Headnote

Arbitration – Grounds for annulment of award – Power of attorney

Summary of facts

An arbitral award was issued terminating the agreement of the purchase of 16 units by the Respondent and ordering the Petitioner to refund the purchase price to the Respondent. While the Respondent applied for the ratification of the award, the Petitioner filed an action for its annulment on the ground that the persons who agreed with the Respondents to refer the dispute to arbitration and attended the arbitration on the Petitioner’s behalf were not properly authorised for that purpose. Furthermore, the Petitioner argued that the award did not include reasons. The First of Instance Court dismissed the Petitioner’s action and ratified the award. The Petitioner appealed before the Court of Appeal which upheld the decision of the lower court.

The Petitioner filed a petition to cassation.

Held

The petition to cassation was dismissed.

According to article 212 of the UAE Civil Procedure Law an arbitrator is not bound by the rules of civil procedure which apply before the courts but must follow the rules set forth in the part dealing with arbitration and any specific procedures that may be agreed upon by the parties.

According to article 216 of the Civil Procedure Law an action to set aside an arbitral award is directed against the award as a legal act based upon an error of procedure rather than an error of judgment. The defects which a party alleging irregularity may assert are strictly defined and pertain either to the agreement to arbitrate or the arbitration proceeding.

Judgment

According to article 212 of the UAE Civil Procedure Law, as well as this court’s consistent holdings, an arbitrator is not bound by the rules of civil procedure which apply before the courts but must follow the rules set forth in the part dealing with arbitration and any specific procedures that may be agreed upon by the parties.

According to article 212 of the UAE Civil Procedure Law and this court’s consistent holdings that an arbitrator is not bound by the rules of civil procedure which apply before the courts but must follow the rules set forth in the part dealing with arbitration and any specific procedures that may be agreed upon by the parties. The arbitrator must also respect standards of due process by allowing each party to submit his requests for relief and arguments, prove his allegations and refute the evidence of the other side. Furthermore, the arbitrator shall follow procedure with respect to the parties including notifying them of the date of the proof hearing. The parties need not attend the arbitration in person and may appoint someone to represent them. The person so appointed does not have to be a lawyer and his power of attorney does not have to be executed as an official deed. The power of attorney may be explicit or tacit, as inferred by the trial court.

Further, according to Article 216 of the UAE Civil Procedure Law and this court’s consistent holdings that an action to set aside an arbitral award is directed against the award as a legal act based upon an error of procedure rather than an error of judgment. The defects which a party alleging irregularity may assert are strictly defined and pertain either to the agreement to arbitrate or the arbitration proceeding. Irregularity relating to the arbitration proceeding and constituting a ground for setting aside the arbitral award includes the award being issued by arbitrators who were not [Page73:] appointed in accordance with the law or by a number of the arbitrators who were not authorised to issue the award in the absence of the others. Irregularity also occurs in situations where there is no confrontation between adversaries or there is prejudice to rights of due process or irregularity in the award itself or in procedures that have affected the award.

The Court of Appeal upheld the Court of First Instance’s decision on the following grounds:

The arbitrator mentions in his award that he had notified the parties who were represented by their respective attorneys. Regardless of the validity of representation before the arbitrator, the action was properly constituted. Any absence of the parties would not invalidate the proceedings. Arbitrators are not bound by the rules of civil procedure which apply before the courts but must follow the rules set forth in the part dealing with arbitration and any specific procedures that may be agreed upon by the parties. The arbitrator must also respect standards of due process and follow procedure with respect to the parties. The arbitral award is in accord with the principle of confrontation between the parties and the basic rules of litigation and there is no alleged contravention of the procedure agreed upon by the parties in this regard.

The Court of Appeal’s reasons are sound and consistent with the correct application of law.