Headnote

Arbitration – Power of attorney – Capacity to agree to arbitration – Power of attorney – Representation of parties

Summary of facts

A dispute arose between the parties in relation to the construction of a villa. The Petitioner filed an action in court against the Respondent, requesting payment of AED 9,282,134. The Respondent sought to deny the jurisdiction of the court on the basis of an arbitration clause in the contract between the parties. The court accepted the Respondent’s position and the Petitioner amended his case to constitute an application for the appointment of an arbitrator. The Court appointed an arbitrator, who on 7 December 2005 issued his award.

The Petitioner initiated an action before the Court of First Instance requesting the annulment of the arbitration award. The Court of First Instance dismissed the request following which the Petitioner appealed before the Court of Appeal. The Court of Appeal confirmed the decision of the Court of First Instance. The Petitioner filed a petition to cassation.

Held

The petition to cassation was dismissed.

There is no need for a special power of attorney for the representative of a party to agree to refer the dispute to arbitration when the parties have already agreed in their contract to resort to arbitration.

When the arbitration is not administered by the court, the arbitrator does not need to file the award with the court. However, the arbitrator must send a copy of the award to the parties within five days of the award being rendered. Each party may then apply separately for ratification or nullification of the award.

While ratifying the arbitration award, the court may neither consider the merits of the case nor determine the extent to which it complies with the law.

Judgment

According to the provisions of Article 203.4 of the Civil Procedure Code, as well as what is established in the adjudication of this Court, the agreement to resort to arbitration may only be made by the party having capacity to dispose of the disputed right and not by those who have the capacity to resort to litigation. This is because the arbitration agreement implies a waiver of the right to file a lawsuit before the courts of the state, including all guarantees prescribed for litigants. Nonetheless, the attorney’s capacity could be explicit, implicit or apparent. Authorization shall be deemed explicit if it is provided verbally or in writing, while the same shall be deemed implicit if it is implied by the status quo, verbal or written agreements and ordinary business practice. Hence, even if the full power of attorney conferred upon the lawyer by the principal to file lawsuits before courts of law does not authorize that lawyer to take the initiative to agree directly to arbitration, the litigant authorizing the lawyer may not argue that there is no special power of attorney conferred upon the lawyer to agree specifically to arbitration as long as there is an implied authorization, which can be deduced from the status quo as well as all documents presented in the pending action, that the lawyer acted within the limits of the said authorization, for example if he initially filed an action on behalf of his principal before the courts of law and then agreed to refer the dispute to arbitration based on the arbitration clause concluded between the principal and the other litigant, who also agreed to arbitration.

A lawyer who is authorized to plead on behalf of his principal in an action filed by or against said principal in litigation does not need a special power of attorney from the principal to approve – during the course of the court’s consideration of the case – the [Page78:] referral of the case to arbitration in accordance with the arbitration clause included in the contract concluded between the principal and the other litigant. Such approval is deemed to fall within the limits of the authorization conferred upon the lawyer and to constitute an essential procedure that the lawyer is authorized to undertake during his pleading on behalf of the principal.

It is established in the adjudication of this Court that Article 213 of the Civil Procedure Code stipulates that arbitration may be conducted through the court or otherwise without the court’s interference as in the case of ad hoc and institutional arbitration. Arbitration through the court is conducted at the court’s decision and upon the agreement of the litigants when the dispute is being considered by the court. In this case, the procedures provided for in paragraphs 1 and 2 of the said article shall be applicable.

Whereas Article 203.3 of the Civil Procedure Code provides that the “The litigation’s facts should be designated in the arbitration document or during the examination of the action even if the arbitrators were authorized for reconciliation, otherwise the arbitration shall be void.”, Article 213 provides:

  1. In case of the arbitration proceeded through the court, the arbitrators should deposit the decision with the original of the arbitration record, the reports and the documents in the clerk’s office of the court authorized principally to examine the action, and that shall be within the fifteen days following the decision’s delivery and they should deposit a copy of the decision in the clerk’s office of the court to deliver them to each party side and that within fifteen days from depositing the original and the clerk’s office of the court shall compile a report with that deposit to manifest it to the judge or the division manager, according to the circumstances, in order to appoint a session within fifteen days to authenticate the decision and the two parties shall be notified therewith.
  2. If the arbitration were incoming in an appellate case the deposit shall be in the clerk’s office of the court authorized principally to examine the appeal.
  3. As for the arbitration which takes place between the litigant parties 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..

These provisions show that there are different procedures for submitting the award to the courts for ratification. Awards rendered in arbitration held through the court have different procedures from awards rendered in ad hoc and institutional arbitration. Furthermore, the control of the court over an arbitration held through the court is different from the control it exercises over an ad hoc or institutional arbitration. An award rendered in an arbitration held through the court is subject to the oversight and control of the court during all phases of arbitration. In this type of arbitration, the court refers the pending dispute to arbitration by virtue of the arbitration document presented to it and, where applicable, determines the subject matter of the arbitration during the consideration of the case pursuant to Article 203.3. Thus, the court is acquainted with the subject matter of the arbitration either through the arbitration document enclosed with the papers of the case or during the arbitral procedure when the matter is referred to arbitrators. Hence, the award may not be nullified in the aforementioned case, even if the arbitrators fail to refer to the arbitration document in the case of ad hoc and institutional arbitration. Rather, it is sufficient in this case to enclose the original of the arbitration document with other documents submitted to the court that referred the dispute to arbitration. This court will then exercise its supervisory and control competence over the award by ratifying or remanding the award in accordance with Article 214 of the Code. The award is remanded by the court [Page79:] if the arbitrators leave a certain point of the dispute unresolved or if the award is too vague, ambiguous or unspecific to be executed. The court also has competence to amend and correct the award if the arbitrators decide on a matter not included in the arbitration, and the court may exclude such matters without affecting the remaining matters referred to arbitration. The court may also rectify the award if it contains material misprints or miscalculations in accordance with Article 215 of the Code.

It is established in the adjudication of this Court that the court, when ratifying the arbitration award, may neither consider the merits of the case nor determine the extent to which it complies with the law. In addition, every argument raised by any of the litigants against the award with respect to the arbitrator’s determination of the dispute, the evidence presented therein or the invalidity or inadequacy of the grounds for the award shall be inadmissible. Although the award must be based on valid grounds, it is exempted from the causation requirements applicable with respect to judicial judgments as long as the award does not contradict with a rule relating to public order, because arbitrators are not necessarily legal professionals. This exemption also applies to evidentiary procedures, whether mentioned in the Civil Procedure Code, the Civil Transactions Law or any other independent law.

Accordingly, the present petition to cassation is dismissed.