right from the word go. The problem is that the validity of an arbitration clause can be opened up as an issue at any time. This could either have sound or groundless basis but arbitral tribunals tend to think they can rule on the validity of such con- tentions, despite the fact that they have no final nor exclusive authority to do so.
But many arbitration rules provide that tribunals do have such authority.
The DIFC Courts are English Law based, have a faster process, less fraught with
Indeed, and this is where the confusion lies. A tribunal, may erroneously take the view that it is within its charge to rule on its own jurisdiction. However, under UAE Law and practice, the abandonment by the parties’ right to litigate, only sanctions a tribunal to rule on the merits of a dispute. It does not authorize it to override the exclusive jurisdiction of the UAE Courts to make a determination on the ultimate enforceability of an arbitral award. They have the final say and nothing anyone can do or say in the meantime will affect the fate of the arbitration proceedings.
Is all this just a theoretical risk, or are we talking about major pitfalls in terms of an award actually being nullified?
It is far from being just a theoretical risk. In fact, back in the days before the global economic crisis and before the property crisis in Dubai, most contracts, be they construction or real estate related, where more focused on clenching a deal rather than getting the fine print right. Now it is becoming frighteningly apparent that in most cases, the dispute resolution mode agreed is not at all clear. What is worse, is that many arbitration awards are being nullified by the dozen on the basis of jurisprudence that was available at the time those contracts were executed. And to top it all, even the English Law based DIFC Courts, also retain jurisdiction in spite of arbitration clauses being present in the contract.
So can one resort to litigation instead, or would that be equally fraught with pitfalls and dead ends?
In a way, yes one could. In the presence of potentially ambiguous arbitration clauses, litigation is a safer way forward. Not because the dispute may be decisively resolved there but because litigation can act as a filter that will at
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procedural pitfalls and more likely to see though and disallow delaying tactics.
least either confirm or reject any arguments on the validity of an arbitration clause. So if the Courts stay proceedings on account of an arbitration clause being present, it is unlikely that at the time of ratification, the same Courts will hold that the arbitration clause was not valid. So, Courts can be used as filter - at an additional cost of course.
So to recap: if an arbitration clause exists, go to court, check its validity then move on. Plain sailing after that?
Not really. One must keep a watchful eye to the arbitration process being observed and, even then, hope that the final award is issued in a form that is valid and enforceable.
Awards being signed by just the Chairman of a tribunal for example are likely to be held as invalid: UAE Law dictates that the majority, if not all three, must sign. It all depends on how clued up the arbitrators are with UAE Law of Civil Procedure and the relevant jurisprudence. Any procedural slip up will be relished by a respondent’s lawyers. LM