The role and importance of international commercial arbitration

It is a question-and-answer session with the panelists during the World Litigation Forum 2018, Dubai. The topic was the role and importance of international commercial arbitration.

Question: What if the Chairman signed the arbitration agreement, but an approval from the board comes after signing? Does it count here in the UAE?

Naseer: It depends on the structure of the company. If it is a public joint-stock company, then the Chairman has all the authority. If the Chairman of the board signed an arbitration agreement in case of a public joint company, then he has the authority by law. So, there is no need for approval. If the Chairman is a Limited Liability Company has a board of directors, then it depends on how the power is assigned to each person. To give an answer in yes or no, I can not as it is very controversial because there are legal theories that approve the latter action that subsidized what’s before. So, if there is approval after an action, it could be accepted, but there is no guarantee from me now. I don’t have clear answers.

Question: Do you think the criminal and civil proceedings in litigation, especially in arbitration, are successful as compared to commercial laws and other laws?

Andrew Kirk: Ordinarily, most criminal issues won’t be dealt with the arbitration. In the future, potentially, I mean, they are mainly dealt with that. Presently most criminal issues are not dealt with in arbitration.

Someone in the audience: You may have heard about a decision in which the court validate arbitration award on the cases on the basis that the manager is not authorized. I think there is a recent judgment which is giving the manager of the Limited Liability Company by default the right to arbitrate to tied before arbitration unless it has not been authorized in the memorandum of association. By default, he has been authorized. Going back also to the question if the authorized person has already approved the arbitration agreement, is it valid or not? I think also this will take us to a recent judgment which is giving the right of objection of the capacity of someone who signs the agreement. The same party and I can’t object to the other party that he signed, but he is not authorized. The one who has the right is the same party who authorized. Thank you!

Naseer: Thank you for this comment. Yes, I agree with you, so now in the case that I presented, the manager, that manager, that company has so many managers like the project manager, the marketing manager. But that manager who signed his name was not on the trading license, not in the memorandum of association, not anywhere. He had a power of attorney just stating his name that he is allowed to run the company and sign agreements, and that’s very broad. And that’s why the court did not accept this as a correct arbitration clause. In terms of authority and approval and the rejection of the act that they have done, when all the agreements, all the challenges that I have seen so far during these 20 years, raised by the company that signed the agreement itself, the company comes and say that our manager who signed the agreement is not entitled to sign the arbitration clause. And this is valid, but the other way around, it is not valid. So, another company can not come and say that the other party who signed the agreement with me is not empowered. When they accept this representation, and that’s all, they have a duty of due diligence and making sure that they are dealing with the right person in that company. Thank you!

Question: Hello everybody, actually this is a question about Dubai arbitration and Chine arbitration. Could you please outline the annual average cost of arbitration in such an institution? I mean, except the cost for lawyers because I have some data, for example, in ICC arbitration, it’s around 60,000 euro. In London, it’s almost a hundred thousand euros, in Stockholm it’s about 50,000 euros. Could you please these figures about Dubai and China, at least minimum cost?

Yuhui Liao: Well, thank you! Actually, I do not have a very clear overview of that. It may depend; for example, there are several major arbitration institutions in China where fee tables can be different; they are different. And it depends on the amount of the dispute, and if you compare it with the court fees, you can say with one word which is higher or which is lower but any also when compared with other international arbitration institutions. Actually, I would seek help from Misses Xi; she can say something because she is an arbitrator herself. Maybe you can say something about the comparison of the arbitration costs comparing with the wage of foreign ones. CEATEC or Shanghai international arbitration center, for example.

Mrs. Xi: It depends on the demand in question may be like a fixed percentage. Currently, I just can not remember to be clear. Okay, maybe, later on, I think.

Yuhui Liao: I think it’s really difficult to just say one conclusion which one is higher. I think it’s not possible.

Mohamed Elghatit: I think the answer is almost the same. I think ultimately, it’s not necessarily about the jurisdiction that impacts the costs. But more so is the rule, and I am slightly surprised by the statistics that you mentioned because my recollection is that the LCI arbitrations are actually usually cheaper than the ICC arbitrations. So, I just question the accuracy of all those figures. But generally speaking, I would say that in the region, it is, and I think Andrew mentioned that we laugh, but probably it is true. Arbitrations are not cheaper than the litigations and primarily not because not only the parties and counsel and the procedure cost more. I think in this jurisdiction or neighboring jurisdictions because there are no disclosure steps in litigation, but there might be in arbitrations. Even though they take place here because arbitrators simply think that they can import their home jurisdiction rules even if they are sitting locally. So, in my experience, usually, litigations and jurisdictions in the Middle East ultimately cost less than the arbitration. You can look at it quickly and think well, arbitration is usually cheaper and quicker, but in reality, it’s not. You have the arbitration, you get the award, then you have to enforce it, and after you are forced to have to execute it, so you start or probably or litigation end. So, the quick answer to your question is it depends.

Igor Kravtsov: Once again, we are thankful to all the speakers for the brilliant presentation and thank you for your attention. Thanks!

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