A Milestone Decision on Arbitration By DCC (Dubai Court of Cassation)

UAE has established itself as a leading nation to take up a progressive approach towards arbitration. Over the years, the UAE has efficiently and effectively managed arbitration disputes. The government of UAE has promoted and advocated for the developments in the arbitration industry. A momentous decision was passed by the Dubai Court of Cassation DCC, at the end of the year 2024.

Historic Judgement

The historic judgment was regarding the arbitration process, arbitration agreement, and the arbitral awards. The milestone decision offers a detailed guideline on crucial arbitration matters. It shed lights over the parties’ selection to begin the arbitration process to continue.

Judicial System in UAE

The judicial system of Emirates is making landmark judgments in recent times. They are making efforts to strengthen its arbitration industry in the country. This decision is dedicated to align local practices with the international best standards. Dubai Court of Cassation DCC had a different perspective on the ADGM Abu Dhabi Global Market court. They adopted a unique view to hear annulment claims.

The Exemplary Judgement

This exemplary judgment was issued in November 2024.  Dubai Court of Cassation 

DCC has interpreted the ICC award and its rule. They have comprehended in detail concerning the tribunal’s authority as to how to award the legal costs. The essential thing here is that the judgment of ICC awards differentiates from Abu Dhabi Courts.

Dubai Court of Cassation DCC also extended its guidance. It was regarding the extension in case of arbitration to third parties as well. The decision by DCC has referred to the party’s agreement that includes Dubai as a seat for arbitration. The Dubai Court of Cassation DCC also clarified in the judgment that the presence of the ICC representation office in ADGM. However, it does not confer on ADGM courts. 

The Clarification

The clarification was over ICC arbitration awards that were seated in Dubai. DCC further explained in detail that there is no connection between the ICC and the Abu Dhabi Global Market Court ADGM arbitration center. 

ADGM is the only court in ABU DHABI

Abu Dhabi Global Market ADGM court is not only an arbitration center but also supports the arbitration agreements. Besides, it is termed as a facilitator of arbitration. They choose to host the hearings regarding arbitration proceedings. 

Dubai Court of Cassation DCC also stresses the need to differentiate between the Physical venue and the seat of arbitration. They believe that where the arbitration hearings took place must be distinguished from the legal principle. This was the highlight of the judgment. This has a great impact on future legal judgments. 

Determination of Arbital Awards

It will also assist in determining the arbitral award. Either the arbitral award is foreign or local. The court will identify the jurisdiction to challenge the arbitral award. 

Dubai Court of Cassation DCC also discussed the authority of the arbitral tribunals regarding the legal costs involved. The legal costs like lawyer’s fees, and other associated costs. 

Permission by ICC (International Chamber of Commerce)

The ICC International Chamber of Commerce rules have granted permission to arbitral tribunals to award acceptable and fair legal costs. 

The arbitral tribunals can advise on reasonable legal costs that are incurred by the parties involved in the process of arbitration.

DCC made it very clear the legal costs term is extensive and is not restricted to legal fees. It encompasses a variety of expenses and fees in it. On the flip side, the Dubai Court of Cassation DCC has refused the arguments of explicitly mentioning the lawyer’s fee as a recoverable cost. 

This was rejected by considering the best international practices regarding arbitration.  Normally the ICC International Chamber of Commerce recognizes the lawyer’s fee as the recoverable cost.  

DCC also highlights this in reference to the ICC guidelines and explanations. 

ICC International Chamber of Commerce fully supports the inclusion of legal fees inside the arbitration costs, unlike the Dubai Court of Cassation DCC. In this ruling, the Abu Dhabi Courts also addressed a crucial matter of extending the arbitration agreement to third parties. The court suggested that the arbitration agreement can be extended to the third parties who have not signed it either.  

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A Judgement by Court

The court passed a remarkable judgment and stated that a party in the arbitration agreement is not necessarily the one who has explicitly signed it.  It can be extended to the parties issuing instructions as well. 

Arbitration Agreement

In this, if an arbitration agreement is signed by a subsidiary party it can be extended over to the parent company and vice versa. 

However, these decisions will depend on which party has the decision-making authority during the formation of the contract.  This historic judgment was passed that aligns with the predefined legal principles and international standards. 

This was passed to recognize the need to extend the arbitration agreements to the entities while not to those who have just signed it. However, this is applicable after accessing the formation and performance of the contract.