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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
Arbitration – Capacity – Service of action – Enforcement of foreign award – New York Convention
The Respondent brought an action before the Dubai Court of First Instance to enforce an award rendered in London against the Petitioner who had assets in the UAE, in relation with a dispute that arose out of a charter party.
The Dubai Court of First Instance ratified and enforced the award in accordance with the enforcement provisions of the UAE Civil Procedure Law. The Petitioner appealed before the Court of Appeal which dismissed the appeal and upheld the lower court’s decision.
The Petitioner filed a petition to cassation.
The Court of Appeal’s decision was overturned and the matter was remanded to the Court of Appeal for reconsideration by a different panel.
Sections 4, 6 of Article (8) and Section 2 of Article (9) of the UAE Civil Procedure Law confirm that companies in the UAE shall be served at their head office, through their legal representative or other person acting on their behalf. If neither person is available, a copy of the notice shall be delivered to one of their office staff. If none of those persons were present at the head office at the time of service or someone was present but declined service (which would be the case if the head office has been closed down), the matter shall be reported to the competent judge or the head of the circuit, as the case may be. The judge will then direct that service be undertaken through the press (a widely circulated UAE daily newspaper in Arabic).
If the company has a head office that, at the time of service, was closed down or a member of staff declines service then service through the press may proceed without an inquiry regarding the name and domicile of the company’s duly authorised representative. However, if the company has no head office and the bailiff is unable to serve its duly authorised representative in person or at his/her domicile, service may not proceed by affixation or through the press unless reasonable means have been exhausted by the party effecting service to inquire about the name and domicile of the representative.
Article 238 of the Civil Procedure Law provides that conventions that have become part of UAE law through ratification shall apply with respect to disputes concerning the enforcement of foreign court judgments and arbitral awards. By Federal Decree No. (43) of 2006, published in the Official Gazette on 28 June 2006, the UAE ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 which thus applies to the dispute at hand.
The Petitioner argued in their first appeal that they were not properly served and that, therefore, the primary decision was void. The Petitioner was served on 13 November 2012 at an address different from the one on their trade license. The Petitioner’s address was known since their first trade license was issued on 2 May 1978. The petitioner was served at their trade license address (as provided by the Respondent) on 4 December 2012. After not finding the general manager or anyone acting for him, the bailiff spoke to one of the members of staff who declined service. Even if the Petitioner was properly served that time at their correct address, they were still served only once because they were not reserved at the same address before the order was made to serve them through the press. The Respondent made no genuine attempt to [Page137:] determine the Petitioner’s domicile and arrange for them to be served there. Particulars were omitted from the statement of claim which also included inaccurate particulars, in contravention of Article 7 of the UAE Civil Procedure Law.
Sections 4, 6 of Article (8) and Section 2 of Article (9) of the UAE Civil Procedure Law confirm, as consistently held by this Court, that companies in the UAE shall be served at their head office, through their legal representative or other person acting on his behalf. If neither person is available, a copy of the notice shall be delivered to one of their office staff. If none of those persons were present at the head office at the time of service or someone was present but declined service (which would be the case if the head office has been closed down), the matter shall be reported to the competent judge or the head of the circuit, as the case may be. The judge will then direct that service be effected through the press (a widely circulated UAE daily newspaper in Arabic).
If the company has a head office that, at the time of service, was closed down or a member of staff declines service then service through the press may proceed without an inquiry regarding the name and domicile of the company’s duly authorised representative.
However, if the company is without a head office and the bailiff is unable to serve its duly authorised representative in person or at his domicile, service may not proceed by affixation or through the press unless reasonable means have been exhausted by the party effecting service to inquire regarding the name and domicile of the representative.
In this regard, the Court of Appeal held: “As to the Petitioner’s plea that the primary decision is void due to an irregularity in the service of process, the clerk’s office had issued notice for the petitioner to attend the hearing of 5 December 2012. The bailiff attended the Petitioner’s address for service (as provided by the Respondent) and when he did not find the general manager or anyone acting for him, the bailiff spoke with a member of staff who declined service without offering a reason. The Court of First Instance then decided, at the hearing of 5 December 2012, to serve the Petitioner through the press which means proper service and re-service. It cannot be argued that the staff was not an employee of the Petitioner because he never claimed that at the time of service and the Petitioner has not furnished any proof of this. The Petitioner’s plea is without merit and is dismissed.
The Court of Appeal’s conclusion is supported by evidence and is not inconsistent with the law. The exception taken to its decision under this head is accordingly baseless.
