Dubai Court of Cassation judgment - Expert evidence not invalidated by omission of oath
Dispute Resolution / UAE
This case (1406 of 2023) concerned an attempt by one of the parties to an arbitration to set aside an award because the tribunal-appointed expert did not swear an oath before taking up his mandate.
Law Update: Issue 364 - Healthcare & Life Sciences Focus
Dr. Hassan ArabPartner, Regional Head of Dispute Resolution
Hend Al MehairiAssociate,Private Client Services
This case (1406 of 2023) concerned an attempt by one of the parties to an arbitration to set aside an award because the tribunal-appointed expert did not swear an oath before taking up his mandate (which is normally required of a court-appointed expert in UAE ligation). However, citing Decree No. 11 of 2007 approving the DIAC Arbitration Rules, the Dubai Court of Cassation held that an arbitral tribunal may depart from conventional litigation procedures because arbitration is considered an exceptional method of resolving disputes. As a result, the tribunal-appointed expert was not required to swear an oath before taking up his mandate and this would not result in any irregularity in procedure or invalidate the relevant award that relied on the expert’s report.
A dispute arose between the Appellant and the Respondent, who were shareholders in a company. Pursuant to the parties’ arbitration agreement, the Appellant initiated arbitration proceedings before the Dubai International Arbitration Centre (“DIAC”) in 2020, claiming compensation from the Respondent for allegedly causing the decline in the value of the company and breaching his fiduciary duties as a director. The Respondent contested the jurisdiction of the arbitral tribunal and raised several procedural and substantive objections to the Appellant's claim.
The arbitral tribunal issued its award on 6 February 2023, in which it upheld its jurisdiction and ordered the Respondent to pay the Appellant AED 15 million in compensation, as well as arbitration costs, legal fees, and interest. The tribunal relied heavily on the report of an expert that it had appointed to assess the value of the company and the damages suffered by the Appellant. The expert did not swear an oath before taking up his mandate, as required by the UAE Law of Evidence in Civil and Commercial Transactions.
The Respondent did not raise this issue before the tribunal during the arbitration. However, when the Respondent challenged the arbitral award before the Court of Appeal, it sought to set aside the award on that basis that, among other things, the expert’s alleged failure to swear an oath and the tribunal's reliance on his report. The Appellant, on the other hand, filed a petition before the Court of Appeal to confirm the award and enforce it against the Respondent. The Court of Appeal joined the two appeals and decided in favour of the Respondent, setting aside the award on the basis that the expert's report violated public policy.
The Appellant appealed before the Court of Cassation.
In its appeal, the Appellant argued that the Court of Appeal erred in law. It submitted that the Court of Appeal wrongly considered the appointed expert to be a witness who is subject to the requirement by law to swear an oath. The Appellant contended that the DIAC Arbitration Rules, which the parties had agreed to govern their arbitration, did not require an oath by the expert and that the Respondent had waived his right to raise this issue by not raising it before the arbitral tribunal.
The Court of Cassation granted the Appellant's appeal and reversed the Court of Appeal's decision, with costs and legal fees to be paid by the Respondent. The Court held that the arbitration was governed by the DIAC Arbitration Rules. Where the DIAC rules are silent, the arbitration would be governed by any rules that the parties or the tribunal may determine, except if they conflict with a mandatory provision of applicable law in force in the UAE from which the parties could not derogate.
The Court found that the DIAC Arbitration Rules did not mandate an oath by the expert and that the UAE Law of Evidence in Civil and Commercial Transactions did not apply to the arbitration as it was not a mandatory provision of law. Hence, reliance by the arbitral tribunal on the expert’s report did not invalidate its award.
The Court also held that the Respondent had waived his right to challenge the expert's report by not raising it before the tribunal.
The court dismissed the Respondent's appeals and confirmed the validity and enforceability of the arbitral award.
The Court of Cassation judgment is noteworthy for several reasons. First, it demonstrates the court's respect for the parties' autonomy and choice of the DIAC Arbitration Rules as the governing procedural rules of their arbitration, subject to public policy and mandatory law.
Second, it shows the court's deference to the arbitral tribunal's discretion and authority to appoint an expert and to evaluate his report and its weight as evidence.
Third, it highlights the court's strict application of the principle of waiver and estoppel, which prevents a party from raising a procedural objection for the first time before the court after failing to do so before the tribunal.
Fourth, it reflects the court's pro-arbitration stance and its support for the finality and enforceability of arbitral awards unless there is a clear violation of public policy or mandatory law.
This Court of Cassation judgment is important for the development and promotion of arbitration as an alternative dispute resolution mechanism in Dubai and the UAE. It also provides welcome guidance and clarity for parties and practitioners on the interpretation and application of the DIAC Arbitration Rules and the UAE Law of Evidence in Civil and Commercial Transactions in relation to arbitration proceedings and awards.
The Dubai Court of Cassation judgment 1406 of 2023 reaffirms the autonomy of arbitral tribunals in conducting proceedings pursuant to the agreed rules, highlighting the distinct nature of arbitration from traditional court litigation. The judgment is a positive development that provides guidance on how courts may approach issues of procedural irregularities and the interpretation of arbitration rules. This judgment is a testament to the evolving nature of arbitration as a preferred mode of dispute resolution in the UAE legal landscape.
For further information,please contact Dr. Hassan Arab and Hend Al Mehairi.
Published in January 2024
