Not everyone can take failure in their stride. Antithetical to the Litigation, the arbitration does not offer an obvious way of review or an appeal against the award passed by the arbitrator. It is usually troublesome and disappointing for parties in arbitration to challenge the award. As agreed, the rules of arbitration accepted by the parties in an international arbitration explicitly debar any further recourse which is generally available under domestic regulations of the territory where the arbitration proceedings were conducted.

Arbitration Lawyers of Dubai have jotted down few options available to losing party to challenge the arbitration award on merits. This may include amending the imprecisions in the award, referring the matters which were overlooked by the tribunal or submitting an application to set aside a part of the award or in its entirety. Challenging the award and enforcing the award have different timelines. Wherein, a challenge is either before the tribunal or before the courts where the arbitration was conducted. Enforce on the other hand is always before the courts other than the place of arbitration.

UAE Legislative Framework

The new Arbitration Law, Federal Law Number 6 of 2018 deals with the arbitration proceedings conducted in UAE and has repealed the provisions of the Civil Procedure Code. The new Law presents a new concept of commencing a different action for challenging the arbitration awards. Where, previously, the courts of UAE affirmed that the application for challenging the award could only be reviewed at the time when a successful party has submitted the award for ratification and enforcement. The losing party was barred from initiating independent proceedings for that matter.

With the introduction of the new law, the losing party can challenge the award before competent courts by either starting afresh or in response to winning party’s ratification application.

According to Article 53(1) of the Law, the party can rely on several following grounds for setting aside the award which is somewhat similar to UNCITRAL Model Law:

• An arbitration agreement is void and non-enforceable according to the law;
• Party was incompetent at the time of arbitration award;
• Either party did not have the capacity to enter into the agreement;
• Failure of either party to attend the proceedings due to the absence of proper notice of appointment of an arbitrator;
• The arbitration award excludes the choice of law adopted by parties;
• The constitution of Arbitral tribunal was not in accordance with the law;
• Award was not issued in a specific timeline;
• Award issues entail matter which is beyond the jurisdiction of the tribunal or matters which oppose the public policy of the territory in which arbitration was conducted;
• The subject matter of the dispute if beyond the scope of arbitration.

Procedurally, the application for setting aside the arbitration award shall be registered before the Court of Appeal having jurisdiction over the matter within 30 days from the date of receiving arbitration award. Any subsequent provision to waive the right of setting aside the award shall be null and void.

Consequently, the new concept will have the following benefits for the losing party:

• The decision of the court will be final and can only be appealed before the Court of Cassation;
• The court may set aside the award in entirety or in part;
• The agreement for arbitration will remain intact even post the award was set aside by the court, unless the defect in an arbitration agreement is the main ground for setting aside the award;
• The court may grant 60 days’ time-period to rectify the award;
• The proceedings for setting aside may not restrict either party to enforce the award unless otherwise, the court agrees.

The paradigm of UAE Courts

The rule that the court should not interfere or review the substantial aspects of arbitration awards or acquiescence with the law, which was on numerous occasion confirmed by Court of Cassation in case number 88 05 2004. Later in 2008, the Cassation court categorized the grounds for challenging arbitration awards in two categories by virtue of Cassation case number 270/2008 and 32/2009 including, the issue related to the arbitration agreement and issues related to arbitral proceedings.

The issues pertaining to the agreement entailed the invalid agreement, un-enforceable agreement, subject matter beyond the scope of the arbitration, infringement of public policy. Whereas, the grounds related to the proceedings included the inadequate composition of the arbitral tribunal, a tribunal not authorized to issue an award, failure to determine the dispute, party’s lack of entering into the agreement, failure to abide by arbitration rules and regulations.

The Cassation court in the foregoing case relied on several instances of grounds for challenging arbitration award as follows:

1. Capacity to sign the Agreement

   : the legal capacity is the ability of an individual to agree and conclude to be a party to the arbitration. Lacking such status would result in annulment of the award. Court of Cassation in 164/2008 and similar other cases opined that the manager of a Limited Liability Company has full authority to carry out functions of the company, thus, holds the right to enter in the arbitration

2. Prerequisite Conditions

   : the court of Cassation has affirmed that parties may impose a condition precedent to be fulfilled prior to referring the arbitration. Should they fail to comply with such conditions, they will be in breach of the principle of Pacta Sunt Servanda (agreement must be kept).

3. Defects in Arbitral Award

   : Previously under Article 212(5) of the Civil Procedure Law, it was obligated that the award shall be signed by the arbitrators. Accordingly, the signature of just chairman would not suffice the requirement, in case the matter is presented by a tribunal of numerous arbitrators. This is in accordance with the Court of Cassation case 233/2007 where the court held the award void, due to the formal defect in the award.

4. Matter opposing the public policy

   : The Dubai Court of Cassation lately held that the public policy is not the only ground for challenging the arbitral award considering the fact that earlier Article 216 of the civil procedure code did not proclaim public order as a ground for challenging the award. To this effect, the rules regarding public order as mentioned under Article 3 of the Civil Transactions Code albeit imperative, should not be considered for setting aside the award. This, however, a very restrictive approach towards the definition of public policy and does not make a part of international public policy. Wherein, Article 3 of the Civil Transaction Code states that “public order shall be considered including provisions regarding family matters as well as matters pertaining to government regimes and social principles which are not in conflict with other fundamental rules of Islamic Jurisprudence”.

Conclusion

UAE is the hub of multinational corporations and their businesses in the Middle East and is a centre of arbitration having several internationally-recognized arbitration institutes, wherein the awards can be enforced or challenged before UAE court under new Arbitration Law, which has its basis on UNICTRAL Model Law.