Proposal for an Online Dispute Resolution Mechanism for the Islamic Finance Industry
By: Camille Paldi
The author proposes that for 2020 the Islamic finance industry aims to create an automated and online dispute resolution mechanism called (“DWIFAC”) or the Dubai World Islamic Finance Arbitration Centre and (“DWIFACJO”) or the Dubai World Islamic Finance Arbitration Centre Jurisprudence Office complete with an online Sukuk Bankruptcy Tribunal (“SBT”) and an online Takaful Tribunal (“TT”) and that DWIFACJO issue a standardized dispute resolution contract for each DWIFAC, SBT, and TT, which may be attached to the main contract (Paldi, 2020). The arbitration contracts may be delivered and executed online and uploaded through the secured DWIFAC online portal and DWIFAC App (Paldi, 2020). The DWIFACJO standardized dispute resolution contracts may contain a similar built-in dispute resolution mechanism as the FIDIC contract containing three stages including (1) the online Dispute Resolution Board (DAB), (2) online amicable settlement, and (3) final referral to online DWIFAC, SBT, and TT arbitration (Paldi, 2020). Within thirty days of the occurrence of the subject-matter of a dispute, any party to the contract may submit an online claim to the DAB through the DWIFAC online portal or DWIFAC App, addressed to the chairman of the DAB and with a copy e-mailed or texted to all parties of the contract (Paldi, 2020). The online claim can also be accessed through the online DWIFAC portal and DWIFAC App (Paldi, 2020). However, if any of the parties to the contract considers that there are circumstances, which justify the late submission, she may submit the details online through the online DWIFAC portal or DWIFAC App to the DAB for a ruling (Paldi, 2020). If the DAB considers that it, in all the circumstances, is fair and reasonable that the late submission be accepted, the DAB shall have the authority to override the relevant thirty-day limit and if it so decides, it shall advise both the parties accordingly via email or text message as well as upload the decision to the online DWIFAC portal and App (Paldi, 2020). All DAB decisions shall be accessible through the online DWIFAC portal and DWIFAC App (Paldi, 2020).
The DAB shall have sixty days to issue a binding online ruling, which must be implemented immediately and which will be available on the DWIFAC online portal and through the DWIFAC App (Paldi, 2020). The DAB decisions shall also be emailed or texted to the disputing parties (Paldi, 2020). The DAB may deliberate online and coordinate with other DAB members via text, e-mail, online chatrooms, and/or video-conferencing (Paldi, 2020). If either party is not satisfied with the DAB ruling, either party can give notice of dissatisfaction via email or text to the other party and upload the Notice of Dissatisfaction online on the online DWIFAC portal and/or the DWIFAC App before the thirty days after the day on which she received the decision on or before the thirty days after the day on which the said period of sixty days expired (Paldi, 2020). If there is no dissatisfaction within thirty days after the day on which she received the decision, the DAB’s decision, which shall be delivered electronically via email or text to all parties to the dispute and which shall be available on the online DWIFAC portal and/or through the DWIFAC App, shall become final and binding upon both parties (Paldi, 2020). The DAB’s decision may then only be overturned by online settlement or online arbitration at DWIFAC, SBT, or TT (Paldi, 2020).
The DAB shall consist of three people who must be suitably qualified in law, Islamic finance, and Shari’ah (Paldi, 2020). Each party shall nominate one member for the approval of the other party (Paldi, 2020). The parties shall consult both these members and shall agree upon the third member, who shall be appointed to act as chairman (Paldi, 2020). However, if a list of potential members is included in the contract, the members shall be selected from those on the list, other than anyone who is unable or unwilling to accept appointment to the DAB (Paldi, 2020).
The agreement between the parties and either a sole member (adjudicator) or each of the three members shall incorporate by reference the General Conditions, which shall take into account all facets of Online Dispute Resolution, as written by DWIFACJO, with such amendments as agreed between them (Paldi, 2020). The composition of the DAB shall be by nomination and then joint-selection (Paldi, 2020). DAB members are to be re-numerated jointly by the parties with each paying half of any fees (Paldi, 2020). DAB members may only be replaced by mutual agreement (Paldi, 2020). The appointment of any member may be terminated by mutual agreement of both parties, but not by any party acting alone (Paldi, 2020). Unless otherwise agreed by both parties, the appointment of the DAB shall expire when the discharge of the matter shall have become effective (Paldi, 2020). Where the parties fail or are otherwise unable to agree upon the appointment, nomination or replacement of any member of the DAB, then the appointing official so named in the contract shall make the appointment (Paldi, 2020).
