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Claim No: ARB 005/2020

IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

LACHESIS

Claimant

and

LACROSSE

Defendant

ORDER OF H.E JUSTICE SHAMLAN AL SAWALEHI

UPON the Claimant’s claim issued on 30 March 2020 requesting the Court to set aside the final award issued by the Ladonna (“LADONNA”) on 20 February 2020 (the “Award”) (the “Claim”)

AND UPON reviewing the Claimant’s grounds of challenge of the Award in their Detailed Particulars of Claim dated 22 August 2020

AND upon reviewing the Defendant’s submissions in opposition to the Claim

AND UPON hearing counsel for the Claimant and counsel for the Defendant at the hearing which took place by way of teleconference on 30 November 2020

AND UPON reviewing all documents on the Court file

IT IS HEREBY ORDERED THAT:

1. The Claim is dismissed.

2. The Claimant shall pay the Defendant its costs of these proceedings on the standard basis, to be assessed by a Registrar if not agreed.

Issued by:
Nour Hineidi
Registrar
Date of Issue: 22 March 2021
Time: 1.30pm

SCHEDULE OF REASONS

Introduction

1. The Claimant asks the Court to set aside the Award on eight grounds (“Grounds 1 to 8”) (the “Claim”).

Background

2. On 18 December 2017, Lachesis (the “Claimant”) and Lacrosse (the “Defendant”) entered into charters for the purpose of works to be carried out on a project within the Lacey.

3. A dispute arose and, pursuant to an arbitration agreement between the parties (the “Arbitration Agreement”), the Claimant commenced arbitral proceedings against the Defendant in LADONNA on 9 August 2018.

4. The tribunal (the “Tribunal”) rendered the Award on 20 February 2020, finding in favour of the Defendant.

5. On 20 February 2020, the Claimant applied to this Court to have the Award set aside.

Ground 1: was the arbitral procedure in accordance with the agreement of the parties?

6. The Claimant claims that the arbitral procedure was not in accordance with the agreement of the parties and asks the Court to set the Award aside on this basis under Article 41(2)(a)(iv) of DIFC Law No.1 of 2008 (the “Arbitration Law”) which provides, as material:

7. By the Arbitration Agreement, the agreement of the parties included the LADONNA Arbitration Rules (the “LADONNA Rules”). Article 37(4) of the LADONNA Rules provides that “an award shall be signed on every page.” It is uncontroversial that the Award was not signed on every page.

8. The Claimant argues that, as a result of this, the Award is not valid and should be set aside.

9. If it is accepted that the arbitral procedure was not in accordance with the agreement of the parties in the way claimed by the Claimant, in my view, this fact without more will only enliven the Court’s discretion to set aside the Award. Article 41(2) provides that an “arbitral award may be set aside by the DIFC Court…” (emphasis added) It follows that the Court might not set aside an award, and notwithstanding that the arbitral procedure followed in the arbitration was not in accordance with the agreement of the parties.

10. In my view, it is for claimants when making applications under Article 41(2) to ensure that they have furnished proof that one of the grounds to set aside is made out and also to ensure that they have addressed the Court’s discretion and in particular the question of why the Court’s discretion should be exercised in one way and not the other.

11. The Claimant in this Application has said nothing in respect of this second aspect of Article 41(2) determinations. Instead, it has effectively merely stated that 41(2)(a)(iv) is engaged and that the Award should on this basis alone be set aside.

12. The Claimant could have, for example, identified negative consequences or any prejudice it has or still suffers stemming from the fact that the Award is not signed on every page. In my view, it is not enough for the Claimant to simply claim, as it has done, that there was a “serious breach of the mandatory requirement on form, content and delivery of the Award…” The Claimant should have elaborated on how the description “serious” became an appropriate one to apply. In the absence of such an explanation, I am inclined to think that serious was an inappropriate term to use.

13. As the Defendant has stated, courts will generally inquire into the materiality of the procedural requirements not complied with and will not set aside an award if only formalities or technical provisions were not met. Thus, departures from the parties’ arbitral procedure will generally be condoned unless they are prejudicial. In other words, an arbitral award will not be set aside if only formal or technical objections to the award are made. In my view, this is all the Claimant has done.

