MEDIATION RULES 2023: A NEW LAUNCH BY DIAC

The Mediation Rules of Dubai International Arbitration Centre (“DIAC”) has now come into effect (the “Mediation Rules 2023/Rules”) and governs all new requests for mediation submitted to DIAC from 1 October 2023 (the “Effective Date”). This positive step by the Center featuring the accurately structured Mediation Rules 2023, aims to provide best practices in alternative dispute resolution (“ADR”) aligning with the highest global standards. Parties’ autonomy is valued the most focusing on to the best outcome that accomplish their requirements. 

Mediation is unequivocally an efficient and time-effective ADR, where parties seek aid of a neutral/impartial third-party (the “Mediator”) nominated by the parties or the Arbitration Court and appointed pursuant to Mediation Rules 2023 by the Arbitration Court, who acts as a facilitator, to assist them in resolving their differences/disputes. This enables the parties to regain and maintain a healthy commercial relationship amongst them, rather than dragging themselves into litigation or arbitration before courts or the tribunal. 

Pre-existing Agreement to Mediate or Not

Any party may refer a dispute to mediation before DIAC whether there is a pre-existing agreement to mediate or not. Where there is a pre-existing agreement to mediate, the Rules shall apply to mediations which commence after the Effective Date regardless of the date on which the agreement to mediate was entered into. Subject to the approval of the Mediator, the parties may agree in writing to modify the provisions of the Rules to the extent that such modifications are within the spirit of the Rules and do not render them inoperable.

Overarching Objective of the Rules

The core objective of the Rules is for all mediations to be conducted fairly, impartially, efficiently and proportionately, having due regard to the sum(s) claimed and/or counterclaimed and the complexity of the dispute. Pursuant to Article 2.5 of the Rules, the parties involved, their representatives, and the Mediator pledge their commitment to upholding the overarching objective of the Rules.

Agreement to Mediate

Within 15 days of notification of a party’s request (the “Requesting Party”) to mediate vide the application form set out in Appendix 1 of the Rules, the other party (the “Responding Party”) shall submit a reply to the Centre in the form set out in Appendix 2 of the Rules with a copy to the Requesting Party. This indicates the Responding Party’s willingness for mediation. The Centre may, if the Responding Party consent for mediation, grant the Responding Party an extension of time up to 7 days to file the reply, if sought for. If the Responding Party do not reply to the Centre within the prescribed time limit or additional time as may be determined by the Centre in its absolute discretion, it shall be deemed that the Responding Party does not consent to the dispute being referred to mediation under the Rules and the mediation shall not proceed.

Commencement of Mediation

Where the parties reach an agreement to refer the dispute to mediation pursuant to the Rules, the mediation shall commence pursuant to Article 3, on the date on which the Centre sends written confirmation to the parties that such an agreement has been reached.

Notifications and Communications

All notifications and communications between the parties, the Mediator and the Centre shall be made in writing by email or as otherwise directed by the Centre. The Centre may also request a Party to provide any documentation in hard copy format if it considers it necessary to do so.

Costs of Mediation

In accordance with Article 5 of the Rules, the fees and expenses of the Mediator shall be agreed by the parties and the Mediator at the time of the preliminary meeting and reflect the complexity, value and agreed timeframe of the mediation. An advance on costs, payable in equal shares by the parties, shall be fixed by the Centre to cover the anticipated fees and expenses of the Mediator and the Centre’s administrative fees, with reference to Appendix 3 of the Rules, following the preliminary meeting, unless the parties and the Mediator agree upon any alternative calculation of the Mediator’s fees and/or expenses. Any unused amounts remaining on account shall be reimbursed to the parties in the proportionate amount initially paid. The Centre, with the agreement of the Mediator, may suspend or terminate any application or mediation where any request for payment, including the advance on costs have not been complied with by the date stipulated by the Centre.

