Headnote

Arbitration – Jurisdiction – Arbitration agreement – Existence – Powers of arbitrators to grant interim relief – Summary actions – Receivership actions

Summary of facts

The Petitioners and the Respondents entered into a Joint Venture Agreement. The Petitioners filed an action before the court alleging that the First Respondent defaulted on his obligations and exceeded his powers by altering the Joint Venture Company’s position as he sold his share in the Company to his son, the Second Respondent, without the consent of the other partners. The Respondents invoked the arbitration clause before the court.

The Court of First Instance ruled that the action could not proceed due to the existence of the arbitration clause. The Petitioners appealed before the Court of Appeal, which upheld the lower court’s decision. The Petitioners filed the present petition to cassation.

Held

The decision of the Court of Appeal was overturned.

In the absence of a specific agreement of the parties in the main contract or in a submission agreement, arbitrator(s) do not have power to order interim, conservatory or summary relief, and the parties’ agreement to arbitrate any disputes concerning the interpretation or performance of the main contract would not give the arbitrators the authority or jurisdiction to order such measures or relief. In such instance, the parties may have recourse to the courts as the forum of general and competent jurisdiction over such matters.

A receivership action is the domain of “summary jurisdiction” under the jurisdiction of a Summary Judge. That action is not a substantive action in which the merits of the dispute are heard with a view to its determination but rather, an action to avert an impending risk to the disputed property remaining in the hands of the possessor. The relief takes the form of an interim provisional measure to protect the property while leaving those in dispute to fight out the case and the fundamental issues between them before the trial court.

Judgment

Article 203 (1) and (3) of the UAE Civil Procedure Law states that the parties to a contract may generally include a clause in their main contract or in a subsequent agreement, stipulating that any future dispute arising between them in respect of the performance of a particular contract shall be referred to one or more arbitrators. The subject matter of the dispute must be defined in the arbitration document or during the course of proceedings. This reflects the legislative intention that while arbitration is normally a consensual process, its subject matter must be specific and clear, revealing the intention of the parties to identify the disputes which are to be submitted to the arbitration tribunal.

Absent specific agreement of the parties in the main contract or in a submission agreement, arbitrator(s) do not have power to order interim, conservatory or summary relieves and the parties’ agreement to arbitrate any disputes concerning the interpretation or performance of the main contract would not give the arbitrators the authority or jurisdiction to order such measures or relief. In such instance, the parties may have recourse to the courts as the forum of general and competent jurisdiction over such matters.

Receivership under Article 29 of the Civil Procedure Law is a summary measure designed to avert an impending risk to the matter at issue and, absent specific [Page122:] agreement of the parties in the contract or in a submission agreement, arbitrators do not have power to decide receivership issues which do not fall within the scope of arbitration and are not excluded from the jurisdiction of the courts.

It is further settled that arbitration clauses must be interpreted narrowly given the status of arbitration as an alternative dispute resolution method. A receivership action which is the domain of “summary jurisdiction” by the Summary Judge is not a substantive action which enquires into the merits of the dispute with a view to its determination but an action to avert an impending risk to the disputed property remaining in the hands of the possessor. The relief takes the form of an interim provisional measure to protect the property while leaving those in dispute to fight out the case and the fundamental issues between them before the trial court.

The Court of Cassation held that the Court of Appeal ruled incorrectly when it held that where an arbitration agreement exists, the dispute may not be brought before the court even if the issue is one of receivership. The Court of Appeal incorrectly applied the law and its decision was therefore overturned.