Headnote

Arbitration – Grounds for annulment of award – Public order

Summary of facts

The Respondent purchased a real estate unit from the Petitioner. In their sale and purchase agreement, the parties agreed to refer future disputes arising from their agreement to arbitration.

A dispute arose that was referred to arbitration. On 6 January 2010, the sole arbitrator issued an arbitral award annulling the sale and purchase agreement and ordering the Petitioner to return the sum paid by the Respondent.

The Respondent brought an action before the Dubai First Instance Court requesting the ratification of the arbitral award. The Petitioner argued that the arbitral award was null and void on the grounds that it was issued without an arbitration deed and because the sole arbitrator had violated the Petitioner’s right to defence. The Court of First Instance ratified the award, and the Court of Appeal upheld the Court of First Instance’s judgment. Consequently, the Petitioner filed the petition to cassation.

Held

The judgment of the Court of Appeal was overturned.

It is established by the practice of this Court that the Court of Cassation may raise grounds relating to public order as long as the court of substance, when rendering its judgment, had all the necessary elements to issue its judgment based on those grounds.

It also follows from Article 203.4 of the UAE Civil Procedure Code that it is not permissible for parties to agree to arbitrate on matters regarding which conciliation is not permissible.

Matters relating to the sale of off-plan units have been regulated by the legislator in Article 3 of Law No. 13 of 2008 regulating the Interim Real Estate Register in the Emirate of Dubai. Matters relating to the registration of off-plan units in the Interim Real Estate Register may not be the subject matter of arbitration, as this is contradictory to public policy.

Judgment

Matters relating to the sale of off-plan units have been regulated by the legislator in Article 3 of Law No. 13 of 2008 regulating the Interim Real Estate Register in the Emirate of Dubai. Matters relating to the registration of off-plan units in the Interim Real Estate Register may not be the subject matter of arbitration, as this is contradictory to public policy.

The dispute submitted to the sole arbitrator is governed by Article 3 of Law No. 13 of 2008 and cannot be settled by arbitration. The award rendered by the sole arbitrator is therefore null and void. The Court can annul the award of its own motion since it concerns a matter of public policy.

The award annulling the sale and purchase agreement due to the Petitioner’s failure to register the unit within the time frame required by Article 3.2 of Law No. 13 of 2008 regulating the Interim Real Estate Register in the Emirate of Dubai should be annulled on the grounds that it concerned a matter that is related to public policy.

Accordingly, the judgment of the Court of Appeal is overturned and the award annulled.