11 Apr 2022

Introduction

Arbitration is one of the alternative ways of resolving disputes away from the corridors of the courts, through which a binding judgement is decided in a dispute between two or more parties by an arbitral tribunal based on the agreement of the parties. The Arbitration Law has permitted the parties to refer any dispute that may arise between them to arbitration to be settled, provided that this is in writing.

The parties may agree on the form of the arbitral tribunal, and they may decide whether the tribunal consists of one or more individual arbitrators, provided that the number is odd, otherwise the arbitration will be void.

Arbitration Award

The “arbitration award” is the final decision given by the arbitrator similar to the decision of the judge or jury in a court case. The arbitral award is considered binding on its parties and possesses the authority of the res judicata and has the same executive force as if it were a judicial award, except that it is required for its implementation to obtain a decision for approval by the court.

Arbitration decisions are usually final, conclusive and enforceable, but by mutual consent and before signing the arbitration agreement, a paragraph or clause can be inserted into the agreement that allows the parties to appeal the arbitrators’ final decision and to any form of arbitration with the consent of all parties, and if the contracting parties do not include this clause in Agreement, then they lose their right to appeal the arbitration award and it is final.

The arbitrator after going through all the evidence and hearing arguments will close the hearings after which no more evidence or arguments will be allowed. The arbitrator will then write the award. In arbitration, there is no right to appeal like there is in court. In arbitration proceedings, it is not possible to challenge the arbitration awards of an arbitration tribunal, at least in theory. If you need any help in resolving any disputes you can reach out to arbitration lawyers at Fotislaw. However, an arbitral award can only be set aside in very limited circumstances.

Laws governing Arbitration in the UAE

Federal Law Number 6 of 2018 on “Arbitration” and its amendments (Arbitration Law)
Federal Law Number 11 of 1992 concerning the Civil Procedural Law. (Article 235-243)

Appeal against an Arbitration Award in the UAE

I. Onshore seated Arbitrations:

In accordance with the UAE Arbitration Law (Federal Law Number 6 of 2018), it is not possible to appeal the award of an arbitral tribunal on substantive grounds.

The parties may, however, apply to the local Court of Appeal for the award to be set aside. According to Article 53 of the Arbitration Law, in onshore seated arbitrations, the award may be set aside, if:

There exists no valid arbitration agreement or the agreement has become void under law chosen by the parties (or under UAE law if no law is specified);
either party was incompetent to execute the arbitration agreement or lacked full legal capacity to do so;
a party was deprived of the right to present its case because it did not receive proper notification of the arbitrator’s appointment or of the arbitration, the party’s right to due process was breached by the tribunal or for any other reason outside the party’s control;
the award fails to apply the governing law;
the appointment of the arbitrators and tribunals establishment were not in conformity with the Federal Arbitration Law or the parties’ agreement;
the proceedings were invalid in a manner that affects the arbitral award;
the award was not issued within the specified time; or
The award contravenes public order or public morality;
the award decides matters not falling within the terms of reference or exceed their scope. However, only the portion of the award addressing issues on matters not submitted to arbitration may be set aside if they can be separated from the matters on which the tribunal had the authority to rule.

According to Article 53(2) of the Federal Arbitration Law, a court is allowed to set aside an award on its own when the subject of the dispute cannot be submitted to arbitration or the award offends public policy or the morals of the state. The merits of the award cannot be appealed although a party can apply for set-aside.

II. Offshore seated Arbitrations

As for offshore jurisdictions, the DIFC Arbitration Law (Article 41) and the ADGM Arbitration Regulations (Article 62) states the only available recourse is to submit a set-aside application. Hence, the award may be set aside if;

a party to the arbitration agreement lacked capacity or the arbitration agreement is not valid under the applicable law;
the notification for the appointment of the arbitrator or of the proceedings was not given to the party against whom the award is invoked or was otherwise unable to present its case;
the award decides on matters not falling within the terms of reference or contains decision exceeding their scope. However, if the decisions on matters on which the tribunal had the authority to rule can be separated, only the portion of the award addressing issues on matters not submitted to arbitration may be set aside; and
The tribunals composition or the arbitral procedure was not in accord with the parties’ agreement or in the absence of such an agreement, with the applicable law.

There is no other option for further recourse or appeal to the court against an arbitral award made in an arbitration that is seated in the ADGM. The ADGM Arbitration Regulations provide for set-aside when the award is not yet binding or has been set aside by the competent authority in the arbitral seat or under the law of which the award was rendered. Similarly, when the dispute is referred expressly to a different tribunal or a body, then the DIFC Arbitration Law mandates set-aside.

Both the DIFC Arbitration Law (Article 41(2)(b)) and the ADGM Arbitration Regulations (Article 58(2)(b) provides the court with the power when the subject matter of the dispute was not arbitral or in contravention with the UAE public policy, to set aside an arbitral award.