International Arbitration in the Middle East: 2024 in Review and What to Expect in 2025

2024 has been another year of significant legal developments in the Middle East arbitration landscape, with jurisdictions across the region enhancing their positions as leading hubs for international commercial disputes. Key developments range from the launch of new institutions and institutional rules, arbitration-friendly decisions issued by the local courts, and record-breaking caseloads. Notably, cases relating to the effects of Dubai Government Decree No. 34 of 2021, which abolished the DIFC-LCIA Arbitration Centre, continue to work their way through local and foreign courts.

1. Domestic and foreign courts consider the enforceability of DIFC-LCIA arbitration clauses

Dubai Government Decree No. 34 of 2021 (“Decree No.34”) abolished the DIFC-LCIA Arbitration Centre and provides that all future disputes arising under DIFC-LCIA arbitration clauses shall be transferred to the DIAC and subject to the DIAC Rules. An increasing number of disputes are falling within the scope of Decree No.34, with 32% of all DIAC arbitration cases last year brought under a DIFC-LCIA arbitration clause.[1] Domestic and foreign courts are now considering circumstances where parties had contractually agreed to refer disputes under the DIFC-LCIA Arbitration Rules (“DIFC-LCIA Rules”), but those disputes are subject to the DIAC Rules. 

In March 2024, the Singapore High Court upheld enforcement of a provisional award for interim relief made under DIAC Rules in circumstances where the underlying arbitration agreement referred instead to the DIFC-LCIA Rules. The Court ultimately decided to enforce the award on the basis that the respondent had submitted to the tribunal's jurisdiction for the purposes of the interim relief proceedings by contesting the application without raising jurisdictional objections in its submissions. However, it noted a number of “significant differences” between the DIFC-LCIA and DIAC rules and stated (obiter) that “arbitration procedure under the [DIAC] Rules was not in accordance with the parties’ agreement for arbitration under the DIFC-LCIA Rules,”. In October 2024, the Singapore Court of Appeal upheld the lower court’s decision.

The Singapore decision followed the much-discussed Baker Hughes case (see our 2023 review article) in which a Louisiana Court rejected the defendant’s motion to dismiss Louisiana court proceedings on the basis that the underlying contract provided for the DIFC-LCIA Rules with a DIFC seat (and not the Louisiana courts). 

A similar decision in the Cayman Islands (Al-Haidar v Rao and Petronash) concerned a challenge to the enforcement of a provisional award for interim relief on the basis that the arbitration was not conducted in accordance with the parties’ agreement. The court concluded that the defendant was estopped from challenging the tribunal’s jurisdiction regarding the provisional award where such challenge had not been raised earlier before the tribunal in the context of the application for interim relief.

The domestic courts in the UAE have taken a different approach. On April 24, 2024, the Abu Dhabi Court of Appeal upheld a Court of Abu Dhabi First Instance finding that a DIFC-LCIA arbitration agreement was valid and enforceable. The initial dispute had been brought before the Abu Dhabi Courts. The defendant successfully argued that the Abu Dhabi Courts did not have jurisdiction over the matter as the contract contained a DIFC-LCIA arbitration agreement and, in accordance with Decree No.34, the case would be administered by DIAC.

More recently, the DIFC Court of First Instance confirmed the enforceability of DIFC-LCIA arbitration agreements in ARB 009/2024 Narciso v Nash, a construction dispute for breach of contract and wrongful termination originally brought before the Sharjah Court. Narciso successfully applied to the DIFC Court for an interim injunction to stay the Sharjah proceedings on the basis this was in breach of the parties’ DIFC-LCIA arbitration agreement.  When hearing a subsequent application by Nash to discharge the injunction, the court expressed a “strong (albeit necessarily provisional) view that [Decree No.34] has not rendered the Arbitration Agreement in the present case null and void, inoperative or incapable of being performed.”

It remains to be seen whether a consistent approach will emerge across foreign and local courts, but the ongoing decisions continue to highlight the importance of reviewing arbitration clauses in existing contracts and templates.

2. DIFC Court of Appeal confirms interim award is enforceable

On March 22, 2024, the DIFC Court of Appeal upheld an earlier decision by the Court of First Instance to enforce an interim award issued in a London-seated arbitration, confirming that the DIFC Courts have jurisdiction to enforce interim measures ordered by arbitral tribunals even where the seat of the arbitration is not the DIFC.

