<p>We shed some light on some of said issues, particularly, (i) the  event of not signing part of the agreement; (ii) not calling upon the  arbitration clause before the national courts and (iii) the absence of a  special delegation to the signatory of an arbitration agreement, as  follows:</p>
<p><strong>I. Not signing part of the Agreement where the arbitral clause is embedded</strong>:</p>
<p>In a recent case handled by Al Tamimi &amp; Company in Abu Dhabi, the  Claimant filed a case against the Defendant before the Abu Dhabi Courts  disputing some issues in the agreement they previously concluded and  requesting the appointment of an expert to evidence the Defendant&rsquo;s  alleged defaults.&nbsp;</p>
<p>The disputed agreement was a set of documents divided into two parts attached to each other, namely, part 1 and part 2.</p>
<p>a) Part 1 was four pages signed by both parties containing the very  basic details of the contracting parties and a summary of their  obligations.&nbsp;</p>
<p>This part had an explicit clause referring to Part 2, deeming it as  an integral part forming the whole agreement and further states that the  Claimant has received, read and agreed to comply with its terms.&nbsp;</p>
<p>b) Part 2 was the full extensive part of the agreement, detailing the  obligations of each party, the triggers for default, and an arbitration  clause clearly stating that any dispute shall be resolved by  arbitration.&nbsp;</p>
<p>Since Part 1 (signed by both parties) referred to Part 2 and the  parties knew that the agreement could not be executed without Part 2,  the parties saw no need to sign Part 2.</p>
<p>At the first hearing before the Abu Dhabi Court of First Instance,  the Defendant brought the arbitration clause to the court&rsquo;s attention.  Nevertheless, the Court of First Instance rejected such plea and instead  issued a preliminary judgment to appoint an expert as requested by the  Claimant.&nbsp;</p>
<p>The Court&rsquo;s rationale was that the Court deemed the above Parts (1  and 2), as two separate agreements. The Court further explained that  only Part 1 was signed by the parties showing their consent to its  content, on the contrary to Part 2 which was not signed. The Court  neglected Part 2 (or the &ldquo;second agreement&rdquo; as per its interpretation)  and thus the arbitration clause was not binding.&nbsp;</p>
<p>The Defendant appealed the preliminary judgment for misapplication of the law and misinterpreting the facts of the dispute.&nbsp;</p>
<p>The Appellant relied on the fact that an agreement to arbitration was  made through the reference made in Part 1 to the content of Part 2 i.e.  the arbitration clause.&nbsp;</p>
<p><strong>The Court of Appeal upheld the judgment issued by the Court of First Instance for the same reason.&nbsp;</strong></p>
<p>Originally and as a general rule, we note that the national courts  retains jurisdiction for disputes arising from contractual agreements.  However, paragraph 1 of article 203 of the Civil Procedure Code No. 11  of 1992 as amended (the &ldquo;CPC&rdquo;) provides an exception to the above rule.  Said paragraph states that:</p>
<p>1. <em>&ldquo; It shall be permissible for contracting parties generally to  stipulate in the original contract or in a subsequent agreement to  refer any dispute between them concerning the implementation of a  specified contract to one or more arbitrators and it shall likewise be  permissible to agree by special conditions to arbitration in a  particular dispute.&rdquo;</em></p>
<p>Although such exception is regulated by law, certain conditions must  be satisfied for it to be deemed as a valid agreement. We note that  paragraph 2 of the above article states that:</p>
<p>2. <em>&ldquo;An arbitration agreement may be proved only by writing.&rdquo;</em></p>
<p>It is thus essential to have the agreement to arbitrate made in  writing, which is the case for most standard commercial agreements. It  is the act of &ldquo;signing the said agreement&rdquo; that remains a question to be  addressed. Is signature mandatory or would the evidence showing that it  was agreeable by the parties - even if it was not initialed and signed &ndash;  suffice? In the above example, the implied doctrine is that it should  be signed, otherwise it will not be deemed&nbsp; binding and will be  overlooked.</p>
<p>In conclusion and to avoid any unforeseen alteration to a planned  method of resolving potential disputes, it is recommended that the  contracting parties sign and initial every page of the agreement.</p>
<p><strong>II. Call upon Arbitration at the first hearing before the National Court:</strong></p>
<p>We often encounter situations where our clients instruct us on a very  short notice to represent them in a dispute before the national court  whose hearing is scheduled the next day. The first question we ask the  client is whether there is an arbitration agreement between the two  parties.&nbsp;</p>
