How Proper Arbitration Structuring Saves Millions
Seat, rules, tribunal and language — the drafting decisions that set what a dispute costs years before one starts.
What an arbitration clause has to settle before anything goes wrong: the seat, the institution, how the tribunal is appointed, the language, and confidentiality. Includes what Dubai Decree No. 34 of 2021 changed for contracts naming the DIFC-LCIA.
Reviewed by Mohamed Noureldin, Founder, Managing Partner & Senior Legal Consultant
An arbitration clause is usually the last provision negotiated and the shortest one in the contract. It is also the only clause that decides how every other clause will be read if the relationship fails. Three lines and twenty lines cost the same to draft. The difference between them shows up years later, in the fees, the length of the timetable, and sometimes in an argument about whether the tribunal was properly constituted at all.
Arbitrations seated onshore in the UAE run under Federal Law No. 6 of 2018, as amended in 2023. Where the seat is the Dubai International Financial Centre or the Abu Dhabi Global Market, the arbitration law of that jurisdiction applies instead; both are common-law jurisdictions with their own courts. That single choice drives most of what follows.
Related: our commercial arbitration practice advises on clause drafting and on running cases to award.
Seat, venue and governing law are three separate decisions
The seat fixes the procedural law of the arbitration and identifies the court with supervisory jurisdiction: the court that hears an application to challenge an arbitrator, to grant interim relief in support of the arbitration, or to set the award aside. The venue is only where hearings physically take place, and it can move for convenience without disturbing the seat. The law governing the contract is a third question. The law governing the arbitration agreement itself is a fourth, and most clauses say nothing about it.
Clauses that provide for “arbitration in Dubai” and stop there leave room for argument over whether the seat is onshore Dubai or the DIFC, which are different legal regimes with different supervising courts. Name the seat expressly, and name it as a legal seat rather than as a city where meetings will be held.
Name an institution that still exists
Dubai Decree No. 34 of 2021 abolished the DIFC-LCIA Arbitration Centre and moved its caseload to the Dubai International Arbitration Centre. Contracts signed before that decree still circulate with DIFC-LCIA clauses in them, and those clauses now need thought rather than assumption. The DIFC itself remains fully available as a seat; it is the institution that went, not the jurisdiction.
In Abu Dhabi, ADCCAC was restructured and has operated as arbitrateAD since 2024. For new contracts, the practical position is straightforward: name DIAC, arbitrateAD, or an international institution whose rules you have actually read, and pair it with a seat that matches the parties’ expectations. A clause pointing at a body that no longer administers cases is not necessarily unworkable, but it produces a preliminary skirmish before anyone reaches the merits, and preliminary skirmishes are billed at the same rates as everything else.
Related: we act in international arbitration proceedings seated in the UAE and abroad.
The tribunal, and who appoints it
A sole arbitrator is cheaper and faster than three. Three gives each side an appointment and, on a heavily technical or high-value case, a broader base of experience. The clause should say which, or say how the number is decided, because leaving it open hands the question to the institution at the moment the parties are least able to agree on anything.
Qualification requirements are worth stating and worth keeping short. A requirement that the chair be qualified in a common-law system, or fluent in a particular language, or experienced in construction claims, is useful. Stacking four such requirements together produces a pool of candidates so small that the appointment itself becomes contested. The appointment mechanism matters as much as the criteria: name the appointing authority for the case where a party refuses to nominate.
Language and the record
The language of the arbitration governs pleadings, evidence and the award. Where the underlying documents are in Arabic and the arbitration is in English, or the reverse, translation of the record is a real and often underestimated cost, and it is one the clause can control by matching the arbitration language to the language the project is actually run in. An application to an onshore court in support of the arbitration will proceed in Arabic regardless of what the parties chose for the arbitration itself.
Confidentiality, interim relief and contract chains
Do not assume confidentiality is automatic. Rules differ on what is confidential, on whether the existence of the arbitration is covered, and on the exceptions. If confidentiality is one of the reasons for choosing arbitration, read the rules you are naming and add an express obligation where they fall short.
Preserve the ability to go to a court for urgent relief before the tribunal exists. Freezing an account or preventing a call on a guarantee cannot wait for the constitution of a tribunal, and a clause drafted as an exclusive submission to arbitration can create doubt about whether a party may approach a court at all for that limited purpose.
On projects run through several contracts – a development with an employer, a main contractor and a chain of subcontractors, or a joint venture with a shareholders’ agreement sitting above supply contracts – use the same clause throughout. Mismatched clauses mean parallel proceedings on the same facts before different tribunals, with no reliable route to bring them together and no guarantee the outcomes agree.
Related: speak to our arbitration team about clauses in a live contract portfolio.
The drafting choices that actually reduce cost
Most institutional rules contain an expedited track, and availability usually turns on the amount in dispute or on the parties agreeing to it. Check that threshold against the size of the contract before adopting a set of rules: an expedited procedure that never applies to your contract value is not a saving.
Institutional fee bases also differ, some calculated by reference to the amount in dispute and others by reference to arbitrator time. On a large claim that difference is material, and the fee schedule is published. Read it at drafting stage rather than discovering it at registration.
Finally, think about where the award will need to be used. If the counterparty’s assets sit onshore, the award will end up in front of an onshore court whatever the seat, and the drafting question is whether the clause and the process leave any easy target for a challenge there. Clauses that are clear about the seat, the rules, the tribunal and the scope of the submission give a losing party less to work with.
Related Services: our arbitration practice covers clause review, institutional proceedings and enforcement.
Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. Readers should seek professional legal advice tailored to their specific circumstances before making any decisions or taking any action based on the content of this article.
Nour Attorneys Team
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