Arbitration is an investment and, like any investment, one must assess the risks against the benefits. Such an evaluation often focuses upon the merits of the legal and commercial issues in dispute.
A recent case heard by the Court of Appeal in Dubai (Case No. 371-203) provides a reminder that on top of the over-arching merits of a claim, parties to an arbitration have to put procedural requirements and the form of the arbitration at the top of their list of priorities to ensure that their investment is not squandered by subsequent ratification and enforcement issues.
Arbitration in the United Arab Emirates (UAE) is governed by articles 203 to 218 of Federal Law (11) of 1992, as amended (the Civil Procedure Code (CPC)).
In Case No.
371-203, the Tribunal granted an award in favour of the claimant under the Dubai
International Arbitration Centre (DIAC) rules.
The award was successfully challenged during enforcement proceedings and was annulled
by the Court of First Instance. Upholding the annulment, the Court of Appeal
found that the Tribunal failed to sign the award in accordance with articles
212(7) and 212(5) of the CPC.
decision, the ramifications of Article 212(7) of the CPC are that an award in
an arbitration seated in Dubai will be invalid if the arbitrators
fail to sign both the section setting out the reasoning for the decision and
the section containing the decision itself. The logistical exception is if
parts of the two sections are on the same page and if the signatures are also
on that page, the court will assume that the signature is applicable to both
reason the Court of Appeal gave for annulling the award was that it was only
signed by two of the three arbitrators. Article 212(5) of the CPC states that
if one or more arbitrators refuse to sign the award, then this shall be stated
in the award. Given that the main award did not specifically describe why the
dissenting arbitrator had not signed the award, despite the implication being
quite obvious, then the award could be annulled.
The reasons for
annulment that the Court of Appeal upheld highlight how simple, administrative
issues can have a devastating effect on an arbitration award. Under article 212
of the UAE Civil Procedure Code, the award must also comply with the following
- It must include a copy of the arbitration agreement.
- It must include a summary of the litigants’ statements and documents.
- It must state the reasons for the award.
- It must state the date and place of issue.
- Unless otherwise agreed by the parties, the award must be in Arabic.
procedural issues are avoidable. Parties and their legal advisers should work
with the Tribunal and the governing administrative body, such as DIAC, to
ensure that all procedural requirements are identified and precisely complied
with. This case highlights that without getting “the simple things” right, the
investment in an arbitration may be wasted.