The Petitioner further pleaded that the Respondent lacked the legal capacity to sue on the basis that, as per the arbitral award to be recognised, the Claimant in the Arbitration Case is Frontline Shipping Limited — the Charterer in the Charter Party — while the Respondent’s Power of Attorney in the instant action before the Court of First Instance gives their name as Frontline, the name mentioned in the primary decision and all notices. The Respondent’s name changed to Frontline Shipping International only before the Court of Appeal after they filed a Power of Attorney with this new name that had not been submitted in the Court of First Instance. Hence, the action is brought by a party lacking capacity and the primary decision is accordingly void. The Court of Appeal failed to take this view and its decision is thus flawed and ought to be overturned.
This Court has held that the purpose of declaring the name of a party in proceedings is to identify it clearly. Every declaration that achieves this objective would be sufficient as long as the party has been clearly identified. The Respondent filed their [Page138:] action as Frontline although their supporting docket included a Charter Party dated 2 May 2007, and the London arbitral award to be enforced, dated 24 April 2012, where the Respondent’s name appears as Frontline Shipping Limited. Therefore, the Respondent has been clearly identified and the omission from their name in the statement of claim which was rectified on appeal does not invalidate the primary decision. The argument that the primary decision is void due to that omission is without proper legal basis and the Court of Appeal was right to ignore it. The exception taken to the Court of Appeal’s decision under this head is accordingly baseless.
The Petitioner also argued that their purported signature on the Charter Party belongs to someone who is not legally authorised to agree to arbitration. According to the Petitioner’s trade license, the Petitioner is a limited liability company whose manager is Mohammed Salahuddin but it was B.L. Ganesh who signed the Charter Party containing the arbitration clause as a witness. B.L. Ganesh is not authorised to manage the Petitioner’s company or sign the arbitration clause on their behalf. The Petitioner had filed an original, attested copy of their Memorandum of Association. Article (9) of the Memorandum of Association states that the company shall be managed by Abdullah Ahmed Al Ghurair and Sayed Mohammed Salahuddin, neither of whom is authorised to sign the vessel’s Charter Party. This is not affected by the Court of Appeal’s point that the Petitioner had appointed an English arbitrator. In their letter to the Respondent, dated 19 April 2011, the Petitioner expressed reservations and objected since the outset of the proceedings to the jurisdiction of the arbitral tribunal and the validity of the arbitration clause saying that their defence in the arbitration was limited to jurisdictional matters and that, therefore, the award on the merits was outside the scope of the Petitioner’s defence and did not meet the requirements for enforcement under the New York Convention. The Court of Appeal failed to take this view and its decision is accordingly flawed and ought to be overturned.
Article 238 of the Civil Procedure Law provides, and this Court has held, that conventions that have become part of UAE law through ratification shall apply with respect to disputes concerning the enforcement of foreign court judgments and arbitral awards. By Federal Decree No. (43) of 2006, published in the Official Gazette on 28 June 2006, the UAE joined the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 which thus applies to the dispute at hand. Article V of the NY Convention states:
Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:
a) The parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made.
It is well settled that capacity to agree to arbitration must exist with respect to the person signing the arbitration clause. This Court has also held that the trial court’s decision must contain assurance that the court has examined the evidence and documents in arriving at what it believes is the truth. Its reasoning must lead to the conclusion on which its decision is based. Failure to address material evidence relied upon as would indicate that the trial court has acquainted itself with the facts of the case would amount insufficient reasoning.
The Petitioner had pleaded in their defence before the Court of Appeal that the B.L. Ganesh who signed the Charter Party dated 2 May 2007 is not authorised to agree to [Page139:] arbitration and signed the Charter Party as a witness only. The Petitioner filed, in support of this point, their Memorandum of Association as an LLC, Article 9 of which confirms that the company shall be managed by Abdullah Ahmed Al Ghurair, Khalid Abdullah Ahmed Al Ghurair, Sayed Mohammed Salahuddin and Bukhari Sayed Abdul Rahman. At the end of his fax to the Respondent, dated 19 April 2011 (which the latter filed in the Court of Appeal), the Petitioner’s lawyer qualified his client’s appointment of an arbitrator with the following statement “At the same time, we write to advise that we have appointed Mark Hasher as arbitrator with respect to all disputes arising from the Charter of the vessel on behalf of I.I.I Pergi bearing in mind that such appointment is made without prejudice while reserving our client’s rights to challenge the jurisdiction of the arbitral tribunal including, but not limited to, their right to confirm that they are not party to any agreement whether generally or under a charter party.”
The Court of Appeal did not cite and reply to this defence and simply stated: “it is clear from the recitals of the arbitral award that the Defendant (Petitioner) was represented before the tribunal that issued the award by an English arbitrator.” This does not address the Petitioner’s defence or constitute a proper reply. The appealed decision is marred by flawed reasoning and is prejudicial to defence rights and is overturned.