Mechanism of Mediator Appointment

The critical aspects of the appointment of the Mediator, and the overall conduct of the mediation process are dealt in Articles 6 and 7 of the Rules. Unless agreed otherwise by the Parties, the Arbitration Court shall appoint a single Mediator within 7 days of the commencement of the mediation. However, the Arbitration Court may at its discretion and in appropriate circumstances propose to the parties that they consider the appointment of co-Mediators, but the final determination in that respect will be for the parties to agree. In appointing the Mediator or co-Mediators accordingly, the Arbitration Court shall consider any mechanism or method of nomination agreed upon by the parties and give due consideration to the nature of the underlying transaction, the nature of the dispute, the nationality, location, qualifications and experience of the Mediator and language of the parties and any other relevant circumstances.

Mediator’s Declarations

Prior to an appointment by the Arbitration Court, a prospective Mediator shall sign a declaration containing a statement of acceptance, impartiality and independence, availability and nationality, and provide the Centre with an up-to-date curriculum vitae; and disclose any known, actual, or potential conflicts of interest which could raise questions of their impartiality or independence. Any Mediator conducting a mediation under the Rules shall be and shall remain impartial and independent of the parties involved in the mediation and have an ongoing duty to disclose to the Centre and to the parties any real or potential conflict of interest or other relevant matter or circumstances that might call into question or create reasonable doubts as to the Mediator’s impartiality, independence and/or availability.

Objection to Mediator’s Appointment

Either party may object to the Mediator appointed by the Arbitration Court within 5 days of the notification of such appointment, or knowledge of circumstances giving rise to the objection, setting out in detail their reasons for the objection. The Arbitration Court shall consider the objection and, if upheld, shall appoint a replacement Mediator. If a challenge has not been raised within the specified time limit, the parties shall be deemed to have expressly agreed to the appointment of the Mediator.

Resignation by Mediator

A Mediator may resign (i) for any reason by notifying the Centre and the parties in writing, (ii) on the joint written request to the Mediator and the Centre by the parties; or (iii) if the Mediator becomes incapacitated and can no longer perform the duties required pursuant to the Rules. Upon Mediator’s resignation, the Arbitration Court shall appoint a new Mediator within 7 days of such resignation pursuant to the provisions set out in the Rules.

Conduct of Mediation

The Mediator shall, no later than 7 days after the transmission of the file by the Centre, contact the parties for setting the date for a preliminary meeting (held in person, or virtual means, as agreed by the parties or as determined by the Mediator after consultation with the Parties), and may send out to the parties a draft mediation agreement for review. The Mediator shall have the absolute discretion to determine the procedure of the mediation, giving each Party a reasonable opportunity to present their respective positions and having due regard to the relevant circumstances. The Mediator may, at their discretion, meet or communicate with the parties jointly or separately, having considered the impact on the progress of the mediation, keeping the parties informed of the procedural steps being taken in the mediation.

The Mediator shall assist the parties by such methods as the Mediator, in their discretion, considers appropriate in conclusively settling all or part of the matters in dispute on mutually agreed terms. In the event that the parties settle their dispute, the Mediator may, to the extent they feel competent to do so, facilitate the preparation of a settlement agreement; and a copy of it, executed by the parties, shall be kept by the Mediator and the Centre for their records.

In all matters not expressly provided for in the Rules, the Centre and the Mediator shall act in the spirit of the Rules; and each party shall act in good faith throughout the mediation.

Parties’ Representatives

The parties may be represented or assisted by person(s) of their choice, irrespective of their nationality or professional qualifications.

Speedy Mediation

If the Parties have agreed that the mediation be conducted on an expedited basis, the Mediator shall conclude the mediation proceedings within the period agreed at the preliminary meeting. Thereafter, the Mediator will review the progress made with the parties and the mediation shall continue until the conclusion of the mediation pursuant to the Rules.

Conclusion of Mediation

The mediation shall be concluded pursuant to Article 8 of the Rules if (i) the Responding Party do not consent to the dispute being referred to mediation under the Rules within the time limit specified by the Rules or (ii) on withdrawal of the mediation application for non-payment of the advance on costs within the time limit granted by the Centre; or (iii) when the Mediator concludes that there are no further mediation attempts that can practically assist the parties in settling the dispute amicably; or (iv) when one party withdraws from the mediation; or (v) when parties agree to terminate the mediation; or (vi) upon execution of the settlement agreement by the parties, or (vii) upon conclusion of the mediation under the provisions of the Rules, the proceedings shall be terminated without prejudice to the merits of the dispute.

