Grounds For Setting Aside Arbitral Awards In UAE

The Arbitration law allows specific remedies against an arbitral award to ensure the smooth operation of arbitration procedures in the United Arab Emirates. An aggrieved party may resort to the law Court for setting aside the arbitral award on specific Grounds. One of the fundamental concepts of the UAE Federal Law No. 6 on Arbitration (“Arbitration Law”) is that the Court should interfere only in restricted situations in Arbitration. The Arbitration Law offers limited grounds for contesting arbitration judgments before the Court. An opposition cannot recognise the arbitral award until action in nullity is brought before the Court or during the review of the request for recognising the decision. The applicant must provide evidence for annulment. This article will give some insight into the arbitral process, the Arbitral award, and the reasons for contesting the arbitral decision.

What is Arbitral Award?

An Arbitral award is a decision rendered by the Arbitration tribunal in the course of an arbitration process. The Arbitral award must be written and signed by the Arbitrator. It must also include the reasons for passing the award in the particular case.

 Article 52 of the Arbitration Law provides for the provision relating to the binding force of the Arbitral Award. It states that the arbitral award made according to the requirements of the present Law shall be binding on the Parties and shall have the same res judicata effect and enforceability as a Court judgment.

 

Arbitration Agreement: Meaning

An arbitration agreement is an agreement between the parties to refer to Arbitration all or a part of disputes that have arisen or may arise between them in connection with a specific legal relationship, whether contractual or not. An arbitration agreement can be included in a contract as an arbitral clause or formed independently if the original contract lacks such a clause.

Conditions for enforcement of Arbitral awards in UAE

The Law provides various remedies against an arbitral decision to determine the proper conduct of the arbitration process. An aggrieved party may apply to a law court to have the arbitral decision set aside on the grounds listed below.

Article 53 of the Arbitration Law states that an objection to an arbitral award considered in the case if the applicant for annulment files a nullity action with the Court or during the consideration of the request for recognition of the decision, and the applicant for annulment must show the following:

The invalidity of Arbitration Agreement

No arbitration agreement existed, or such agreement was invalid or forfeited under the Law adopted by the Parties or under this Law.

1. Incapacity of parties to make Arbitration Agreement

At the time of the conclusion of Arbitration Agreement, the party was incompetent or lacked capacity under the applicable law.

2. Absence of proper notice of arbitration proceedings to the parties.

A Party to the Arbitration was unable to provide a statement of defence due to the Arbitral Tribunal’s failure to observe the principles of litigation or give adequate notice of the Arbitrator’s appointment or the arbitral proceedings.

3. Arbitral Award not based on Law of Arbitration Agreement

The arbitration award was not based on the Law as stipulated in the Arbitration Agreement by the parties.

In Petition No. 980 of 2010 (issued on 23 February 2011), the Abu Dhabi Court of Cassation held that it is permissible for the parties to request for the setting aside an arbitral award if such award failed to meet the legal requirements or where the award has been null and void.

4. Appointment of Arbitrator(s) contrary to Arbitration Agreement

The Arbitral Tribunal’s composition or appointment of an arbitrator is in contravention of the requirements of the existing Law on Arbitration or the Parties’ agreement.

5. Award passed after a reasonable time.

The arbitration procedures are null and invalid if the award influenced in any manner or if the arbitral award has passed after the stipulated time had expired.

6. Award passed beyond the scope of the Arbitration Agreement.

The arbitral judgement has decided on issues not addressed by, or outside the scope of the Arbitration Agreement. However, only the final of those portions of the award may be null and invalid if the judgement can be separated from those not so filed on issues referred to in arbitration.

In the case with Petition No. 438 of the 23rd Judicial Year (issued on 12 July 2004),it was observed that the Arbitral decision passed must be within the limits of the competence and authority of the arbitrators derived from the arbitration agreement.

In another case with Petition No. 403 of 2003 (issued on 13 March 2004), the Dubai Court of Cassation held that the award not considered invalid because one of the tribunal’s members was out of the country at the time of the passing of the award. If such Arbitrator attended the hearings, participated in the award’s rendering, and signed the original copy of the award presented to the Court of First Instance, such award is valid.

7. Issue fall outside the scope of Arbitration settlement

Arbitration cannot resolve the subject matter of dispute.

8. Award against public policy

If the arbitral decision contradicts the State’s public order and morals.

In Petition No. 180 of 2011 (issued on 12 February 2012), the Court held that Arbitration did not resolve issues related to the registration of off-the-plan apartments in the Interim Real Estate Register. In direct conflict with public policy, the sole Arbitrator’s award is invalid and unenforceable. As it is an issue of public policy, the Court has the authority to overturn the judgement.

Period for filing of Annulment of Arbitral Awards

1. The Court’s decision (Federal or local Appeal Court) on the action in nullity is final, and it may appeal to the courts of cassation.
2. As per Article 54 of the Arbitration Law, the arbitral award must not be declared null and void until thirty (30) days have passed from the date of notice of the arbitral award to the petitioner seeking nullification. In other words, the arbitral tribunal’s decision is challenging within 30 days of passing the arbitral award.

Documents required for enforcement of Arbitral Awards

Any party seeking to enforce an arbitral judgement must submit to the Court’s president a request for recognition of the award and issue of an enforcement order, provided that the request accompanied by the following:

1. The original or a properly certified copy of the prize.
2. A copy of the Arbitration Agreement
3. If the arbitral award passed in another language, a translation into Arabic verified adequately by a duly recognized body.
4. A duplicate of the Court’s minutes of the award’s deposit.

The purpose of this article is to provide a general overview of the subject. Expert’s firms like HHS lawyers and legal consultants specialized in dealing with cases relating to Arbitration. if you have any questions regarding filing an arbitration request with DIFC-LCIA or if you would like more information about the Arbitration Agreement, contact experts.