In principle, when the parties agree to arbitrate, they shall be bound by that agreement. It should therefore follow that when a party initiates arbitration proceedings, the other party - the respondent – will avail itself of the opportunity to present its case and participate in the proceedings. Ideally (and usually), a respondent will participate effectively; it will comply with the provisions of the arbitration agreement, the provisions of the arbitral rules, if any, and the arbitral tribunal's directions. However, this is not always the case in practice. However it does happen that a respondent will opt not to participate in arbitration proceedings if, for example, it believes there is no chance of success. It may sometimes be the case that a respondent does not appreciate the significance of the notice of arbitration due to a lack of familiarity with arbitration, which may lead to the decision not to participate in the proceedings. In other cases, the respondent may be unable to participate due to financial constraints, if it is, for example, in the process of liquidation.
In all the above scenarios, the arbitral tribunal may have no option but to proceed in default of the participation of the respondent. One of the crucial steps that needs to be taken when this happens, is to ensure that the respondent is aware of the existence of the arbitration proceedings filed against it, and to ensure that the respondent is given full opportunity to present its case by filing a defence. If at a later stage, it is proven that the respondent was not properly notified, then the enforcement of the final award will be at risk.
Article V (1) (b) of the New York Convention provides that the recognition and enforcement of the award may be refused, if "[t]he party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case".
Therefore a key question is what is considered a "proper notice"? Some jurisdictions adopt a rigid approach for the proper notice. For example, the Swedish Supreme Court on 16 April 2010 held that the lack of notification due to the change of the respondent's address was not deemed as a proper notification and hence annulled a final award rendered under the auspices of the Commercial Arbitration Court at the Russian Federation Chamber of Commerce and Industry. In that case, the request for arbitration was served to the respondent at its last known address mentioned in the contract, and a delivery receipt was provided by the courier service. The proceedings went ahead on an ex parte basis. However, it appeared at the enforcement stage that the respondent had changed its address and did not inform the claimant as explicitly required under the terms of the contract. Notwithstanding the respondent's failure to notify the claimant with its new address, the Swedish Supreme Court found that the respondent was not properly made aware of the proceedings and annulled the final award.1
Other jurisdictions adopt a more flexible approach. Under section 14 of the UK Arbitration Act, the arbitration is commenced when a party serves a notice to the other party requesting it to appoint an arbitrator. According to section 76 of the Act, in the absence of the parties' agreement, notifications have to be made by "any effective means" to the addressee's last known address. This section is derived from Article 3 of the UNCITRAL Model Law. In Bernuth Lines Ltd v High Seas Shipping Ltd,2 the court held that "any effective means" includes serving the notice by email. The email was ignored by the staff of the respondent as it was received as spam; the court nonetheless considered it a valid notification, stating that "there was no reason why delivery of a document by email - a method habitually used by businessmen, lawyers and civil servants - should be regarded as essentially different from communication by post, fax or telex". The position in English law can be summarised as follows: notification of the respondent is valid if there is proof that the service of notice has been effective. The approach of English law seems to be helpful practically and one can say that it generally supports the use of arbitration, where it has been agreed between the parties.
In the UAE, there is no clear set of guidelines or requirements for a proper notification. Article 208 of the UAE Civil Procedure Law provides that "the arbitrator shall, without the need to comply with the rules provided under this Law in respect of serving of notices, notify the parties to the dispute" Due to the lack of guidelines and proper awareness of the principles of arbitration, practitioners in the UAE tend to apply the classic rules of the UAE Civil Procedure Law to the notification. In particular, some lawyers prefer to serve the notices through the court and in case of failing to reach the respondent, they conclude all the required steps under the notification provisions of the Civil Procedure Law including notification by publication in newspapers. This approach may be recommended in some cases where the respondent is intentionally hiding and is expected to appear and fight their case at the enforcement stage. The advantage of this approach is to show the ratification judge at the state court that the respondent has been notified of the arbitration in compliance with the classic requirements under the Civil Procedure Law, a law which the judge is familiar with.
A question has arisen concerning the validity of notifications by publication as they are in clear breach of the principle of confidentiality of arbitration. The UAE courts, however, do not seem to condemn such notifications. A related question is whether arbitration is indeed confidential.
The UAE law is silent on this point and in practice notifications that may constitute a breach of the confidentiality principle are deemed to be acceptable by local courts.
The above approach is considered as the safer approach by many lawyers even if the dispute is handled under the DIAC Rules, which established a clear set of rules for the notification. Article 3.4 of the DIAC Rules provides that all notifications "shall be deemed to have been received if physically delivered to the addressee or its representative at his habitual residence, place of business, mailing address". In practice, the case management unit of DIAC sets a high standard with regard to notification to ensure that the notifications have indeed been received by the respondent. Article 3.5 provides that "[s]uch notification or communication shall be in writing and shall be delivered by registered post or courier service or transmitted by facsimile transmission, telex, telegram, email or any other means of telecommunication that provides a record of transmission".
In cases where the respondent is not found at the provided address, the claimant will be requested by the DIAC or the arbitral tribunal after it has been constituted to make reasonable enquiry and to provide an alternate address, failing which, the communication would be deemed to have been received by the respondent at its last known address pursuant to Article 3.4 of the DIAC Rules. Article 2 of the Swiss Rules adopts the same approach as well as Article 3(2) of the ICC Arbitration Rules.
If it is proved that the respondent was properly notified of the existence of the proceedings in accordance with the requirements of the seat of arbitration and that the principle of due process was respected, the enforcement of the final award rendered by default should not be rejected on the grounds of the nonparticipation of the respondent in the proceedings. This principle is commonly acknowledged by most jurisdictions in the world. It was acknowledged in the Emirate of Ajman in the UAE where the First Instance Court applied the New York Convention and decided to enforce a foreign arbitration award in default of an appearance of the respondent. However it is important, where notification may be an issue, that appropriate advice is taken to ensure that the proper procedures have been complied with.
1. Journal of International Arbitration (2010) 27 J. Int. Arb. 5.
2.  EWHC 3020
Ahmed Ibrahim is a partner with Ahmed Ibrahim in association
with Fenwick Elliott
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