It is becoming ever more apparent that the UAE, and in particular Dubai, is becoming a major player in the world of international arbitration. The region now has a strong track record as an international centre for commerce and has:

These developments have led to a significant increase in the number of cases lodged with the region's arbitration centres this year. For example, in "onshore" Dubai, as of September 2012, the Dubai International Arbitration Centre (DIAC) had registered 260 cases in 2012, taking the total number of cases filed in the last three years to over 1,100 (making it the largest arbitration centre in the Middle East). In addition, the alliance between the DIFC and the LCIA, the DIFC-LCIA Arbitration Centre, which was created in 2008, now has 30 registered cases - just over double the number of cases registered a year earlier.

In a judgment heralded as a watershed moment in Dubai's development as a major global centre for international arbitration, Dubai's highest court indicated that it will enforce foreign arbitral awards in accordance with the UAE's treaty obligations under the New York Convention.

The Dubai Court of Cassation's decision in Airmech (Dubai) LLC v Macsteel International, in which the court enforced a DIFC-LCIA award rendered by a tribunal seated in London, is of great significance for arbitration users and practitioners throughout the region. It made clear, for the first time, that the courts should regard the provisions of the UAE Civil Procedure Code as completely irrelevant and inapplicable to the enforcement of foreign arbitral awards in Dubai (see Legal update, Dubai court signals intent on enforcement of foreign arbitral awards). The judgment concluded that the courts should have regard only to the grounds for resisting enforcement set out in the New York Convention when considering such applications. This is an extremely encouraging conclusion in a jurisdiction where the enforcement of foreign arbitral awards has generally been perceived as problematic.

This year saw the DIFC Courts tender two apparently contradictory decisions in relation to whether the DIFC Courts should stay proceedings in favour of an arbitration seated outside the DIFC, in circumstances where there was a valid arbitration clause.

In the Injazat case, Justice David Steel concluded that the current DIFC Arbitration Law (closely modelled on the UNCITRAL Model Law) failed to implement the New York Convention, in that there was no provision for the application of Article 13(1) of the DIFC Arbitration Law (which provides the basis for a mandatory stay) where the arbitration was to be seated outside the DIFC (see Legal update, DIFC Court declines to stay proceedings in favour of LCIA arbitration).

A few months later, Justice David Williams handed down a decision in the International Electromechanical Services (IES) case (in which similar circumstances applied) but did not follow the previous decision in Injazat (see Legal update, DIFC Court determines it has inherent jurisdiction to stay proceedings in favour of DIAC arbitration). Justice Williams agreed with the decision in Injazat that there was no mandatory statutory requirement to stay proceedings. He also agreed with Justice Steel that it was difficult to identify the source of a discretionary power to order a stay when faced with such "detailed and precise" legislation.

However, Justice Williams concluded that the question was not whether or not the court had the inherent jurisdiction to stay proceedings, but rather "whether the established jurisdiction to stay proceedings, where the subject matter of that jurisdiction is covered by an arbitration agreement, has been eliminated by legislation". Justice Williams found that, in this case, the inherent jurisdiction had not been eliminated by legislation and thus granted a stay.

It should be noted that the two judgments can be distinguished, in that the Injazat decision concerned an arbitration clause where the seat was outside Dubai, whereas the IES decision concerned a DIAC arbitration clause, and hence the seat was in Dubai. Consequently, until there is a decision confirming that the DIFC Courts have inherent jurisdiction to stay proceedings in favour of an arbitration seated abroad, the position will remain unclear. However, a positive sign that can be taken from the IES decision is the court's view that it could not have been the intention of the legislative body to create a Financial Free Zone in which agreements to arbitrate, including those with a foreign seat, would be more difficult to enforce than in "onshore" Dubai.

Elsewhere, the DIFC Court of Appeal ruled in the Corinth case that the DIFC Courts did have jurisdiction to hear a claim brought against an English plc with a branch office presence inside the DIFC, despite the fact that the particular dispute concerned activities of an onshore branch of Barclays bank which took place outside the DIFC. The case is significant as it raises the possibility that any entity with a presence in the DIFC may be sued in the DIFC Courts, even where the dispute itself is otherwise unrelated to the DIFC. However, it should be noted that the judgment specifically carved out from the DIFC Courts' exercise of jurisdiction in this matter the doctrine of forum non conveniens.

Pursuant to Law No. 16 of 2011, the jurisdiction of the DIFC was extended so that any party, even those with no connection to the DIFC, can now agree in writing (before or after a dispute has been raised) to have their commercial disputes resolved by the DIFC Courts (see Article, DIFC Courts "go global" and facilitate enforcement of arbitral awards). This is a potentially significant development for companies and individuals operating both in the UAE and the wider Middle East, who can now choose the DIFC Courts as the forum for the resolution of their disputes even when neither party has a physical presence or any other connection with the DIFC.

The attraction of this option lies in the fact that the DIFC Courts are a state-of-the-art common law court located in the Middle East's central commercial hub, whose procedures are based on the English civil procedure rules (with the ability, for example, to grant default and summary judgment), and whose judges comprise very experienced former judges from the senior courts of (for example) England, Singapore and New Zealand. Judgments rendered by the DIFC Courts can be enforced in the "onshore" Dubai Courts as Dubai Court judgments and, in contrast to most regional "onshore" courts, parties in the DIFC Courts can be awarded the bulk of their legal costs and expenses.