Headnote

Arbitration – Appointment of arbitrators – ICC rules of arbitration

Summary of facts

The parties concluded an exclusive commercial agency agreement dated 8 June 2000, which was duly registered with the Commercial Agencies Department of the UAE Ministry of Economy and Planning.

The agreement was subsequently renewed until 3 April 2008. It provided for arbitration of any disputes arising out of it under the ICC Rules. The Respondent, the exclusive agent, entered into contractual agreements in the exclusive territory without paying the agreed commission to the Petitioner, the principal, in breach of the exclusive agency agreement. Following the Respondent’s failure to agree to the appointment of a sole arbitrator and its refusal to accept service of a request for arbitration dated 17 June 2006, the Petitioner made an application to the Dubai Court of First Instance requesting the appointment of a professional accountant to adjudicate the dispute between the parties. Following the Dubai Court of First Instance rejection of the application and the Court of Appeal’s rejection of the subsequent appeal, the Petitioner filed the petition before the Court of Cassation.

Held

The petition to cassation was dismissed.

It is true that Article 204.1 of the Civil Procedure Code provides that “if the litigation has occurred and the litigant parties haven’t agreed on the arbitrators, or one or more arbitrators, who was agreed on, has abstained from the work, has retired there from, has been dismissed there from, or his refusal has been decided, or a hindrance has prevented his undertaking therein, and there were not an agreement between the litigant parties concerning that, the court which is principally authorized to examine that litigation shall appoint whoever shall be needed of the arbitrators, and that on the grounds of a request from one of the litigant parties, through the usual procedures of the action prosecution. The number of those appointed by the court should be equal to the number agreed on between the litigant parties or completing thereto.”. However, if the arbitration clause specifies the procedure for the appointment of arbitrators, it should be strictly followed and no recourse may be made to the court originally having jurisdiction to hear the dispute for the appointment of arbitrators.

Judgment

The Petitioner argued that the judgment of the Court of Appeal confirmed the dismissal of the action on the basis that the appointment of the arbitrator fall within the jurisdiction of the International Chamber of Commerce in Paris, while pursuant to Article 18 of the Commercial Agencies Law only the UAE courts have jurisdiction to adjudicate any dispute arising from the performance of an agency agreement between the principal and the agent. Therefore, the Respondent’s failure to respond to the Petitioner’s invitation to appoint an arbitrator extinguished the Respondent’s right to invoke the arbitration clause, which meant that the court was then competent to hear the dispute.

The Court of Cassation held that the arbitration clause is considered as a whole and that the amendment of any element therein, such as the procedure for the selection of the number of arbitrators, can only be made with the parties’ express consent.

It is true that Article 204.1 of the Civil Procedure Code provided that “If the litigation has occurred and the litigant parties haven’t agreed on the arbitrators, or one or more arbitrators, who was agreed on, has abstained from the work, has retired there from, has been dismissed there from, or his refusal has been decided, or a hindrance has prevented his undertaking therein, and there were not an agreement between the litigant parties concerning that, the court which is principally authorized to examine [Page98:] that litigation shall appoint whoever shall be needed of the arbitrators, and that on the grounds of a request from one of the litigant parties, through the usual procedures of the action prosecution. The number of those appointed by the court should be equal to the number agreed on between the litigant parties or completing thereto.” However, if the arbitration clause specifies the procedure for the appointment of arbitrators, it should be strictly followed and no recourse may be made to the court originally having jurisdiction to hear the dispute for the appointment of arbitrators.

With respect to the Rules of Arbitration of the International Chamber of Commerce, which were referenced in the arbitration clause between the parties, the case shall be settled by three arbitrators appointed in accordance with the ICC Rules. On this basis, it was not appropriate for the Petitioner to have approached the courts to appoint the arbitrator. Furthermore, this meant that the Petitioner’s claim regarding the Respondent’s failure to acknowledge and respond to the request for arbitration was wrong, since such failure does not result in a waiver of the procedure following which the arbitrators were to be appointed pursuant to the aforementioned arbitration clause. Therefore, the Petitioner’s claim that the Respondent’s failure to respond to the request for arbitration constituted an amendment to the arbitration clause was equally incorrect.

Accordingly, the present petition to cassation was dismissed.