Law firm Stephenson Harwood Middle East LLP has recently acted for the Claimant, Narciso, in a landmark case (Narciso v Nash (ARB 009/2024)), which was held before the DIFC Court of First Instance. 

This case is of particular significance as it represents the first time the DIFC Court has dealt with a DIFC-LCIA arbitration clause following the issuance of the Decree No. 34 of 2021 concerning the Dubai International Arbitration Centre ('Decree 34'), which came into effect three years ago.

Decree 34 abolished the DIFC Arbitration Institute ('DAI'), the administering body of the DIFC-LCIA Arbitration Centre, and the Emirates Maritime Arbitration Centre ('EMAC') transferring the rights and obligations of both arbitration centres to the Dubai International Arbitration Centre ('DIAC').

Narciso, a UAE-incorporated construction company, had entered into a subcontract with Nash, also a construction company, in April 2020. This included an arbitration clause under the DIFC-LCIA Arbitration Centre Rules. Following a dispute, Narciso terminated the subcontract in July 2021.

Having terminated the subcontract, Nash applied to DIAC to appoint an arbitrator, which led to procedural complications and a subsequent claim being filed in Sharjah by Nash. Narciso obtained an interim anti-suit injunction from the DIFC Court to halt the Sharjah proceedings, arguing they breached the original arbitration agreement.

Nash made an application to discharge the injunction on various grounds, including that the arbitration agreement in the subcontract was no longer effective given the Decree.

The DIFC Court upheld the injunction, confirming its jurisdiction as the supervisory court due to the chosen seat of arbitration and that DIFC Court was mandatorily required to apply the Decree, such that the arbitration agreement was deemed valid. It went on to state that even if that was not correct, in the DIFC Court's view the Decree did not conflict with party autonomy.

Stephenson Harwood partner Mark Lakin said, "This decision alleviates some of the concerns about the Decree's effectiveness, ensuring that parties with existing DIFC-LCIA clauses can still pursue arbitration in the UAE. This will be of particular interest to any parties who still hold such DIFC-LCIA arbitration clauses within their contracts.  Furthermore, this decision signifies DIAC's validity as clearly demonstrating that both the Decree and DIFC-LCIA arbitration clause are still valid, effective and enforceable."

The Stephenson Harwood team was led by Dubai-based partner Mark Lakin, who was supported by managing associate Magda Kofluk and associates Samantha Martin and Mayss Akasheh.