Aligning with Global Standards: Dubai Court of Cassation Embraces Pro-Arbitration Principles

The Dubai Court of Cassation (DCC) recently issued three pivotal judgments that significantly advance the pro-arbitration stance of the UAE, bringing its legal framework into closer alignment with international best practices adopted across major global jurisdictions. These rulings affirm principles of party autonomy and arbitral authority that are foundational to international commercial arbitration.

1. Cost Recovery: Upholding Party Agreement (Commercial Case No. 756/2024)
   The most critical ruling addressed the recoverability of legal costs under the rules of the International Chamber of Commerce (ICC).

• The Shift: Historically, Dubai courts required an explicit clause in the arbitration agreement itself to allow a tribunal to award legal costs.
• The New Standard: The DCC reversed this stance, ruling that Article 38(1) of the ICC Rules (which permits the recovery of “reasonable legal and other costs”) constitutes a sufficiently clear and express agreement by the parties to grant the tribunal this power.
• Global Alignment: This decision reinforces the universal principle that parties are bound by the rules they choose to govern their arbitration. It aligns with the practice of most leading arbitration seats worldwide, where the incorporation of institutional rules like the ICC’s is considered sufficient to empower the tribunal on costs.

1. Arbitration Clause Continuity in Contract Assignment (Commercial Case No. 945/2024)

The Court provided clarity on the transfer of arbitration agreements in commercial transactions:

• The Ruling: The DCC held that a broad assignment of rights under a contract is deemed to include the transfer of the arbitration clause to the assignee. The clause remains valid and binding on the new party.
• Global Alignment: This ruling adheres to the international doctrine that the arbitration clause follows the main contract (often expressed as the principle that the accessory follows the principal). It prevents parties from circumventing a valid arbitration agreement through contractual restructuring, upholding the sanctity of the original agreement.

1. Procedural Prerequisites: Tribunal Authority Confirmed (Commercial Case No. 946/2024)
   The DCC clarified the legal nature of procedural conditions (like mandatory negotiation or submission to an expert) required before commencing arbitration:

• The Ruling: The Court confirmed that the fulfillment of these prerequisites is a matter of “admissibility” (a procedural issue for the tribunal to decide), not “jurisdiction” (a matter that could allow the court to intervene and invalidate the entire agreement).
• Global Alignment: This position supports the competence-competence principle and limits judicial interference in the arbitral process. It empowers the tribunal to manage its own proceedings and prevents parties from easily derailing the arbitration by claiming procedural non-compliance in court.
  In essence, these judgments collectively enhance the integrity, enforceability, and efficiency of arbitration seated in Dubai, ensuring its legal framework is harmonized with the standards expected by the international business and legal communities