14. Moreover, as the Defendant has argued, pursuant to Article 40(1)(a) of the Arbitration Law, if the Claimant determined that there were in the Award “any errors in computation, any clerical or typographical errors or any errors of a similar nature,” it had 30 days upon receipt of the Award to request that those errors be corrected. It is arguable that the absence of the Tribunal’s signatures on each page of the Award constituted a type of error captured by Article 40(1)(a) of the Arbitration Law. The Claimant made no attempt to have this error corrected under Article 40(1)(a), however. Simply put, the Claimant probably had an opportunity to rectify the errors in question and on account of which it now asks the Court to set aside the Award, but it did not take that opportunity.

15. Having missed this opportunity, in my judgment the Claimant is now to be regarded as having waived its right to make an objection against the Award on the basis that the Tribunal did not sign each page of the Award pursuant to Article 9 of the DIFC Arbitration Law which provides:

A party who knows that any provision of this Law, including one from which the parties may derogate, or any requirement under the Arbitration Agreement has not been complied with and yet proceeds with the Arbitration without stating his objection to such non-compliance without undue delay or, if a time limit is provided therefore, within such period of time, shall be deemed to have waived his right to object.

16. In the Claimant’s Detailed Particulars of Claim, it has detailed further similar objections to the award. These include an objection in relation to “cryptic reasoning” being used when entering into a finding ([5.1.2]) allegedly in breach Article 37 (3) of the LADONNA Rules; the paper carrying the signatures being different to the rest of the paper in the Award ([5.1.3]); delivery of the Award not being prompt ([5.1.4]) as required by Article 37(5) of the LADONNA Rules; and fees not being calculated in accordance with Article 45 of LADONNA Rules and Article 38 of the Arbitration Law ([5.1.5]). The above analysis and principles are applied to these further objections, mutatis mutandis.

17. To make a further point about the Award’s reasons, Article 38(2) of the Arbitration Law and Article 37(3) of the LADONNA Rules impose an obligation on arbitrators to give the reasons on which the Award is based. In short, a tribunal is required to identify the issues that were dispositive in the dispute and explain its decision. As explained by the English Court of Appeal in Bremer Handelsgesellschaft v Westzucker [1981] 2 Lloyd’s Rep 130 (at pp 132-133):

All that is necessary is that the arbitrators should set out what, on their view of the evidence, did or did not happen and should explain succinctly why, in light of what happened, they have reached their decision and what that decision is. This is all that is meant by a ‘reasoned award’.

18. Thus, the mere fact that the reasoning given by a tribunal is, say, cryptic, does not necessarily amount to evidence of a breach of the tribunal’s duty to give reasons so long as the reasoning of the tribunal can be understood in its proper context. In my judgment, the Defendant has not demonstrated that the Tribunal’s reasoning has fallen short of this standard.

19. For the reasons given above, Ground 1 is dismissed.

Ground 2: was a party to the Arbitration Agreement under some incapacity within the meaning of Article 41(2)(a)(i) of the Arbitration Law?

20. The answer to the question posed in the subtitle of this ground can be shortly stated as being in the negative.

21. The Claimant’s arguments under Ground 2 do relate to incapacity but do not concern incapacity for the purposes of Article 41(2)(a)(i) of the Arbitration Law. Article 41(2)(a)(i) provides:

The Claimant submits that an attorney lacked the capacity to amend one of the charters, being an underlying contract in which the Arbitration Agreement is contained. Article 41(2)(a)(i), however, concerns the capacity to conclude a binding agreement to arbitrate as distinguished from capacity to conclude the underlying contract.

22. As explained in the leading text ‘International Commercial Arbitration’ by Gary B. Born (Second Edition (2014); the Defendant has not provided an extract from the most recent edition of this text, but the explanation given in the passage which follows remains authoritative):

23. The Claimant’s challenge under this ground is misconceived and is dismissed.

Ground 3: was the Claimant able to present its case within the meaning of Article 41(2)(a)(ii) of the Arbitration Law?

