Headnote

Arbitration – Grounds for annulment of award – Independence and impartiality of arbitrators

Summary of facts

The Respondent initiated legal action before the Abu Dhabi Court of First Instance requesting the ratification of an arbitral award. The Court ratified the arbitral award and rendered it enforceable.

The judgment was appealed by the Petitioner before the Court of Appeal, which upheld the lower court’s decision in ratifying the award. Subsequently, the Petitioner challenged the Court of Appeal’s decision before Abu Dhabi Court of Cassation.

Held

The appealed judgment was overturned.

The independence and impartiality of an arbitrator – being a judge settling disputes – is a fundamental guarantee in proceedings before arbitrators. The rules and procedures relating to challenges against arbitrators pertain to public order and cannot be departed from by the parties.

Judgment

The Petitioner argued that the lower courts refused to annul the award despite a prior work relationship between the arbitrator appointed by the Respondent and its legal representative that affected the arbitrator’s impartiality. The lower courts stated that the partiality of arbitrators was not one of the conditions listed in Article 216 of the Civil Procedure Code for setting aside an arbitral award and that, in any event, the Petitioner had not initiated the proper proceedings to dismiss the arbitrator.

The Court of Cassation held that this claim was admissible. Article 114 of the Civil Procedure Code lays down the conditions under which a judge is deemed unfit to hear an action even if no challenge is filed by the parties. One of these conditions is when the judge is the agent of one of the parties in his private business. In light of this, a judge must be recused if there is a prior relation between the judge and one of the parties without either party having to issue a formal challenge. Any agreement otherwise contravenes public order rules.

The Petitioner in this case argued before the lower courts that the arbitrator appointed by the Respondent worked for the Respondent’s legal representative and that this circumstance affected his impartiality. The lower courts ruled that the Petitioner should have challenged the arbitrator during the arbitration proceedings and that under Article 216 of the Civil Procedure Code it is not permissible to request the setting aside of an award on the basis of the impartiality of arbitrators.

Paragraphs (b) and (c) of Article 216 provide that it is permissible for the parties to request the setting aside of an arbitral award while the court is considering its ratification if the award was issued by arbitrators not fulfilling the legal requisites or if there is a nullity that affected the award. A relationship or connection between one of the arbitrators and either party to the dispute renders that arbitrator unfit to hear the dispute as said relationship or connection affects his impartiality.

Accordingly, the appealed judgment was overturned.