Claim No. ARB 004/2018
THE DUBAI INTERNATIONAL FINANCIAL CENTRE
COURTS
In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum,
Ruler
IN THE
COURT
BEFORE H.E. JUSTICE SHAMLAN AL SAWALEHI
BETWEEN
LORALIA GROUP LLC
Applicant
and
LANDEN SAUDI COMPANY
Respondent
| Hearing | : 1 May 2019 |
|---|---|
| Counsel | : Mr Patrick Dillon-Malone and Al Tamimi and Company for the Applicant Mr Michael Patchett-Joyce & Ali Al Hashim and Badr Al Jafaari Law Office, KSA for the Respondent |
| Judgment | : 20 June 2019 |
JUDGMENT OF H.E. JUSTICE SHAMLAN AL SAWALEHI
UPONreviewing the Applicant’s Part 8 Claim dated 11 October 2018 seeking to set aside
UPONreviewing the Respondent’s Cross-Application seeking recognition and enforcement of the Award pursuant to Articles 42 and 43 of the DIFC Arbitration Law;
UPONreviewing the Respondent’s Applications for Immediate Judgment and Security;
UPONhaving reviewed the documents included in the Court
UPONhaving heard counsel for both parties at a hearing which took place on 1 May 2019 at the DIFC Courts
IT IS HEREBY ORDERED THAT:
1. The Applicant’s Application to Set Aside
2. The Respondent’s Application for Immediate Judgment and for Security are dismissed in full.
3. The Respondent’s Cross-Application for Recognition and Enforcement of the Award is granted. Pursuant to Article 42(1) of the DIFC Arbitration Law, the Award shall be enforced in the same manner as a judgment of the DIFC Courts. As such, the Applicant shall pay the Respondent:
a. damages in the amount of USD 7,356,016.22;
b. costs relevant to the arbitral proceedings in the amount of USD 692,002.66; and
c. post-award interest at the rate of 8% per annum.
4. In the event that the Applicant fails to pay the above sums within 14 days, the Respondent may apply to seek enforcement and execution of this Order.
5. In addition to the sums listed at paragraph 3 above, the Applicant shall pay the Respondent’s costs of these proceedings, to be agreed by the parties within 30 days of issuance of this judgment. Should the parties be unable to agree, they may apply to the DIFC Courts’ Registrar
6. The Applicant has the right to apply to set this Order aside within 14 days of being served with the Order. The Award may not be enforced until after the end of that 14 day period or, if the Applicant makes an application within that period, after the application has been finally disposed of.
Issued by:
Nour Hineidi
Deputy Registrar
Date of issue: 20 June 2019
Time: 1pm
JUDGMENT
Procedural Background
1. The Applicant, Lorelei Group LLC (hereafter the “Applicant”) filed its Part 8 Claim (hereafter the “Set Aside Application”) on 11 October 2018 seeking to set aside the Arbitral Award (hereafter the “Award”) issued in favour of the Respondent, Landen Saudi Company (hereafter the “Respondent”), on 5 June 2018 in the matter of Landen Saudi Company v Lorelei Media Group LLC, DIFC-LCIA arbitration proceedings no. 1678. The Applicant argues that the Award should be set aside on the basis that it both conflicts with the public policy of the UAE
2. By way of brief background, the Award was issued as a result of DIFC-LCIA arbitral proceedings brought by the Respondent against the Applicant, commencing on 16 June 2016. The substantive hearing took place over two days in Muscat, Oman in September 2017. The Respondent sought damages for breach of contract arising from a Distributor Agreement dated 6 May 2014, executed between the parties, regarding the promotion and sale of the Applicant’s products to commercial and residential users in the Kingdom of Saudi Arabia (hereafter “KSA”). The Applicant disputed the claims and counterclaimed for substantial sums. In line with the Distributor Agreement between the parties, the dispute was governed by English law and the seat of the arbitration was the DIFC. A three-member tribunal acting under the Arbitration Rules of the DIFC-LCIA convened and issued its final Award on 5 June 2018, and the parties received the Award on 11 July 2018.
