DIFC Proposes Major Overhaul to Arbitration Law, Introducing New Mediation Framework

The Dubai International Financial Centre (DIFC) has launched a public consultation on sweeping proposed amendments to its dispute resolution framework. The update will amend and modernise the long-standing DIFC Law No. 1/2008 under a new unified legislative title: Arbitration and Mediation Law.

Comparative Benchmarking Behind the Reforms

The proposed amendments were developed after exhaustive comparative benchmarking against leading international arbitral bodies—including the LCIA, ICC, and DIAC—and top common law jurisdictions like England & Wales, Singapore, Hong Kong, and Australia.

The drafters also took into careful account UAE Federal Law No. 6/2018 and the ADGM Arbitration Regulations 2015.

Key Proposed Amendments to Arbitration

The 2026 draft introduces critical modernizations to streamline proceedings and offer greater commercial flexibility. Key adjustments include:

Electronic Communications

• Updating Article 8 to formally incorporate modern electronic communication methods.

Asymmetrical & Separable Agreements

• Explicitly validating unilateral or asymmetrical arbitration agreements, which grant one party the sole right to choose between a tribunal or a court.
• Reinforcing the principle of separability, confirming that an arbitration clause remains valid even if the main contract is found to be ineffective.

Court Powers & Deadlines

• Granting the DIFC Court new powers to extend statutory deadlines for commencing arbitral proceedings.
• Clarifying the Court’s role in issuing interim measures.

Modern Tribunal Powers

• Giving tribunals the explicit authority to rule on security for costs.
• Empowering tribunals to issue peremptory orders and deliver summary awards or provisional awards on different aspects of a dispute at different times.

Third-Party Funding & Multi-Party Disputes

• Introducing mandatory disclosure rules for third-party funding agreements.
• Formalizing procedures for the consolidation of proceedings and the joinder of additional parties.

Emergency Arbitrators

• Establishing a framework for the appointment and operation of emergency arbitrators to handle urgent pre-tribunal relief.

A New National Focus on Mediation

Crucially, the proposed legislation goes beyond arbitration by introducing an entirely new section dedicated exclusively to Mediation. This addition provides comprehensive structural clarity on the operation of the DIFC Mediation Centre.

It establishes formal rules governing the conduct of mediation, rules on the admissibility of evidence, the strict enforcement of resulting settlement agreements, and clear procedural transition paths should parties choose to later escalate their dispute to arbitration or litigation.

Invitation for Public Comment

DIFCA has formally opened the floor to legal practitioners, businesses, and the public to review these changes.

Stakeholders are invited to submit their feedback on Consultation Paper No. 2. Comments and expressions of interest should be emailed directly to consultation@difc.ae.