24. The Claimant submits that it was denied the opportunity to present its case in the arbitration (the “Arbitration”). Specifically, it says that it was denied permission to amend its pleadings and to present “evidence or the oral submissions not shunned as not being pleaded case.” The Claimant says that the outcome and final award of the Tribunal would have been “definitely different” had it instead been given permission to take these steps.

25. In my judgment, the Claimant has fallen far short under this ground. The Claimant agreed to arbitration under the LADONNA Rules, but it has not demonstrated that it was unable to present its case in any way in breach of those rules. Moreover, while it has stated that the Award would have been different had it been allowed to take the steps it says it was not allowed to, it has not explained how exactly the Award would be different. Nor has it been explained clearly what the desired steps would have consisted of.

26. Ground 3 is dismissed.

Ground 4

27. The Claimant avers:

There were serious delinquencies in adherence to the principle and the stipulation of law during the procedures of the Arbitration, be it the treatment meted out to the Witnesses or the Party Representatives of the Claimant especially during the hearing held from 4 to 8th of December 2019.

28. The Claimant does not purport that the objections under Ground 4 engage a specific provision of Article 41 of the Arbitration Law. Instead, the Claimant makes broad reference to Article 41(2). Ground 4 is not sufficiently particularised.

29. Ground 4 is dismissed.

Ground 5: is the Award in conflict with the public policy of the UAE?

30. The Claimant avers that the Tribunal failed to consider facts and questions of law put to it in submissions and during the hearing of the dispute and, moreover, that it made findings “based on wrong and/or contradictory facts.”

31. In its Detailed Particulars of Claim, the Claimant highlights over 40 alleged errors in the Award – pertaining to questions of law and questions of fact (the “Errors”) which need not be recounted here – and says that the Errors render the Award as being in conflict with UAE public policy. The Claimant asks the Court to set aside the Award under Article 41(2)(b)(iii), which provides:

32. As to how UAE public policy is engaged, the Claimant submits that the Dubai Supreme Court has annulled on several occasions judgments where “the judgment ignores evidences or contradicts proven facts.” The Claimant relies on two Dubai Supreme Court decisions in this regard, namely that in Appeal No. 1071/2019 (Commercial) dated 16 February 2020 and that in Appeal No. 484/2018 (Commercial) dated 20 February 2019.

33. As to the relevance of these Dubai Supreme Court decisions, the Claimant relies on the DIFC Court decision in Loralia Group LLC v Landen Saudi Company ARB-004 [2018] dated 20 June 2019 in which I stated, at [37]:

Both parties accept that public policy may differ between the DIFC and onshore-Dubai in circumstances where arguments are based upon legal provisions that explicitly do not apply in the DIFC, such as the UAE Civil Procedure Code. However, I would reframe this statement to say that the uniform UAE public policy allows for differing outcomes in certain circumstances where matters are rightfully brought before the DIFC Courts rather than other UAE courts. While the outcomes may differ, the public policy applied is actually the same. Public policy of the UAE encompasses the constitutional and legislative creation of the DIFC and thus incorporates the intended differences legally allowed within the DIFC.

The Claimant says that Loralia Group is authority for the proposition that “a public policy observed in Dubai Supreme Court is applicable before DIFC Court unless there is law or a precedent explicitly considering the matter not related to public policy.”

34. In my view, Loralia Group can be said to be an authority for the proposition that the public policy of the UAE is the same from jurisdiction to jurisdiction within the UAE. As such, the UAE’s public policy in, say, onshore Dubai is the same as that in the DIFC. It follows that if a part of the UAE’s public policy was authoritatively articulated in Dubai law, it would be an articulation of the public policy of the UAE for the purposes of DIFC law, too. But I do not think that Loralia Group takes the Claimant any further than this for present considerations.

