DIFC-LCIA Arbitration Clauses: Are They Enforceable?

Summary

The US Court of Appeals for the Fifth Circuit has recently upheld the enforceability of a DIFC-LCIA arbitration clause, notwithstanding the fact that the DIFC-LCIA no longer exists. The decision highlights the uncertainty that surrounds the enforceability of DIFC-LCIA arbitration clauses.

Background

On 14 September 2021 Dubai Decree No. 34 of 2021 abolished the Dubai International Financial Centre Arbitration Institute (DAI), which administered DIFC-LCIA arbitrations, replacing it with the Dubai International Arbitration Centre (DIAC).

For most in the arbitration community, it was an unexpected and significant change to the arbitration landscape in Dubai. The DIFC-LCIA Arbitration Rules were an adaptation of the LCIA Rules and were administered by staff from the LCIA and as such DIFC-LCIA administered arbitration was a popular choice for parties operating in the region. As a result, a significant number of contracts negotiated prior to the abolition of