Headnote

Arbitration – Separability of arbitration agreement

Summary of facts

The Petitioner and the Respondent entered into a school management and investment agreement, which they bilaterally agreed to terminate at a later date. A dispute arose in relation to the deposit cheque that was provided by the Respondent.

The Respondent requested the Abu Dhabi Court of First Instance to appoint three arbitrators to settle the dispute on the basis of the arbitration agreement contained in the agreement. The Petitioner objected to the Respondent’s request on the ground that the agreement had been terminated.

The Court of First Instance appointed three arbitrators, who issued an award that was ratified by the Court of First Instance. The Petitioner filed an appeal before the Court of Appeal, which overturned the judgment of the Court of First Instance and annulled the award.

Thereafter, the Respondent filed a petition to cassation before the Court of Cassation, which overturned the Court of Appeal decision and returned the case to the Court of Appeal. The Court of Appeal found that the termination of the agreement by the parties did not terminate the arbitration agreement.

The Petitioner then filed the petition to cassation.

Held

The petition to cassation was dismissed.

Article 216 of the Civil Procedure Code specified the conditions in which the parties can request setting aside an arbitral award. Such conditions are limited by the law and may not be departed from.

The termination or expiry of an agreement does not entail the termination of the arbitration agreement included in it unless the arbitration clause or agreement is invalid.

Judgment

The Petitioner argued that Court of First Instance exceeded its power by deciding to extend the parties’ agreement while the Respondent submitted in all phases of the dispute that the parties had agreed to terminate the agreement, which indicated their intention to terminate the arbitration clause.

This argument was rejected by the court. The general idea behind Articles 212 and 216 of the Civil Procedure Code is that arbitration is based on the parties’ intention and agreement to avoid long proceedings before courts. When conducting the proceedings, arbitrators are only bound by the procedural rules that are provided for in the arbitration chapter of the Civil Procedure Code. Furthermore, arbitrators shall rule in accordance with the law unless authorized by the parties to conciliate, in which case they are not bound by the law except for matters relating to public order.

In addition, the legislator has limited the conditions in which the parties can request the setting aside of an arbitral award. The Petitioner’s arguments are not included in the conditions provided for in the law and therefore should be rejected.

The Court of Appeal’s decision that the termination of the agreement does not terminate the arbitration agreement that is contained therein was correct.

Accordingly, the present petition to cassation is dismissed.