In case of conclusion of the mediation is for the aforementioned reasons (i), (iii), (iv) or (v), and at the request of a party, the Centre shall issue a certificate that the attempt at mediation failed and the mediation proceedings were terminated, without any further comments or reference of the merits.

Utmost Confidentiality

Confidentiality which is one of the foundations of the mediation process. While the concept of ‘without prejudice communications’ is not generally acknowledged in the UAE, it is well prescribed in Article 9 of the Rules. Unless the parties expressly agree in writing to the contrary, the parties and the Mediator shall keep confidential (i) all information related to the mediation, together with all materials created for the purpose of the mediation; (ii) all documents produced by, or in the possession of, any party to the mediation, including as the result of judicial or arbitration proceedings related to the dispute which is the subject of the mediation or in respect of any other dispute that has arisen from, or is related to, the same legal relationship(s), not otherwise in the public domain; and (iii) the contents and/or existence of any settlement agreement, save to the extent that disclosure of its existence may be required by a party under a legal obligation, or to enforce any settlement agreement or challenge its validity, existence, scope or applicability in legal proceedings commenced and pursued in good faith before a state court or other judicial authority.

Nothing that is communicated to the Mediator in private shall be revealed to the other party, without the express consent of the party who such private communication(s); and in no circumstances shall any statement made during the mediation process, whether in writing or orally, be used in any judicial or arbitration proceedings as evidence of admissions against the interests of the party that made them. However, the Mediator is permitted to make disclosure of what would normally be considered confidential pursuant to Article 9 of the Rule if required by law or a competent judicial authority to make such disclosure.

Centre and Arbitration Court’s Functions

All mediations shall be administered by the Centre in accordance with the Rules and the Centre’s internal policies; and any matter relating to the powers and duties of the Centre not expressly referred to in the Rules, shall be decided by the Arbitration Court. Further, the decisions of the Arbitration Court upon matters that it is required to decide shall be conclusive and the reasoning of the Arbitration Court’s decision(s) shall not be communicated to the parties, save for the reasoning of decisions upholding a challenge to a Mediator’s continued appointment.

The Centre shall maintain an archive of any settlement agreements for a maximum of 5 years from the date such settlement agreement is deposited with the Centre. Thereafter, such documents may be destroyed in a confidential manner without notice to any party or Mediator.

Exclusion of liability

No Mediator or their employees, affiliated personnel, or person appointed by them, the Arbitration Court and its members, nor the Centre or any of its employees or personnel shall be liable to any person or any party for any act, error, or omission in connection with any mediation governed by or conducted pursuant to the Rules; and no party shall seek to make any Mediator, member of the Arbitration Court, and/or any of the Centre’s employees or personnel act as a witness in any legal proceedings in connection with any mediation governed by the Rules.

Conclusion

This proactive move by DIAC reflects the UAE’s efforts to augment the worthiness of mediation amongst the ADR for setting cross-border commercial disputes and providing an enforceable settlement agreement resulting from mediation of such disputes.

How Al Dhaheri International Can Help

We recommend the interested parties to mediate, to incorporate a clause in your contracts going forward, which shall read as follows: “In the event of a dispute arising out of or relating to this contract, including any question regarding its existence, validity or termination, the parties shall seek settlement of that dispute by mediation in accordance with the Mediation Rules of the Dubai International Arbitration Centre, which Rules are deemed to be incorporated by reference into this clause.”

We are happy to assist you in registering a mediation case before the DIAC. At Al Dhaheri International Advocates & Legal Consultants, one of the leading Dubai law firms, we are committed to encourage our clients to use ADR modes which includes mediation, in the best interests of our clients. Our experienced team of Dubai lawyers is here to provide expert legal guidance.

For any clarification on the above or legal assistance with regards to mediation process, please get in touch with our Managing Partner Mr. Mohsen Moustafa, one of the best and prominent lawyers in Dubai.

Written by — Senior Legal Counsel Dr. Sherina M. Saji