The defendant argued that Articles 42 and 43 of Arbitration Law DIFC Law No. 1 of 2008 (as amended) (the “DIFC Arbitration Law”) provide for the enforcement of awards, which are final on their merits and, therefore, an interim award does not fall within the scope of such provisions.  The defendant argued that interim measures may only be enforced under Article 24(2) of the DIFC Arbitration Law, which relates to the enforcement of interim measures by the DIFC Courts where the seat of arbitration is the DIFC.

The Court of Appeal disagreed on both points. It drew a distinction between the Court’s supervisory jurisdiction (which depends upon the seat of arbitration) and its enforcement jurisdiction with respect to the recognition and enforcement of foreign awards, deciding that enforcement of an interim award issued by a foreign-seated tribunal falls within the latter.  It also concluded that there is no reason in principle why an award, which is interim or provisional, and therefore binding for a limited period of time until a further decision is made, should not be treated as an award for the purposes of enforcement under the DIFC Arbitration Law and New York Convention and, as a matter of policy, every reason why it should be.

The decision clarifies the enforceability of interim measures awarded in foreign-seated arbitrations within the DIFC and bolsters the reputation of the DIFC (and its courts) as a pro-enforcement jurisdiction for international arbitration.

3. DIFC Court of Appeal confirms that it has jurisdiction to issue freezing orders in support of proceedings pending in foreign courts

The DIFC Court held in November 2024 that it has jurisdiction to issue freezing orders in support of proceedings pending in foreign courts and not only in cases where judgment has already been rendered.  This marks a departure from the court’s previous decision in Sandra Holding v Al Saleh (discussed in our 2023 review article) and confirms the DIFC Court’s power to prevent a party to foreign proceedings from dissipating its assets in advance of an apprehended judgment that might be subject to recognition and enforcement in the DIFC.

4. DIFC Court upholds USD 1.6 billion ICC award

In a decision from August 2024, the DIFC Court of First Instance rejected an application to set aside a DIFC-seated USD 1.6 billion ICC award.

In the arbitration, the award creditors argued that the award debtors had bribed Iraqi officials.  In response, the award debtors argued that the tribunal did not have jurisdiction to hear the claim because this would violate the foreign act of state doctrine, which prevents any tribunal from adjudicating the lawfulness or validity of sovereign acts by a foreign state, or from hearing claims of unlawful actions by a foreign state.

In applying to set aside the arbitral award, the award debtors argued that, by dismissing their objections, the tribunal had exceeded its jurisdiction and violated UAE public policy.

Whilst the DIFC Court of First Instance confirmed that the foreign act of state doctrine does exist in DIFC law as a matter of UAE public policy, H.E. Justice Shamlan Al Sawalehi found the award debtor had not proven that “the Tribunal acted beyond their jurisdiction and breached the act of state doctrine and UAE Public Policy when making the Award.”   

The DIFC Court’s strong enforcement track record when it comes to enforcement and rejecting set aside applications remains a key consideration for parties when choosing a regional seat of arbitration.

5. Dubai court rules that asymmetric jurisdiction clause is not enforceable

On October 29, 2024, the Dubai Court of Cassation held that a unilateral option to arbitrate is invalid.[2]

Asymmetric jurisdiction clauses are common in international banking practice and provide one party with the option to choose the applicable forum for disputes – often either litigation or arbitration – whilst limiting the other party to sue in a specific forum. The English courts have consistently held that such clauses are valid under the principle of party autonomy, with the DIFC courts and the ADGM courts taking a similar approach.[3] However, courts in some other jurisdictions have concluded that such clauses violate the principle of equality between the parties and/or fail to reflect a clear mutual agreement between the parties.

The Dubai Court of Cassation concluded that the clause in question, which provided that one party alone shall decide between arbitration and litigation in any dispute, did not demonstrate mutual consent to arbitrate and to exclude the UAE court’s jurisdiction.

UAE law does not have a binding system of precedent such that the judgment should not be interpreted as a general rule that the courts will not enforce asymmetric clauses.  However, it does suggest there is a risk that the courts may accept jurisdiction in contravention of an asymmetrical clause or possibly refuse to enforce an award or judgment obtained pursuant to an asymmetric clause.

