Claim and facts of the case
Party A filed a suit before the Dubai Court of First Instance
seeking a judgment confirming an arbitration award in which Party B
and Party C, a joint venture, were ordered to pay Party A the
amount of AED 400,000 plus 9% interest from the due date of 20 July
2003, until full payment in addition. Part B was also awarded the
costs of the arbitration.
Party A had sought a judgment against Party B and Party C in
relation to a subcontract for the supply and installation of lifts
in a Residential Complex in Al Nahda, Sharjah.
Upon completion of the works by Party A, Party B and Party C had
refused to pay the final installment payment of AED 400,000 (which
represented the amount withheld against maintenance works) without
any legal justification. In the first hearing before the Court,
Party B pleaded the existence of an arbitration clause in the
agreement. Accordingly, Party A amended its case and requested the
Court to appoint an arbitrator to conclude the dispute between the
parties.
The sole arbitrator's award required Party B and Party C to pay
jointly and severally the amount of AED 400,000 together with 9%
interest per annum from the due date until full payment to Party A.
Further, Parties B & C were required to jointly and severally
pay AED 14,000 as arbitration fees.
Accordingly, Party A filed a case with the Dubai Courts seeking to
enforce the award. Party B and Party C filed an interlocutory
application requesting the Court to invalidate the award/set aside
the award.
Court of First Instance
The Court of first instance ruled in favor of Party A and ratified
the arbitral award. Consequently, Parties B & C appealed to the
Court of Appeal.
Court of Appeal
In reversing the lower court's decision, the Court of Appeal
ruled that the arbitration award should be set aside. Subsequently,
Party A appealed to the Court of Cassation.
The Court of Cassation (Date of Judgment 17 November 2009)
Party A argued that the Court of Appeal erred in its decision to
overturn the decision of the Court of First Instance. The sole
reason proffered by the Court of Appeal was that the arbitrator did
not sign each and every page of the arbitral award. Party A
referred to Article 212 of the UAE Civil in arguing that one of the
essential requirements of an arbitration award is the signature of
the arbitrator who has issued the award.
Article 212(5) provides as follows:
"The arbitrators' award shall be passed by a majority and
shall be made in writing and accompanied by the dissenting vote. In
particular, the award shall contain a copy of the arbitration
agreement, a summary of the statements of the parties, their
documents, the grounds and context of the award, the date and place
of issue and the signatures of the arbitrators. Should one or more
arbitrators refuse to sign the award, such refusal shall be stated
in the award; provided, however, that the award shall be valid if
signed by a majority of the arbitrators."
Article 212(7) provides as follows:
"The award shall be deemed to have been issued from the date
of signing the same by the arbitrators."
The Court of Cassation upheld Party A's defense. The Court
determined that one of the essential requirements of an arbitration
award is the signature, on the award, of the arbitrators who have
issued the award. The Court further explained that from a legal
point of view; the signature is the only evidence of the existence
of the award, which refers to both the ultimate decision and the
grounds reached in support of that ultimate decision. The Court of
Cassation therefore found that the arbitrators should sign both
ultimate decision and the grounds reached in support of that
ultimate decision. Crucially, the Court of Cassation held that a
failure to do so would render the award invalid.
The Court of Cassation found one exception to this crucial and
important rule. Where the grounds or reasoning for the ultimate
decision are continued on the same page as the relief ultimately
ordered, and the page containing the ultimate relief is signed,
that signature shall be deemed to cover the reasoning for the
granting of the relief.
If the reasoning and grounds for the ultimate decision and the
ultimate decision itself appear on separate pages, then all pages
of the award should be signed by all arbitrators. Failing this,
such award shall be invalid.
In this case, the final page of the award, which contained the
ultimate decision, also contained part of the reasoning for the
ultimate decision. The final page was signed; therefore the
signature was deemed to cover both the grounds for the ultimate
decision and the ultimate decision itself. Importantly, the Court
of Cassation ruled that the format of the award complied with
Article 212.
The importance of this judgment cannot be underestimated. Many
English translations of Article 212 do not outline the
peculiarities applicable to the formalities of awards in the detail
expressed by the Court of Cassation. To ensure the validity of
arbitration proceedings, it is essential that this Article be read
and applied in connection with the reasoning of the Court of
Cassation.
The Court of Cassation reversed the finding of the Court of
Appeal.
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