14 Sep 2021

Hadef in the Courts: Enforceability of arbitration agreements

Authored by: Omar Al Heloo, Mohammed Abbas, Rashed Faidhallah

In brief:

  • Hadef & Partners successfully enforce a foreign arbitration award issued in default in the absence of an explicitly signed arbitration agreement between the parties.
  • The decision points to the Dubai Courts taking a more pro-arbitration approach

Background

Hadef & Partners successfully assisted a leading Fortune Global 500 Group in enforcing a foreign arbitral award issued in default before the Dubai Execution Court. 

Awards issued in default, have often been a potential impediment to the enforcement of foreign arbitral awards or judgments in the UAE due to Article 85(2)(b) of Cabinet Resolution 57 of 2018 (as amended) which deals with the enforcement of foreign awards and requires that litigants “were summoned and were duly represented”.

In this case, there was no explicitly signed arbitration agreement between the parties. The claimant asserted that their standard terms, which included an arbitration clause, should apply to the transaction in question. Typically, a signed arbitration agreement is considered one of the first documents that the Dubai Execution Court requires in order to proceed and enforce an award. 

Judgment

The Dubai Execution Court decided to enforce the award without the standard arbitration agreement. While the award was issued in absentia, it found there was sufficient evidence that the service was duly carried out on the Defendant by the Claimant during the arbitral proceedings in accordance with the applicable law. Hadef & Partners provided sufficient evidence in relation to the arbitration agreement for the judge to determine that the standard terms provided by the Claimant could be accepted as an arbitration agreement during this matter. As no appeal was filed by the opposing party, the decision enforcing the award became final and binding. 

Legal significance

As the Dubai Court of Execution has not provided reasoning for the decision, one can only speculate as to the exact rational supporting the decision. However, it would appear the Dubai Execution Court is giving further regard to the terms of the New York Convention when deciding on applications for the enforcement of foreign arbitral awards. As this matter was not raised to the higher courts, it remains unclear to what extent this now reflects “standard practice” in the Dubai Courts. That said, the decision is very much in line with the UAE’s transition into an arbitration-friendly jurisdiction.

If you would like more information on enforceability of arbitration agreements and Dispute Resolution, or have any questions, please contact Omar Al Heloo, Partner, Mohammed Abbas, Associate and Rashed Faidhallah, Associate, Dispute Resolution.

 
 
 

This article, including any advice, commentary or recommendation herein, is provided on a complimentary basis without consideration of any specific objectives, circumstances or facts. It reflects the views of the writer which may, in some cases, differ from those of the firm, especially in the developing jurisdiction of the UAE.