Headnote

Arbitration – Judgments that cannot be appealed – Article 151 of the UAE Civil Procedure Law – Definition of arbitration agreement – Reference to the general terms of the contract containing an arbitration agreement – Challenge of decisions made during the course of proceedings which do not determine the entire subject matter of the dispute

Summary of facts

The Petitioner hired the Respondent to undertake work for a project and concluded three subcontracts. The Respondent provided the Petitioner three performance bonds for 10% of the subcontract value. The Respondent requested payment for the work completed under the subcontracts but the Petitioner failed to make payment. The Respondent completed the subcontract works and obtained an order to stop the liquidation of the performance bonds and obtained two provisional attachment orders over the Petitioner’s assets and shares in the hands of third parties and a provisional attachment order over the Petitioner’s personal assets.

The Respondent brought Commercial Action No 2090-2012 against the Petitioner seeking to confirm the attachment as security for a claim. The Court of First Instance rejected the case due to the presence of an arbitration clause.

The Respondent appealed in Abu Dhabi Commercial Appeal No. 23 of 2013. The Court of Appeal overturned the Court of First Instance’s ruling and referred the matter back to the Court of First Instance for a determination on the merits.

The Petitioner filed the present petition to cassation arguing that the subcontract comprises of the subcontract itself, conditions of contract, bill of quantities and the general conditions of contract. Accordingly, the Respondent contended that none of the contract documents can be referenced as a separate document.

Held

The petition to cassation was dismissed.

The mere reference in the subcontract to an arbitration clause that is available for viewing at the Petitioner’s head office does not evidence a clear and unmistakable intent to incorporate the arbitration clause contained in the document, into the subcontract. Moreover, the reference does not indicate that the Respondent was aware of the existence of the arbitration clause. Accordingly, it cannot be said that the parties made an arbitration agreement in writing which they intended to incorporate as a binding provision into their contract.

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. A plea that a matter should not be heard due to an arbitration clause is a plea of lack of jurisdiction since its purpose is to deny the court’s jurisdiction to hear the matter. In dismissing such plea, the court impliedly declares itself as having jurisdiction and such a decision may not be appealed separately prior to the issue of the final decision unless the court is not competent to try the matter.

Judgment

It is well established that arbitration involves an explicit agreement to resolve a dispute through an arbitrator in place of the courts and the arbitration agreement, whether drafted as a clause or a separate submission, 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.

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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 such 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.

Appendices and schedules to a contract need not be signed by the parties but it must be mentioned in the contract signed by parties, that they form an integral part of the contract. However, if an appendix or schedule contains an exceptional cause such as an arbitration clause, it will not be binding upon the parties unless they have appended their signatures to the appendix or schedule.

In the current case, there is no provision in the subcontract stating that the parties agree to refer any disputes which may arise between them to arbitration. The subcontract states: “The subcontract comprises the following documents: the conditions of contract relating to the project, the bill of quantities, the general conditions of contract, etc., which are available for viewing at the head office.” The subcontract also states “Except as otherwise provided by this Agreement, the documents are to be taken as mutually explanatory of one another, if possible. In the event of any inconsistency between the documents their priority shall be in accordance with the following sequence: 1) The Subcontract Agreement (if any), 2) the Conditions of Contract Relating to the Project, 3) The General Conditions of Contract, etc.” The Appellant essentially argued that the general conditions of contract contain an arbitration clause. However, the mere reference in the subcontract to an arbitration clause that is available for viewing at the Petitioner’s head office does not evidence a clear and unmistakable intent to incorporate the arbitration clause contained in the document, into the subcontract. Moreover, the reference does not indicate that the Respondent was aware of the existence of the arbitration clause. Accordingly, it cannot be said that the parties made an arbitration agreement in writing which they intended to incorporate as a binding provision into their contract.

The Court of Appeal’s decision to set aside the primary ruling and to dismiss the arbitration plea is essentially a declaration of the Court of First Instance’s jurisdiction over the matter and accordingly the petition to cassation is dismissed.