Following a recent amendment to the Dubai International Financial Centre1 (DIFC) Arbitration Law, it is now clear that matters brought before the DIFC Courts which are governed by a valid arbitration agreement shall be stayed by the Courts in favour of non-DIFC seated arbitrations. This ensures that the DIFC Arbitration Law complies with the New York Convention and brings welcome certainty following two recent conflicting DIFC Court judgments. The change is particularly important as a significant number of international businesses operating in the Middle East choose to refer their disputes to arbitration.
The Tension of Conflicting Case Law -
In Injazat v Denton Wilde Sapte,2 Denton Wilde Sapte applied for a stay of proceedings brought by Injazat in the DIFC Courts on the basis that it had commenced an LCIA arbitration in London pursuant to an arbitration agreement between the parties. Justice Sir David Steel found that the DIFC Arbitration Law3 only imposed an obligation on the court to stay an action in favour of arbitration where the matter was subject to a domestic arbitration clause. This obligation did not apply in the case of foreign-seated arbitrations. The judge also refused to exercise a residual discretion to stay the proceedings: the legislation was “detailed and precise” and made it clear that it was not open to a party to apply for a stay in favour of a foreign-seated arbitration.
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