Headnote

Arbitration – Applicable procedure in arbitration – Representation of parties

Summary of facts

The Petitioner requested the ratification and enforcement of the award rendered by the arbitrator on 18 September 2006. The Petitioner stated that on 20 November 2002, an agreement was concluded between the Petitioner and the Respondent whereby the Respondent acted as a subcontractor in the construction of three residential multi-storey towers in the Dubai Marina development project. According to the agreement, the consideration payable in lieu of the accomplishment of the three towers was AED 23,562,666. As only two towers were completed, the Petitioner claimed a payment of AED 4,942,564.49 in addition to an amount of AED 809,226.44, being the legal interest accumulating until 20 April 2005. Clause 16 of the agreement stipulated that any dispute arising between the parties and not amicably resolved within 180 days in accordance with the Conciliation and Arbitration Regulations of the local Chamber of Commerce would be settled through arbitration, which the Petitioner initiated on 15 September 2005.

The Respondent filed a counterclaim for AED 9,445,719 and requested that the dispute be referred to an expert. The arbitrator conducted the arbitral proceedings, heard witnesses, appointed an expert and, following the submission of the expert’s final report, rendered an award on 18 September 2006.

Thereafter, the Petitioner initiated proceedings to set aside the award. On 8 February 2007, the Court of First Instance annulled the award. The Respondent appealed this judgment, and on 12 November 2007 the Court of Appeal set aside the appealed judgment and ordered that the claim for ratification of the award be considered again. The Petitioner challenged this judgment before the Court of Cassation requesting that the Court of Appeal’s judgment to be overturned.

Held

The petition to cassation was dismissed.

According to Article 212 of the Civil Procedure Code, arbitrators are not required to follow the procedures applicable to lawsuits filed with the courts of law. Arbitrators are required to abide by the procedures prescribed under the arbitration chapter of the Civil Procedure Code as well as any other procedures agreed upon by the parties, including the observance of the right of defence. The parties may attend the arbitral sessions, and they may also authorize third parties to represent them in the arbitration procedures. Such third parties need not necessarily be attorneys at law or authorized under an official power of attorney. Rather, such authorization may be made implicitly, and shall be subject to the discretion of the court hearing the merits of the dispute.

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Judgment

The petitioner’s argument was twofold. Firstly, the Petitioner argued that the challenged judgment involved a misapplication of the law and is therefore invalid. Secondly, the Petitioner argued that, after cancelling the appealed judgment which rendered the award null, the Court of Appeal considered the award ratification claim without remanding the claim to the Court of First Instance, whose jurisdiction over the subject matter was not exhausted and whose decision was limited to acceptance of a secondary plea as to the nullification of the award. Hence, the challenged judgment deprived the Petitioner from the consideration of the action before two levels of jurisdiction and was passed in contradiction of Article 166 of the Civil Procedure Code. The challenged judgment was thus considered to be defective and must therefore be overturned.

The court rejected the above argument. Article 166 of the Civil Procedure Code provides: “In case the Court of First Instance adjudicates on the subject matter of the action, and the Court of Appeal sees that such judgment or any of the procedures affecting the same is invalid, then the Court of Appeal shall cancel the same and adjudicate on the action. However, in case the Court of First Instance decides to have no jurisdiction to consider the case or to accept a secondary plea resulting in the suspension of the case, and the Court of Appeal decides to cancel such judgment and to confirm jurisdiction of the Court of First Instance or to dismiss the secondary plea and to consider the case, then the Court of Appeal shall remand the Case to the Court of First Instance to reconsider the subject matter thereof.” According to this article, as well as what is customary in the adjudication of the courts, when the Court of Appeal decides that a judgment passed by the Court of First Instance is defective in its reasoning or the procedures thereof and that this defect does not extend to the statement of claim, then the Court of Appeal shall adjudicate on the subject matter of the action, as long as the Court of First Instance has exhausted its jurisdiction over such action.

The Court held that the Court of First Instance had exhausted its jurisdiction with respect to the subject matter of the action, namely the award ratification petition.

The Court of Appeal overturned the appealed judgment for being defective and considered the award ratification petition submitted. Thus, the Court of Appeal has acted in accordance with the applicable law, and any argument against the above shall be deemed groundless.

In the second ground, the Petitioner argued that the challenged judgment involved a breach and misapplication of the law, defective causation and violation of the Principle of Equality of Arms. According to the Petitioner, the challenged judgment decided to nullify the judgment passed by the Court of First Instance and to ratify the award based on the fact that the power of attorney mentioned in the arbitration deed and issued to the attorney at law applies only to representation during arbitration procedures and not to the signing of the arbitration deed. This is because the arbitration clause was incorporated in the construction contract and no power of attorney was conferred by the Petitioner. Therefore, the arbitrator did not serve any summons upon the Petitioner to appear, provide his testimony and sign the relevant arbitration document. Additionally, the arbitrator did not define the relationship between the alleged attorney and the Petitioner, and erroneously assumed that he was the representative or agent of the Petitioner. As the challenged judgment concluded that the power of attorney was conferred on the attorney at law to represent the Petitioner during arbitration the judgment was deemed to be defective and should be overturned.

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The court rejected the argument, pursuant to Article 212 of the Civil Procedure Code discussed above. It is established from the case papers that the attorney appeared during procedures in his capacity as the representative of the Respondent against whom the arbitration was sought and that he was authorized to defend the same in accordance with the power of attorney issued. Additionally, the attorney submitted his defence and filed a counterclaim before the arbitrator. It is established from the letter of establishment dated 12 December 2005 that the attorney was appointed by the general manager of the Petitioner to defend the same. This letter also included the delegation of […] to represent the Petitioner. As the challenged judgment concluded that the arbitration clause was incorporated in the construction contract and that the Petitioner was duly represented in the arbitration procedures, the argument made on this ground is thus deemed to be groundless.

Accordingly, the present petition to cassation was dismissed.