3. The Award found in favour of the Respondent on liability and awarded it USD 7,356,016.22 plus costs and post-award interest at a rate of 8% per annum. Costs were awarded to the Respondent in the amount of USD 692,002.66, with USD 514,921.11 calculated on the basis of 7% of the amount awarded to the Respondent (excluding interest and costs). It is this portion of the costs award that the Applicant contests as being a contingency fee, which the Applicant alleges is against the public policy of the UAE.
4. After initially filing the Part 8 Claim on 11 October 2018, the Applicant sought various assistance from the Court regarding Service
5. The parties exchanged several further pleadings and witness statements in advance of the Hearing of 1 May 2019. The Court determined that all pending matters in the Claim, including the substantive Set Aside Application could be determined in one Hearing. At the Hearing, it was agreed between the parties that the Hearing would suffice for decisions on the Respondent’s Applications, the Applicant’s main Set Aside Application, and the Respondent’s Cross-Application. After allowing the parties to make post-hearing submissions, I reserved judgment on these issues.
The Applicant’s Arguments
6. The Applicant seeks to set aside the Award pursuant to Article 41(2)(b)(iii) of the DIFC Arbitration Law on the grounds that the Award “is in conflict with the public policy of the UAE,” specifically the public policy against contingency fees. Furthermore, the Applicant resists the Respondent’s Cross-Application for enforcement of the Award pursuant to Article 44(1)(b)(vii), claiming also that enforcement of the Award would be “contrary to the public policy of the UAE.”
7. The Applicant initially sought to highlight several details relevant to the arbitral proceedings.
a. In the course of the arbitral proceedings, the Applicant admitted significant sums which were then granted to the Respondent.
b. The Applicant prevailed on all issues of quantum that were contested between the parties.
c. The costs portion of the Award gave no credit to the Applicant for early admissions, nor did it credit the Applicant’s argument that it had agreed to pay a large portion of the arbitral claim prior to the Arbitration.
d. The Arbitral Tribunal
e. The Tribunal followed a “costs follow the event” approach while also giving weight to the amount of risk taken on by the Respondent’s counsel (although other methods of assigning costs were argued).
8. The Applicant presents the issues, in this Claim, as follows:
a. Did the Tribunal give effect to a contingency fee arrangement?
b. Is the Award in conflict with the public policy of the UAE within the meaning of Article 41 of the DIFC Arbitration Law?
c. Can it be said that the Applicant, as a matter of fact and law, has waived any objection to the breach of UAE public policy?
d. What is the effect of the breach of public policy in this case?
9. As to the contingency fee, the Applicant acknowledges that the precise terms of the agreement between the Respondent and law firm Badr Al Jafaari Law Office (hereafter “Badr Al Jafaari Law”) have not been seen. However, it seems to be the case that a 7% success fee was paid to Badr Al Jafaari Law in addition to the expenses / disbursements accumulated in the case and also in addition to certain specified lawyers’ fees. The expenses/disbursements and specified lawyers’ fees comprised the non-success portion of the costs award, amounting to USD 177,081.52. The remaining sum comprised the contingency/success fee, which was awarded seemingly due in part to the risk taken on by Respondent’s counsel in accepting such a fee arrangement. This fee was not a conditional fee or an uplift, which may be permitted, but instead is a “bare and unadorned success fee, calculated as 7% of the sum awarded to [the Respondent].”
10. The Applicant states that “there can be no doubt that the Tribunal gave full effect to the contingency or success fee in this case. It did so on a pure straight line calculation, without deductions or discount for the admitted matters or for [the Applicant] having prevailed on all contested matters of quantum, and it based its decision in terms on the risk assumed by [the Respondent’s] legal team, which it visited entirely, without qualification or analysis, on [the Applicant].” Thus, the Applicant argues that it is clear that the Tribunal gave effect to a contingency fee arrangement in the costs provisions of the Award.
11. As per Articles 41(2)(b)(iii) and 44(1)(b)(vii) of the DIFC Arbitration Law, arbitral awards may be set aside or refused recognition on the grounds of conflict with “the public policy of the UAE.” It is important to note that the wording here is specific and refers to the public policy of the “UAE” (and is not a reference to the public policy of “Dubai” or the “DIFC”). This is because federal public policy applies throughout the UAE in a unitary and indivisible nature. While it is possible that public policy concerns may differ between onshore and offshore proceedings, this is not the case for this matter. Instead, the public policy against contingency fees is the same throughout the UAE and the Applicant argues that a harmonious interpretation of public policy is required on this issue.
