F - Practice Direction No. 1/2017: Indemnity Costs for Failed Challenges to Arbitral Awards in the DIFC Courts

Rationale

The rationale for Practice Direction No. 1/2017 (PD 1/2017) is to discourage ‘guerilla tactics' aimed at delaying the enforcement of arbitral awards, while still leaving the path open for challenges with merit. ‘Guerilla tactics' is the generic term for losing parties or arbitral award debtors' attempts to file unmeritorious challenges to final arbitral awards in order to delay and prevent enforcement.

Stopping guerilla tactics

PD 1/2017 highlights and clarifies two relevant principles intended to deter guerilla tactics before they begin.

1. Judges reserve the right to take into account the merits of a challenge to a Part 43 (the part of the Rules of the DIFC Courts which deals with Arbitration claims) application for ratification of an arbitral award when deciding whether to require the defendant to pay the amount of the award into court first, as security under Article 44(2) of DIFC Law No. 1/2008 (DIFC Arbitration Law). This applies to all applications for ratification, not only applications under the New York Convention.