbitration proceedings, meaning that, initially, the arbitration was conducted within Abu Dhabi and its seat was “transferred” to where ADGM opened the ICC office.

Whether the court’s decision will be followed in future cases remains to be seen. For now, however, it seems likely that an arbitration in Abu Dhabi under the ICC Rules will be deemed to be an arbitration in ADGM, whether or not that is the intention of the parties.

Although the Emirate of Abu Dhabi contains two separate arbitration supervisory regimes, the decision also highlights the inherent ambiguity of the arbitration clause, which states that “the place of arbitration shall be the Emirate of Abu Dhabi” or similar: Onshore courts apply Arbitration Law, ADGM Courts apply the ADGM Arbitration Regulations 2015. Parties should take care to specify the seat of arbitration in their arbitration agreement and consider that when arbitration is held in the United Arab Emirates, the court with supervisory jurisdiction over the arbitration is also specified.

¹ Reference is made to Abu Dhabi Law No. 4/2013 on Abu Dhabi Global Market.