Headnote

Arbitration – Capacity to agree to arbitration -Time limit for arbitration proceedings - Power of a court to review merits upon ratification

Summary of facts

The Petitioner entered into an usufruct agreement with the Respondent giving the Respondent the beneficial ownership of shops in a hotel owned by the Petitioner. A dispute arose between the parties over the use of the shops, and the Petitioner gave notice to the Respondent that the agreement was terminated. The Respondent requested the Court of First Instance to appoint an arbitrator to settle the dispute as per the arbitration clause included in the agreement. Following the issuance of the award, the Respondent requested the Court of First Instance to ratify the award, which the Petitioner opposed. The Court of First Instance ratified the award. The Court of Appeal confirmed the judgment of the Court of First Instance. The Petitioner filed a petition to cassation alleging that the arbitration agreement was not signed by an authorized representative and that the award was issued after the expiry of the time limit. It also contested the procedure followed by the arbitral tribunal.

Held

The petition to cassation was dismissed.

Only a person who has capacity to dispose of a right in a dispute may validly agree to arbitration.

Arbitrations conducted outside the court are not bound by the same procedures as arbitrations conducted in court.

The parties may make an express or implied agreement to extend the time limit to issue the award determined by agreement or by law.

The court may not review the merits of the award when ratifying it.

Judgment

Under Article 203.4 of the Civil Procedure Code, only a person who has capacity to dispose of a right in a dispute may validly agree to arbitration. That is because an agreement to arbitrate involves a waiver of the right to bring an action before the courts of the UAE and of the guarantees that such action affords to the litigants. The authority given to an agent may be express or implied. The authority will be express if it is expressed in words, whether spoken or written. The authority will be implied if it is deduced from the facts of the case, everything that has been said or written and ordinary business practice, may be regarded as part of the surrounding facts.

It is settled by the law that an arbitration agreement may be contained in the contract in respect of which the dispute has arisen or in a separate document.

Article 213 of the Civil Procedure Code provides that arbitration may be conducted in court and outside the court. As far as arbitrations through the court are concerned, they will be conducted by order of the court if the dispute is placed before it. In such cases, the procedures provided for in Articles 213.1 and 213.2 of the Civil Procedure Code must be followed. In the case of an arbitration conducted outside the court, the procedures to be followed are those provided for in Article 213.3 of the Civil Procedure Code. If one of the parties in an arbitration being conducted outside the court wishes to have the award ratified or nullified, it must make an application through the normal procedures by lodging a statement of claim with the office of the court. These procedures are laid down in Article 42 of the Civil Procedure Code.

Pursuant to Articles 203 and 210 of the Civil Procedure Code, if the parties agree in writing to settle any disputes arising between them in relation to the performance of a contract by arbitration and stipulate a particular time limit for this purpose, the [Page106:] arbitrator must make his award within the agreed time limit. If there is no agreement on a particular time limit, he must issue award within six months from the date of the first hearing of the arbitration, failing which it will be permissible for any of the parties to raise the dispute before the courts. The parties may explicitly or implicitly agree to extend the time limit determined by agreement or by law, and they may authorize the arbitrator to extend it to a particular time. It is also open to the court, upon the application of the arbitrator or one of the parties, to extend the time limit as it sees fit for the determination of the dispute. Such agreement may be implied by the attendance of the parties at an arbitration hearing and the discussion of the subject matter of the dispute after the time limit has lapsed. That is a matter that should be left to the appreciation of the lower court and is not subject to review by the Court of Cassation, provided that its judgment is based on sound grounds supported by the papers.

When dealing with the ratification of an arbitration award, the court may not review the merits. Any challenge raised by one of the parties in relation to the assessment of the dispute, the evidence provided or the invalidity or reasoning of the award will not be allowed.. The arbitrator is not bound to follow the rules of reasoning of the judiciary, as long as he does not contravene the principles of public order, because he may be a non-lawyer. This exemption applies to the procedures of evidence, whether they are contained in the Civil Procedure Code, the Civil Code or any independent law.

With regard to the ground raised by the Petitioner relating to capacity to arbitrate, that is a matter left to the discretion of the lower court on the basis of the facts, evidence and documents placed before it.

All grounds submitted by the Petitioner are rejected. Accordingly, the present petition to cassation is dismissed.