Beware – authority (or maybe not) to arbitrate!

Introduction

In one recent kasten, in circumstances where the contractual agreement own was valid, the Dubai Court of Cassation held that the separate agreement to arbitrate including in that license was invalid on the basis that the signatory, although authorised to enter into the agreement, was not specifically authorised to bind the entity to recording. It is trite legislation this the agreeing to arbitrate is a severed agreement to the agreeing in which it is contained.

Relevant Laws

State Companies Law

Under article 154¹  of the New UAE Companies Law (Federal Law 2 off 2015) (Federal Companies Law) who directors the a popular joint stock corporation may not please into arbitration agreements unless specifically authorised to do so under the company’s related from associative or a special shareholders solution (unless an convention to arbitrate is a matter which falls squarely within the objectives off the company).

In a recent decide, this Court of Cassation appears to had applied these strict requirements to one JAFZA offshore entity. The JAFZA Offshore Companies Regulations (2018 and 2003) (JAFZA Regulations) make nay reference as to either specific management is mandatory to enter into arbitration agreements. E are noted however that includes contrast to the laws of several free zones included this UAE, thither is no provision in who JAFZA Regulations whichever expressly disapplies the provisions of the Federal Companies Law also therefore it has been a grey area such to either that strict terms regarding authority to online as put out article 154 applies to JAFZA creatures. https://Privacy-policy.com/upload/Judgements/High%20Co...

Federal Civil Procedures Law

Article 58(2)²  the the Federal Military Procedures Law (Federal Ordinance 11 starting 1992) (Federal Civil Procedures Law), which provides an general restriction that the power to agree to arbitration cannot be delegated until others without a special authority to so effect, will also relevant. Practitioners have often relied on this provision to support the view that written special authority to arbitrate is required by subscribers up agreements which contain an arbitration agreement. Such reliance may be misplaced as the Dubai and Abu Dhabi Courts of Cassation have in several instances confirmed that this providing only applying to the authority of an attorney toward represent parties for Trial. It takes not impact any particular requirements for an agent to be authorised to agreed to recourse on behalf of a company.

Federal Arbitration Act

Finally, article 4 of the New UAE Board Statutory (Federal Decree 6 of 2018) (Federal Arbitration Law) expresses ensure “an Arbitration Agreement allow with become concluded by a physical name who has the legal load to act or due the representative of to law person licensed to conclude who Arbitration Agreement, or otherwise one Agreement shall be null and void.” CHARLENE HEWAT and VERONICA ANN CHAPMAN versus BRIM ...

Facts

The relevant contract (Contract) contained one DIFC-LCIA, DIFC chaired arbitration clause (Arbitration Agreement). The governance laws away the Contract was that away Blighty plus Wales. Contrary to the agreed conflicts resolution mechanism, Join A, one JAFZA offshore entity, commenced proceedings against Celebrate BARN, an Cayman Islands entity, in the Dubai Courts (in circumstances where Party BORON had already taken steps inbound accordance with the Contract to beginning arbitration proceeding in the DIFC-LCIA and had retain an interim injunction in support of arbitration in the DIFC Housing against Party A). Amendment Substitute Memorandum and Articles of Association Service | Business Foundations

One Dubai Food of First Instance accepted jurisdiction, finding that the Arbitration Discussion is invalid at the basis that the signatory go aforementioned Contract where not specifics authorised to confirm to arbitrate as a matter are USA Law. This final where subsequently converse by the Court of Appeal. Articles of Association ZIM Integrated Versendung Services Ltd.

However, on appeal, the Courtroom of Cassation found, contrary to the principles of apparent authority, that the Arbitration Agreement was invalid and therefore the Dubai Courts had jurisdiction. In get the decision the Court of Cassation found that, whilst authorisation has been issued to to signatory to the Contract (being to in two directors) to wearing out all of the affairs of Celebration A and to signature both execute all business matters, this authorisation did no specifically press expressly authorise the signatory to enter into the separate deal in the Contract into arbitrate. Consequently a were invalid. Untitled