6. Dubai Court confirms arbitral tribunals’ authority to award legal costs under the ICC Rules

On November 19, 2024, the Dubai Court of Cassation confirmed that Article 38(1) of the ICC Rules, which allows arbitral tribunals to award “reasonable legal and other costs incurred by the parties for the arbitration”, includes lawyer’s fees. The decision followed historic rulings of the court that the DIAC Rules did not permit recovery of legal costs, which prompted DIAC to amend its rules in 2022 to expressly allow it.[4] In a 2023 decision, the court had found that the ICC Rules did not permit recovery of legal costs, and so the 2024 decision was a welcome clarification.[5]

7. Dubai establishes the new Conflict of Jurisdiction Tribunal

Dubai Decree No. 29 of 2024 (“Decree No.29”), which came into effect on April 3, 2024, established a new Judicial Authority for Resolving Jurisdictional Conflicts between the DIFC and onshore Dubai courts (“Conflict of Jurisdiction Tribunal”).

The Conflict of Jurisdiction Tribunal abolished the Joint Judicial Committee (“JJC”) established in 2016 to rule on conflicts between the DIFC and Dubai courts.  Whilst the role and composition of the Conflict of Jurisdiction Tribunal is broadly the same as the JJC, Article 9(c) of Decree No.29 provides that Conflict of Jurisdiction Tribunal decisions constitute judicial principles that are binding on all judicial bodies, which should offer greater predictability for parties seeking to resolve disputes with a connection to Dubai. 

Decree No.29 also provides that the Conflict of Jurisdiction Tribunal will issue decisions within 30 days of final submissions by the parties and that there will be no automatic stay on proceedings. The procedure has recently been tested in practice and the DIFC Court issued its first judgment on the effect of Decree No.29 in October 2024, indicating that it will not automatically stay proceedings following an application to the Conflict of Jurisdiction Tribunal; rather,  it must be satisfied that a genuine jurisdictional dispute has arisen.

8. Abu Dhabi’s new center for international arbitration

In December 2023, the Abu Dhabi Chamber of Commerce and Industry announced the formation of the Abu Dhabi International Arbitration Centre (stylized as “arbitrateAD”), a new international arbitration center. arbitrateAD and its new Arbitration Rules (“arbitrateAD Rules”), which provide for a transparent, modern and cost-efficient arbitration center, replace the Abu Dhabi Commercial Conciliation and Arbitration Centre (“ADCCAC”) and its corresponding rules. 

The new arbitrateAD Rules took effect from February 1, 2024, and, unless otherwise agreed by the parties, apply to any arbitration commenced on or after that date in which the parties agree to submit their dispute to (i) the arbitrateAD Rules; (ii) arbitrateAD; (iii) the Abu Dhabi Chamber of Commerce and Industry, or (iv) ADCCAC (although in this case provisions relating to the emergency arbitrator and expedited procedures would not apply unless expressly agreed).  The ADCCAC Rules still apply to arbitrations commenced prior to February 1, 2024.

Under Article 22 of the arbitrateAD Rules, the offshore Abu Dhabi Global Market (“ADGM”) is the default seat of arbitration unless the parties expressly agree otherwise, or unless the arbitrateAD Court decides otherwise. Prior to the new arbitrateAD Rules, the default seat for ADCCAC arbitrations was ‘on shore’ Abu Dhabi, with arbitrations subject to onshore federal UAE laws.  Parties should, therefore, be precise in their drafting to ensure that the rules and the seat that apply to their arbitration agreements align clearly with their intentions.

9. ADGM Court considers jurisdictional challenge

A recent decision by the ADGM Court of First Instance considered a jurisdictional challenge to an application for recognition and enforcement of an arbitral award. The arbitration clause in question referred to the “place” of arbitration as the “UAE” with any dispute to be submitted to the ICC under the ICC Rules. The evidentiary hearing took place in the ADGM, following which the Tribunal issued its award. Following a jurisdictional challenge in the ADGM Courts, in which the court considered judgments from parallel proceedings in the Dubai Court of Appeal and the Umm Al Quwain court, the ADGM court determined that the seat of arbitration was onshore Dubai, not the ADGM, on the basis that the parties had agreed this through correspondence and in the Terms of Reference. The court adjourned the recognition and enforcement application pending a decision of the Dubai Court of Cassation, as the court of the seat, in relation to set-aside proceedings.