12. The Applicant cites numerous provisions in support of this argument that the public policy of the UAE is squarely and harmoniously against the use of contingency fee arrangements.
a. Article 31 of Federal Law No. 23 of 1991 Regarding the Regulation of the Legal Profession (hereafter “Law No. 23”), which states: “it shall not be permitted for a lawyer to buy all of part of the rights which are in dispute, nor to agree to take a part thereof in respect of fees.” Violation of this provision may result in disciplinary consequences for the lawyer, as per Article 47 of the same law.
b. The Federal Supreme Court has required the nullity of all contingency fee arrangements and this bar on contingency fees cannot be waived.
c. Ministerial Resolution No. (666) of 2015 on the Code of Ethics and Professional Conduct of the Legal Procession in the UAE (hereafter “Resolution 666”) makes clear, via Articles 1, 2C, 3D and 4C, that Law No. 23 applies to all lawyers providing legal services in the UAE, including those acting in the DIFC and those lawyers involved in arbitration.
d. In Dubai, the prohibition on contingency fees is reflected in Article 7(c) of the Draft Charter for the Conduct of Advocates and Legal Consultants in the Emirate of Dubai, which states that fees “must not be a share in kind of the disputed property rights.”
e. Article 9.3 of the DIFC Courts’ Code of Best Legal Professional Practice (hereafter the “DIFC Courts’ Best Practice Code”) states that “A Lawyer may not receive a contingency fee in respect of any litigious or contentious action.” The corresponding comment makes clear that contingency fees are not considered best practice in the DIFC.
f. Article 8(2) of the Mandatory Code of Conduct for Legal Practitioners in the DIFC Courts (hereafter the “DIFC Courts’ Mandatory COC”) states that “Practitioners shall not . . . undertake work in a manner which improperly increases the fees payable to them.” The Applicant argues that the contingency fee given effect in the Award would fall under this provision.
13. The Applicant argues that the above provisions create a clear picture of an unambiguous prohibition on contingency fees that applies throughout the UAE, without exception, applying both to litigation and arbitration proceedings. DIFC Law is consistent with the UAE Federal Law on this issue. Furthermore, this policy is consistent with the larger GCC region, common law and UNCITRAL Model Law jurisdictions where the same prohibitions exist, with few exceptions. Contrary to the Respondent’s arguments, this Court is not tasked with applying a transnational public policy.
14. It is clear that Badr Law falls within the scope of the above provisions by: (a) being registered with the DIFC Courts, (b) representing a party in a DIFC-LCIA arbitration which is seated in the DIFC, and (c) providing legal services for these current proceedings. Thus, it follows that the Tribunal’s award of costs is contrary to the public policy of the UAE and must therefore be set aside.
15. As to any question of the Applicant’s potential waiver of objection to this issue, the Applicant’s primary argument is that the waiver doctrine has no application to public policy grounds of objection. This principle is consistent with Federal Supreme Court and DIFC Courts’ precedent as well as international best practice. Thus, it is not possible in law for a party to a DIFC-LCIA arbitration to waive a mandatory requirement pursuant to UAE public policy.
16. Furthermore, the Applicant argues that it did not waive its objections in fact. The costs submissions phase of the arbitral proceedings did not require involvement from the parties on the costs submissions of the opposing party. The Respondent’s costs submissions included an alternative basis of calculation based upon hourly work, rather than the success fee basis. Thus, the Tribunal had the ability to use this method instead and the Applicant reasonably expected the Tribunal to choose the lawful method of calculation. Therefore, the Applicant in no way waived its right to object to the inclusion of a costs award based upon a contingency fee.
17. In conclusion, the Applicant argues that in finding that the contingency fee portion of the Award conflicts with the public policy of the UAE, it follows that the whole Award or such part of it as the Court determines is tainted, must be set aside. The Applicant primarily argues that the whole of the Award is tainted by the costs provisions due to the undisclosed and direct conflict of interest that afflicted the Respondent’s lead counsel in the arbitration proceedings as a result of the contingency fee arrangement. In the alternative, the Applicant argues that at least the costs provision contained within the Award should be set aside.
The Respondent’s Arguments
18. First, the Respondent argues that there is some question as to the DIFC Courts’ jurisdiction over this matter. This is because the arbitral proceedings have ended, the Applicant’s Application is too late, and the Application should have been made to the Arbitral Tribunal.
