Headnote

Arbitration – Applicable procedure in arbitration – Grounds for annulment of award – Minutes of arbitration hearings

Summary of facts

The Respondents (sisters) filed a case against the Petitioner (their brother) before the Court of First Instance requesting the appointment of an expert to determine the share of each one of them in a plot of land in Dubai and their revenues generated from the building built on it.

The parties had all agreed to purchase the plot of land together and construct a building on it that would ultimately be let. It was agreed that the Respondents would manage the project and register the land in the name of all of the parties with the Dubai Land Department (DLD). The purchase price was paid by both parties and the Petitioner took possession of the plot and registered it solely in his name with the DLD. Once the building had been constructed and was being let, the parties fell into dispute over how the proceeds should be split. As per the terms of the written agreement between them, the matter was referred to arbitration, and an award was rendered in favour of the Petitioner. The Respondents then sought a declaration from the Court of First Instance that the award was invalid on the basis that the arbitrator had failed to follow certain procedures set down in the Civil Procedure Code, namely that he had not served the parties with a notice of summons and had not taken any minutes of the hearing.

The Petitioner successfully applied to have the claim struck out on the basis that the arbitration clause made it clear that the arbitrator could conduct the arbitration without reference to the Civil Procedure Code “unless in matters relevant to public order”. The Court therefore ratified the arbitration award, but the decision was overturned by the Court of Appeal. The Petitioner subsequently filed a petition to cassation.

Held

The Court of Appeal’s judgment was overturned.

The arbitrator must abide by the prescribed procedures of arbitration and the specific procedures upon which the litigants agree. With respect to an arbitration conducted outside the court, the arbitrator is not required to take minutes of the arbitration hearings unless he is obliged to do so at the request of the litigants or under the rules of institutional arbitration as the case may be.

The arbitrator’s failure to serve a notice of summons to the disputing parties was not an adequate ground for nullifying the award insofar as this defect did not obstruct the intended purpose of the procedure. Furthermore, an invalidation that was based on the arbitrator’s failure to serve a summons upon the disputing parties was a relative one and irrelevant to public order as it was designed for the benefit of the litigant who was not served to appear before arbitration.

Judgment

The challenge was based on one ground according to which the Petitioner alleged that the challenged judgment involved a misapplication of law. The adjudication of the court was based on the ground that the papers did not reveal whether the arbitrator had actually observed the procedures prescribed under Articles 208, 212 and 216 of the Civil Procedure Code for summoning the disputing parties, hearing the grounds of their defences and enabling them to make their submissions.

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The claim was admissible, as the defects that the party seeking the invalidation of arbitration award may maintain are exclusively enumerated under Article 216 of the Civil Procedure Code and relate either to the arbitration agreement or the arbitral proceedings.

The arbitrator shall abide by the prescribed procedures of arbitration and any specific procedures upon which the litigants agree. If the arbitration was conducted within the court, the arbitrator must apply the procedures laid down in the first and second paragraphs of Article 213 of the Civil Procedure Code. If it was conducted outside the court through an ad hoc tribunal or institutional arbitration, the procedures to be followed, in particular, are those provided for in the third paragraph of the same article.

The arbitrator was not required to take minutes of the arbitration hearings unless he was obliged to do so at the request of the parties or under the rules of institutional arbitration. It is imperative under Articles 208 and 212 to summon the disputing parties, hear their defences and enable them to submit their documents in application of the rules on hearing the disputing parties. Under the same articles, however, the arbitrator was not restricted by the rules of the Civil Procedure Code upon serving a notice of summons to the disputing parties. The arbitrator’s failure to serve a notice of summons upon the disputing parties is not an adequate ground for nullifying the award, insofar as this defect did not obstruct the intended purpose of the procedure. Invalidation that was based on the arbitrator’s failure to serve a summons upon the disputing parties was a relative one and irrelevant to public order, as it was designed for the benefit of the litigant who was not served to appear before arbitration.

The arbitrator was not obliged under the Civil Procedure Code with respect to arbitration to take minutes of the arbitration hearings held with respect to the present dispute. The arbitrator satisfied the rule of hearing the disputing parties through the submission of both parties’ memorandums bearing their requests and grounds of defence. As a consequence, the purpose of serving the notice of summons upon the parties was fulfilled.

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