Dubai Court of Cassation (General Assembly), Resolution No. 10 of 2023, 24 October 2023
The General Assembly unanimously abandoned the earlier view that closure of a Dubai International Arbitration Centre case for unpaid costs makes the arbitration clause lapse. Under Federal Law No. 6 of 2018 on Arbitration, proceedings end with an award terminating the whole dispute (Article 45(1)), and the arbitration agreement survives even the annulment of an award unless the annulment rests on its non-existence, expiry, nullity or impossibility (Article 54(4)). A fortiori, it does not lapse before the arbitration has run its course without both parties' clear will. A decision to close the file for unpaid costs, absent a final award, neither extinguishes the clause nor implies waiver; either party may refile at the Centre and rely on the clause before the courts.
The Technical Office of the Court of Cassation asked the General Secretariat of the Court to consider departing from a principle adopted in earlier judgments: that a decision of the Dubai International Arbitration Centre to close a case because the arbitration costs were not paid causes the arbitration clause to lapse, since the purpose of arbitration has ended with the impossibility of continuing it, so that the claimant may bring his claim before the courts. The proposed replacement was that such a closure does not cause the clause to lapse and does not imply a waiver of it; the purpose of arbitration is not exhausted, the claimant may not go to court, and either party may resubmit the case to the Centre, pay both parties' shares of the costs and ask the tribunal to order the other party to pay its share. The question was referred to the General Assembly.
The Assembly examined Federal Law No. 6 of 2018 on Arbitration. Under Article 45(1) arbitral proceedings end with the issue of the award terminating the whole dispute. Under Article 54(4), unless the parties agree otherwise, the arbitration agreement remains in force after the award is annulled, unless the annulment is based on the non-existence of the agreement, the expiry of its term, its nullity or the impossibility of performing it. Thus the agreement survives even the annulment of the award, excluding the jurisdiction of the state courts as long as it is valid and effective; a fortiori, it cannot lapse before the arbitration has even begun, without a clear intention of both parties, while no award terminating the dispute has been made.
The Assembly unanimously departed from the earlier principle and held that a decision not to proceed with and to close the arbitration file for non-payment of costs, so long as no award ending the dispute has been made, does not cause the clause to lapse or imply its waiver; either party may resubmit the claim to the Centre and either may rely on the clause before the courts.
Respondents sometimes refuse to pay their share of the arbitration advance in the hope of forcing a claimant into court or stalling the case. Under this resolution non-payment and closure of the file do not release the parties from the arbitration agreement: the claim must go back to arbitration, and a court action can still be met with the arbitration plea.
| Articles 45(1) and 54(4) of Federal Law No. 6 of 2018 on Arbitration — text of articles 45, 54 |
“لا يترتب عليه سقوط شرط التحكيم ولا يستخلص منه التنازل عن شرط التحكيم”Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.
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