19. In the alternative, the Respondent engages with the Applicant’s arguments regarding public policy. The Respondent argues that the DIFC Courts should and must have regard to a transnational approach to public policy in order to remain in keeping with international standards of arbitration. There is no interpretation of transnational public policy that outlaws success fees. Renumeration of counsel by way of a success fee is not prohibited by DIFC-LCIA Arbitration rules, nor by any DIFC Law, regulation or other legal instrument.
20. Alternatively, if it is found that that UAE public policy as regards international arbitration does not follow a transnational approach, then the Court should differentiate between DIFC and onshore-Dubai public policy. In this case, a transnational approach to public policy should be applied in the DIFC at least as regards international arbitration. This is in keeping with the structure and goals of the DIFC and thus in keeping with the public policy of the UAE, which allows the DIFC to function differently than onshore-Dubai. UAE public policy is nuanced enough to account for the difference between the DIFC and onshore-Dubai.
21. The Respondent argues that the concept of public policy is a “very narrow one,” and that even proof of infringement of mandatory law does not automatically establish breach of public policy. Instead, breach of public policy is shown when an award has “fundamentally offended the most basic and explicit principles of justice.”
22. The Respondent also argues that the Applicant has not pointed to any real prejudice amounting from the use of and award of a success fee for Respondent’s counsel. The fact of this success fee did not infringe upon or jeopardise the integrity of the administration of justice. The success fee caused no mischief and its existence was properly disclosed when appropriate. Furthermore, the Tribunal was careful to assess whether the claimed costs were reasonable, independent of the fact of a success fee.
23. The Respondent argues that the Arbitral Tribunal acted within the scope of its powers in determining the costs award, considering plentiful evidence in the process. The decision was well within the scope of the applicable DIFC-LCIA Arbitration Rules. The costs award is therefore correct and unimpeachable. The Respondent argues that this Court is not tasked with reopening or reassessing the merits of the arbitral dispute. In any event, the grounds on which the Tribunal decided to award the Respondent its costs were reasonable, proportionate and valid.
24. Additionally, the Respondent argues that even if the fee arrangement were against public policy, the Applicant waived its right to object on this basis, as per Article 9 of the DIFC Arbitration Law. Furthermore, if the Court does determine that any portion of the costs award is invalid, the correct response is to set aside that specific provision, not the Award as a whole. Clearly, it is too extreme to invalidate an otherwise sound Award simply based upon a costs provision.
25. The Respondent states that its Cross-Application is quite straightforward. If and when the Applicant’s Set Aside Application is rejected, there remains no defence or objection to the Respondent’s Cross-Application for recognition and enforcement of the Award. Accordingly, in the event that the Applicant fails on its Set Aside Application, the Court ought to make an Order to grant the Respondent’s Cross-Application and to recognise and enforce the Award.
26. As to its Application for Security, the Respondent argues that such interim measures are just in the circumstances. Furthermore, the Respondent argues that the Court’s direction to hear the Respondent’s applications along with the Applicant’s main claim is procedurally unfair. The Respondent’s preference is for the Court to consider sequencing decisions such that it would grant security and then determine the merits of the dispute.
27. The Respondent also highlights that the fee arrangement in question is legal in KSA. The Respondent and Badr Law are Saudi entities. The contract between the Respondent and Badr Law was governed by Saudi law and furthermore, Saudi law generally permits success fee arrangements. Principles of comity require that the Award be enforced.
Discussion
28. In this decision, I will first dispel with preliminary issues. Then, I will determine the substantive issues in the Set Aside Application, namely, whether to set aside the Award based upon the Applicant’s arguments. Finally, I will address the Respondent’s Cross-Application and costs proposals for these proceedings.
29. As a preliminary issue, I shall discuss the Respondent’s two Applications, one for Immediate Judgment in the matter and the other to require the Applicant to pay security into Court. Both parties agreed during the Hearing of 1 May 2019 that all matters relevant to this case could be determined at one hearing. As such, the Respondent’s Application for Immediate Judgment falls away in favour of determining the substantive Set Aside Application at this time. Certainly, the Respondent’s papers on the Application for Immediate Judgment have been seen and are considered as far as they respond to the Applicant’s Set Aside Application. However, as I will determine the matter on the merits in this decision, the Application for Immediate Judgment is no longer relevant and must be dismissed in full.
