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Dubai chamber rows tripled over past year

Commercial disputes heard at Dubai's chamber of commerce tripled last year as more deals turned sour because of the financial crisis.

A total of 292 cases were handled by the Dubai International Arbitration Centre (DIAC), figures released yesterday showed.

In a further sign of the increasingly unsettled business environment in the emirate since the global financial crisis, the chamber's legal services department received 930 mediation cases last year. It settled 301 cases, the Dubai Chamber of Commerce and Industry said.

"This represents the growing sophistication of Middle East arbitration," said Tom Canning, a litigation and arbitration partner with the law firm DLA Piper Middle East in Dubai. "It's a move away from settling disputes behind closed doors to more typical dispute resolution channels as seen in other parts of the world."

A significant percentage of the disputes were likely to involve companies in the construction and property sectors, Mr Canning said.

Arbitration and mediation are alternative legal processes in which disputes are resolved by a third party without recourse to expensive and time-consuming litigation.

Many of the disputes that have emerged in the past year relate to late payment or non-payment by developers to contractors for work completed, after a slowdown in the region's construction sector since the start of the financial downturn has left some developers struggling.

DIAC took the unprecedented step last year of bringing in legal experts from other international centres of dispute resolution to ease a backlog of cases.

Arbitration case managers were recruited from the International Chamber of Commerce in Paris to help handle cases.

"The increase in arbitration cases is indicative of a rise in commercial disputes," said Mohamad Mouzehem, a spokesman at the Dubai Chamber of Commerce and Industry .

There was a growing understanding by the business community that using arbitration channels to resolve disputes was a quicker, more effective and cheaper alternative to pursuing claims through courts, Mr Mouzehem said.

Another reason for the increase was the wider use of arbitration clauses in corporate contracts that specified any disputes had to be heard under DIAC regulations, he said.

In a sign that corporate litigation has also been on the rise in the emirate, the Dubai International Financial Centre (DIFC) Courts said the number of cases before them rose to 36 last year from nine in 2008.

Sir Anthony Evans, the Chief Justice of the DIFC Courts, said this month that authorities were considering allowing the courts to handle specific types of commercial cases from outside the DIFC zone involving banking, shipping and financial services.

By Tom Arnold

© The National 2010