Headnote

Arbitration – Ratification of foreign award (prior to ratification by the UAE of the New York Convention)

Summary of facts

The Petitioner filed an action before the Dubai Court of First Instance requesting the Court to ratify and enforce in Dubai the foreign award passed in the Petitioner’s favour by an arbitration panel in London on 25 April 2002. On 28 February 2004, the Court ratified the award. The Respondent appealed the judgment, and on 16 June 2004 the Court decided to cancel the appealed judgment and to remand the case to the Court of First Instance. The Petitioner then challenged this judgment by way of a petition to cassation seeking to overturn the challenged judgment. The Respondent requested the dismissal of the petition to cassation.

Held

The petition to cassation was dismissed.

The Court held that UAE national courts have competent jurisdiction to ratify awards passed only within the United Arab Emirates. Such jurisdiction shall not be extended to awards passed in a foreign country, irrespective of whether or not the same award has been ratified in such foreign country.

Judgment

The appeal is based on two arguments in which the Petitioner claimed that the Court of Appeals’ judgment involved a breach and misapplication of the law, as well as a contradiction with the facts as established by the case papers. According to the Petitioner’s plea, Article 235 of the Civil Procedure Code regarding the execution of foreign courts’ rulings, orders and arbitration awards does not set the UAE’s accession to an international treaty with the relevant foreign country as a condition for enforcing foreign rulings, orders and awards in the UAE. In fact, the only condition stipulated in the first paragraph of the law relating to the execution of foreign awards is the equal treatment principle.

Article 25 of the Shipping Charter originally concluded between the parties, states that any dispute arising between the parties shall be referred to arbitration in London in accordance with the English Arbitration Act of 1996. The award that was to be ratified had become final and res judicata in accordance with the provisions of the English Arbitration Act after being ratified by the British Consulate in Bombay and the UAE. Both the English Arbitration Act and the Charter concluded between the parties included no provision as to the exclusive jurisdiction of the British courts to ratify arbitration awards passed in Britain. UAE law includes no provision as to the nonjurisdiction of the UAE courts to ratify awards issued in Britain. Rather, such law only requires fulfilment of all conditions stipulated under Article 235.2 of the Civil Procedure Code concerning the enforcement of foreign awards in the UAE. It is unquestionably established from the facts of the action that neither Britain nor the UAE have joined the New York Conventions on the Execution of Arbitration Awards and that they have not concluded any bilateral treaty concerning the execution of British awards in the UAE without prior ratification.

The Court considers the Petitioner’s above arguments to be inadmissible under Chapter III of the Civil Procedure Code, which provides that the lawmaker has stipulated the rules governing arbitration conducted in the UAE and the procedures applicable for petitioning the Court to ratify or nullify the award.

Article 212.4 of the Code provides that “the arbitrator’s judgment should be delivered in the state of the United Arab Emirates, otherwise the rules set for the arbitrators’ decisions delivered in a foreign country shall be followed therein”. Article 213.3 further stipulates: “As for the arbitration which takes place between the litigant parties [Page52:] outside the court, the arbitrators should deliver a copy of the decision to each party within five days from the delivery of the arbitration decision and the court shall examine the authentication or the nullity of the decision according to the request of one of the litigant parties through the usual procedures of the action prosecution.” Article 215.1 of the law provides: “The arbitrators’ decision shall not be executed except if the court in which clerk’s office the decision was deposited, has authenticated it, and that after looking into the decision and the arbitration document and verifying that there is no prohibition to execute it, and such court shall be authorized to amend the material errors in the arbitrators’ decision according to the request of the concerned persons through the proceedings set for amending the arbitrations.” According to the law, only awards passed in the UAE shall be subject to the UAE courts. This is in contrast to foreign awards, which may not be considered by such courts even if they have already been ratified.

This fact may not be altered by the provisions of Articles 235 and 236 of Chapter V of the Code regarding the enforcement of court rulings, orders and arbitration awards passed in a foreign country. Rather, the lawmaker has permitted the UAE courts to order the enforcement of such foreign awards in the state after duly verifying that the award in question fulfils the conditions stipulated under Article 235 of the Code. The above-mentioned provisions relate only to the enforcement of such awards and make no reference to the jurisdiction of the UAE’s national courts over the ratification or nullification of such awards. On this basis, the Court considers the Petitioner’s argument based on Article 235 to be futile.

According to Articles 21 and 22 of the Civil Transactions Law, jurisdictional rules and all procedural matters are subject to the law of the state in which the lawsuit is filed or the proceedings are conducted, unless the provisions of any international conventions applicable in the UAE contradict those rules. Accordingly, the Court considers the Petitioner’s claim, which contradicts the rules governing arbitration under UAE law (i.e., the Civil Procedure Code) to be groundless. The Court of Appeal dismissed the Petitioner’s action, and the Court considers that it was correct in its decision. In addition, the judgment should not be deemed defective based on the rules governing the enforcement of foreign awards, as the Court of Cassation may clarify unclear matters and rectify legal principles erroneously applied without overturning the judgment, as established in the adjudication of this Court, provided that the result reached in such judgment is consistent with the applicable law.

Accordingly, the present petition to cassation is dismissed.