Legal Articles / Arbitration


A Challenging Issue

arbitration

|

April 11, 2016

|

1881 views


Legal Rule

By force of law an Arbitrator(s) has to suspend the arbitration proceedings with immediate effect if a party to an arbitration process challenges the arbitrator while or during the arbitration processes are going on, until a resolution has been made on the challenge which was has been raised by such party by an authority or court of law which has the right to rule on such a point.

If the arbitrator continues with the arbitration processes despite such a challenge raised by a party or after knowing that such a challenge exists, any actions or decisions made by him pursuant to such challenge shall be considered as null and void as per Article 216 of the Civil Procedures Law of UAE.

Further, the same invalidity shall also apply even if the facts/grounds on which the challenge is based is untrue or incorrect. The arbitrator is bound by law to stop proceedings as soon as challenge is made irrespective of whether or not the validity of such a challenge is sound. A decision on the challenge can only be made by the competent court.

Additionally, the law also says that for a challenge to be valid it may be based on a rule or law which is not specifically listed as conditions for challenge under the arbitration rules of the arbitration center.

Facts of the case

The claimant filed a case in the Dubai Commercial Court to ratify and recognize the arbitration award passed by the arbitration tribunal on the grounds that it was agreed between the parties that any dispute arising between them shall be settled through arbitration through the Dubai International Arbitration Center (DIAC) in accordance with the DIAC rules by a single arbitrator to be appointed from the DIAC's list of arbitrators.

The Court accepted the request and proceeded to ratify the arbitration award. The defendant in the arbitration proceedings was directed to comply with the award and pay the legal as well as arbitration charges to the claimant.

The defendant was not pleased with this and filed a case at the Court of First Instance seeking to nullify the effect of the ratification and thus the arbitration award.

Petitioners Arguments

The defendant in the arbitration proceedings petitioned the Court of First Instance that the arbitration awards should be nullified and voided because the petitioner had, during the arbitration processes, filed a civil case (challenge) in the court of law relating to the subject matter of the dispute. He contended that although his case was dismissed by the Court of First Instance, the case was being still being appealed. Accordingly he argued that as per Article 216 of the Civil Procedures Law of the UAE, the arbitrator was bound to wait till a judgment was made on the appeal or until it was dismissed.

The Court accepted this point of view and ruled that the arbitration awards is void and null since the Appeal was still going on.

The decision of the lower court was upheld by the Court of Appeal when it reached the appeal stage.

Grounds of Appeal

The claimant in the Arbitration proceedings approached the Court of Cassation to set aside the judgments made by the lower courts and to uphold the original arbitration award which was ratified by the competent court.

The claimant contended that the conditions to challenge the arbitrator has been exclusively listed in the DIAC rules. The arbitrator has no reason to uphold a challenge if such a challenge is based on issues which are not specifically listed in the DIAC rules. Additionally, the challenge which was made by the petitioner to the Arbitration center was made after a period of 5 days which is why the arbitrator did not consider it as a serious challenge. More importantly, the claimant argued, the challenge was not based on the list of issues which needs to be mandatorily followed for a challenge to be valid. The Claimant further submitted that the law did not oblige an arbitrator to stop proceedings in case of a challenge in such a case. The arbitrator has full discretionary powers to make a decision on the validity of a challenge especially if he feels that the challenge was not a serious one which was made with the sole intention of delaying the arbitration processes. The conclusive and sole rule which should be used as the reference in determining the validity of challenges shall exclusively be Article 39 of DIAC rules.

Court Judgment

The Court disagreed with the arguments raised by the original claimant. It ruled that Article 216 of the Civil Procedure Law of UAE allowed for the nullification of an arbitration award if there is any mistake in the arbitration judgment or if there was a mistake in the procedure which led to the judgment. According to Article 39 of Decree No. 2 of 1994, the arbitration proceedings shall be suspended if there is a challenge which is based on cases listed in the said Article. However, the court observed that the same article did not mention these cases on an exclusive and exhaustive basis. The court interpreted that a party may raise a challenge even based on general laws of the country even if they are not specifically mentioned in above-mentioned the DIAC rules as conditions to challenge.

According to general laws of the UAE, a challenge raised by a party to arbitration processes is enough to stop the proceedings till a resolution is made on the challenge. The arbitration proceedings should not proceed even if a challenge is untrue or baseless since the arbitrator is not the authority to make a ruling on such issues. In the event the arbitrator continues with the arbitration processes despite knowing that a challenge has been raised then his award shall be null and void as per Article 216 of the CPL.

Related Links


Copyright © of this article is retained by the author and/or other copyright owners. We explicitly grant you permission to download a copy, without any alteration, of this article for personal non-commercial research or study, without prior permission or any charge. This article can be utilized on your website or for marketing, however, we grant you permission to host this article on your website and no other rights. This content should not be altered in any way or sold commercially in any format without prior permission of the copyright holder. During reference of this article, full biographic details entailing the name of the author, his designation, the institute and the publishing date of the article shall be provided.


Client Testimonials

I owe the success of my case to Dr. Hassan's diligent approach. He remained focused, put me at ease and always went the extra mile. Dr. Hassan tirelessly put my case in the best possible light and I cannot thank him enough. I would highly recommend Dr. Hassan - I am grateful to him from the bottom of my heart.

Raphael Lauria
Manager, FME General Trading

Dr. Hassan Elhais is among the best legal consultants I have ever worked with. He has an amazing ability to reduce complex issues into a simple concept that non-legal people can understand. He consistently develops innovative litigation strategies that help us to achieve our ultimate legal goals.

Zhuo Liu
Client

...the extraordinary effort that has been exerted by the staff, and we specially thank Dr. Hassan Mohsen Alhais. Wishing your continues success & excellence...

H.H. Sheikh Saeed Bin
Mohammed Hashir Al Maktoum

I believe everyone should recognize what a difference Dr. Hassan Elhais work has made to people's lives; and especially to our family's life, because we will remain forever grateful to each and every one of his team.

Luis Pozueco
Client

Dr. Hassan Elhais never fears cases that involve exposure and he always gives me his honest assessment of our chances of success, which is invaluable to me.

Bassam Yamout
Director, JM Metal Trading LCC

He aided us not only in providing legal advice but also in all legal issues that required a long term strategic approach to achieve most favorable and optimum outcomes he provided us with high level of professional service.

Philippe Delbecq
Client

Dr. Hassan Elhais is a responsible, reputable counsel who operates to high levels of service.

Anil Relwani
Manager, Luxury Real Estate

Dr Hassan Elhais is responsive, thorough and creative with his advice, and is a valued advisor and legal consultant.

Asma Mattar
Manager, Italian Style

Regardless of the complexity of the matter I know Dr. Hassan Elhais will consider not only legal strategy but also business practicalities in providing advice and litigation options.

Dr. Massimo Hakim
Chairman, Italian Style

I recommend Dr. Hassan Elhais to anyone who says 'I'm in legal trouble'. I was extremely satisfied with the high standard of his work. He has always been there when I have needed him and I refer all my clients, family and friends to him/his firm.

Manish Gupta
Marketing Manager, Express Digital System

Dr. Hassan Elhais was very professional and he listened to my needs. He was very prompt, efficient and always kept me informed. Dr. Hassan Elhais's service was excellent and I would definitely recommend him to friends and colleagues.

James Horsley
British Client

Comments

No comments found.

Leave a Comment

Your email address will not be published. Required fields are marked *

Want to know more?
Then talk to us.


Main Menu

Contact Me