Ras Al Khaimah Court of Cassation, Commercial Appeal No. 60 of 14 JY, judgment of 26 January 2020
A party that continues with an arbitration knowing of a breach of the arbitration agreement or of a non-mandatory rule, without objecting in time, waives its objection. Choosing an arbitral institution brings in its procedural rules, and the tribunal rules on its own jurisdiction. The manager of a limited liability company may agree to arbitration on its behalf; the special authority required by the Civil Procedure Law applies to litigation agents, not managers. An assignee of a contract containing an arbitration clause is bound by the clause.
The appellant asked the Ras Al Khaimah Court of Appeal to stay and annul an award of 25 September 2019 made under the rules of the Ras Al Khaimah Centre for Conciliation and Commercial Arbitration. It raised a series of objections: that the tribunal had no jurisdiction and the clause did not designate the Centre; that the person who signed for one respondent lacked capacity to agree to arbitration; that the clause did not bind a party to whom the contract had been assigned; that the proceedings were in English and used untranslated documents; and that the wrong law had been applied. The Court of Appeal dismissed the action and the Court of Cassation dismissed the appeal. It held that a party who carries on with the arbitration knowing of a breach of the agreement or of a non-mandatory rule of the Arbitration Law, without objecting within the time allowed, waives the objection. Agreement on institutional arbitration means that the institution's procedural rules apply (Article 11(1) of the Arbitration Law) and the tribunal decides objections to its own jurisdiction, including the existence, validity or scope of the arbitration agreement; complaints about that power and the tribunal's interpretation of the clause fall outside the annulment action. Under Articles 237 and 325 of the Commercial Companies Law then applicable (Federal Law No. 8 of 1984), the manager of a limited liability company has power to manage it and to agree to arbitration on its behalf; the requirement of special authority for arbitration in Article 58(2) of the Civil Procedure Law concerns an agent conducting litigation, not a company manager. The court was entitled to find authority from the memorandum annex naming the signatory as authorised to manage and sign for the company and from his emails during the arbitration. A party that accepts the assignment of a contract containing an arbitration clause, even impliedly, is bound by the clause. Under Article 29 the language is Arabic unless the parties agree otherwise; they had agreed on English and no timely objection was made to untranslated documents. Article 53's grounds of annulment are exhaustive.
A practical checklist for RAK arbitrations: raise procedural objections immediately; expect an LLC manager's signature on an arbitration clause to bind the company; and assume an assignee of a contract takes the arbitration clause with it. Decided under the 2018 Arbitration Law and, on the manager's authority, under the 1984 Companies Law.
| Articles 11, 29, 53 of Federal Law No. 6 of 2018 on Arbitration — text of articles 11, 29, 53 |
| Articles 237, 325 of Federal Law No. 8 of 1984 on Commercial Companies |
| Article 58 of Federal Law No. 11 of 1992 (Civil Procedure Law) Decided under this law; it has been replaced by Civil Procedure Code. |
“استمرار أحد الأطراف في إجراءات التحكيم مع علمه بوقوع مخالفة لاتفاق التحكيم أو لحكم من أحكام القانون الجائز الاتفاق على مخالفته. عدم”Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.
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