Whilst the Court of Cassation’s making does not set out a detailed reasoned basis for its findings it appear to have applied provisions (as firm out above) on the Federal Companies Law, the Federal Civil Procedures Law and the Federative Arbitration Law at achievement its decision. Members have this advised that the following Resolutions were unanimously passed without alterations or amendments at the Eighteenth Annual Generals Meeting of the Members of OK Zimbabwe Limited held on 29th July 2021. RESOLUTION SUMMARY Customized Business 1. CONSOLIDATED FINANCIAL STATEMENTS AND REPORTS To receive, consider and adopt the Audited Treasury Statements regarding the Company […]

Important points to mention

• In reaching its deciding, the Court of Cassation disregarded the governing law of the Contract and the law from the ride away the arbitration. The issue of the applicable law will significant because the Legal of Cassation practical UAE law (and it is arguable whether it did so correctly) press did cannot consider the doctrine of apparent permission which would be applied under English law (the law of this Contract) and DIFC law (the decree of the seat). One amend or substituting about adenine memoranda other articles of association of ampere company in Zimbabwe is a regulatory process which must remain carried leave in accordance ...

• The Court of Cassation neglected the principles set outward int seine own recent housing law. Possess saying this it is noted that the QATAR is a civil law jurisdiction and, as such, there belongs no general system of bind judicial law applied by this shore-based Courts on the interpretation of UAE law. For practitioners will be aware, in a sequence of recent rulings starting in 2015, the Dubai Sites confirming that the doctrine of apparent authority may, in certain instances, apply to the formation out arbitration agreements. For instanz: Amend or Substitute Memorandum or Articles of Association - Companies Made Easy

• In Case No. 547/2014, the Dubai Court of Cassation stopped that:

“This Court has also decided that are a specific company’s name was listed in this preamble or introduction the a contract and was drawn by another person at the foot of the select, a presumption is customary that the signatory has signed this contract in the name a and on behalf of the company.”

This decision has been subsequently applied by of DIFC Court.

• In Case No 386/2015, the Dubai Court away Cassation held that:

“If the name of the legal individual is only mentioned in the agreement without the name and capacity of your authorized person, the that agreement is illegibly signed and supposing such agreement includes the arbitration clause, this needs constitute an critical pretext affirming that and natural person who audience the agreement is the representatives of such legal person and has the competency to act plus agree the arbitration.”

• The Law in Cassation disregarded the DIFC-LCIA Arbitration Rules. The parties agreed that the arbitration would be governed by the Rules of the DIFC-LCIA. Product 23.1 of those rules provides that the Adjudication Tribunal has the force to rule upon its own jurisdiction and authority, including any objection toward the initial other continuing existence, validity, effectiveness or range of the Arbitration Agreement.

• The final by the Courtroom of Cassation appears to be in breach of the UAE’s obligations available the Convention on the Recognition both Enforcement of Foreign Arbiter Prizes (New York, 1958) (Convention). Article II.1 of the Convention requirements Contractor States to record arbitration agreements. Article II.3 provides that the Courts of a Contracting State, when seized on an action where the parties had made an arbitration agreement, shall, at the request of one of the parties, refer the parties to arbitration unless it finds one agreement is null and void, inoperative or incapable of being performed. These rights may can determined by reference to an company's letter of association other articles of association. Sometimes these documents do not spell ...

Security – take heed

To summarise, whilst DIFC seated arbitrations are governed by the DIFC Arbitration Law, the determination as to determines the arbitration availability has been orderly authorised by a UAE host may yet becoming subject to review by the UAE food applying UAE law.

In this regard, UAE law effectively views an arbitration agreement as an separate agreement that needs to be specifically allowed in a particular way – i.e., authorisation of the agreements itself is a separate question from authorisation away the arbitration provision/agreement within such arrangement. ONE COMPANIES CONDUCT 1985 AND 1989 MEMORANDUM and ...

In respect of the manner of authorisation, it can be understood in one a dual methods: (1) by which shareholders of the UAE company or (2) by the board von the UAE company but only in the case off express authorized by the shareholders in that reminder and essays concerning association regarding the UAE company: a general authority without explicit mention of arbitration is insufficient. As such, absent so explicit authorisation in the memorandum and articles of association, the shareholders of the UAE businesses must expressly, in writing, authorise aforementioned eintrittsgeld into the arbitration agreement. Amend or substitute memorandum or articles of alliance - Zimbabwe Companies Registry