Dubai Court of Cassation, Commercial Appeal No. 237 of 2025, judgment of 10 April 2025
An agreement to arbitrate is not presumed: its wording must show that the parties made arbitration the only way to resolve their disputes. A clause that sits alongside the courts' jurisdiction or offers a choice between them, such as one allowing either party to go to court if it rejects the decision, is not a binding arbitration agreement. New limitation rules apply to periods not yet complete; where Article 92 of the 2022 Commercial Transactions Law shortened the period for claims between traders from ten to five years, the five years run from 2 January 2023, unless the remainder of the old ten-year period ends sooner.
A contractor built a residential building in Dubai under a 2015 contract and claimed AED 5.16 million for unpaid work, variations and extras after completion in 2017. The courts below, on an expert report, awarded about AED 1.8 million with interest, rejecting the owner's objections that the contract required arbitration and that the claim was time-barred.
On arbitration, the Court of Cassation upheld the lower courts. Clause 18 of the contract provided that disputes on matters not covered by the drawings, conditions or specifications would be decided by the consultant as arbitrator, and that if either party rejected his decision the matter would go to the competent courts, with the consultant's decision treated as the reference document on technical matters. Such wording did not make arbitration the exclusive route and so did not prevent the courts from hearing the dispute.
On limitation, the owner's appeal succeeded. Article 95 of the 1993 Commercial Transactions Law barred claims between traders on commercial obligations after ten years from the due date; Article 92 of the 2022 law, in force from 2 January 2023, reduced this to five years. Under the transitional rules (Articles 6 and 7 of the Civil Transactions Law, as cited by the Court), new limitation rules apply to periods that have not run out; where the new period is shorter, it runs from the new law's entry into force, unless the rest of the old period would end earlier. The courts below had applied the ten-year period without determining when the sums fell due or which rule governed. The judgment was quashed and remitted.
Construction and supply contracts often contain clauses that refer disputes to an engineer or arbitrator but keep recourse to the courts. The judgment confirms that these do not bar court proceedings. It also sets out how the shorter five-year limitation period introduced in 2023 applies to older commercial claims: claims between traders that fell due before 2023 are barred on 2 January 2028 at the latest, or earlier if the old ten-year period ends first.
| Article 92 of Federal Decree-Law No. 50 of 2022 (Commercial Transactions Law) — text of article 92 |
| Article 95 of Federal Law No. 18 of 1993 (Commercial Transactions Law) Decided under this law; it has been replaced by Commercial Transactions Law. |
| Articles 6 and 7 of Federal Law No. 5 of 1985 (Civil Transactions Law) on the temporal application of limitation rules — text of articles 6, 7 Decided under this law; it has been replaced by Civil Transactions Law 2025. |
| Federal Law No. 6 of 2018 on Arbitration (requirements of a binding arbitration agreement, applied without citing an article) |
“أي شرط تحكيم يأتي في سياق التجاور مع اختصاص قضاء الدولة، أو التخيير بينهما، ولا يحتوي إلا على مبدأ اللجوء إلى التحكيم، دون أن يقطع في الاتفاق على التحكيم وحده والتقيد بقوته الملزمة، لا يعد اتفاقًا ملزمًا بالتحكيم”Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.
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