Headnote

Arbitration – Article 151 of the UAE Civil Procedure Law – Special power of attorney – Jurisdiction of the court – Challenge to decisions made during the course of proceedings which do not determine the entire subject matter of the dispute

Summary of facts

The Respondent concluded two sale and purchase agreements with the Petitioner for the purchase of residential units. The Respondent made full payment of the purchase price of the units but discovered that the Petitioner did not complete the scope of work as per the agreement. The Respondent brought Commercial Action No 833- 2013 seeking to appoint an engineering expert to inspect the project site and to determine the percentage of completion of the project and any structural works. The Petitioner pleaded that the claim was barred by the existence of an arbitration clause in the agreements.

The Court of First Instance appointed an expert who filed a report. The Respondent amended its claim and requested the Court of First Instance to terminate the agreement and to direct the Petitioner to pay the original sum with interest, as well as compensatory damages.

The Court of First Instance dismissed the claim on the basis of the existence of the arbitration clause. The Respondent appealed in Abu Dhabi Commercial Appeal No. 1881-2012 and the Court of Appeal set aside the First Instance Court’s ruling and referred the matter back to the Court of First Instance for judgment.

The Petitioner filed the present petition to cassation.

Held

The petition to cassation was dismissed.

A special power of attorney allows the attorney to undertake specific matters as set out in the power of attorney and matters which are incidental to the powers conferred. If the holder of the power of attorney acts outside the scope of authority granted by the power of attorney such acts will not bind the principal, unless the principal has authorised the attorney. The trial court shall assess whether intent has been adequately expressed in the power of attorney and leaves no doubt under the circumstances of the purposes intended to be served. The trial court’s assessment will not be reviewed by the Court of Cassation as long as it has exercised its discretion soundly on the evidence. Here, the Power of Attorney given to conduct business which involves acceptance of the Petitioner’s offer regarding the two residential units in question on the Respondent’s behalf did not authorise the arbitration of any disputes that may arise in relation to the performance of the two agreements. Thus, the Court of Appeal correctly reasoned that the arbitration clause was void and accordingly set aside the primary ruling and referred the matter to the Court of First Instance.

Further, 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.

Judgment

The Court of Cassation may, on its own motion, raise grounds related to public policy as long as they are determinable on the facts and evidence that were previously put before the Court of Appeal. According to Article 151 of the Civil Procedure Law and the established principles of the Court of Cassation, decisions made during the course of proceedings which do not conclude the entire dispute may not be challenged [Page100:] separately before a decision resolving the entire proceedings has been issued. This excludes 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 jurisdiction originally.

An arbitration plea is a plea of lack of jurisdiction for 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 not be appealed separately prior to the issue of the final decision unless the court is not competent to try the matter.

Since arbitration is an exceptional method to resolve disputes it entails a departure from conventional litigation where the right to access courts of law is waived, with its guarantees provided to litigants. Therefore, an arbitration agreement requires a special power of attorney that allows the attorney to carry out only the specific matters set out in the power of attorney and matters which are incidental to the powers conferred according to their nature and custom. The holder of the power of attorney may not act outside the scope of authority granted by his power of attorney and if he does his acts will not bind the principal unless the principal has authorised them. This is a matter for the trial court to assess based on the circumstances of the case as it involves a question of whether intent has been adequately expressed by the grantor of the power of attorney and leaves no doubt under the circumstances of the purposes intended to be served. The trial court’s assessment will not be reviewed by the Court of Cassation as long as it has exercised its discretion soundly on the evidence.

An attorney who is authorised to enter into a sale and purchase agreement is not authorised to enter into an arbitration agreement which is not an essential component for concluding an agreement for sale.

The Power of Attorney given to conduct business which involves acceptance of the Petitioner’s offer regarding the two residential units in question on the Respondent’s behalf did not authorise to arbitrate any disputes that may arise in relation to the performance of the two agreements. Thus, the Court of Appeal correctly reasoned that the arbitration clause was void and accordingly set aside the primary ruling and referred the matter to the Court of First Instance. The Court of Appeal thus confirmed the jurisdiction of the courts over the dispute. The Court of Appeal’s ruling did not conclude the original matter in controversy between the parties and therefore cannot be the subject of a separate appeal according to Article 151 of the Civil Procedure Law.

Accordingly, the petition is rejected.