30. As to the Respondent’s Application for Security, the Respondent has mentioned that it preferred and deserved for the Court to require security from the Applicant before determining the merits of the dispute. I find this unnecessary given the progression of the case. At this time, I will determine whether to set aside or to recognise and enforce the Award, or portions of the Award. Based on this decision, the Respondent will have the ability to proceed in a non-interim manner. Furthermore, the Applicant has not cited any reason for granting security beyond the wrong of being kept from the fruits of its successful claim. Certainly, on the speedy conclusion of this matter, the Respondent will not be kept further from any rightful sums and if so, can apply to remedy this. Therefore, the Respondent’s Application for Security must also be dismissed in full.
31. As a final preliminary issue, I will address the Respondent’s arguments regarding jurisdiction. The Respondent claims that the Set Aside Application has been made too late and to the wrong forum such that the DIFC Courts do not retain jurisdiction over the claim. However, the Set Aside Application was made within the time required pursuant to Article 41(3) of the DIFC Arbitration Law and is therefore not too late. As to the issue of forum, whether or not the substantive arguments contained within the Set Aside Application should have been made first to the Arbitral Tribunal speaks to waiver, rather than jurisdiction. Although the Arbitral proceedings have “terminated” according to the Respondent’s arguments, the DIFC Courts remain the correct and only courts qualified to hear the Set Aside Application, as per Article 41(1) and (2) of the DIFC Arbitration Law. Thus, the DIFC Courts clearly retain jurisdiction over this matter.
The Applicant’s Set Aside Application
32. I find it useful to proceed on the basis of the Applicant’s own breakdown of issues for its Set Aside Application, as stated above. The Applicant argues that four question need be answered to determine its Claim:
a. Did the Tribunal give effect to a contingency fee arrangement?
b. Is the Award in conflict with the public policy of the UAE within the meaning of Article 41 of the DIFC Arbitration Law?
c. Can it be said that the Applicant, as a matter of fact and law, has waived any objection to the breach of UAE public policy?
d. What is the effect of the breach of public policy in this case?
33. As to the first question, did the Tribunal give effect to a contingency fee arrangement, the parties are in general agreement. The Applicant argues and the Respondent accepts that the Tribunal gave effect to a success fee in the costs provisions of the Award. This question requires no further comment.
34. The second question, regarding whether the Award is in conflict with the public policy of the UAE within the meaning of Article 41 of the DIFC Arbitration Law, is much more complex. Article 41 of the DIFC Arbitration Law states in relevant part:
“41. Applications for setting aside as exclusive recourse against arbitral award
(1) Recourse to a Court against an arbitral award made in the Seat of the DIFC may be made only by an application for setting aside in accordance with paragraphs (2) and (3) of this Article.
(2) Such application may only be made to the DIFC Court. An arbitral award may be set aside by the DIFC Court only if:
(a). . . .
(b) the DIFC Court finds that:
...
(iii) the award is in conflict with the public policy of the UAE.”
35. Thus, the Applicant seeks to set aside the Award on the basis that the Award is “in conflict with the public policy of the UAE.” As per Article 41, should the DIFC Court find that the Award is in conflict with the public policy of the UAE, the Award “may be set aside.” Certainly, it is accepted that Article 41 lists out the various and limited reasons for setting aside a DIFC-seated, final arbitral award, and thus it is the correct vehicle for the Applicant to pursue its Claim. The Applicant has only cited Article 41(2)(b)(iii) as reason for setting aside the Award, not listing any other reason that setting aside would be required or appropriate.
36. A determination of these issues requires inquiry into the content of “the public policy of the UAE” as regards to success fees for legal representation given in the course of a DIFC-seated arbitration. I need not be convinced that the public policy referred to in Article 41 of the DIFC Arbitration Law refers to the same public policy of the UAE as a whole. This is an uncontroversial finding at this time. However, the Respondent is correct in its assertion that “public policy of the UAE,” at least as used to invalidate an otherwise valid final arbitral award, is narrow and nuanced.
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.
