22 Jun 2017

Emirates Maritime Arbitration Centre (‘EMAC’): Commencement of Operations in September 2016

Authored by: Richard Briggs & Raymond Kisswany

Emirates Maritime Arbitration Centre (‘EMAC’): Commencement of Operations in September 2016

In brief:

  • Discusses the establishment and commencement of operations of EMAC
  • Examine the specifics of EMAC’s Arbitration Rules
  • Set out the fee guidelines

Some may recall that in September 2014, based on an initiative from the maritime industry, the Government of Dubai announced the approval of the creation of the Emirates Maritime Arbitration Centre (‘EMAC’), describing EMAC as ‘a first-of-its-kind initiative in the Middle East [. . .] aimed at addressing and resolving maritime disputes via [arbitration] based on legal frameworks and [to] set maritime regulatory guidelines and standards [in order to] position the emirate as a world-class maritime hub’. This article discusses the establishment and commencement of operations of EMAC.

Currently, most maritime - based disputes subject to arbitration or mediation are resolved in one of the well-established alternative dispute resolution hubs such as: New York (‘SMA Rules’), London (‘LMAA Rules’), Singapore (‘SCMA Rules’) or Hong Kong (‘HKIAC Rules’). The United Arab Emirates (‘UAE’), as an international commercial and shipping hub, is perfectly placed to fill the vast geographical vacuum between alternative dispute resolution hubs in Europe and Asia. EMAC was conceived from the realisation of a specialised maritime arbitration and mediation centre with the intention of filling the geographic vacuum as well as to service the growing market necessities of domestic, regional and international maritime companies. As such, one of the EMAC’s main objectives is to be capable of resolving international as well as domestic maritime disputes through arbitration and mediation while at the same time creating a modern centre, for example, cases will be managed online as well as online payment systems.

There have been several developments since late 2014 when EMAC formally commenced its operations on 25 September 2016.

On 20 April 2016, the UAE Vice President, Prime Minister and Ruler of Dubai, His Highness Sheikh Mohammed Bin Rashid Al Maktoum issued Dubai Decree No 14 of 2016 establishing EMAC as an independent legal entity and Dubai Decree No 16 of 2016 appointing the first Board of Trustees for EMAC. The Chairman of EMAC’s Board of Trustees is Sir Anthony Colman, a former English High Court Judge of the Commercial Court from 1992 to 2007 and former Deputy Chief Justice of the DIFC Courts in Dubai from 2010-2015. The Vice Chairman and Secretary General of EMAC is Majid Obaid Bin Bashir who is a former Legal Consultant to the Dubai Government and is a well-known arbitrator. The initial Board of Trustees has 15 trustees with a renewable three year term. Five of the trustees are lawyers (including the co-author of this article, Richard Briggs, a long-time Dubai-based lawyer with Hadef & Partners), the remaining ten trustees represent various sectors within the UAE’s diverse maritime industry.

An important step was taken on 23 June 2016 when the Trustees adopted the Arbitration Rules and Mediation Rules. That same day, the Board appointed a Secretary General and Executive Committee as well as agreed membership fees, panel fees and the criteria to admit arbitrators and mediators.

Understandably, one of the key factors parties look to in choosing an arbitration centre is the centre’s rules. In this respect, EMAC’s rules are based on UNCITRAL 2010 with only minor variations. EMAC’s overall approach is to adopt a so-called ‘light touch’ to case management ensuring disputes are managed efficiently and effectively. Furthermore, parties will be able to ‘fast track’ the procedures, which is essential for low value claims where parties seek a speedy yet economic resolution. EMAC’s Board of Trustees is currently in discussions to draft particular rules aimed specifically at speedy low cost arbitration procedures. In fact, EMAC’s Arbitration Rules require the tribunal to issue a final award within 90 days after proceedings are closed, unless EMAC’s Executive Committee permits a time extension. EMAC Arbitration Rules have also included procedures for an emergency arbitrator for urgent cases. Furthermore, a party may apply to the Secretariat to appoint a temporary arbitrator in order to conduct emergency proceedings prior to the formation of the arbitral tribunal.

EMAC’s Arbitration Rules provide the arbitral tribunal with extensive discretion to award costs. Generally, arbitration costs will be the responsibility of the unsuccessful party; however, the arbitral tribunal may, if it so chooses, allocate costs between the parties if it deems such allocation is reasonable in the circumstances.

An important factor for parties involved in arbitrations is the supervising court over the proceedings. Unless the parties choose otherwise, the default seat for EMAC arbitrations will be the Dubai International Financial Centre (‘DIFC’) with jurisdiction to the DIFC Courts.

