Application to Nullify an Arbitration Award dismissed by Dubai Court of Cassation

Dubai Court of Cassation rules that pre-arbitral conditions precedent are not a jurisdictional matter

On 8 June 2023, the Dubai Court of Cassation issued its decision in Case 1514 of 2022. The case clarified several important points, one of which related to the impact of multi-tier dispute resolution clauses that contain conditions precedent to commencing arbitration proceedings, and whether a Court will uphold a tribunal’s decision as to the satisfaction of these condition precedents. These multi-tier dispute resolution clauses frequently require parties to, for example, attempt amicable settlement discussions, expert determination, or dispute adjudication board proceedings, failing which the Parties may not be entitled to commence arbitration proceedings.

Historically, the Dubai Courts have upheld these clauses and have interpreted them to mean that tribunals constituted as part of premature arbitration proceedings have no jurisdiction to hear the dispute. This was contrary to judgments in other jurisdictions, such as Hong Kong[1] and England and Wales[2], and contrary to the Chartered Institute of Arbitrators’ Guidance on Jurisdictional Challenges (Article 3), all of which found that these clauses go towards admissibility and not jurisdiction.

However, the Dubai Court of Cassation has, in this recent decision, aligned itself more with international jurisdictions. In Case 1514 of 2022, the contract required the parties to refer a dispute to the engineer for issuance of a decision within 90 days. In the preceding arbitration, the tribunal had found that the condition precedent had been satisfied. The Court of Cassation made clear that the Tribunal had considered the condition precedent and decided that it had been sufficiently met; therefore, the Courts should not interfere with the decision except if it prejudices the right to defence or affects public order. As such, it confirmed that compliance with pre-arbitration conditions precedent is a question of admissibility, not jurisdiction. The effect of this latest decision could create a shift in UAE law in the following ways:

1. It is for arbitral tribunals to decide whether any pre-arbitration conditions precedent have been satisfied by the parties; and
2. Even if the parties have failed to comply with a mandatory multi-tier dispute resolution process, this would not vacate an arbitral tribunal’s jurisdiction and return jurisdiction to the Courts. The jurisdiction to settle the dispute remains with the tribunal. In this case, the tribunal had considered the condition precedent and therefore the Court upheld the tribunal’s decision in this regard without re-assessing the merits.

This issue may become particularly important in instances where a claimant has commenced arbitration proceedings to comply with Article 250(2) of the UAE Civil Procedures Code (Federal Law 42 of 2022) requiring substantive proceedings to be commenced within eight days of obtaining a precautionary attachment.

Dubai Court of Cassation Case 1514 of 2022 made two other important decisions relating to the payment of arbitration fees and the power to award legal costs. Watch this space for our next article on these topics!

[1] For example: C v D [2022] HKCA 729

[2] For example: The Republic Of Sierra Leone v SL Mining Limited [2021] EWHC 286 (Comm); and NWA & FSA v NVF & others [2021] EWHC 2666 (Comm)

Posted by: Sirena Chalhoub