In a significant ruling that underscores the strict formalities governing arbitration agreements under UAE law, the Dubai Court of Cassation recently issued its final judgment in Case No. 445/2025/24, rejecting the appeal of a joint venture comprising a Spanish multinational construction company and a leading Turkish EPC contractor.
The dispute revolved around the enforcement of payment obligations under subcontracting agreements in the Expo 2020 Metro Line project, and more critically, the enforceability of an arbitration clause embedded in unsigned contract annexes.
Background: Retention Dispute Over Completed Works
The Respondent, a German contractor specialising in complex civil and geotechnical engineering projects, filed Commercial Case No. 3836/2023 before the Dubai Court of First Instance seeking payment of AED 1,151,122.81, plus statutory interest, in relation to retention sums withheld under two subcontracts executed as part of the "Expo Link 2020 Metro Line Project."
The first subcontract, dated August 20, 2017, involved pile drilling in pier areas and had a final contract value of AED 5.49 million.
The second, dated November 9, 2017, covered pile drilling in zones 1 and 3, with a final value exceeding AED 7.3 million.
In both instances, 10% of the final amount was withheld as retention.
The Respondent alleged that after fulfilling all contractual obligations and following the expiration of the respective defects liability periods, the Appellants (the JV) failed to release the retained amounts or issue completion certificates.
The Arbitration Defence and Initial Rulings
The Appellants raised a jurisdictional defence, asserting that both subcontracts contained binding arbitration clauses incorporated via annexes.
However, the Court of First Instance, after appointing an expert to assess the claims, rejected this defence and ruled in favour of the Respondent, ordering payment of the full claim plus 5% annual interest.
On appeal, the Dubai Court of Appeal accepted the arbitration objection and dismissed the case, holding that the existence of an arbitration clause deprived the courts of jurisdiction.
Appeal before the Dubai Court of Cassation
The Respondent escalated the matter to the Dubai Court of Cassation ("DCC"), arguing that no valid arbitration agreement existed.
On March 5, 2025, the DCC rendered its final judgment overturning the Court of Appeal's decision.
The crux of the DCC's finding was that, while the annexes did contain an arbitration clause, they had nevertheless not been signed by the Respondent's authorised representative.
Although the annexes were referenced in the signed subcontracts and were stamped, the Court ruled that this did not amount to an enforceable arbitration agreement under UAE law, because arbitration clause remove access to the judiciary and are subject to more stringent conditions.
TH DCC held that:
The DCC concluded that since the Respondent's authorized representative had not signed the annexes containing the arbitration clause, there was no binding arbitration agreement.
Legal Significance
This case serves as a cautionary reminder of the well-established principle under UAE law and the Federal Arbitration Law (Federal Law No. 6 of 2018) that arbitration cannot be presumed or implied – it must be expressly and clearly agreed.
In the construction industry, where subcontracting arrangements are often voluminous and layered with annexes and standard terms, parties must ensure that any reference to arbitration clauses is not only incorporated clearly but also properly executed through authorised signatures.
A failure to meet these formalities can render arbitration clauses null, reinstating the jurisdiction of local courts and exposing parties to potentially prolonged litigation.
Conclusion
The judgment highlights the importance of formality in drafting and executing arbitration clauses.
If an arbitration clause is located in a separate document such as an annex or attachment, it cannot be presumed enforceable, unless that document is expressly signed (and not just stamped) by the parties' authorised representatives.
Courts will not imply consent to arbitration merely because the annex is referenced or stamped within the main contract.
If the primary contractual document is silent on arbitration, and the annex is not properly executed, the clause will likely be deemed invalid.
In essence, the message from this DCC judgment is that a signature on the main contract does not rescue an unsigned arbitration clause buried in a supplementary document.
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