Introduction
We are undoubtedly witnessing a paradigm shift in the current Dispute Resolution landscape as the reconciliatory potential of the constellation of Alternative Dispute Resolution (ADR) methods like negotiation, mediation, and arbitration stands increasingly proven and prevalently preferred.
It is common knowledge that there are a host of reasons for the proliferation of ADR.
Parties are less inclined to choose the conventional court litigation system owing to its inherent inefficiencies and are willing to proclaim their preference for more efficient ADR mechanisms like mediation that offers reasonable time and cost, effective processes that are open, flexible, and responsive to the unique needs of the parties, thereby achieving desired outcomes.
Mediation is increasingly becoming the preferred default option for dispute resolution as it may offer unique solutions, stronger confidentiality, and safeguard relationships and can be availed to resolve a wider spectrum of disputes coupled with advantages offered by party autonomy.
DIAC Mediation Rules 2023
The Dubai International Arbitration Centre (DIAC), known for its relentless pursuit to seamlessly improve the efficiency of ADR tools, timely issued the DIAC Mediation Rules 2023 (the “Rules”), which came into effect on 1 October 2023. The Rules offer a more structured approach to enhance the legitimacy, utility and benefits of mediation. All new applications for mediation submitted to the DIAC after 1 October 2023 will be governed by these Rules. They also apply to pre-existing agreements to mediate if the parties agree to mediate their dispute before the DIAC after this date (Article 2.1), irrespective of the date on which the agreement to mediate was entered into (Article 2.3).
Below are some of the salient features of the new Rules:
- Article 3 Commencement of Mediation
The time limits set out by the Rules seek to avoid delays. The Rules grant a responding party only 15 days (with a possible extension of 7 days) to submit any response to a mediation request. Failure, on the part of a respondent, to submit a response will be deemed as non-consent to the dispute being referred to mediation, and therefore mediation shall not proceed.
- Article 5 Cost of Mediation & Article 6 Appointment of Mediators
The fees and expenses of the mediator shall be at the discretion of parties and should be agreed at the time of the preliminary meeting. The fees and expenses should be proportionate to the complexity, value and agreed timeframe of the mediation and shall be paid by the parties in equal shares unless agreed otherwise.
- Article 6 Appointment of Mediators
All mediators are to be appointed by the DIAC’s Arbitration Court and the parties are at liberty to nominate a mediator for the appointment by the Arbitration Court in accordance with the Rules. It is important to note that once a mediator has been appointed, the mediator should approach the parties within a period of 7 days in order to fix a date for the preliminary meeting.
As per Article 6.8, the Arbitration Court requires the prospective mediator to declare that he or she accepts to act as mediator, is impartial and independent, and is available to act. The prospective mediator should also declare his or her nationality, and it is an ongoing duty of mediators to disclose any known, actual or potential conflicts of interest which could affect their impartiality, independence, or availability.
- Article 7 Conduct of Mediation
Subject to Article 7.1, the mediator may exercise absolute discretion in determining the procedure of the mediation, provided that the parties are given a reasonable opportunity to present their respective positions and after having due regard to the relevant circumstances of the case.
It is further stipulated that each party has an obligation to act in good faith throughout the course of the mediation proceedings.
Article 7 goes on further to state that, in the event the parties are able to settle their dispute, the mediator may facilitate the preparation of a settlement agreement, the executed copy of which shall be provided to the mediator and the DIAC for record-keeping purposes.
- Article 9 Confidentiality
This Article emphasises strict confidentiality, which is obviously a very important aspect in mediation. In this regard, parties and the mediator are to keep all information related to the mediation entirely confidential. It is clearly stated that, in no circumstances, shall any statement made during the course of the mediation process be used in any judicial or arbitral proceedings (that may arise subsequently) as evidence of any admissions or otherwise.
In line with Article 12, the DIAC is required to maintain an archive of all settlement agreements (executed pursuant to any mediation proceedings) for a maximum of 5 years from the date of delivery to the DIAC and thereafter, such agreements may be destroyed in a confidential manner without notice to the parties or the mediator.
Appendix 1 of the Rules contains the form of application to be used for the initiation of any mediation proceedings, and Appendix 2 provides what information is required from a responding party in replying to an application for mediation. Furthermore, Appendix 3 provides for (in tabular form) the DIAC’s applicable Registration and Administrative Fees, which should be read and understood in conjunction with Articles 5.2 and 5.7 of the Rules.
As a supportive gesture, the Rules provide recommended clauses (for mediation, arbitration, and mediation and arbitration together) for the ease of contracting parties who wish to have future disputes referred to mediation under the auspices of DIAC. For instance, a recommended mediation clause reads 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 Center, which Rules are deemed to be incorporated by reference into this clause”.
Thus, through these new Rules, the DIAC undoubtedly aims to achieve a more structured approach in order to enhance the advantages of mediation, and promote mediation as a hassle-free dispute resolution method.
Disclaimer
This publication does not provide any legal advice and it is for information purposes only. You should not rely upon the material or information in this publication as a basis for making any business, legal or other decisions. Therefore, any reliance on such material is strictly at your own risk.
Reference: DIAC Mediation Rules 2023
Author: Dr.Mahmood Hussain & Thara Kumar (Paralegal)
