How Arbitration Works in the UAE: Understanding DIAC and Commercial Dispute Resolution

Arbitration has become one of the primary methods for resolving commercial disputes in the UAE, particularly in Dubai. Many businesses in the region operate across borders and prefer a process that is faster and more flexible than traditional court proceedings. Over time, arbitration has emerged as a practical and efficient alternative. DIAC, or the Dubai International Arbitration Centre, is the institution that administers a significant number of these disputes. It plays a central role in construction, real estate and general commercial agreements and is a key feature of the UAE’s dispute resolution landscape.

The UAE modernised its arbitration framework in 2018 through Federal Law No. 6 of 2018. This legislation clarified procedures and aligned the system with international standards. It permits electronic submissions, virtual hearings and grants parties greater autonomy over procedural matters. One of the law’s notable strengths is its limitation on court intervention, ensuring that arbitration proceedings are not subject to unnecessary delays. The legislation also simplifies the enforcement of arbitral awards, which is essential for maintaining confidence in the process. Businesses operating in the UAE benefit from a predictable and reliable enforcement regime.

DIAC is a well-established arbitration institution based in Dubai. It administers disputes by providing a structured procedural framework. When a contract includes a DIAC arbitration clause, disputes are referred to DIAC rather than the courts. Proceedings commence with a request for arbitration, followed by a response from the opposing party. An arbitrator is then appointed, either by agreement of the parties or directly by the centre, depending on the terms of the arbitration agreement.

Once the arbitrator is confirmed, the proceedings move into the substantive phase. Parties exchange written submissions, including statements of claim and defence, supporting documents and witness statements. Hearings may be conducted where necessary, although many cases are decided on the basis of written submissions alone. Virtual hearings have also become common in recent years. After reviewing the evidence and submissions, the arbitrator issues a written award. This award is final and binding, enforceable under UAE law and internationally, as the UAE is a signatory to the New York Convention on the recognition and enforcement of arbitral awards.

DIAC’s prominence is closely linked to Dubai’s commercial environment. Arbitration clauses referring disputes to DIAC are widely used in regional contracts, reflecting the institution’s familiarity and reliability. DIAC is particularly prevalent in construction disputes, given the scale of development activity in Dubai, as well as in shareholder disputes, joint ventures and real estate matters. Its procedures are designed to meet the needs of complex commercial relationships.

While DIAC remains the most commonly used arbitration centre in Dubai, parties may also opt for ADGM arbitration in Abu Dhabi. ADGM operates within an English common law framework and is often selected for financial or international transactions. The choice between DIAC and ADGM typically depends on the nature of the transaction, the governing law and the parties’ commercial priorities.

Arbitration continues to play an increasingly important role in the UAE’s legal system, offering efficiency, flexibility and enforceability. DIAC has established itself as a trusted institution within this framework. Understanding how DIAC operates provides valuable insight into how commercial disputes are resolved in practice across the UAE.

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