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NEWS May 20 2020

Consolidation of DIAC Arbitrations

By Arthur Dedels, Arbitration Associate

 

Do parties have a right to consolidate several related DIAC arbitrations into a single arbitration?

The DIAC Arbitration Rules 2007 do not contain a provision dealing with the consolidation of several related arbitrations into a single arbitration. A query therefore is whether parties have a right to consolidate several related DIAC arbitrations. Practice shows that in certain circumstances this can be done.

Horizons & Co have been instructed by the same client to act on two related arbitrations. Both arbitrations are governed by the DIAC Arbitration Rules 2007 and are administered by the DIAC. The disputes in these arbitrations are particularly similar, the parties are the same, they are represented by the same counsel, and the tribunal is the same. The issues in the disputes are based on very similar (albeit separate) sale purchase agreements in relation to the same property development project. The amounts in dispute however are very different.

The client has been advised that it would be in their best interests to consolidate the arbitrations into a single arbitration for costs reasons. The issue was raised with the other side and the tribunal at the preliminary hearing, in which the other side and the tribunal agreed to the proposed consolidation.

Following the preliminary hearing, the parties wrote to the DIAC requesting a consolidation of the arbitrations noting the above similarities between them and that the parties and the tribunal agreed that it was appropriate to consolidate the arbitrations. The DIAC requested the tribunal to confirm the same in writing. This request was complied with and the DIAC promptly consolidated the two arbitrations into one.

As a result of the consolidation, the advance on costs has been reduced by the DIAC. The consolidation of course has also relieved counsel and the tribunal of the need to duplicate certain aspects of work.

This case demonstrates that despite the DIAC Arbitration Rules 2007 not containing any provisions dealing with the consolidation of arbitrations, in practice the DIAC is willing to effect consolidation, at least when the following criteria is met:
 
a. The arbitrations are at an early stage (such as the preliminary hearing stage).
b. The parties to the arbitrations are the same.
c. The parties’ counsel are the same.
d. The tribunal is composed of the same arbitrator(s).
e. The arbitration agreements are the same.
f. The issues in dispute are very similar.
 

It however remains unclear whether the DIAC will be prepared to consolidate the arbitrations if some of the above criteria is not met, or if the request for consolidation is made by one of the parties in the absence of the other party’s or the tribunal’s agreement.

By contrast, other major arbitration rules contain provisions specifying the circumstances in which several arbitrations can be consolidated. By way of example, article 10 of the ICC Arbitration Rules 2017 provides that the ICC Court may consolidate two or more arbitrations governed by the ICC Arbitration Rules at the request of a party, provided that:
 
a. the parties agree; or
b. all of the claims are made under the same arbitration agreement; or
c. the parties to the arbitrations are the same, the disputes are in connection with the same legal relationship, and the ICC Court finds the arbitration agreements to be compatible.

The DIFC-LCIA Arbitration Rules 2016 provide in articles 22.1(ix) and 22.1(x) that the LCIA Court can order consolidation of two or more arbitrations governed by the DIFC-LCIA Arbitration Rules, provided that:

a. the parties agree; or
b. the parties to the arbitrations are the same, the arbitrations are commenced under the same arbitration agreement or compatible arbitration agreements, and no tribunal has been formed yet or the tribunals are composed of the same arbitrator(s).

As the DIAC Arbitration Rules 2007 do not deal with consolidation of related arbitrations into a single arbitration, it is not clear whether the parties have a right to consolidate. As the above case study demonstrates however, the DIAC is prepared to consolidate arbitrations in certain circumstances. Parties to the DIAC arbitrations therefore would be well advised to consider requesting the DIAC to consolidate several related arbitrations into one in appropriate circumstances, as this may save their time and costs.
 
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