Headnote

Arbitration – State jurisdiction – Article 151 of the UAE Civil Procedure Law – Reference to arbitration agreement – Form of arbitration agreement – Challenge of non-final judgments

Summary of facts

The Petitioner hired the Respondent for executing aluminum works for a project based on two subcontracts but failed to make payment to the Respondent. The Respondent brought Commercial Actions No. 1218-2013 and No. 1438-2013 against the Petitioner. The Petitioner pleaded that the subcontracts each contained an arbitration clause and the claim should be pursued through arbitration. The Court of First Instance agreed and dismissed the case.

The Respondent appealed in Abu Dhabi Commercial Appeal No. 1529 of 2012. The Court of Appeal found that the arbitration clause in the main contract was not incorporated into the subcontract and overturned the Court of First Instance’s ruling, referring the matter back to the Court of First Instance for determination on the merits.

The Petitioner filed the present petition to cassation and contended that the Court of Appeal erred in finding that the arbitration clause in the main contract was not incorporated into the subcontract as the Respondent had agreed that the subcontract is an integral part of the main contract.

Held

The petition to cassation was dismissed.

The Appeal Court decision could not be appealed as it did not conclude the subject matter of dispute.

In accordance with Article 151 of the UAE Civil Procedure Law, decisions made during the course of proceedings that do not conclusively determine the subject matter of the dispute cannot be challenged separately until a final decision on the entire dispute is issued.

In any event, the subcontract referenced the general conditions of the Petitioner’s contract with the employer without making an explicit reference to the arbitration clause. Such reference does not imply the Respondent’s consent to that clause.

Judgment

It is well established that according to Article 216 of the UAE Civil Procedure Law and the precedents established by the Court of Cassation any rulings issued during the course of proceedings that do not conclude the entire subject matter of the dispute may not be separately challenged before a decision determining the entire proceedings has been issued. This excludes any decisions dealing with provisional and summary remedies, decisions granting a stay of proceedings, self-executing decisions and decisions declaring lack of jurisdiction or conferring jurisdiction on a court that did not have original jurisdiction. An arbitration plea is a plea of lack of jurisdiction since its purpose is to deny the jurisdiction of the court to hear the matter. In dismissing such plea or ruling on the merits the court impliedly declares itself as having jurisdiction and its decision may be appealed separately only if the court is not competent to try the matter.

It is further settled that arbitration involves an explicit agreement to resolve a dispute through an arbitrator rather than the courts and whether the agreement is drafted as [Page98:] a clause or a submission agreement, it must be in writing and contained in a document signed by the parties or in an exchange of letters, telegrams or other means of written communication.

The reference in a contract to any document containing an arbitration clause constitutes an arbitration agreement in writing, provided that the reference is clear and explicit, i.e. with specific mention of the arbitration clause contained in the referenced document. A general reference to the terms of the document without specific reference to the arbitration clause demonstrating that parties are made aware of its existence would not extend to the clause and there would be no arbitration agreement between the parties to the contract.

The subcontract references the general conditions of the Petitioner’s contract with the employer without making an explicit reference to the arbitration clause. An arbitration clause is an exceptional clause requiring the explicit agreement of the parties. The reference in the subcontract to the terms of the main contract containing the arbitration clause does not imply the Respondent’s consent to that clause. Accordingly, the arbitration clause in this case does not prevent the courts from exercising jurisdiction over the dispute.

As a result of the foregoing, the Court of Appeal’s ruling did not conclude the entire subject matter of the dispute and hence the petition to cassation is dismissed.