Originally from The MENA Leading Arbitrators’ Guide to International Arbitration

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I. INTRODUCTION

As the name suggests, free zone arbitration is a type of arbitration that is dispensed by so-called free zones. Free zones commonly constitute geographic areas carved out of a national territory that are designated for the use and promotion of specific industry sectors outside the mainland (or onshore) regulatory framework. In that sense, free zones typically operate offshore, independently of the mainland and with a certain degree of economic and regulatory autonomy.

Some—albeit very few—free zones operate fully autonomously by adding a legislative and a judicial dimension to their operations. Such free zones are commonly known as judicial free zones. Judicial free zones benefit from an independent, autonomous judiciary and usually dispense their own self-contained body of substantive laws, including an arbitration law, which will allow the free zone to serve as a seat of arbitration in its own right.

Judicial free zones made their début in the Middle East with the arrival of the Bahrain Chamber of Dispute Resolution (BCDR)-American Arbitration Association (AAA) in Bahrain  and the Qatar Financial Centre (QFC) in Qatar,  followed by the establishment of the Dubai International Financial Centre (DIFC) and, most recently, the Abu Dhabi Global Market (ADGM). Both the Bahrain Free Arbitration Zone and the QFC are tempered versions of a judicial free zone and not quite as advanced in their structural set-up as their UAE counterparts. The operation of the DIFC as a judicial free zone has indeed been such a success that it has not only served as a blueprint for the later-established ADGM but has also been exported abroad to template the establishment of judicial free zones in developing jurisdictions.