What this guide covers
When drafting a DIAC arbitration clause, it is essential to consider the intricacies of the DIAC 2022 Rules and the UAE legal framework to ensure effective dispute resolution. A well-crafted arbitration clause can save parties from potential pitfalls and costs associated with poorly drafted clauses.
Introduction to DIAC Arbitration and the Importance of a Well-Drafted Clause
The Dubai International Arbitration Centre (DIAC) is a leading arbitration institution in the UAE, providing a framework for resolving commercial disputes. The DIAC 2022 Rules, which came into effect on March 21, 2022, provide a comprehensive set of rules for arbitration proceedings. A well-drafted DIAC arbitration clause is crucial in ensuring that parties can effectively resolve their disputes through arbitration.
The DIAC recommended model clause is a useful starting point for drafting an arbitration clause. The model clause provides a basic structure for an arbitration agreement, including the seat of arbitration, language, and number of arbitrators. However, parties should carefully consider their specific needs and circumstances when drafting an arbitration clause.
When selecting the seat of arbitration, parties must choose between Dubai onshore, the Dubai International Financial Centre (DIFC), and the Abu Dhabi Global Market (ADGM). Each of these options has its own advantages and disadvantages, and the choice of seat will impact the governing law and the procedure for challenging arbitral awards. For example, the DIFC is a common law jurisdiction, whereas Dubai onshore is a civil law jurisdiction.
The language of arbitration is also an essential aspect of the arbitration clause. The DIAC 2022 Rules provide that the language of arbitration shall be the language agreed upon by the parties, or, in the absence of an agreement, the language of the contract (Article 17, DIAC 2022 Rules). Parties should consider the language of their contract and the language proficiency of the arbitrators when selecting the language of arbitration.
Drafting the Arbitration Clause: Key Considerations
When drafting the arbitration clause, parties should consider the number of arbitrators, which can be either a sole arbitrator or a three-member tribunal. The DIAC 2022 Rules provide that the default number of arbitrators is three, unless the parties agree otherwise (Article 12, DIAC 2022 Rules). Parties should also consider the governing law of the contract, which may be different from the seat law. The governing law will apply to the substantive issues in dispute, whereas the seat law will apply to the procedural aspects of the arbitration.
Institutional arbitration, such as DIAC arbitration, is generally preferred over ad hoc arbitration, as it provides a framework for the arbitration procedure and access to institutional support. However, parties may still opt for ad hoc arbitration if they prefer a more flexible and tailored approach. Multi-tier clauses, which provide for negotiation, mediation, and arbitration, can also be effective in resolving disputes efficiently.
Pathological clauses, which are clauses that are unclear or ambiguous, should be avoided. Examples of pathological clauses include clauses that provide for multiple seats of arbitration or clauses that attempt to limit the jurisdiction of the arbitral tribunal. The DIAC 2022 Rules provide guidance on the commencement of arbitration proceedings, including the requirements for a notice of arbitration (Article 4, DIAC 2022 Rules).
The Federal Law No. 6 of 2018 (FDL 6/2018) also provides a framework for arbitration in the UAE, including the requirements for a valid arbitration agreement. Parties should ensure that their arbitration clause complies with the requirements of FDL 6/2018 and the DIAC 2022 Rules.
Practical checklist
- Select the seat of arbitration carefully, considering the advantages and disadvantages of Dubai onshore, DIFC, and ADGM
- Choose the language of arbitration, considering the language of the contract and the language proficiency of the arbitrators
- Decide on the number of arbitrators, considering the complexity of the dispute and the costs associated with a three-member tribunal
- Ensure that the arbitration clause is clear and unambiguous, avoiding pathological clauses
- Consider the governing law of the contract and the seat law, and ensure that the arbitration clause reflects the parties' intentions
- Review the DIAC 2022 Rules and FDL 6/2018 to ensure compliance with the requirements for a valid arbitration agreement
What we'd typically advise
As a UAE law firm, we recommend that parties seek legal advice when drafting a DIAC arbitration clause. A well-drafted arbitration clause can save parties from potential pitfalls and costs associated with poorly drafted clauses. We also recommend that parties consider the specific needs and circumstances of their contract when drafting the arbitration clause.
Our team of experienced arbitration lawyers can assist parties in drafting a DIAC arbitration clause that meets their needs and complies with the requirements of the DIAC 2022 Rules and FDL 6/2018. We can also provide guidance on the advantages and disadvantages of different seats of arbitration, languages, and numbers of arbitrators.
In addition to drafting the arbitration clause, we can also assist parties in navigating the arbitration procedure, including the commencement of arbitration proceedings and the selection of arbitrators. Our team has extensive experience in DIAC arbitration and can provide parties with practical and effective advice on how to resolve their disputes efficiently and effectively.
Frequently asked questions
What is the difference between the governing law and the seat law in a DIAC arbitration?
The governing law applies to the substantive issues in dispute, whereas the seat law applies to the procedural aspects of the arbitration. For example, if the governing law is UAE law and the seat law is DIFC law, the arbitral tribunal will apply UAE law to the substantive issues in dispute, but will be subject to the procedural rules of the DIFC.
Can a DIAC arbitration clause provide for ad hoc arbitration?
Yes, a DIAC arbitration clause can provide for ad hoc arbitration, but this is generally not recommended. Institutional arbitration, such as DIAC arbitration, provides a framework for the arbitration procedure and access to institutional support, which can be beneficial for parties.
What is the effect of a pathological clause in a DIAC arbitration clause?
A pathological clause can render the arbitration clause unenforceable or lead to uncertainty and disputes. For example, a clause that provides for multiple seats of arbitration can lead to confusion and disputes over the jurisdiction of the arbitral tribunal.
How do the DIAC 2022 Rules apply to the commencement of arbitration proceedings?
The DIAC 2022 Rules provide that the arbitration proceedings commence on the date of receipt of the notice of arbitration by the Registrar (Article 4, DIAC 2022 Rules). The notice of arbitration must include certain information, such as the names and addresses of the parties, a statement of the claim, and the relief sought.
Can a DIAC arbitration clause provide for a multi-tier dispute resolution process?
Yes, a DIAC arbitration clause can provide for a multi-tier dispute resolution process, such as negotiation, mediation, and arbitration. This can be an effective way to resolve disputes efficiently and effectively, as it provides parties with multiple opportunities to resolve their disputes before proceeding to arbitration.
Published 19 May 2026. General information only — not legal advice. Contact us for matter-specific advice.