Headnote

Arbitration – Grounds for annulment of award – Public order – DIAC arbitration rules

Summary of facts

The Petitioner, a real estate developer, entered into a sale and purchase agreement for a property with the Respondent. As the Petitioner defaulted in its obligation under the agreement, the Respondent initiated arbitration under the DIAC arbitration rules.

The sole arbitrator ruled that the sale and purchase agreement was invalid on the ground that the property was not registered in the Interim Real Estate Register in the Emirate of Dubai, as required by Article 3 of Law No. 13 of 2008, and ordered the Petitioner to return the sum paid by the Respondent.

The Respondent filed an action before the Dubai Court of First Instance seeking the ratification and enforcement of the award. The Petitioner objected to the ratification of the award. The Court of First Instance dismissed the Petitioner’s objection and ratified the award. The Petitioner then appealed the decision of the Court of First Instance, and the Court of Appeal upheld the lower court’s decision.

Thereafter, the Petitioner filed the present petition to cassation.

Held

The judgment of the Court of Appeal was overturned.

Article 216 of the UAE Civil Procedure Code allows the parties – in certain circumstances outlined in the article – to request the setting aside of an award when the court is hearing an action to ratify it. However, despite the rule that the courts will not review the merits of the case when considering a request for the award’s ratification or nullification and despite the fact that a violation of public order is not one of the grounds listed in Article 216, the courts will look into the merits of a case to examine the irregularity of the decision in light of the law if the arbitrator exceeded the limits of his jurisdiction by resolving a matter relating to public order.

The concept of public order relates to the fundamental interests of a society and forms the basis for the social, political, economic and ethical rules that are issued by the state. These public order rules must be respected in all actions and rulings.

Article 3 of the UAE Civil Procedure Code implies that provisions relating to the circulation of wealth and individual ownership are rules and principles upon which society is based. These rules and principles also include the rules pertaining to the registration of property in the Interim Real Estate Register in the Emirate of Dubai. As such, any dispute relating to this issue falls under the jurisdiction of the courts and cannot be resolved through arbitration.

Judgment

The appealed judgment erred in upholding the lower court’s judgment ratifying the award that annulled the sale and purchase agreement in application of Law No. 13 of 2008 on the basis that the property was not registered in the Interim Real Estate Register in the Emirate of Dubai as required by Article 3 of Law No. 13.

As such, the sole arbitrator exceeded his jurisdiction by ruling on a matter relating to public order that falls within the jurisdiction of the courts.

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