The DIFC is a separate enclave within the Emirate of Dubai with its own common law-based legal jurisdiction. None of the civil and commercial laws of the UAE apply in the DIFC. Instead, the DIFC has its own laws, primarily based on English common law, and its own court system. The DIFC courts have provided consistent rulings and have shown a willingness to be pro-arbitration. More importantly, DIFC Court judgments are automatically enforceable in the Dubai Courts by virtue of a Memorandum of Guidance with the Dubai Courts, as well as pursuant to Dubai Law No 12 of 2004 concerning the Law on Judicial Authority. This means that where the DIFC Courts have granted recognition and enforcement of a DIFC seated arbitral award, that award can, without a review of the underlying merits of the arbitral award, be enforced in the Dubai courts, as well as the rest of the UAE’s Emirates. Additionally, DIFC Court judgments are enforceable regionally through various bilateral and multilateral agreements (including via the Riyadh Treaty with countries such as Iraq and Sudan), as well as in any state that has ratified the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (‘New York Convention’).

The advantage of an EMAC arbitration seat in the DIFC is clear, it will greatly limit unmeritorious and frivolous challenges to sound arbitral awards and orders of an EMAC arbitral tribunal.

However, all too often, claimants and defendants must decide to resolve disputes not based on the law or facts of the case, but rather based on the fees payable to the arbitration centre. With the aforementioned in mind, EMAC has ensured that the costs to resolve disputes are not particularly burdensome on parties. In fact, compared to other arbitration centres, the fees are quite modest. In summary, the arbitration fees depend on the value of the claim in dispute. For example, registration fees range from AED1,000 to AED10,000 (US$272 to US$2,720) for disputes where the claim value exceeds AED100 million (US$27,211,000). Administrative fees range from AED4,000 to AED60,000 (US$1,100 to US$16,325). EMAC’s Administrative Arbitration Fees can be found at the end of this article under Schedule 1. Arbitrators’ fees will be on a time spent basis instead of charging a flat fee depending on the amount in dispute.

In addition to arbitration, EMAC has separate rules governing mediation. The most interesting facet of the Mediation Rules is that, where a mediation results in settlement between the parties, the parties may choose to register the settlement in writing as an arbitral award by consent. In such circumstances, the mediator becomes an arbitrator and is not required to provide a reasoned award; rather, he/she will simply prepare an arbitral award based on the parties’ settlement terms. The advantages to this are astronomical because should one party breach the terms of settlement, the non-breaching party does not have to bring breach of settlement proceedings against the breaching party but rather, is only required to enforce an arbitral award in the methods discussed above. EMAC mediation will provide a practical and economical alternative dispute resolution forum suited for domestic, regional and international parties.

Mediation fees will also be in line with the overall aim of EMAC to provide quality alternative dispute resolution in an effective and cost efficient manner. The EMAC mediation registration fee is AED1,000 (US$272). Additionally, there is an administration fee of AED4,000 (US$1,089). The mediator’s fees will be determined on a time spent basis in consultation with the parties and EMAC.

Individuals and companies can apply for annual membership of EMAC online. Membership is open internationally and is not limited to individuals and companies within the UAE. Benefits of membership include discounted fees for events, publications as well as interactive connection between members.

Online application is available to those applying to be listed on the panel of arbitrators, mediators or experts. It is important to note that there will not be a separate application fee.

Annual membership fees for individuals are currently set at US$100 and US$200 for corporate memberships which permit three individual nominations per corporate registration.

Lastly, EMAC’s official website is live with the URL address of www.emac.org.ae. The website includes helpful information for interested parties about the EMAC, EMAC rules and other relevant resources.

 

Schedule 1: EMAC Administrative Arbitration Fees

Disputed Amount

Centre's Administrative Fees

Up to AED 200,000/-

AED 4,000/-

From AED 200,001 up to AED 500,000/-

AED 6,000/-

From AED 500,001 up to AED 1,000,000/-

AED 8,000/-

From AED 1,000,001 up to AED 1,500,000/-

AED 10,000/-

From AED 1,500,001 up to AED 2,000,000/-

AED 12,000/-

From AED 2,000,001 up to AED 2,500,000/-

AED 14,000/-

From AED 2,500,001 up to AED 5,000,000/-

AED 16,000/-

From AED 5,000/001 up to AED 10,000,000/-

AED 18,000/-

From AED 10,000,001 up to AED 20,000,000/-

AED 21,000/-

From AED 20,000,001 up to AED 30,000,000/-

AED 24,000/-

From AED 30,000,001 up to AED 40,000,000/-

AED 27,000/-

From AED 40,000,001 up to AED 50,000,000/-

AED 30,000/-

From AED 50,000,001 up to AED 60,000,000/-

AED 33,000/-

From AED 60,000,001 up to AED 70,000,000/-

AED 35,000/-

From AED 70,000,001 up to AED 80,000,000/-

AED 40,000/-

From AED 80,000,001 up to AED 90,000,000/-

AED 45,000/

From AED 90,000,001 up to AED 100,000,000/-

AED 50,000/-

Above AED 100,000,000/-

Maximum AED 60,000/-

 

Please feel free to contact the authors of this article by email with any questions you may have.

 

(Originally published in the March 2017 edition of IPBA Journal)

 
 

This article, including any advice, commentary or recommendation herein, is provided on a complimentary basis without consideration of any specific objectives, circumstances or facts. It reflects the views of the writer which may, in some cases, differ from those of the firm, especially in the developing jurisdiction of the UAE.