Headnote

Arbitration – Ratification of award – Conflict of interest of arbitrator – Scope of Article 114 of the Civil Procedure Law – Whether a party’s lawyer is party for the purpose of Article 114

Summary of facts

A dispute had arisen between the parties for which an arbitral tribunal was appointed by a decision rendered in Commercial Action No. 516-2005. The tribunal issued its award and the Petitioner brought Commercial Action No. 1282-2009 against the Respondent to ratify the award. The Court of First Instance confirmed the arbitral award. The Respondent appealed and the Court of Appeal upheld the primary ruling. The Respondent appealed again in Commercial Appeal No. 980-2010 and the Court of Cassation overturned the Court of Appeal’s ruling with remand for fresh consideration by a different panel. The (new) Court of Appeal ordered that the primary ruling be set aside while dismissing the request for confirmation of the arbitral award issued in Action No. 516-2005. The Petitioner appealed to the Court of Cassation, arguing that the Court of Appeal refused to confirm the arbitral award on the grounds that the arbitrator the Petitioner had nominated was observed by a witness visiting the law firm of the Petitioner’s lawyer and that his position as legal advisor at the Bank of Bahrain did not justify his recurring visits to the law firm in question and that, therefore, he was unfit to act in the arbitration matter. However, the Petitioner argued that the fact that the arbitrator has such a business relationship with the Petitioner’s lawyer does not render him unfit to serve as arbitrator. The arbitrator has no connection to the Petitioner and is not its agent, nor is he an employee of the Petitioner or its lawyer.

Held

The Court of Appeal decision was overturned.

Article 114 of the UAE Civil Procedure Law sets specific grounds for which judges would be considered unfit to try cases and precluded from hearing them even if their recusal is not sought by the parties. These grounds may not be broadly interpreted or deduced through analogical reasoning. The agency that renders a judge unfit to try a case involves the authority to act for one of the parties. A lawyer is not a party in a legal matter for which he has been retained. The party is the person for whom the lawyer is acting in the proceeding and as non-parties lawyers are not subject to disqualification. The fact that the arbitrator sitting on the tribunal had previously worked for or was associated with the law firm of the lawyer acting for the Petitioner does not constitute grounds for disqualification under Article 114 of the UAE Civil Procedure Law as the circumstances described do not fall within Article 114. The arbitrator has not been shown to have acted as an agent or representative of the Petitioner.

Judgment

An arbitrator’s impartiality and independence as a judge adjudicating a dispute is a fundamental guarantee of the arbitration process. The essence of Article 207 of the UAE Civil Procedure Law is that the rules and procedures for recusal of arbitrators are matters of public policy that cannot be contravened by private agreement since they involve the twin guarantees of impartiality and independence which are an indispensable requirement of any adjudicative process. Those guarantees must exist with respect to both arbitrators and judges to ensure that grounds for recusal would be equally applicable to both the judges and arbitrators. Article 114 of the Civil Procedure Law provides: “A judge shall be unfit to try a case and precluded from hearing it even if his recusal is not sought by any of the parties, if: he is the agent of one of the parties in his private business or his guardian, trustee, or presumptive heir.”

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In other words, an existing relationship between a judge and one of the parties automatically requires recusal without application, in the interest of maintaining the appearance of impartiality before the parties and the public so that judges’ actions are not called into question for reasons which are typically perceptible. Failure to abide by this restriction will render the judge’s ruling void as a matter of public policy.

Article 114 of the Civil Procedure Law sets specific grounds for which judges would be considered unfit to try cases and precluded from hearing them even if their recusal is not sought by the parties. These grounds may not be broadly interpreted or deduced through analogical reasoning. The agency that renders a judge unfit to try a case involves the authority to act for one of the parties. A lawyer is not a party in a legal matter for which he has been retained. The party is the person for whom the lawyer is acting in the proceeding and as non-parties lawyers are not subject to disqualification.

Hence, the fact that the arbitrator sitting on the tribunal had previously worked for or was associated with the law firm of the lawyer acting for the Petitioner does not constitute grounds for disqualification under Article 114 of the UAE Civil Procedure Law as the circumstances described do not fall within Article 114. The arbitrator has not been shown to have acted as an agent or representative of the Petitioner.

The Court of Appeal based its decision on a witness’ observation of the arbitrator who was nominated by the Petitioner at the law firm of the Petitioner’s lawyer conducting himself in a manner consistent with him being an employee of the firm and the arbitrator’s position as legal advisor to the Bank of Bahrain not justifying his recurring visits to that firm which rendered him unfit to act in the arbitration matter. However, these are not among the circumstances enumerated in Article 114 and are not sufficient in themselves to prove the arbitrator’s partiality and render him unfit to act in the arbitration matter as a member of the three-man tribunal. The Court of Appeal has misapplied the law using flawed reasoning and its ruling will be overturned.