A recent case has reinforced the importance for parties of strictly complying with the procedural requirements of the UAE Civil Procedure Code, failing which there is a very significant risk the UAE Courts will refuse to enforce an arbitral award.
Procedural Requirements for Arbitral Awards in the UAE
The procedural law on domestic arbitration in the UAE (this article does not consider arbitration in the DIFC which has its own arbitration law, or enforcement of foreign awards under the New York Convention) is set out in Articles 203 to 218 of the UAE Civil Procedure Code (Federal Law No. 11 of 1992) (the “Code”). If the parties fail to voluntarily comply with an arbitral award, a party may apply to the Court for enforcement, and the other party may seek to have award annulled. It is then for the Court to determine whether to ratify or annul the award in question. In doing so, the Court is meant to only consider the formal and procedural issues of the matter, not the merits of the award itself.
Under Article 216(1) of the Code, the Courts are given a wide discretion to annul an arbitrator’s decision in the following cases:
- Lack of a valid arbitration agreement;
- Lack of authority and/or capacity of the arbitrators;
- Failure by the arbitrators to observe the prescribed timescale in the arbitration agreement;
- If the arbitrators were not all present on delivery of the award; and/or
- Failure to follow the arbitration procedures set out in the Code.
In respect of the final point, the Code clearly sets out a number of procedural requirements for a domestic arbitral award, inter alia:
- It should be delivered in the UAE, otherwise it shall be considered to be foreign and the rules in relation to foreign awards shall apply (Article 212(4));
- It must be reasoned, should be delivered with a majority of opinions and should contain specific documents, such as a copy of the arbitration agreement and the litigants’ statements (Article 212(5));
- It should specify the delivery date and place of the award (Article 212(5));
- In the event that one of the arbitrators has refused to sign the decision, for example if they dissent, this should be mentioned within the decision (Article 212(5)); and
- It should be in Arabic unless otherwise agreed, in which case an official translation should be submitted (Article 212(6)).
Position of the Courts
The UAE Courts take a strict approach to ensuring procedural rules have been followed in determining whether to enforce arbitral awards. In the past, the Courts have shown a willingness to annul awards where the following procedural requirements had not been followed:
- Where a witness had not provided sworn evidence during a hearing;
- Where an award is not provided in Arabic and there was not an appended translation;
- A costs award was annulled where the parties had not given the arbitrators the specific power to award costs;
- Where the signatory of an arbitration agreement does not have specific authority to bind the company under Articles 58 and 203(4) of the Code;
- Where the arbitrators have failed to sign both the reasoning and the dispositive section of the award, as required under Articles 212(5) and 212(7) of the Code; and
- Where an arbitrator had dissented and had therefore not signed the award, but did not provide reasons, as required under Article 212(5) of the Code.
None of these failings touched on the substance of the dispute, but they were sufficient in the eyes of the Court to require the annulment of the award.
Conclusions and implications
While the UAE is an arbitration friendly jurisdiction, the Court’s strict attitude towards compliance with procedural requirements means that parties must ensure they comply with the necessary formalities, or risk finding that any award in their favour is ultimately unenforceable. Accordingly, it is of critical importance that parties seek legal advice on dispute resolution provisions prior to contract execution and also seek advice on procedural matters from lawyers experienced in the UAE’s procedural requirements for arbitration throughout the dispute.