Headnote

Arbitration – Claim for damages against tribunal for breach of confidentiality – Burden of proof – Elements of a valid tort claim

Summary of facts

The Respondents were arbitrators in a major construction dispute. During the course of the arbitration the parties filed a request to the tribunal to suspend hearings while a settlement proposal was explored. Settlement was subsequently reached on a number of major issues. The settlement terms were to remain confidential and not to be disclosed to any tribunal member. Disputes under the settlement agreement were to be referred to a single arbitrator separately appointed. However, the contractor referred the main dispute back to the Respondents alleging that the settlement agreement had been breached. The Respondents allowed the contractor to produce documents that related to the settlement process and the Petitioner appealed to the arbitral body to appoint another tribunal, citing breaches of confidentiality and significant losses arising from that breach. The Petitioner then filed a claim against the Respondents in the sum of AED 60 million, with interest at 12%, for damages arising out of an alleged breach of a confidentiality agreement. The Courts below were requested to appoint an expert to determine damages, but declined to do so. The matter was referred to the Court of Cassation.

Held

The petition to cassation was dismissed.

Although it was alleged that the Respondents were in breach of their confidentiality obligations (as well as a ruling from the sole arbitrator that they had no right to disclose any verbal or written correspondence during the settlement period), the Petitioner did not show in fact that there was any breach of confidentiality, nor were the Respondents parties to the settlement agreement. On that basis there was no primary liability and therefore no need to refer the case to the Court to assess damages. The elements of a tort claim are error, damage and a causal relationship between the two. If any one of the three elements is missing, no valid claim can be made.

Judgment

This court is aware that current contest is established on five reasons. Generally the Petitioner appeals the contested judgment for violation of law, defective inference, invalid reasoning, conflict with facts highlighted by presented papers and breach of defence rights, for supporting court of first instance decision who rejected Petitioner case based on the argument that Respondents are not under any obligation under the Settlement Agreement as they are not parties to it.

It is clear that Tribunal members (Respondents) failed to act within the scope of mission delegated to them, as the Settlement Agreement is a contract required to be executed on good faith principles. The Respondents have no valid right to discuss the provisions of the agreement. They agreed to approve the Agreement and its contents in addition to their decision dated 21 April 2010 to suspend arbitration proceedings until the sole arbitrator appointed under arbitration case number 370/2010 concerning the settlement agreement dispute rendered his final award.

The sole arbitrator ruled that the Respondents had no right to disclose any verbal or written correspondences during the period 7 April 2010 and 30 November 2010, while amicable settlement was in discussion, in addition to any other information regarding discussions between parties, their attorneys, representatives and advisers regarding the settlement of claims highlighted by each party regarding arbitration case number 02/2009.

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The contested judgment should be set aside on the basis that it held that documents are clear of any evidence of error committed by the Respondents, and that the Petitioner failed to submit any papers or documents in support of its case. The Plaintiff submitted five documents highlighting the Respondents’ errors, including application to appoint an arbitrator to discuss arbitration case number 2/2009; decision taken by DIAC according to which Respondents were appointed to discuss above lawsuit; its application dated 25 November 2010 directed to the Respondents to suspend arbitration proceedings regarding case number 2/2009 according to the Secret Agreement; decision taken by Respondents according to which arbitration actions are suspended; Respondents’ decision directed to parties of arbitration case number 2/2009 to submit their defence points, documents & witnesses; and finally account statement highlighting cost of losses suffered thereby due to the Respondents’ failure to act within the scope of mission delegated thereto.

The Petitioner claims that the contested judgment failed to consider these major defence points, supported by documents, and declined to respond to the Petitioner’s request to delegate an expert to highlight the volume of damages suffered thereby due to the Respondents’ errors. The judgment should be considered null and void.

This Court believes that the above challenge point is invalid and refutable. According to precedents of this court, the Petitioner is required to provide valid evidence in support of its claims. It is also well founded that there are three elements for responsibility under tort: error, damage and causality relationship between error and damage, which means that whenever a claim is unable to fulfil any of the three elements, no responsibility may be established. It is established that the Petitioner party is liable to prove error committed by the Respondents, and that such error caused the Petitioner certain damages. Whether a claim fulfils the tort elements highlighted above or not are all among issues of fact left to a trial court, as long as trial court is able to establish its judgment on valid reasons, supported by valid evidence.

It is well founded that for any judgment to be final and enforceable against parties in a manner that neither party is allowed to raise the same issues again, is the unity of subject and parties. A party’s request to a court to delegate an expert is not left to a party’s own judgment. The trial court has the right to reject such request whenever it believes that papers and evidence presented to it are sufficient to support a truthful and fair judgment.

In the current case, it is clear to this court that the Court of First Instance judgment supported by the Court of Appeal judgment both ruled that “whereas Plaintiff establishes its compensation claim on the argument that Respondents disclosed confidential information, that in study of Agreement dated 13 November 2010, the Court is aware that parties agreed to keep and maintain confidentiality of all verbal and written correspondence exchanged between parties, after which Agreement stressed that disclosure shall be limited to the necessary extent for information and reporting purposes, followed by an agreement that disclosure is permitted to managers, executive directors, and legal consultants, this court believes that condition becomes vague and open.

Whereas Petitioner failed to provide the Court details of the nature of such confidentiality to allow for the Court to investigate whether the Respondents breached confidentiality rules or not, therefore the Court hereby rules that the Respondents did not commit any error, based on which the Court hereby rules that the element of error was not established on Respondents side.”

Furthermore, the contested judgment went on to highlight that “Petitioner ’s claim that Respondents committed an error for which Respondents are liable to pay [Page148:] compensation is established on its claim of breach to confidentiality agreement executed between Petitioner and Project Contractors, dated 13 April 2010. In addition to the Petitioner’s failure to provide any valid evidence that the Respondents committed any error, the Court is not aware according to documents submitted by Appellant that the Respondents were under any obligation under the Settlement Agreement, and its contents of confidentiality conditions, due to the fact that the Respondents were not party to this Agreement, and were under no obligation according its terms, therefore this Court believes that there is no need to delegate any account expert to investigate the volume of damage claimed by the Petitioner, based on which court hereby rejects Petitioner Appellant claim for expert delegation.”

This Court believes that the above judgment reached by the trial court is valid established on valid papers, with no apparent violation of any law, and that Petitioner claims or challenges against the Respondents due to the argument that the Respondents agreed to discuss an issue after judgment enjoyed the status of res judicata (matter already adjudged), are all invalid and incorrect arguments, after Petitioner failed to present any valid evidence that the Respondents signed any Confidentiality Agreement; therefore this court believes that Petitioner challenge based on this point is invalid and is hereby rejected.