In this case, the Claimant filed an application with the Court
of First Instance to enforce an arbitration award issued under the
auspices of the Abu Dhabi Commercial Conciliation and Arbitration
Center ("ADCCAC"). The Defendant filed a counterclaim
with the Court of First Instance, the basis of which was that the
arbitration award was invalid as it contradicted the UAE Civil
Procedure Law ("CPL").
In the Counterclaim the Defendant argued that the arbitral award
should be held invalid for the following reasons:
- It overlooked the parties' pleas and violated the terms of reference;
- It did not take full and proper account of the opinion of the dissenting member of the Tribunal;
- It breached Article 216 of the CPL as the tribunal refused to appoint a specialised engineering expert to inspect the supplied materials;
- Prior to the issue of the award there was no consultation between the members of the Tribunal and no draft arbitral award was produced
- The Claimant did not submit the arbitral award within the time limit stated in Article 213 of the CPL
- The Tribunal failed to suspend the arbitration proceedings in accordance with the CPL following allegations of forgery in the expert's report;
The Defendant's challenge of arbitrators was not dealt with
sufficiently.
The Court of First Instance and the Court of
Appeal
The Court of First Instance held that the arbitral award was valid
as it complied with both the procedural formalities prescribed in
the CPL and what had been agreed between parties. The
Defendant's counterclaim was therefore dismissed, giving cause
to an appeal before the Court of Appeal. The Court of Appeal upheld
the lower's court decision and the Defendant subsequently
appealed the decision to the Abu Dhabi Federal Court.
Abu Dhabi Federal Court
The Abu Dhabi Federal Court held that arbitration awards can be
classified as decisions issued by arbitral tribunals, which
decisions are not burdened by the obligation to comply with Court
procedures. The exception to this can be found in what is
stipulated under Book two of the CPL, specifically, the requirement
that both parties be given the opportunity to defend themselves and
submit documentation in support of their respective cases. However,
the Court recognised that the parties may agree on certain
procedures to be endorsed and followed by the tribunal.
The Court further held that the arbitration award, if not
unanimous, should contain the majority and dissenting opinion, and
should include a copy of the arbitration agreement, the terms of
reference and a description of the parties' respective
positions and their documents. The award should also contain the
reasoning behind the decision. From a procedural point of view, the
Court indicated that the award should also reference the delivery
date, delivery place and contain the arbitrators' signatures.
If one or more of the arbitrators has refused to sign the award,
the reasons for such refusal should be mentioned therein. The Court
held that the award shall be valid if the majority of the
arbitrators have signed it.
With respect to the grounds for setting aside an award, the Court
held that a party had the right to request nullification in
accordance with the exhaustive list contained in Article 216 of the
CPL. Such grounds include:
- If the award has been delivered without terms of reference or on the basis of an invalid arbitration agreement;
- If the award deals with matters outside the scope of matters in dispute (as defined in the terms of reference);
- If the award was issued by arbitrators who were not validly appointed in accordance with the law;
- If the award was issued by arbitrators under some sort of incapacity;
- If the procedures of arbitration have not been correctly followed.
Importantly, the effect of this is that the arbitral award
cannot be challenged unless there exists one of the grounds
stipulated in Article 216 of the CPL. Contentions about the
assessment, lack of reasoning or overlooking some of the
parties' pleas is not a ground for challenge under Article 216.
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With respect to the Defendant's counterclaim, the Abu Dhabi
Federal Court held that:
- Most of the Defendant's arguments did not fall within the exhaustive list stipulated in Article 216 of the CPL. For example, the Defendant's first argument that the arbitrators had overlooked certain pleas was not a ground for challenge as it is related to the merits of the case.
- The second argument (that the dissenting Tribunal member's view had not been taken into account), was dismissed as the Court found that the dissenting member had given his opinion only after the issue of the award.
- The Court rejected the third argument that an expert had not been appointed as it was not included in the exhaustive list prescribed by Article 216.
- The Court held that the time period stated in Article 213 of the CPL (for the presentation of the award to the Court) has an organising/regulatory purpose only and that failure to adhere to this time period will not render the arbitral award void.
- With respect to the forgery allegation, the Court held that the arbitral tribunal had considered it but determined that it was not substantive. Accordingly, the arbitral tribunal had decided not to stay the arbitration proceedings.
- The Court found that the application submitted by the Defendant challenging the appointment of the arbitrators was submitted after the close of pleadings and only one day before the issuance of the award. The result of this finding is that the challenge did not meet the legal requirements and was therefore dismissed.
For the above reasons, the Abu Dhabi Federal Court dismissed the Defendant's counterclaim with costs of AED 1,000 awarded to the Claimant.
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