The Role of Mediation in the DIFC Courts

Published with the kind permission of the author – Natasha Bakirci, Assistant Registrar – Dubai International Financial Centre Courts

DIFC logoLondon, 5 January, 2015.

The DIFC Courts, Dubai’s commercial and civil common law jurisdiction, were established in 2006 to hear disputes concerning the Dubai International Financial Centre and those doing business in, with or from the Centre. The Courts’ jurisdiction was later extended by Dubai Law No. 16 of 2011, which amended Law No. 12 of 2004 and allowed for external parties to opt-in to the Courts’ jurisdiction in writing either before or after a dispute has arisen[1]. Mediation already plays a role in the Courts’ procedure and it is envisaged that there will be more of a focus on encouraging early settlements of disputes in the future.

The Small Claims Tribunal (SCT)

The Small Claims Tribunal (SCT) of the DIFC Courts, which drew inspiration from the Singaporean model, features a formal session of mediation as part of its procedure. Claims with a maximum value limit of 500,000 AED (UAE Dirhams) can be considered by the SCT if both parties agree, or in the context of employment related matters without a value limit provided both parties agree in writing to the SCT’s jurisdiction [2].

Approximately 90% of applications before the SCT settle at the “consultation” phase which is a mandatory Court–guided mediation session. Only if the parties are unable to reach a settlement will a judge of the DIFC Courts go on to hold a hearing and deliver a Court judgment. SCT proceedings are confidential and parties are not normally legally represented.

Part 27 of the Rules of the DIFC Court (RDC) on Alternative Dispute Resolution 

Mediation is also provided for in Part 27 of the RDC which makes provision for Alternative Dispute Resolution, which was previously referred to by the term “Justice by Reconciliation” (JBR) prior to the amendment of the RDC in April 2014[3].

RDC Part 27.1 emphasises the Courts’ “primary role as a forum for deciding civil and commercial cases” whilst encouraging “parties to consider the use of alternative dispute resolution (such as but not confined to mediation and conciliation) as an alternative means of resolving disputes or particular issues.” RDC Part 27.2 highlights that alternative dispute resolution can significantly help parties to save costs, save parties the delay of litigation, enable parties to achieve settlement of their disputes while preserving their existing commercial relationships and market reputation, provide parties with a wider range of solutions than those offered by litigation and would also contribute to the more efficient use of judicial resources. Part 27 provides for judges to invite parties to consider whether their disputes could be resolved through alternative dispute resolution, either at the Case Management Conference stage or at another juncture if deemed appropriate. Furthermore, legal representatives are exhorted to consider with their clients and the other parties concerned, the possibility of attempting alternative dispute resolution and to ensure that their clients are fully informed as to the most cost effective means of resolving their dispute[4]. Despite ample provision being made in the RDC for alternative dispute resolution, there are few examples of Part 27 being implemented in practice. Specific case examples in which Part 27 of the RDC has been used include, inter alia,  the case of Dr Aziz Kurtha v. Bin Shabib & Associates (BSA) LLP & ORS (CFI 004/2008) Order of 19 January 2009 on Mediation – Justice by Reconciliation, in which Sir Anthony Colman ordered the parties to select a neutral mediator and to “take such serious steps as they may be advised to settle their dispute by JBR”; and a number of Court case management orders including that of H.E. Justice Shamlan Al Sawalehi of 2 June 2014 in the case of BGC Brokers L.P. v. Mourad Abourahim (CFI 027/2013) where the parties were ordered to exchange lists of three neutral individuals who were available to conduct ADR procedures by a certain date, and subsequently to in good faith endeavour to agree a neutral individual from the lists so exchanged and provided.

The Establishment of the Dispute Resolution Authority (“DRA”)

Dubai Law No. 7 of 2014, amending Dubai Law No. 9 of 2004, which was issued on 21 May 2014 established the Dispute Resolution Authority (“DRA”). The DRA will comprise of the following entities: (i) the DIFC Courts; (ii) the Arbitration Institute; and (iii) any other tribunals or ancillary bodies established in accordance with Article 8 (5) (b) of this Law, which empowers the Chief Justice of the DIFC Courts in his new role as Head of the DRA to set up such ancillary tribunals and establishments. There is discussion at the current moment as to whether this might allow for Court-ordered mediation through the eventual establishment of a DIFC Mediation Centre, which would in fact form part of the DIFC Arbitration Institute.

A potential future DIFC Mediation Centre 

Singapore, which the DIFC Courts often looks to as an exemplary common law system has its Singapore Mediation Centre (SMC). The SMC was established in 1997 to promote and facilitate the settlement of disputes through alternative dispute resolution. The SMC is a not-for-profit organisation structured as a company limited by guarantee by the Singapore Academy of Law. The DIFC Courts are currently considering the creation of a separate DIFC Academy, very much akin to the Singaporean model, which would cover all of the DIFC Courts’ activities which are not specifically related to litigation. As the Courts’ caseload increases, it may well be that certain cases which a judge feels would be suitable for an attempt at settlement would be sent for mediation before the Court would consider entertaining an application. This would achieve a number of the purposes set out in RDC 27.2 cited above.Continue Reading

Civil justice reforms and the balance of power

Almost all mediations are strongly affected by cost considerations. Many are completely dominated by them. Costs are a crucial element in the weighing of risk and reward that parties are being asked to engage in at a mediation and mediation’s big attraction is often that it gives the parties the chance to settle and to “stop the clock”.

So it is unsurprising that the changing machinery for the incurring and recovering of legal costs in our civil procedure system is a matter of enormous interest, indeed concern, to the mediation community.

The Super-claimant

Mediators got used to working in the CFA/ATE universe. It had its problems but we got used to it. It was always difficult to negotiate with the “super-claimant” who had passed all the risks of defeat to a combination of his lawyers and his insurers. “Bill, what incentive do I have to settle for that?” such a Claimant would ask. “There is simply no down-side for me in fighting on.” The obligation to pay the lawyers and the ATE insurers (and often the funders too) might well mean that until a very substantial sum of money indeed had been tabled at a mediation, the super-claimant him- or herself was getting nothing.Continue Reading