New DIAC rules further promote mediation in the Middle East

Opting for mediation can offer parties a cheaper way of resolving disputes without having to take their case through the courts or arbitration. Mediation also has the advantage of being an effective dispute-resolution mechanism for parties who wish to retain a commercial relationship in the future.

New mediation rules, developed by the Dubai International Arbitration Centre (DIAC), came into effect on 1 October 2023 (the DIAC Mediation Rules).

Mediation: an overview

Mediation is a process by which parties seek to resolve a dispute by appointing a neutral third party, known as a mediator. The mediator offers potential recommendations for the parties to consider.

A successful mediation could involve one or two days of structured negotiation. If the mediation is successful, the parties would then negotiate and sign a settlement agreement, the terms of which would be legally enforceable. 

The process is structured in a way that encourages the idea of resolving the dispute outside of court by reaching an amicable settlement and applying flexible and creative solutions. The mediator is not a judge and cannot impose a binding judgment on the parties in dispute. Unless the parties have contractually agreed to mediate, mediation is a voluntary process. Due to the flexibility of mediation, the parties can choose to structure the procedure in whatever manner they find comfortable. Where the parties decide to choose a specific mediation model, they can outline their intentions in their contract.

The DIAC Mediation Rules

In a statement commemorating the DIAC Mediation Rules, DIAC executive director Jehad Kazim said the institution, with its new mediation rules, aims to “merge time-honoured traditions with modern techniques”. The DIAC Mediation Rules are intended to establish mediation as a preferred dispute resolution mechanism in Dubai. Parties may refer a dispute to mediation under these rules, whether they have a pre-existing agreement to mediate or not.

Confidentiality provisions

The new DIAC Mediation Rules contain features that are likely to make mediation an attractive option for businesses in the region. In particular, the confidentiality provisions at Article 9 of the DIAC Mediation Rules state that unless the parties expressly agree otherwise, the following shall be kept confidential:

• all information related to the mediation;
• all documents in the parties’ possession, which are not publicly available; and
• the contents or existence of a settlement agreement.

In addition to the above, Article 9.3 of the DIAC Mediation Rules provides that in no circumstances shall any “statement” made during the mediation process, whether in writing or orally, “be used in any judicial or arbitration proceedings as evidence of admissions against the interests of the party that made them”. These provisions are also brought onto a statutory footing by way of Mediation Law 6 of 2021.

The DIAC Mediation Rules also afford the parties and the mediator scope to decide at a preliminary meeting on the degree and extent of confidentiality as well as the ‘without prejudice’ nature of the proceedings.

The importance of without prejudice and confidentiality provisions is paramount in Dubai, given the emirate is a civil law jurisdiction in which common law principles – such as without prejudice – do not generally apply. Conducting proceedings on a without prejudice basis encourages the parties’ trust in the process, and instils confidence that all mediation-related information, exchanges, and materials will be kept confidential.

How far do these confidentiality provisions go?

Whilst it is important that the DIAC Mediation Rules contain express confidentiality provisions, it remains to be seen how these provisions will be interpreted by the regional courts. This is particularly the case in relation to offers of settlement made during the mediation process which are expressed to be on a ‘without prejudice’ basis.

The provisions related to confidentiality in the DIAC Mediation Rules use slightly different language to those contained in other established mediation rules, including the LCIA’s. For example, Article 12 of the LCIA Mediation Rules expressly extends without prejudice status to the ‘negotiations’ between the parties in addition to the ‘documents’ prepared for the purposes of the mediation. Parties should therefore carefully study the rules to ensure that they are suited to the circumstances of their dispute and consider supplementing the confidentiality protections provided by the relevant institution, where necessary.

Looking forward

It is expected that the UAE will soon sign the Singapore Mediation Convention, an agreement that aims to facilitate a process by which settlement agreements can easily be recognised and enforced internationally. Once the UAE has become a signatory, mediation will be an even more attractive form of dispute resolution in Dubai.

Co-written by Jeremy Speller and Lydia Redman of Pinsent Masons.