Headnote

Arbitration – Time limit for arbitration proceedings

Summary of facts

An insurance company (the “Company”) initiated a legal action before the Sharjah Court of First Instance against the two Petitioners requesting that the Court oblige them to jointly provide an account statement detailing:

  1. The production achieved by one of the Petitioner, in its capacity as an insurance agent under the agency contract concluded between the parties;
  2. The amount of commissions to determine the amount due to the Company (Claimant before the Court of First Instance).

The Company further requested the Court to appoint an expert, to award whatever amount determined by such expert to the Company and to oblige the Petitioners to return the insurance policies owned by the Company. The Petitioners argued before the Court of First Instance that the Court had no jurisdiction due to the existence of an arbitration agreement and requested that the Court appoint an accountant to act as sole arbitrator. The Court of First Instance accepted the Petitioners’ plea. The Company subsequently appealed the judgment, which was dismissed by the Court of Appeal. The Company thereafter challenged the judgment before the Court of Cassation, which overturned the challenged judgment and rejected the Petitioners’ plea that the Court had no jurisdiction owing to the existence of an arbitration agreement. The Court of Cassation remanded the case to the Court of Appeal, which cancelled the appealed judgment and dismissed the plea regarding the existence of an arbitration clause, considering that the arbitration period of three months, starting from the date of the first arbitral session and provided for in the agreement, had elapsed. The Petitioners challenged the judgment before the Court of Cassation.

Held

The Petition to cassation was dismissed.

  1. According to the provisions of Articles 203 and 210 of the Civil Procedure Code, if the parties agree, in writing, to refer any dispute arising out of a given contract to arbitration which is to be conducted within a certain period, then the arbitrator shall abide by such a period. However, in case there is no agreement made between the parties as to time limit for the rendering of the award, the arbitrator shall issue his award within six months of the date of the first arbitration session. Following the expiry of such time limit the parties may refer the dispute to the Court.
  2. The parties may explicitly or implicitly agree to extend the time limit for the rendering of the award. Furthermore, the Court may, upon the request of the arbitrator or either party, extend the time limit to such a period as it deems sufficient for the settlement of the dispute. The arbitrator, however, may not extend such period without the consent of the parties.

Judgment

The appeal is based on four grounds, upon which the Petitioners claimed that the Court of Appeal’s judgment involved a breach and misapplication of the law, defective causation, an invalid inference, a breach of the right of defence and inconsistency with the facts of the case.

Whereas it is established from the challenged judgment that the basic arbitration period prescribed under the arbitration agreement is three months from the date of the first arbitral session, that the arbitrator sent a letter on 7 May 1995 to the Petitioner's company and a copy thereof to the Respondent informing them that all amicable means had failed and that a date would be fixed for the arbitration session after the general manager of the Respondent returned from abroad; and

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Whereas the challenged judgment concluded that arbitration sessions were conducted prior to such date, as the said letter referred to the letter dated 6 May 1995 with respect to the submission of a report concerning the subject of arbitration; and

Whereas the present action was initially filed on 7 September 1996, i.e., more than one year from the date of the said letter and more than three years from the date of the arbitration agreement. Meanwhile, the Petitioners did not provide any document showing that they had agreed to extend the arbitration duration or to authorize the court to so do;

As a result, the challenged judgment rightly held that the arbitrator had failed to issue the award within the legal period and that there was no explicit or implicit agreement or authorization to extend such period. The plea that an arbitration agreement existed is to be dismissed and the case is to be remanded to the Court of First Instance for reconsideration.

As such, any argument made against the above shall be within the discretionary jurisdiction of the Court of First Instance, which may decide on the existence of an implicit or explicit agreement between the parties to extend the arbitration duration as mentioned above. Any such argument may not be brought before the Court of Cassation.

Accordingly, the present petition for cassation is dismissed.