Courts have jurisdiction over summary and precautionary proceedings that shall be executed in the country, although they have no jurisdiction over the original action. Furthermore, arbitration may not be conducted in respect to attachment and execution procedures or the proceedings required for the validation of such procedures unless referral to arbitration has been pre-agreed.
The Facts
Civil Case 275/2008 was filed in the Dubai Court of First Instance in respect to the execution of a Precautionary Attachment.
The Plaintiff's claim is based on the grounds that under a Construction Agreement dated 14th May 2005, the Plaintiff had agreed with the Defendant to construct and maintain an office and warehouse complex on a plot in the Jebel Ali Free Zone.
The Plaintiff completed the agreed works, meaning the Defendant became liable for payment to the Plaintiff of AED 664,335.16. However, as the Defendant had refrained from paying this amount to the Plaintiff, the Plaintiff applied for and obtained a precautionary attachment order against the Defendant's properties.
In view of the existence of an arbitration clause in the Construction Agreement between the parties, the Plaintiff also filed a case to appoint an arbitrator to resolve the dispute. On 12th June 2008, the Court dismissed the claim, and the Plaintiff appealed. On 28th January 2009, the Court of Appeal dismissed this appeal. Consequently, the Plaintiff appealed to the Court of Cassation.
The Court of Cassation held that pursuant to Article 22 of the Civil Procedure Law, courts shall have jurisdiction over summary and precautionary proceedings that shall be executed in the country although they have no jurisdiction over the original action. As mentioned above, arbitration may not be conducted in respect of attachment and execution procedures or the proceedings required for the validation of such procedures unless referral to arbitration has been pre-agreed.
It was agreed between the parties to the Construction Agreement that disputes between them would be resolved by arbitration. However, the Construction Agreement did not contain an agreement that the Arbitral Tribunal would have jurisdiction over precautionary procedures against the Respondent's properties in Dubai.
Article 255 of the Civil Procedures Law requires the applicant for attachment to bring, within eight days from the date of the attachment order, an action before the court to prove his right and to validate the attachment. This applies to cases where the attachment order has been rendered by a summary court; otherwise, the attachment order shall be deemed void ab initio.
If the action to prove the right has been brought beforehand, and the action to validate the attachment was brought subsequently before the same Court in order that both actions are heard together, this Article 255 shall be applicable as it deals with cases where the Court is competent to decide the merits, and consequently is competent to hear the claim for validating the attachment order.
However, if the Court is not competent to decide the merits, the Plaintiff shall still have the right to file an action to validate and enforce the attachment order independently from the claim for the right. The original rule is that the action will be admitted unless there is a restriction. The restriction provided for in the said Article is a "non-standard" exception resulting in the Arbitral Tribunal not having power over the precautionary summary procedures decided by the Court within its jurisdiction. It was held by the Court of Cassation that the appealed decision had not observed the above construction of Article 255. Therefore the law had been misapplied necessitating the overturning of the appealed decision.
Outcomes
Arbitration may not be conducted in respect of attachment and execution procedures or the proceedings required for the validation of such procedures unless referral to arbitration has been pre-agreed.
Article 255 of the Civil Procedures Law requires the applicant for attachment to bring, within eight days from the date of the attachment order, an action before the court to prove his right and to validate the attachment. This applies to cases where the attachment order has been rendered by a summary court; otherwise, the attachment order shall be deemed void ab initio. If the action to prove the right has been brought beforehand, and the action to validate the attachment was brought subsequently before the same Court in order that both actions are heard together, this Article 255 shall be applicable as it deals with cases where the Court is competent to decide the merits, and consequently is competent to hear the claim for validating the attachment order. However, if the Court is not competent to decide the merits, the Plaintiff shall still have the right to file an action to validate and enforce the attachment order independently from the claim for the right. The original rule is that the action will be admitted unless there is a restriction. The restriction provided for in the said Article is a "non-standard" exception.
By Hassan Arab- Dubai Office
© Al Tamimi & Company 2009
