In a recent judgement, the Dubai Court of Appeal reaffirmed the importance of complying with the legal and procedural framework of the Arbitration and confirmed that any procedural irregularity could lead to the annulment of the Award.
The matter concerned an application for the annulment of an Award under Article 53 of the Federal Law No. 6 of 2018 (“UAE Arbitration Law”).
The Claimant argued that in the Award, the Tribunal awarded the Respondent monetary entitlements and interest, where in fact the Respondent had not submitted a counterclaim to claim such monetary entitlements and the only relief sought by that Respondent was the dismissal of the case. The Claimant argued that by doing so, the Tribunal exceeded its powers and awarded the Respondent a relief which the Respondent did not specifically seek/ claim.
The Court of Appeal stated that the grounds under the Article 53 of the UAE Arbitration Law focus on procedural errors in rendering the Award and not substantive errors in the assessment of the merits. The Court noted that as per Article 53(1)(h) of the UAE Arbitration Law, an Award shall be invalidated if, in rendering the same, the Tribunal decided on matters not included in the arbitration agreement or matters which exceeded its scope.
The Court found that a Tribunal, awarding a relief which was not specifically sought by a party, constitutes the Tribunal exceeding its powers and mandate, and thus falls within the purview of Article 53(1)(h) of the UAE Arbitration Law. In reaching this conclusion, the Court of Appeal relied on the scholarly work by Dr. Fathi Wali in ‘National, Commercial, and International Arbitration’ wherein Dr. Wali states that “a violation of one of the fundamental principles of litigation occurs if an arbitration award rules on something that the parties did not request. In such a case, the award is void because it lacks a necessary presumption, which is the relief sought. What the party requests is the decision they seek for the right or legal position their claim aims to protect. The arbitrator must adhere to this request, meaning they must not exceed it. An arbitration award is void if the panel rules on matters not submitted to it or exceeds its limits, even if what it ruled on or exceeded falls within the issues the parties agreed to arbitrate. For the same reason, the award is void if it grants more than what was requested. The arbitrator, like a judge, is bound by the parties’ requests and cannot rule on anything other than what was requested, as the arbitrator’s jurisdiction is limited to what is requested. Moreover, ruling on something not requested is considered a violation of the principle of confrontation and a breach of the right to defense, as the arbitrator, by ruling on something not requested, would have ruled on an issue that was not contested between the parties, and the party against whom the award was made would not have had the opportunity to present their defense”. [emphasis added]
The commentary by Dr. Wali, and the judgement by the Court of Appeal is interesting for the following reasons:
- Th judgement provides an interesting example of what may constitute as “matters not covered by the Arbitration Agreement or falling beyond the scope of said arbitration” under Article 53(1)(h) of the UAE Arbitration Law.
- Article 53(1)(h) of the Arbitration Law prohibits ruling on matters which are not covered by the Arbitration Agreement. However, the Court of Appeal judgement takes Article 53(1)(h) a step further and confirms that a decision by the Tribunal on matters which were not submitted for its ruling and determination, would constitute a breach of Article 53(1)(h), even if those matters concerned issues that the parties agreed to arbitrate and fell within the scope of the arbitration agreement.
The Court of Appeal’s decision underscores the importance of procedural compliance and serves as a reminder to the Arbitrators to ensure that their Awards do not exceed the stipulated parameters.
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