Dubai Court of Cassation provides useful guidance on the Dubai courts' approach to arbitration

On 15 October 2024, the Dubai Court of Cassation issued its decision in Case No. 606/2024, and in doing so provided useful guidance as to the provisions of the Federal Law No. 6/2018 (the "Arbitration Law"), as amended by Federal Decree-Law No. 15/2023 (the "Amendment Law").  The decision also reinforced the Court's approach to the enforcement of arbitration awards, demonstrating the arbitration-friendly nature of the Dubai Courts.

Background

The case related to an application to annul an arbitration award issued by the Dubai International Arbitration Centre ("DIAC") in relation to a dispute between the appellant, a contractor, and the respondent, a bank, under a construction contract.  The appellant claimed that the respondent owed it additional sums and commenced arbitration seeking payment and the release of a performance bond.  The respondent filed a counterclaim.

The tribunal issued an award ordering the appellant to make a payment to the respondent, and awarded the respondent its costs, although the respondent was ordered to release the bond. The appellant subsequently sought to annul the award and filed Case No. 11/2024 before the Dubai Court of Appeal.  The Court of Appeal dismissed the appeal.  The appellant appealed to the Dubai Court of Cassation.

Grounds of Appeal

The Court of Cassation also dismissed the appeal.  The grounds for appeal and the Court of Cassation's decisions in relation to those grounds provide useful guidance on the Dubai courts' approach to arbitration.

Ground 1

• The appellant argued that the chairman of the tribunal had been appointed as a member of the DIAC arbitration court, and this allegedly violated both (a) Article 10 of the Arbitration Law, which required that an arbitrator should not be a member of the supervisory or regulatory bodies of the arbitral institution, and (b) Article 10 bis of Federal Law No. 6/2018 (as introduced by the Amendment Law), which provides that the chairman of the tribunal should not be a member of the arbitral institution.
• The court held that the provisions of the Amendment Law did not apply to the appointment of a chairman made before the effective date of the Amendment Law. In addition, the appellant's failure to request the recusal of the chairman within the legal time limit constituted a waiver of their right to object in accordance with Articles 15(1) and 25 of Arbitration Law.

Grounds 2 and 3

• The appellant alleged that the award was invalid due to the non-signature of one of the arbitrators, who would not sign without setting out his dissenting opinion.  In addition, it alleged that the failure to attach the dissenting opinion was also grounds for annulling the award.
• The Court rejected the appellant's argument. The Court held the arbitral award had mentioned the reason for non-signature, which was the objection of the dissenting arbitrator, and that the dissenting opinion did not need to be attached since the award was issued by a majority, in accordance with Article 41 of the Arbitration Law and Article 37(6) of the DIAC Rules.

Ground 4

• The appellant argued that the tribunal disregarded their defence regarding the respondent's lack of entitlement to claim penalties or compensation after February 2018, when it had sold the project to another entity.
• The Court of Cassation dismissed this argument, stating that the tribunal addressed and rejected the defence, and the court cannot review the merits of the tribunal's assessment.

Ground 5

• The decision states that the appellant argued that the tribunal had disregarded the Arbitration Law by deciding to remove the appellant's legal representative based on the principles of investment arbitration and the IBA Guidelines on Conflicts of Interest.  One of the arbitrators had disclosed that they were jointly representing one of the appellant's representative's clients in another case, which could raise doubts about independence and impartiality.
• The court held that the Arbitration Law did not regulate the tribunal's authority to remove a party's legal representative and that the tribunal had not violated any mandatory provisions of the applicable laws. 

Ground 6

• The appellant argued that the arbitration award was not issued within the deadline for delivering the award, and that the tribunal had added information to the award after issuing it and after the expiry of its mandate, with the date of the award being after the date that the tribunal announced that it had issued the award to DIAC.
• The court dismissed this argument, stating that the award was issued within the extended deadline granted by DIAC and the 15 January 2024 date was when the tribunal closed proceedings and submitted the award to the Centre.

Comment

While the UAE is a civil law jurisdiction, and court decisions are therefore not binding, the Court of Cassation's decision provides welcome clarification on the way that the Dubai Courts are likely to apply the provisions of the Arbitration Law, as well as the changes introduced by Amendment Law.  In particular, the decision clarifies that:

• the provisions of the Amendment Law do not apply retrospectively;
• the courts will hold parties to the relevant time limits in the Arbitration Law;
• under the Arbitration Law, where there is a dissenting opinion, the award will nevertheless remain valid as long as the refusal of the dissenting arbitrator is documented, and the majority sign the award;
• the court will not look to review the merits of the tribunal's decision when considering whether to annul or enforce an arbitration award; and
• the tribunal is free to determine the relevant procedure to be followed in the arbitration where the law Arbitration Law is silent.

Ultimately, the Court of Cassation's decision is a clear win for arbitration in the UAE, reinforcing Dubai's role as a major arbitration hub, with well-developed arbitration law and courts willing to enforce it.