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UAE Court of Cassation adopts restrictive interpretation of new Arbitration Law

  • Legal Development 22 June 2020 22 June 2020
  • International Arbitration

In a surprising judgment, the UAE Court of Cassation recently held that an arbitration award could be nullified for lack of signature of the pages containing the reasoning and decision of the award, in a strict interpretation of the new UAE Arbitration Law. In this article, we discuss the reasoning of the Court of Cassation and the impact of its decision.

UAE Court of Cassation adopts restrictive interpretation of new Arbitration Law

Background

UAE Federal Law No. 6 of 2018 issuing the Arbitration Law (the Arbitration Law) which came into force on 16 June 2018 repealed Articles 203 to 218 of Federal Law No. 11 of 1992 issuing the UAE Civil Procedure Code (the Civil Procedure Code) applicable to arbitration, and any other provisions contrary to the Arbitration Law.

Article 41-3 of the Arbitration Law provides that arbitration awards shall be signed by the arbitrators. Further, Article 53 of the Arbitration Law provides limited grounds for challenging arbitration awards which are intended to limit the control of the courts over the ratification and enforcement of arbitration awards; such grounds for challenge include the lack of a valid arbitration agreement, lack of capacity to agree to arbitrate, defective notification of the appointment of an arbitrator and failure to observe arbitration procedures.

The Court of Cassation has referred the case back to the Court of Appeal which, unless the arbitrators have corrected the irregularity observed by the Court of Cassation, could potentially nullify the award to follow the Court of Cassation judgment.

 

Based on the reading of Articles 41-3 and 53 of the Arbitration Law, the lack of signature of the award by the arbitrators is a ground for nullification under the Arbitration Law. A recent Court of Cassation judgment dated 14 June 2020 has, however, taken a significant step further by ruling that the lack of signature by the arbitrators on each page containing the reasoning and the decision of the arbitration award is a ground for nullifying an arbitration award.

Recent judgment

In August 2019, the Claimant commenced proceedings before the Dubai Court of Appeal challenging the validity of a Dubai International Arbitration Center (DIAC) arbitration award. This was on the basis that the arbitrators did not sign all the pages of the arbitration award and in particular the pages containing the reasoning and decision of the award.

The Claimant alleged that Article 212 of the Civil Procedure Code which was repealed by the Arbitration Law is similar to Article 41-3 of the Arbitration Lawas they both require the signature of the arbitration award by all arbitrators. The Claimant further claimed that Article 212 of the Civil Procedure Code was interpreted by the courts to mean that arbitrators should sign both the reasoning and decision of the arbitration award, failing which the award is invalid. Accordingly, the Claimant alleged that Article 41-3 of the Arbitration Law shall be interpreted in the same way as Article 212 of the Civil Procedure Code.

The Respondent, however, pointed out that Article 212 of the Civil Procedure Code has been replaced by the Arbitration Law and therefore argued that the court judgments interpreting Article 212 do not apply for the interpretation of the Arbitration Law. Further, the Respondent argued that the last page of the arbitration award was signed according to the requirements of Article 41-3 of the Arbitration Law and that Article 53 of the Arbitration Law lists restrictive grounds for the challenge of an award, none of which include the lack of the signature of the reasoning of the arbitration award.

Reasoning of the Court

On 27 November 2019, the Court of Appeal issued its judgment dismissing the Claimant’s challenge. The Court of Appeal held that the Arbitration Law lists restrictive conditions for the challenge of an award, none of which include the lack of signature of all the pages of an arbitration award.

The Claimant appealed the judgment of the Court of Appeal before the Court of Cassation reiterating the same arguments pleaded before the Court of Appeal.

In a surprising judgment dated 14 June 2020, the Court of Cassation held that Article 212 of the Civil Procedure Code which was repealed by the Arbitration Law is similar to Article 41-3 as they both require the signature of the award by all arbitrators. On that basis, according to the Court of Cassation, the judgments of the court interpreting Article 212 of the Civil Procedure Code and which held that both the reasoning and decision of the award must be signed by the arbitrators, failing which the award is invalid, are applicable to the Arbitration Law. The Court of Cassation held that the nullification of an arbitration award for lack of signature of the reasoning and the decision of the award is a matter of public order.

Rectification of an award

Although the Court of Cassation adopted a very restrictive interpretation of the Arbitration Law based on its own interpretation of Article 41-3 and the jurisprudence issued under the previous regime, the Court of Cassation has held that, in the interest of justice, the irregularity of the arbitration award may be corrected by the arbitrators at the request of one of the parties in accordance with Article 54-6 of the Arbitration Law.

The Court of Cassation has referred the case back to the Court of Appeal which, unless the arbitrators have corrected the irregularity observed by the Court of Cassation, could potentially nullify the award to follow the Court of Cassation judgment

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