Invalidity of Arbitration Agreement Impact on Referral to Arbitration and Arbitral Awards
The British University in Dubai (BUiD)
Arbitration has become a common route for dispute resolution, particularly in large projects carried out in the Middle East, in which the parties involved may be part of international entities. Most of the standard forms of contracts recommend arbitration in lieu of litigation due to numerous reasons that are mainly attributable to time and expertise. Nonetheless, in recent years the phenomenon of parties making attempts to file cases before the courts became frequently observed in spite of the existence of an Arbitration Agreement in the contract. In this regard, it is strongly advised for contracting parties to have genuine intention to bind by arbitration, by referring their disputes to arbitration rather than recourse to courts or any other dispute resolution mechanism, and by abiding by arbitral awards. The UAE Arbitration Law, the Model Law and the New York Convention were all drafted with a formidable initiative to secure the parties’ intention to arbitrate, by giving effect to an Arbitration Agreement. To elaborate further, giving effect to an Arbitration Agreement can be demonstrated through the referral to arbitration by either dismissing a claim filed before a court or a stay of court proceedings for lack of jurisdiction. In the same context, giving effect to an Arbitration Agreement, in regard to the arbitral awards, can be understood as the recognition and enforcement of arbitral awards by the courts, whether they were domestic or foreign arbitral awards, without any exemptions, except for those referred to in the national law and conventions as compelling reasons to revoke the arbitral award. However, there are limited cases in which a claimant may refer the dispute to courts or contest enforcing an arbitral award and challenge its validity, albeit having agreed on arbitration as a dispute resolution route, for reasons related to the validity of the Arbitration Agreement beside other reasons included in the aforementioned legislations which mainly revolve around adequacy, integrity and jurisdiction. The subject of this study is to highlight the validity of the Arbitration Agreement and how does this impact the referral to arbitration and the recognition & enforcement of arbitral awards.
arbitration agreement, arbitral awards, Middle East, dispute resolution, United Arab Emirates (UAE)