<p>Unless you wish to give the courts jurisdiction to hear a case,  raising the issue of arbitration before the national court is very  important.&nbsp; If not raised at the first hearing, the court will assume  that the parties have waived their rights to refer the matter to  arbitration and submit to the jurisdiction of the court.&nbsp;</p>
<p>Paragraph 5 of Article 203 of the CPC provides that:</p>
<p><em>&ldquo;If the parties agree to arbitrate the dispute it shall not be  permissible to bring an action in respect thereof before the courts but  nevertheless if one of the parties does have recourse to litigation  without regard to the arbitration clause and the other party does not  object at the first hearing the action must be tried and the arbitration  clause shall be deemed to be cancelled.&rdquo;</em></p>
<p>The timing you should call upon the arbitration clause is a key  factor to have the claim rejected by the national court. The principle  established in the Abu Dhabi judiciary is that any objection to  jurisdiction on the basis of having an agreement to resolve the dispute  through arbitration should be raised at the first hearing. The first  hearing in such context means the very first one where your lawyer  attends before the court, even if the purpose of such attendance is to  submit the power of attorney and requests an extension to review the  case file and submit the statement of defence.&nbsp;</p>
<p>As a result,, remaining silent and not contesting jurisdiction for  having an arbitration clause is deemed a waiver of the previous  agreement to arbitration. The arbitral clause will become ineffective  and the national court retains jurisdiction to review the dispute.</p>
<p>In this regard the Cassation Court ruled in the Cassation No. 141 of  2007 &ndash; Session of 22/11/2007 (Commercial) that the party adhering to the  arbitration clause must take a positive action to object in the first  hearing on the filing of the claim made before the national court by his  opponent.&nbsp;</p>
<p>Consequently, it is essential that the above objection occur at the  first hearing or else the case will be reviewed by the national court  and the arbitration agreement will be cancelled.&nbsp;</p>
<p><strong>III. Absence of a special delegation to the signatory of the Arbitration Agreement:</strong></p>
<p>We always bring to the attention of our clients that the signatories  to an arbitration agreement should have explicit authority allowing them  to arbitrate. Article 203(4) of the CPC states that: &ldquo;It shall not be  permissible to arbitrate in matters which conciliation is not  permissible. An agreement to arbitrate shall not be valid unless made by  persons having the legal capacity to make a disposition over the right  the subject matter of the dispute.&rdquo;</p>
<p>In application of the above article, the Dubai Cassation Court ruled  &ldquo;In accordance with article 203 (4) of the Civil Procedures Law &ndash; that  it is not permissible to agree on resorting to arbitration without  having the capacity to make a disposition over the right of the subject  matter, and not the legal capacity to resort to court. Agreeing to  arbitration means waiving the right to file the claim before the  national courts, which requires a special power of attorney. A  delegation from the principals to the agent to conclude some actions and  dealings will not do.&rdquo; Cassation No. 577/2003 &ndash; Hearing of 12/6/2004</p>
<p>Furthermore, article 58(2) of the CPC stipulates that: &ldquo;No admission  or waiver of a right alleged or settlement or submission to arbitration  or acceptance of or requisition for the oath or refusal thereof or  abandonment of the proceedings or waiver of the judgment in whole or in  part&hellip;.. without special authority&rdquo;.&nbsp;</p>
<p>The above articles of the CPC denote that no rights shall be  submitted to arbitration without a special authority (power of attorney)  to authorize such submission.</p>
<p>In many events we find that the signatories of an agreement having an  arbitration clause do not have a special authority evidenced in their  delegation/power of attorney authorizing them to sign arbitration  agreements in compliance with articles 203(4) and 58(2) of the CPC noted  above.&nbsp;</p>
<p>In light of the above, the arbitration clause could be declared null  and void and resorting to arbitration may not be possible, making the  national courts competent to review the dispute, or even allowing for a  situation where any arbitral award rendered based on said clause could  be annulled by the national courts while ratifying it as per article 216  (b) of the CPC. Article 216 allows the parties to request nullification  from the Court (that looks into the ratification of the arbitration  award) of the arbitration award in the following circumstances, one of  which is having an agreement to arbitrate made by a person lacking the  capacity to arbitrate as outlined above.</p>