Much-needed clarity on this subject has been provided by the recent decision of the General Assembly of the Dubai Court of Cassation (Decision No. 10 of 2023 dated 24 October 2023). This decision is particularly important given an earlier decision of the Dubai Court of Cassation in 2008, under which a party that failed to pay its share of the advance on costs risked being deemed to have waived its right to arbitrate a dispute.
In the 2008 decision, a claim was filed in the Dubai Courts by a claimant whose initial claim had been dismissed by the Dubai International Arbitration Centre (“DIAC”) due to the non-payment of the respondent’s share of the advance on costs and the claimant’s refusal to step in and pay the respondent’s share. The Dubai Court of Cassation decided at that time that the respondent had effectively waived the arbitration agreement by refusing to pay its share of the advance on costs.
General Assembly Clarifies the Position
The General Assembly has now unanimously decided that even where a party refuses to pay its share of the advance on costs or does not participate in the arbitration, the agreement to arbitrate remains valid and can continue to be relied upon by the parties. In other words, a failure to participate in the arbitration process or pay the required advance does not, in itself, amount to a waiver of the arbitration agreement.
This provides welcome certainty for businesses and practitioners involved in arbitration proceedings in the UAE. It also prevents a party from effectively avoiding an agreed arbitration mechanism simply by refusing to cooperate with the proceedings or meet its share of the costs. The decision is an eminently sensible and clear clarification of the position and is most welcomed by the local arbitration community.
What Does This Mean for Businesses?
Businesses involved in arbitration should be aware that non-payment or non-participation by the opposing party does not necessarily prevent the arbitration agreement from being relied upon. However, the consequences of non-payment may depend on the applicable arbitration rules and circumstances of the particular case, so legal advice should be obtained before taking further action.
For legal assistance with arbitration matters, including arbitration agreements, ongoing proceedings and enforcement issues, please contact James Berry Law to discuss your requirements.
This article does not constitute legal advice and should not be relied upon as such. For specific advice, please contact us.
