Headnote

Arbitration – Appointment of arbitrators – Jurisdiction

Summary of facts

The Petitioner was ordered by a contractor, the Respondent, to construct three buildings on a plot of land in Al Bateen for an agreed sum. The contract between the parties contained an arbitration clause. Since the Respondent refused payment on a number of grounds, the Petitioner initiated a procedure before the Dubai Court of First Instance to order the Respondent to settle payment or to appoint an arbitrator to resolve the dispute under Article 204 of the Civil Procedure Code. The Court decided that it did not have jurisdiction to decide on the substance of the dispute because of the existence of the arbitration clause and appointed an arbitrator to settle the dispute. The Respondent appealed the appointment of the arbitrator claiming that the parties had agreed on a different arbitrator in their agreement. The appeal was denied. The Respondent then appealed before the Court of Cassation, where the judgment was overruled and the case was transferred back to the Court of Appeal to reconsider its decision on the basis that the arbitrator was not appointed in the manner set out in the agreement between the parties. The parties then agreed on the appointment of the arbitrator originally appointed by the Court of First Instance. The arbitration was duly held and resulted in an award. The Court of Appeal ratified the arbitrator’s award. The Petitioner challenged the ratification before the Court of Cassation on the basis that the Court of Appeal did not have the power to ratify the award.

Held

The Court of Appeal’s decision was overturned.

Pursuant to Articles 204 and 213.1 of the Civil Procedure Code, the Court that has jurisdiction over the substance of the dispute that was settled by arbitration and which is determined according to the international rules of jurisdiction set forth in Chapter I of Book I of the Civil Procedure Code shall be competent to appoint arbitrators and ratify awards rendered by arbitrators. The principle is that the Court of First Instance has jurisdiction in this respect, irrespective of whether it was deciding in full chambers or whether the issue of the appointment of arbitrators was raised before it or resulted from a claim regarding the non-jurisdiction of the Court because of the existence of an arbitration clause. The exception to this principle is that the Court of Appeal has jurisdiction over the appointment of arbitrators and the ratification of their awards in cases where the Court of First Instance has passed judgment on the subject matter of dispute and the appeal before the Court of Appeal pleads for the existence of an arbitration clause.

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Judgment

The Petitioner argues that the challenged judgment should be overruled. After the objection and transfer, the task of the Court of Appeal is restricted to determining whether or not the judgment may be appealed. If the Court decides that the judgment can be appealed and appoints the same arbitrator assigned by the Court of First Instance, the latter shall have jurisdiction over the ratification of the arbitrator’s award. In violation of this rule, the Court of Appeal ratified the arbitrator’s award, while it should have transferred the case to the Court of First Instance for this purpose.

The Court of Cassation held that the Petitioner’s argument was correct. As a general rule, the court that has jurisdiction over the appointment of arbitrators and the ratification of awards is the court that would have had jurisdiction to hear the substance of the dispute in the absence of an arbitration agreement. The Court of First Instance had jurisdiction over the appointment of arbitrators and the ratification of awards, not the Court of Appeal. According to the Court, the exception to this rule would be if the Court of First Instance had decided on a matter that fell within the jurisdiction of the arbitrator. The Court held that in the present case the Court of First Instance had only issued a ruling on the arbitrator’s appointment and had never been asked to ratify the subsequent award. The Court of Appeal had therefore erred in ratifying the award because it was the Court of First Instance that had jurisdiction to do so.

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