13 May 2016

Abu Dhabi Global Market

Abu Dhabi establishes new common law free zone - ADGM, enacting new arbitration regulations. Comparisons will be drawn with Dubai's already well established free zone, DIFC, and the DIFC-LCIA Rules.

The ADGM is a financial free zone, established in accordance with Federal Law No 8 of 2004, Federal Decree No 15 of 2013, Cabinet Resolution No 4 of 2013, and Abu Dhabi Law No 4 of 2013. The ADGM occupies 1,680,323 sq. m on the Al Maryah Island, in the emirate of Abu Dhabi, and is a separate jurisdiction carved out of the United Arab Emirates (the “UAE”). The ADGM is not subject to UAE civil and commercial laws; instead it is modelled closely on principles of common law, and tailored to the region’s specific needs.

The ADGM comprises of three independent authorities:

  • The Registration Authority – The Registration Authority handles all aspects of incorporation, registration and licensing of legal entities in the ADGM. In addition, it provides all “government-related services” to entities and professionals working on Al Maryah Island.
  • The Financial Services Regulatory Authority (the “FSRA”) – The FSRA undertakes various regulatory functions to foster an open, efficient and transparent marketplace, as well as a trusted regulatory environment.
  • The ADGM Courts – The ADGM Courts and judiciary are broadly modelled on the English judicial system. They are comprised of the ADGM Court of First Instance and the ADGM Court of Appeal. The foundation of the civil and commercial law in the ADGM is provided by the Application of English Law Regulations 2015. These regulations make English common law (including the principles of equity) directly applicable in the ADGM. In addition, a wide-ranging set of well-established English statutes on civil matters are also made applicable in the ADGM. The ADGM Board has also enacted the Interpretation Regulations 2015, which govern how the new regulations in the ADGM should be construed. On 17 December 2015 the ADGM Board enacted the ADGM Courts, Civil Evidence, Judgments, Enforcement and Judicial Appointments Regulations (the “ADGM Courts Regulations”) codifying the courts’ structure, their powers and the rules of judicial procedure. Notably, the ADGM Courts do not have jurisdiction in criminal matters, therefore any references in the English statutes to criminal offences have been amended to refer to breaches of the ADGM Courts Regulations, punishable by a monetary fine.

In connection with arbitration, the ADGM has enacted the Arbitration Regulations (the “ARs”) to govern the arbitration of disputes within the ADGM, however at present the ADGM lacks an arbitral institution. The ARs provide for the recognition and enforcement of arbitral awards in the ADGM Courts, and should encourage the use of the ADGM as a seat of arbitration. The Regulations are modeled on the UNCITRAL Model Law on International Commercial Arbitration with the aim to implement best international arbitration practice and procedure.

The ARs have been designed to facilitate the arbitral process within the ADGM in accordance with the parties’ agreements. Under the ARs:

  • there is limited scope for court intervention in the arbitral process;
  • a tribunal will have the power to consider and decide disputes concerning its own jurisdiction;
  • the grounds for challenging an arbitral award are limited, with no review of the merits;
  • party autonomy and control over the arbitral process has been maximised; and

amends to the UNCITRAL Model Law have been made to accommodate the unique nature of the ADGM’s jurisdictional and legal framework.

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Download Crossing Borders: International Arbitration Insights - Where will we be in 2028?

Crossing Borders is a periodic review of developments in international arbitration across the world. Included in this special 10th edition, we explore what arbitrations will be like going into 2028 - where, how and by whom disputes will be decided.

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