Headnote

Arbitration – Separability of arbitration agreement - Appointment of arbitrators

Summary of facts

The Petitioner entered into a licensing agreement with the Respondent allowing him to sell the Petitioner’s products in the UAE. A dispute arose between the parties in relation to their agreement. The parties’ agreement included an arbitration clause, but the Respondent refused to appoint an arbitrator. The Petitioner therefore obtained from the Court of First Instance a judgment appointing an arbitrator. The Respondent appealed the decision of the Court of First Instance. The Court of Appeal reversed the decision of the Court of First Instance. Thereafter, the Petitioner filed a petition to cassation.

Held

The judgment of the Court of Appeal was overturned.

The arbitration clause is autonomous from the contract in which it is included. The invalidity of the contract does not affect the validity of the arbitration clause.

The decision of the court to appoint an arbitrator was not subject to any form of appeal.

Judgment

Article 203.1 of the Civil Procedure Code provides that the decision of the court to appoint an arbitrator was not subject to any form of appeal. So as long as the parties have agreed to arbitrate any disputes that may arise in relation to the performance of their contract, either party may request the court to appoint arbitrators. This could be because the parties had initially failed to agree on arbitrators, or had agreed on an arbitrator who was then precluded from acting, or disagreed on the appointment of an arbitrator. In cases where the competent court then decides to appoint an arbitrator to resolve the parties’ dispute over the performance of the contract, such a decision shall not be subject to any form of appeal.

It was further established that the invalidity, rescission or termination of the original contract containing the arbitration clause shall not affect the arbitration clause, which shall remain in full force and effect so long as the arbitration clause itself was valid. While the contract is deemed void, the arbitration clause is not void and removes the dispute from the jurisdiction of the courts to the jurisdiction of the arbitral tribunal.

The Petitioner had approached the Court of First Instance to appoint an arbitrator after the Respondent refused to pursue an amicable solution and did not respond to the Petitioner’s invitation to nominate an arbitrator to commence arbitration. The Petitioner was awarded its appointment request by the Court of First Instance and the appointing decision cannot be appealed. The contested decision held that appeal was possible and was thus erroneous and will be reversed without the need to consider the other grounds of appeal.

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