The decision follows a number of recent cases concerning clauses referring to “Dubai,” “Abu Dhabi” or the “UAE” (see our previous article on the issue) and highlights the need to clearly define the seat of arbitration within the UAE given the number of potential seats. 

10. Bahrain Court of Cassation issues its first English language ruling

On May 9, 2024, the Kingdom of Bahrain (“Bahrain”) Court of Cassation issued its first English language ruling, upholding an English-language decision by the Bahrain Chamber for Dispute Resolution (“BCDR”) to dismiss a claim of more than USD 18 million pursuant to the Limitation Act 1980.

The use of English language in this case arises from the Ministry of Justice for Islamic Affairs and Waqf Resolution No. 28 of 2023 (the “Resolution”) that permits the use of English before the BCDR in certain circumstances. The Resolution also requires that any challenges to such judgments also be heard in the same language.

The incorporation of English into the Bahraini legal system reflects a growing trend across the region, with the introduction of English language proceedings in the Qatar Financial Court (2011) and the onshore Abu Dhabi Courts (2023), in addition to the use of English in the DIFC Courts and the ADGM Courts. 

The Resolution is one of several steps taken by Bahrain to enhance its position as a leading regional hub for international commercial disputes. Bahrain and Singapore signed a bilateral treaty in 2024, which established the Bahrain International Commercial Court (“BICC”) modelled on the Singapore International Commercial Court (“SICC”), with appeals heard by the SICC.  The BICC will hear international commercial disputes and arbitration-related matters both in English and Arabic, with a multinational bench of judges.

11. Qatar court refuses set aside application

In May 2024, in B v C [2024] QIC (F) 20, the Qatar Financial Centre Civil and Commercial Court (“QFC”) refused an application to set aside an ICC arbitral award.  B v C concerned two parties to a construction joint venture and the dispute centered on the shareholders’ agreement governed by Qatari law. The arbitration was conducted under the ICC Rules, with the QFC as the seat of arbitration. The arbitral tribunal ultimately found in favor of party C, ordering B to pay C QAR 24 million in respect of lost profits, costs and interest.

In its application to the QFC, B put forward four grounds for setting aside the application, including (among others) that the tribunal had failed to give effect to mandatory provisions of Qatari law.

The QFC refused to set aside the award. In dismissing the mandatory provisions argument, the QFC cited Born's International Commercial Arbitration (3rd Ed.) that “only very clear and serious that only very clear and serious (mis)applications of mandatory law will result in annulment.”

The Court added that it did not consider B’s arguments to be “within the interest of the QFC,” confirming there to be no material difference between “interest of the QRF” (Article 41(2)(B)(ii) of the Arbitration Regulations) and “public policy of the QFC” (Article 41(3) of the Arbitration Regulations). While the Court did not comment on what may be covered by public policy, it did offer that “the public policy exception is to be narrowly construed.”

12. Qatar International Center for Conciliation and Arbitration releases new 2024 arbitration rules

The Qatar International Center for Conciliation and Arbitration (QICCA) has released new arbitration rules (2024 Rules), effective 1 January 2025.

The 2024 Rules introduce optional expedited arbitration procedures, which apply to claims valued at less than QAR 1 million (approximately USD 275,000) and require the tribunal to issue a final award within 90 days. The 2024 Rules also introduce emergency arbitrator provisions, which provide that the decision of the emergency arbitrator must be issued within 15 days. The 2024 Rules also introduce express joinder and consolidation provisions to address multi-party/multi-contract disputes. Article 9 of the 2024 Rules requires the disclosure of the identity of, and the nature of the arrangement with, a third-party funder to the QICCA or the tribunal.

Overall, the 2024 Rules represent an overhaul of the 2012 rules and offer additional clarity, accessibility and efficiency in the arbitral process, bringing the QICCA in line with other arbitral institutions and furthering Qatar’s position as a leading regional hub for international arbitration.

If you have any questions concerning the material discussed in this client alert, please contact the members of our International Arbitration practice.