In a significant development for UAE arbitration, the Dubai Court of Cassation has issued three groundbreaking judgments that will have a positive impact on the arbitration landscape in Dubai.
1. Commercial Case No. 756/2024 — Recovery of legal costs in ICC arbitration
The DCC partially overturned the Court of Appeal’s (the “CoA”) judgment, which had set aside an arbitration award issued under the ICC Rules of Arbitration 2021 (“ICC Rules 2021”) in part concerning the tribunal’s ability to award the recovery of legal costs.
The DCC correctly held that Article 38(1) of the ICC Rules is clear in setting out a non-exhaustive list of costs of the arbitration, including reasonable legal and other costs incurred by the parties for the arbitration. The DCC therefore confirmed that the ICC Rules do entitle the tribunal to award legal costs, and vacated the CoA’s partial annulment of the award.
This is a welcome judgment as one may recall that on 5 February 2024 in Commercial Case No. 821/2023 the DCC had reached the opposite conclusion and found that under the ICC Rules 2021 the arbitral tribunal did not have the authority to determine the parties’ legal costs.
The DCC also refused to set aside the award on other grounds and further found that the seat of the arbitration should be determined either based on the agreement of the parties or by decision of the arbitral tribunal, rather than based on the physical location of the arbitral institution administering the proceedings. This is another welcome departure from existing practice where mainland courts in Abu Dhabi found that an ICC arbitration seated in the “Emirate of Abu Dhabi” was actually seated in the ADGM because the ICC’s representative office was located there. This incorrect reasoning was expressly rejected by the DCC in this case.
2. Commercial Case No. 945/2024 — Impact of assignment on the arbitration clause
The case concerned an assignment of rights under a FIDIC contract by the employer to another company and, in particular, whether or not this impacted the arbitration clause in that contract. In the Dubai Courts, the contractor argued that the assignment did not extend to the arbitration clause without an express provision to that effect and therefore it was entitled to bring a court case against the assignee. The Court of First Instance (the “CFI”) and the CoA found for the contractor on this issue.
The DCC overturned the CFI and CoA judgments. It found that an assignment agreement, on which the contractor signed off, was sufficiently broad to capture all rights and claims arising under the contract and therefore the parties clearly intended the arbitration clause to also transfer to the assignee. Therefore, the contractor was bound by the arbitration clause.
3. Commercial Case No. 946/2024 — Compliance with pre-conditions for arbitration is a matter of admissibility not jurisdiction
In this case the DCC dismissed an appeal and upheld the CoA judgment which refused to set aside a DIAC arbitration award for alleged failure to comply with pre-arbitration procedure in a FIDIC contract.
The DCC held that it is well established in the DCC jurisprudence that compliance with pre-conditions to arbitration, such as submitting a dispute to the engineer for determination, is a question of admissibility, not jurisdiction, and is a matter for the tribunal to determine. On the facts, the DCC found that the contractual pre-conditions were complied with.
The DCC further observed that imposing such pre-conditions lies within the parties’ freedom of contract and their agreement should be upheld as long as the pre-conditions in question do not contravene public order and morals.
Conclusion
These three decisions of the Dubai Court of Cassation are to be welcomed and, in reflecting a pro-arbitration approach to dealing with arbitration awards and arbitration agreements respectively, will have a positive impact on the arbitration landscape in the UAE.
To discuss how these rulings may affect your arbitration matters, you can schedule a meeting with our experts: Matthew Page (Partner), Dr. Karen Seif (Counsel), or Dimitriy Mednikov (Associate).