DWIFAC, SBT, and TT may establish an Ambassador’s List similar to the FIDIC President’s List, from which arbitrators and DAB members may be selected, if not specified in the contract (Paldi, 2020). Persons who have successfully completed a DWIFAC Adjudication Assessment Workshop and International Arbitrator’s Islamic Finance Contracts Course and applied for entry to the DWIFAC Ambassador’s List of Approved Dispute Adjudicators are entered on the List for five years (Paldi, 2020). Successful attendees at an Adjudication Assessment Workshop are required to be fluent in English and to be thoroughly familiar with Islamic finance, law, and Shari’ah (Paldi, 2020).
There may be situations where a party fails to comply with a DAB decision (Paldi, 2020). In such cases, the other party may refer the failure to online DWIFAC, SBT, or TT arbitration (Paldi, 2020). Where notice of dissatisfaction has been given, both Parties shall attempt to settle the dispute amicably online through video-conferencing, face-time, and/or chatrooms and texting before the commencement of arbitration (Paldi, 2020). However, unless both Parties agree otherwise, online arbitration may be commenced on or after the fiftieth day after the day on which notice of dissatisfaction was given (Paldi, 2020). The attempt to obtain an online amicable settlement during this prescribed period of fifty days is a condition precedent to a referral to online arbitration (Paldi, 2020). There is no given time frame to refer a dispute to online arbitration, however, it should be without undue delay (Paldi, 2020). Once the online arbitration procedure has been initiated, the online DWIFAC arbitration shall commence according to the online DWIFAC arbitration rules, the online SBT arbitration shall commence according to the online SBT arbitration rules, and the online TT arbitration shall commence according to the online TT arbitration rules (Paldi, 2020). Parties may upload statements and evidence for online DWIFAC, SBT, and TT arbitrations through the secured DWIFAC online portal and DWIFAC App (Paldi, 2020).
The arbitrator(s) shall deliberate the arbitration proceedings online and in conjunction with each other via e-mail, text, chatrooms, and/ or video-conferencing and face-time (Paldi, 2020). The arbitrators shall have full power to open up, review, and revise any decision of the DAB relevant to the dispute online (Paldi, 2020). Neither party shall be limited in the proceedings before the arbitrator(s) to the evidence or arguments previously put before the DAB to obtain its decision or to the reasons for dissatisfaction given in its notice of dissatisfaction (Paldi, 2020). Any decision of the DAB shall be admissible in evidence in the online arbitration (Paldi, 2020). Online arbitration may be commenced prior to or after completion of the contract (Paldi, 2020). The obligations of the Parties and the DAB shall not be altered by reason of any online arbitration being conducted during the progress of the contract (Paldi, 2020).
The online arbitration at DWIFAC, SBT, and TT shall be conducted in the English language and any arbitral decision shall be final and binding (Paldi, 2020). All of the online DWIFAC, SBT, and TT decisions are to be published online in English, French, and Arabic and the arbitration itself to be conducted in English (Paldi, 2020). All decisions are to be stored in electronically retrievable files (Paldi, 2020). In the event of a conflict of laws, the Shari’ah shall prevail (Paldi, 2020). A valid online arbitration decision should lead to a verdict that conforms to the rules of the Shari’ah (AAOIFI 2004:559) (Paldi, 2020). The Shari’ah and legal basis of the online arbitration decision shall be mentioned in the decision (AAOIFI 2004:559) (Paldi, 2020).
In the context of the online DWIFAC, SBT, and TT, the centers may make arrangements with the Dubai and DIFC or Dubai International Financial Center courts and Abu Dhabi Courts and the ADGM or Abu Dhabi Global Markets Courts for enforceability of online DWIFAC, SBT, and TT arbitration awards (Paldi, 2020). However, parties to the dispute must realize that the online arbitration award issued by DWIFAC, SBT, and TT may be overturned or enforced in other jurisdictions (International Bechtel Co. Ltd. v. Department of Civil Aviation of the Government of Dubai 300 F. Supp. 2d 112 (DDC. 2004) or challenged in UAE courts based on Article 216 of the Civil Procedure Law (Now Article 53 of the Arbitration Law) (Paldi, 2020). Higher Shari’ah Authority decisions shall act as a source of precedent and shall be binding, thus providing legal certainty to Islamic finance, takaful, and sukuk dispute adjudication (Paldi, 2020). The Higher Shari’ah Authority shall act as the highest Shari’ah authority for DWIFAC, SBT, and TT arbitration, the UAE, and the DIFC or Dubai International Financial Center and ADGM or Abu Dhabi Global Market (Paldi, 2020).
- FIDIC Red Book (1999) London; Thomas Telford Publishing.
- Paldi, Camille (2020) ‘Dispute Resolution in the Islamic Finance Industry’ in Abdul Rafay’s Handbook of Research on Theory and Practice of Global Islamic Finance, IGI Global Publishers, USA.