In a recent judgment discussing the admissibility of a counter claim to a case filed by a government entity, the Dubai Court of Cassation has ruled on 3/9/2024 that it is not mandatory to exhaust the procedures stipulated in the Dubai Law No. 3/1996 as amended “Government Claims”” which oblige a person who wants to sue a government entity to notify the Legal Affair Department of the claim in detail, the LAD is to refer the claim to the concerned government entity to allow it the opportunity to amicably resolve the dispute, and if an amicable settlement is not reached the claimant will be allowed to resort to the relevant court and file the claim.

The case is originally filed by a government entity against a European technology application company (Defendant), in its response to the claim petition, the defendant has raised a counter claim which was declared inadmissible by the court of first instance, the court grounded its judgment on the fact that the defendant- counter claimant has not exhausted the procedures of notifying the Legal Affair Department before filing the counter claim.

The Appeal Court has upheld the judgment and the defendant- counter claimant has filed an appeal by way of cassation in which the recent judgment is issued. In its recent judgment the court of cassation has nullified the judgments of the lower courts and ruled the admissibility of the counter claim despite the absence of a notification required by Law No. 3/1996

The court of cassation, adopting the argument of the appellant invoked Article 13 of the Civil Procedures Law which stipulates:

“1. The procedure shall be invalid if such invalidity is explicitly provided for in the law, or if the underlying procedure involves any essential defect or shortcoming due to which the purpose of the procedure cannot be achieved.

2. In all cases, the invalidity shall not be decided despite being provided for in the law, if the purpose of the underlying procedure is achieved.”

The court, relying on Article 13 above quoted ruled that the significance of notifying the Legal Affairs Department before resorting to court is to give the government entity the opportunity to amicably resolve the dispute, that the filing of the original case by the government entity and the seizure of the case by the court, negate the required notification of its value as the possibility to amicably settle the dispute does not exist and there fore it is not required to exhaust the said procedure because the filing of the government entity of the original case clearly reflects its determination not to resolve the dispute amicably

The court of cassation declared the counter claim admissible and referred it to the appeal court to decide the subject.

The appellant is represented by Haider Bin Haider Advocates and Legal Consultants

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في حكم حديث صدر بتاريخ 3/9/2024، تناولت محكمة التمييز دبي مدى مقبولية الدعوى الفرعية في دعوى أصلية مقامة من جهة حكومية، إذا ما أقام المدعي فرعيا دعواه دون إخطار دائرة الشؤون القانونية لحكومة دبي وفق ما يتطلب القانون رقم 3 لسنة 1996
"قانون دعاوى الحكومة. ومن المعلوم أن قانون دعاوى الحكومة يوجب على من يرغب في مقاضاة جهة حكومية، أن يخطر دائرة الشؤون القانونية بتفاصيل إدعائه، لتقوم الدائرة بإبلاغ الجهة الحكومية، وذلك لمنحها الفرصة لتسوية النزاع وديًا، وفي حال لم تتم هذه التسوية خلال ستين يومًا أو لم يتلق الشخص ردًا على إخطاره يكون له الحق في اللجوء إلى المحكمة وقيد دعواه. الدعوى الأصلية موضوع هذا الحكم أقامتها جهة حكومية ضد شركة أوروبية تعمل في مجال تطبيقات التقانة، ومع دفاعها تقدمت المدعى عليها بدعوى فرعية دون أن تسلك طريق الإخطار، قضت محكمة أول درجة بعدم قبول الدعوى الفرعية لعدم اتباع الطريق الذي رسمه القانون، وأيدت محكمة الاستئناف الحكم. طعنتت المدعى عليها أصلياً/ المدعية فرعيا على الحكم بالتمييز، فأصدرت محكمة التمييز حكمها الذي قضى بنقض الحكم المستأنف وبقبول الدعوى الفرعية، وذلك على الرغم من أن المدعية فرعيًا لم تستوف الإخطار المنصوص عليه في قانون دعاوى الحكومة. سببت محكمة التمييز لقضائها بالاستناد على المادة 13 من قانون الإجراءت المدنية والتي استندت عليها الطاعنة كجزء من أسباب طعنها، حيث تنص المادة 13: 1.يكون الإجراء باطلاً إذا نص القانون صراحة على بطلانه أو إذا شابه عيب أو نقص جوهري لم تتحقق بسببه الغاية من الإجراء. 1. في جميع الأحوال لا يحكم بالبطلان رغم النص عليه إذا ثبت تحقق الغاية من الإجراء وبناء على تلك المادة اتفقت المحكمة مع الطاعنة في أن الغاية من الإخطار هي منح الجهة الحكومية الفرصة لحل النزاع وديا دون اللجوء إلى المحكمة، وبلجوء الجهة الحكومية إلى المحكمة وقيد الدعوى الأصلية تكون الجهة الحكومية عن كشفت عن عدم رغبتها في التسوية الودية مما تنتفي معه الغاية من الإخطار، ويصبح من غير الواجب سلوك الطريق الذي رسمه قانون دعاوى الحكومة تقديم الدعوى الفرعية. وفقًا لمتابعتنا فهذا هو الحكم الأول الذي يتناول مقبولية الدعوى الفرعية ضد الحكومة. مثل المستأنفة /الطاعنة في هذه الدعوى مكتب حيدر بن حيدر للمحاماة والاستشارات القانونية.

