INSITE - UAE- Dec 2024

DUBAI COURT OF CASSATION ISSUES KEY JUDGMENT ON ARBITRATION SEAT AND JURISDICTION

Summary: The Dubai Court of Cassation issued a key judgment clarifying several important issues in arbitration law. The court ruled that the Abu Dhabi Global Market (ADGM) Courts do not have jurisdiction over ICC annulment claims seated in Dubai, emphasizing the distinction between the physical venue and the seat of arbitration. It also confirmed that arbitral tribunals can award legal costs, including attorney fees, under Article 38 of the ICC Rules. Additionally, the court held that arbitration agreements could extend to third parties closely related to the contract. 

In Detail: On November 19, 2024, the Dubai Court of Cassation (DCC) delivered a landmark judgment in the Court of Cassation in Case No. 756 of 2024 (Commercial) that clarifies several critical aspects of arbitration, particularly regarding the selection of the seat and the jurisdiction of the ADGM courts. This ruling provides valuable guidance on the interpretation of ICC Rules, the authority to award legal costs, and the extension of arbitration agreements to third parties.

Jurisdiction and the Seat of Arbitration

In the judgment, the DCC ruled that the ADGM Courts do not have jurisdiction over annulment claims concerning ICC awards seated in Dubai. The decision was based on the parties’ agreement that Dubai would be the seat of arbitration, and the presence of the ICC Representative Office in ADGM does not grant the ADGM Courts jurisdiction over awards seated in Dubai. The DCC emphasized the distinction between the physical venue of arbitration and the seat of arbitration, which has significant legal implications, including the jurisdiction to challenge an arbitral award.

Authority to Award Legal Costs

The DCC also addressed the interpretation of Article 38 of the ICC Rules, which allows arbitral tribunals to award legal costs, including attorney fees. The court confirmed that the term “costs” in Article 38 is broad enough to include legal fees, rejecting the argument that the absence of an explicit mention of attorney fees excludes them from being recoverable. This decision aligns with international arbitration practices that recognize attorney fees as part of arbitration costs.

Extension of Arbitration Agreements to Third Parties

In another significant aspect of the ruling, the DCC clarified that arbitration agreements can extend to third parties who are not signatories to the agreement. The court stated that an arbitration clause signed by a subsidiary could extend to the parent company, or vice versa, depending on the authority held by the party during the contract’s formation or performance. This aligns with established legal principles regarding the extension of arbitration agreements to closely related entities.

This judgment reflects the DCC’s ongoing efforts to strengthen Dubai’s position as a leading arbitration hub in the Middle East. By clarifying key aspects of arbitration law, the DCC is creating a more predictable and business-friendly legal environment for international arbitration in Dubai.

Key Links: https://www.tamimi.com/news/the-dubai-court-of-cassation-opines-on-the-implications-of-parties-selection-of-the-arbitration-seat-article-38-of-the-icc-rules-the-tribunals-authority-to-award-legal-cost-and-ex/