Headnote

Arbitration – Applicable procedure in arbitration – Qualifications of arbitrators – Res judicata

Summary of facts

The parties entered into a memorandum of association, dated 10 August 1996, for the establishment of a racing centre. The memorandum of association contained an arbitration clause whereby any disputes arising between the parties in relation to the memorandum were to be referred to arbitration. The agreement further designated an arbitrator for the adjudication of any such future disputes. When a dispute arose between the parties as to the proper termination of the memorandum of association, the Respondent applied to the courts for referral of the dispute to the arbitrator designated in the memorandum of association. The Petitioner lodged a counterclaim, requesting the appointment of another arbitrator, i.e., other than the one designated in the memorandum of association. The Court dismissed the counterclaim and ordered the referral of the dispute to the arbitrator designated in the memorandum by ruling of 8 June 1999. This judgment was subsequently confirmed by the Court of Appeal. On 9 April 2000, the arbitrator rendered an award ordering the Petitioner to pay the Respondent a total of AED 188,360, including AED 10,000 in arbitrator fees. The Court of First Instance ordered enforcement of the award. The Petitioner then appealed the enforcement order, but the Court of Appeal confirmed the first instance order for enforcement by a ruling of 20 January 2001. The Petitioner filed the present petition to cassation.

Held

The petition to cassation was dismissed.

When considering ratification or enforcement of an award, the courts shall not review its merits.

The arbitrators are only obliged to follow those procedures laid down in the arbitration chapter of the Civil Procedure Code and those related to calling upon the parties to litigation.

The law does not require the arbitrator to have a particular level of education.

Evidence questioning a res judicata judgment is not admissible.

Judgment

The Petitioner first argued that the first instance judgment confirmed by the challenged judgment endorsed the arbitrator’s award while the papers failed to contain the arbitration document setting out the dispute’s subject matter, instead confusing the arbitration clause in the contract with the arbitration document and applying arguments from former judgments that vary in terms of subject matter and cause from the present case.

Referring to Article 203 of the Civil Procedure Code, the Court of Cassation held that “it was established in the adjudication of this court that the contracting parties may generally stipulate in the main contract or in a subsequent agreement to refer any dispute arising between both of them to arbitration, provided that the subject of the dispute shall be set out in the arbitration document or in the course of the action trial”.

Pursuant to Article 1 and 2.49 of the Evidence Law, evidence questioning a judgment that had been res judicata was not admissible. According to the facts demonstrated by the papers, both litigants agreed in Clause 12 of the memorandum of association dated 9 April 2000 to refer any dispute arising between them to the arbitrator they designated in the memorandum of association. The judgments issued by the Court of First Instance and the Court of Appeal referred the dispute to this arbitrator pursuant [Page56:] to the arbitration clause contained in the memorandum of association. Therefore, the challenged judgment was rendered in compliance with the law.

The Petitioner further argued that the educational level of the arbitrator was equivalent to the sixth grade of elementary school, whereas the award needed to be issued by a legal or accounting expert, and that the arbitrator’s award breached Article 212 of the Civil Procedure Code, which requires the arbitrator to judge pursuant to the rules of equity. Furthermore, the arbitrator’s decision was not compliant with Article 19 of the Companies Law, which grants the partner of a company a share in return of his work within the company and a share in return of his participation in the capital.

The Court held that the Petitioner’s argument was groundless and irrelevant and that the Court was not obliged to consider it. Furthermore, pursuant to paragraphs 1 and 2 of Article 212 of the Civil Procedure Code, the arbitrators shall deliver their award not restricted by the proceedings of the pleadings, except those provided for in the arbitration chapter of the Civil Procedure Code. Therefore, it is not required to state in the award all the particulars that should be included in a court judgment. The award include a photocopy of the arbitration document, abstracts of the statements and documents of the parties, the reasoning and wording of award, the date and place of delivery and the signatures of the arbitrators.

Finally, the Court held that, when endorsing an arbitral award, the court may not examine its conformity with any legal provisions other than the matters relating to public order but that it may examine the procedural aspects discussed in Articles 212 and 216 of the Civil Procedure Code for the purpose of limitation. Therefore, the argument made against the endorsement of the court judgment based on the educational level of the arbitrator are inadmissible, since Article 206 of the Civil Procedure Code does not require the arbitrator to have attained a specific educational level.

Accordingly, the present petition to cassation was dismissed.