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The General Authority of the Dubai Court of Cassation
Decision no. 10/2023

Impossibility of performing arbitration/ DIAC Decision to Consider the Case Withdrawn.
On 24/10/2023 the General Authority of the Dubai Court of Cassation has issued, unanimously, the decision no. 10/2023 which is a significant decision in relation to arbitration whereby it has departed from settled application of the previous principle regarding the effect of theDubai International Arbitration Center’s decisions that arbitration cases to be considered withdrawn in case of failure to pay arbitration cost.

The court of cassation continued consistently to treat such DIAC decisions as leading to the impossibility of performing arbitration.

The General Authority of the Dubai Court of Cassation:
According to Dubai Law no. 13/2016 Concerning the Judicial Authority in Dubai, the General Authority/ Assembly is an authority constituted of the court president or the old ranking judge and 8 of the members of the cassation court to be appointed by the court president. This Authority is mandated, inter alia, to consider and determine legal issues of complexity or high importance. In the present decision the matter was referred to the authority by the court of cassation’s technical office, which is competent, among other things, to infer and summarize legal principles and judicial rules adopted by the court of cassation.

Previous Ruling:
The verdicts of the court of cassation regarding the effect of the decision Of the Dubai International Arbitration Center (DIAC) to consider the arbitration case withdrawn because the parties failed to pay the cost, remained to be consistent in treating the decision of DIAC as rendering the arbitration incapable of being performed, and hence give the parties the right to resort to the Dubai court which has the inherent jurisdiction.

As to our knowledge, there was one exception where the court of cassation has not applied that principle. It was the ruling of the cassation court in the appeal no. 228/2021 Real Estate, issued on 29/6/2021, the appeal concerning a case filed by a plaintiff who was a respondent/counter claimant in an arbitration proceeding which were conducted under the DIAC Rules, the two parties to the arbitral claim failed to pay the cost of arbitration of both the original and the counter claim and therefore the two cases were considered by DIAC as withdrawn. The Dubai court of first instance dismissed the case because of the existence of an arbitration clause, the appeal court over ruled the verdict of the first court, the court of cassation ruled that the arbitration clause is valid because the DIAC Rules (2007), in Article 5, does not deprive the counter claimant who failed to pay the cost of arbitration, of filing his counter claim in a later date by another request. We do not intend to discuss the conclusion of this ruling;however, it is noted that the ruling applies only to the counter arbitration claim.

The Decision
Prior to the enactment of law no. 6/2018, the arbitration proceeding was organized by a few articles which were contained in the Civil Procedures Law. The present arbitration law is expansive and most covers a wider area of arbitration issues, and it is, indeed, arbitration friendly legislation. To the extent relevant to this brief, there are two Articles of the Law which were invoked by the judicial authority in reaching its decision no. 10/2023, which are Article 45 para 1 and Article 54 para 4.

Article 45/1 states: - “” The arbitration proceedings shall be terminated by the issuance of the award terminating the dispute by the Arbitral Tribunal.””

Article 54/4 states: - “” Unless otherwise agreed by the Parties, the Arbitration Agreement shall remain effective according to the provisions of the present Law after the nullification of the arbitral award, unless such nullification is based on that the agreement itself does not exist, or upon the forfeiture of its term, or its nullity, that it is incapable of being performed.””

Grounded on those articles, the decision no. 10has abandoned the court of cassation’s previous line of ruling and decided that the decision of DIAC to consider the case withdrawn in case of failure to pay the arbitration cost does not lead to the impossibility of performing the arbitration, that any party to that arbitration may pay the feeslater and continue the arbitration proceedings. Moreover, any party to that arbitration can plead the existence of the arbitration clause in any court case filed against that party and the court shall admit such apleading and declare the inadmissibility of the case due to the existence of an arbitration clause.

We believe that the construction of the General Authority of these articles, and the adoption of a different principle regarding the impossibility of performing arbitration in the scenario dealt with by the decision, strongly support the arbitration mechanism and close the door for avoiding arbitration through unjustified cause, given that the parties has chosen to submit to arbitration at their free will.

In conclusion, we believe that the decision impliedly gives the priority to the application of the rules of the arbitral institution chosen by the parties.

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