Headnote

Arbitration – Commercial agency agreements – Jurisdiction

Summary of facts

The Petitioner and the Respondent entered into an agency agreement pursuant to which the Respondent would market and sell the Petitioner’s products within the UAE. The parties’ commercial agency agreement had been registered in the Commercial Agencies Register. The agreement contained an arbitration clause pursuant to which the parties agreed to refer any disputes arising out of the agreement to arbitration. A dispute arose and was referred to arbitration. An award was rendered on 1 July 2010.

The Respondent filed a case against the Petitioner before the Abu Dhabi Court of First Instance requesting the enforcement of an arbitration award.

The Court of First Instance rendered a judgment ratifying the award. The Petitioner then submitted an appeal against the Court of First Instance’s judgment, which was rejected by the Court of Appeal. Thereafter, the Petitioner filed a petition to cassation.

Held

The judgment of the Court of Appeal was overturned.

According to Law No. 18 of 1981, as amended by Law No. 14 of 1988, disputes arising out of commercial agency agreements that are registered in the Commercial Agencies Register cannot be resolved by arbitration. The UAE courts retain jurisdiction in disputes relating to these contracts.

Judgment

The Court of Cassation held that the intent of the legislator when enacting Articles 3 and 6 of Federal Law No. 18, as amended by Federal Law No. 14 of 1988, was that the UAE courts retain jurisdiction to hear disputes arising from the performance of commercial agency agreements. Equally, the UAE courts have jurisdiction to annul any contrary agreement, such as an arbitration agreement, as long as the commercial agency agreement is registered in the Commercial Agencies Register.

The judgment of the Court of Appeal determined that parties to commercial agency agreements were permitted to agree to arbitrate their disputes. The Court of Cassation held that this determination was wrong because it violated Article 6 of Federal Law No. 18.

The Court of Cassation further held that the commercial agency agreement in question had been registered in the Commercial Agency Register. The fact that the Respondent had sought to unilaterally strike the agreement from the register did not affect the principle that commercial agency disputes arising out of registered commercial agency agreements are not arbitrable. The relevant fact was that the commercial agency agreement in question had been registered.

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