35. I have reviewed both Dubai Supreme Court decisions that the Claimant relies on. Neither makes any reference to UAE public policy. The Claimant has fallen far short of establishing that either decision is concerned with UAE public policy and set out to define or describe this policy. Moreover, even if both decisions in fact contained findings about the UAE’s public policy, the Claimant has made no attempt whatsoever to demonstrate the authoritativeness of these decisions as articulations of UAE public policy, something that would be necessary inasmuch as the Dubai Courts’ decisions are not binding on the DIFC Courts.

36. Even if it was established that the Award was in conflict with the public policy of the UAE, still, this would only enliven the Court’s discretion to set aside the Award. And in this regard, while the Claimant has highlighted over 40 alleged Errors in the Award, it has said hardly anything about any consequences of those alleged Errors. This, in my view, is a fatal omission in Ground 4, as it was in Ground 1, and constitutes another reason why, in my judgment, this argument does not get off the ground.

37. It is worthwhile saying a brief word about Article 41(2)(b)(iii) of the Arbitration Law. His Excellency the Deputy Chief Justice Omar Al Mheiri discussed this provision in some detail in a private decision dated 19 February 2020 in Case No. ARB-009-2019. The following passages are of relevance to the Claimant’s Ground 4:

38. Taking this guidance into consideration, even if the Claimant furnished evidence to the effect that the Errors were in fact properly to be regarded as errors; established that the two abovementioned Dubai Supreme Court decisions did authoritatively describe part of the UAE’s public policy; and demonstrated that this policy was such that, because of the Errors, the Award was in conflict of the public policy of the UAE, still, notwithstanding all of this, unless the conflict was sufficiently serious – for example, if recognising the Award and enforcing it would require abandoning the very fundaments on which this legal system is based – it is unlikely that the Court would exercise its discretion to set aside the Award.

39. No such serious breach of UAE public policy is alleged by the Claimant.

40. As a final remark, in my judgment, Ground 4 – a ground comprised of over 40 alleged errors of law and errors of fact in the Award – is an attempt by the Claimant to have the merits of the Award reviewed, by way the UAE public-policy gateway of Article 41(2)(b)(iii) of the Arbitration Law, as a party to litigation might do so by way of an appeal. This strikes me as being at odds with important principles relating to arbitration generally and Article 37(2) of the LADONNA Rules which provides that awards are final specifically.

41. This point is discussed in the ‘UNCITRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration’:

42. For the reasons given above, Ground 5 is dismissed.

Ground 6

43. Under Ground 6, the Claimant submits:

44. Even if the question in question was not referred to the Tribunal, the Claimant has failed to highlight how its determination impacted the Tribunal’s decision on the questions that were referred to it.

45. Ground 6 is dismissed.

Ground 7

46. The Claimant contends that the Tribunal failed to give “proper” and “logical” reasoning in the Award. In particular, it has highlighted subparagraphs (a) to (r) of paragraph [242] of the Award which it describes as “cryptic” and “based on misled facts” and “wrong appreciation of evidence and principles of balance of probabilities.” Some findings, the Claimant avers, are “unsubstantiated” and another is “incomplete and contradictory.”

47. The Claimant does not purport that the objections under Ground 7 engage a specific provision of Article 41 of the Arbitration Law. Instead, the Claimant makes broad reference to Article 41(2)(a) and (b). Ground 7 is not sufficiently particularised. The analysis under Ground 5 is in any event applied to these objections, mutatis mutandis.

48. Ground 7 is dismissed.

Ground 8

49. The Claimant submits that the Award should be set aside on the basis of a finding of the Tribunal that the Defendant had not breached the Arbitration Agreement by seeking attachment orders in the Fujairah and Abu Dhabi Courts. The Claimant says that the Tribunal “shied away from reiterating its powers on interim measures.”

50. The Claimant has not purported that Ground 8 of the Claim engages any of the grounds for setting aside in Article 41 of the Arbitration Law.

51. Ground 8 is dismissed.

Conclusion

52. For the reasons given above, the Claim is dismissed.

Costs

53. The Claimant shall pay the Defendant its costs of the Claim on the standard basis, to be assessed by a Registrar if not agreed.