Headnote

Arbitration – Appointment of arbitrators – Jurisdiction

Summary of facts

The Petitioner brought an action against the Respondent before the Dubai Court of First Instance in which the Petitioner requested the appointment of arbitrators pursuant to Article 23 of a charter-party executed between them. The Petitioner also sought the enforcement of an arbitral award and further requested the Court of First Instance to confirm a provisional attachment (over certain cheques issued by the Petitioner in the Respondent’s favour) that had been previously granted.

The basis of the Petitioner’s claim was that on 6 July 1992, the Petitioner had validly terminated the charter-party due to the Respondent having breached certain obligations relating to payment and the failure to return security cheques issued by the Petitioner in favour of the Respondent.

The charter-party executed between the parties contained an arbitration agreement providing for the determination of disputes by arbitration “in London or anywhere else to be agreed”.

Arguing (i) that the parties failed to agree on the place for the arbitration (or indeed the identity of the arbitrators); (ii) that the Dubai Courts had original jurisdiction to hear the dispute because the Respondent was domiciled in Dubai; and (iii) that the subject matter of the provisional attachment was within the jurisdiction of the Dubai Courts, the Petitioner filed the action (for the appointment of arbitrators) before the Dubai Court of First Instance.

The Court of First Instance determined that it did have jurisdiction to appoint the arbitrators. The Court of First Instance further appointed three arbitrators and ordered them to complete their mandate within three months. The Petitioner’s additional requests for relief, being the enforcement of the ultimate award and the confirmation of the provisional attachment, were held over until the completion of the arbitration.

The Respondent appealed the Court of First Instance’s judgment. The Court of Appeal accepted the appeal as to form and dismissed the challenged judgment.

The Petitioner filed a petition to cassation.

Held

The Court of Appeal’s judgment was reversed.

Pursuant to Article 204 of the UAE Civil Procedure Code, “[i]f a dispute arises and the litigants fail to agree on the arbitrators, the court originally having competent jurisdiction to try the dispute shall appoint the arbitrators required upon the request of either litigant”, even if the agreement to the arbitration is made in a foreign state.

Judgment

The Petitioner based its arguments on the following facts: firstly, that the cheques constituting the value of freight were withdrawn at the Dubai branch of a bank and, secondly, that the Dubai-based branch of the Respondent in Dubai had received cash amounts and cheques from the Petitioner. The Petitioner argued that this implied that the charter-party had been executed in Dubai, which, in turn, meant that the Dubai Courts had jurisdiction to try the action.

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The Court of Cassation agreed, holding that the decision of the Court of First Instance dealing with the Petitioner’s request to appoint arbitrators was changed for the entire litigation and because the Petitioner did not limit its request for relief to the appointment of arbitrators but also sought the enforcement of the ultimate award and confirmation of the provisional attachment (all three requests being attributable to the charter-party).

The Court of Cassation noted that the judgment issued by the Court of First Instance only addressed the first prayer for relief, being the appointment of arbitrators. In this regard, the Court of Cassation relied on Article 151 of the Civil Procedure Code, which provides: “The judgments delivered in the course of the Action, by which the litigation is not terminated unless the judgment terminating the whole litigation is delivered, may not be challenged, save the interim and summary judgments, those delivered to suspend the Action, judgments of obligatory execution, judgments delivered on the lack of jurisdiction as well as the judgments of jurisdiction, if the court has no dominion to judge in the Action.”

The Court of Cassation explained that judgments delivered in the course of a litigation by which the litigation as a whole is not finally resolved (i.e., judgments dealing with part of a claimant’s request for relief) may not be challenged. The exception to this is judgments that relate to a determination of jurisdiction in circumstances where the court confirming its jurisdiction to hear the action actually has no power to hear the dispute. If such a condition is not satisfied, challenging the judgment is not permitted. The next step is to determine whether the court delivering a first instance judgment dismissing a plea of jurisdiction has the requisite power to adjudicate it or not.

Following an examination of the charter-party, the Court of Cassation found that, in performance of its obligations, the Petitioner had issued cheques in favour of the Respondent every fifteen days for the duration of the charter-party. These cheques had been cashed at the Dubai branch of a certain bank. The Court of Cassation found that the provisional attachment order had been issued in relation to a percentage of these cheques. The result of this analysis was that the action filed by the Petitioner was connected to an obligation performed within the jurisdiction of the Dubai Courts. This meant that the Dubai Court was originally competent to hear the dispute in the event that the parties to the dispute were not able to agree to the arbitration clause.

The Court of Cassation further referred to Article 204.1 of the Civil Procedure Code and held that this provision was applicable even if the agreement to arbitrate was made in a foreign state.

It was explained that the challenged judgment was founded on the premise that the Dubai Courts had no jurisdiction to appoint the arbitrators because the Courts of London would enjoy this jurisdiction (the plea appears to have been that both parties had agreed in the charter-party that the Courts of London would have jurisdiction to settle disputes arising out of it). The Court of Cassation determined that such a plea had no grounds because the parties had agreed to arbitration in London (but not to the appointment of the arbitrators), not to litigation in London. The Court of Cassation held that this implied that the Dubai Courts had jurisdiction to appoint the arbitrators.

Accordingly, the Court of Appeal’s judgment was reversed.