Rising DIAC caseload shows prevalence of construction disputes

DIAC’s 2023 annual report showed an 11% jump in the number of arbitration cases administered by the centre in 2023, from 292 in 2022 to 323. The total number of cases registered also rose by 4.4%, from 340 to 355. The total value of the cases registered in 2023 exceeded AED 5.5 billion (£1.16bn).

Construction and real estate cases continued to dominate its caseload last year, representing almost 60% of all DIAC administered cases. Construction contracts were also the most common contract type in DIAC arbitrations in 2023, accounting for 40% of all underlying contracts. Disputes in the banking and finance sector represented almost 10% of the centre’s caseload in 2023, making it the second most active sector for DIAC arbitrations.

International arbitration and construction disputes expert Mark Raymont of Pinsent Masons said it is unsurprising to see the continued success of DIAC with a further positive annual report, reflecting its position in a very competitive market.

“The data showing that construction disputes continue to represent the bulk of the centre’s caseload, at 59% of administered cases falling within the construction and real estate sector, is particularly notable. In our experience, it is closely reflective of the disputes market in the region,” he said.

The rising case load comes following a number of positive reforms carried out by the DIAC in recent years, such as the issuance of its revised arbitration rules in 2022 and refreshed board of directors, arbitration court and advisory committee.

Parties to DIAC arbitrations in 2023 originate from 49 different countries, including Saudi Arabia, the United Kingdom, India, Qatar, and the US. These statistics, according to the DIAC’s report, reaffirm the centre’s “unique proposition” as a “neutral forum” for the resolution of commercial disputes from parties doing business in and through the Middle East, Africa and South Asia (MEASA) region.

In terms of arbitration seats, there was a broadly equal split between Dubai and the DIFC seats in DIAC arbitrations last year. Dubai was selected as a seat in 162, or 50%, of the 323 arbitrations registered by the centre in 2023. Meanwhile, DIFC was selected as a seat in 158, or 49%, of the arbitrations.

According to the annual report, DIAC continued to make progress with diversity of tribunal appointments. The Arbitration Court’s selection of women as arbitrators reached near parity at 47% of all Arbitration Court appointments in 2023. However, it recognised that more needs to be done by parties and co-arbitrators to improve the overall percentage of appointments of women in DIAC arbitration. Of the 143 arbitrators appointed in 2023, 44, or 31%, were women. Of the 60 party-nominated arbitrators, 22% were women, and of the 26 presiding arbitrators nominated by the co-arbitrators, 15% were women.

Dubai-based dispute resolution specialist Melissa McLaren of Pinsent Masons said another encouraging takeaway from the report is DIAC’s clear commitment to diversity, particularly in the strides made to appoint a greater number of women arbitrators.

“The Centre’s position as signatory and active supporter of the Equal Representation in Arbitration Pledge and Campaign (ERA), the Equal Representation for Expert Witnesses Pledge and Campaign (ERE), and Racial Equality for Arbitration Lawyers Initiative (REAL) is also greatly welcomed,” said McLaren.

The DIAC annual report also gives context to the wording of the applicable arbitration agreements. Under article 2.1 of the DIAC Rules, the rules are applicable where parties have agreed to submit existing or future disputes to DIAC or the Dubai Chamber of Commerce and Industry (DCCI). Further, the annual report explains that the centre has jurisdiction under the DIAC rules to administer arbitrations brought under arbitration agreements referring to the DIFC-LCIA Arbitration Centre (DIFC-LCIA) or Emirates Maritime Arbitration Centre (EMAC) (following on from Dubai Decree No.34 of 2021).

The DIAC annual report breaks down the cases by these different types of arbitration agreement. Of the cases registered in 2023, 178, or 55%, were brought on the basis of a DIAC arbitration agreement, and 102, or 32%, were brought on the basis of a DIFC-LCIA arbitration agreement. A further 33, or 10%, of the cases were brought under arbitration agreements referring to DCCI, while one case was brought on the basis of an EMAC arbitration agreement.