38. I find that it is clear from the Applicant’s arguments that UAE Federal Law prohibits contingency or success fees for legal representatives in onshore-Dubai, as regards both litigation and arbitration. This is established by Article 31 of Law No. 23, combined with the various provisions of Resolution 666. It is therefore possible that the application of these provisions contributes to a public policy against all contingency fees in onshore-Dubai and most other parts of the UAE such that an arbitral award which gives effect to a contingency fee arrangement may be set aside in full or in relevant part. However, I need only be concerned with UAE public policy as it correctly applies within the DIFC and thus I make no comment as to the content of UAE public policy as to contingency fees outside of the DIFC.
39. Therefore, I must move on to whether this alleged public policy against contingency fees can be said to apply within the DIFC. In speaking to this issue, it is important to note that Law No. 23, enacted well before the establishment of the DIFC, cannot be said to apply in full within the DIFC. The DIFC Courts have a separate system for registering legal practitioners and governing their conduct. The qualifications and requirements of lawyers under Law No. 23 are not compatible with the requirements to register before the DIFC Courts and vice versa. Furthermore, Resolution 666, which the Applicant contends applies the provisions of Law No. 23 to all lawyers within the UAE, is a Resolution and cannot have the effect of changing the law
40. Even if Law No. 23 does not specifically apply within the DIFC, it is still possible that Article 31 of Law No. 23, combined with Resolution 666, support an overarching UAE public policy that outlaws contingency fees even within the DIFC. However, I find that the structure of legal instruments applicable within the DIFC as regards the conduct of lawyers supports the finding that while UAE public policy may outlaw contingency fees outside of the DIFC, it does not do so within the DIFC. Instead, the DIFC Courts’ Mandatory COC does not mention contingency or success fees. While the DIFC Courts’ Best Practice Code does specify that contingency fees were not considered best practice at the time of the guide
41. While the Applicant argues that Part C-8(2) of the DIFC Courts’ Mandatory COC prohibits the improper increase of fees, which may cover contingency fee agreements, I find that this provision does not prohibit all contingency fees. The specific identification of contingency fee arrangements would clearly have been mentioned should the DIFC Courts’ Mandatory COC have been intended to outlaw all such arrangements. Failure to mention contingency fee arrangements implies that they are not de facto outlawed, however they may constitute a violation of Part C-8(2) if they improperly increase the fees payable.
42. It is not my place at this time to assess whether the contingency fee in question would fail scrutiny under Part C-8(2) of the DIFC Courts’ Mandatory COC as this would constitute reopening the merits of the arbitral dispute. Violation of the DIFC Courts’ Mandatory COC itself requires disciplinary action against the lawyer in question and would not necessarily require invalidation of a corresponding judgment or award. In any event, I can see from the Award that the Tribunal took care to assess whether the fees awarded were reasonable given the circumstances of the arbitral dispute as a whole and therefore there is no need to reinvestigate this matter.
43. Based on the legal instruments in place in the DIFC and in onshore-Dubai, contingency fees for legal representatives may be de facto illegal onshore. However, they merit more case-by-case scrutiny in the DIFC. They may not be considered “best practice” in the DIFC but this label cannot be sufficient to create and support a public policy against contingency fees within the DIFC. Instead, the public policy followed in all of the UAE towards ensuring that reasonable fees are granted to legal representatives applies with slight differences within the DIFC. Within the DIFC, unreasonable fee arrangements may include contingency fee arrangements but not all contingency fee arrangements are automatically invalid. Instead, judges and arbiters are required to assess whether a fee arrangement is reasonable and proper, and this requirement speaks to the overall public policy as regards legal fees.
44. In sum, unreasonable contingency fee arrangements are prohibited in the DIFC and may in fact violate the public policy of the UAE as it applies within the DIFC. In this case, I need not assess further whether the contingency fee arrangement was reasonable. Instead, I look to the Award itself, where the Arbitral Tribunal made sure to assess the reasonable nature of the fees awarded. I have no criticism of the Award in this regard. Thus, it is not required for me to determine whether or not there is a public policy against unreasonable fee agreements within the DIFC strong enough to merit setting aside part or all of an otherwise valid arbitral award. This is because the Award in question gives effect to reasonable fees in the assessment of the Arbitral Tribunal, an assessment I find no reason to reopen at this time.
45. The Applicant also alludes to procedural unfairness within the Arbitral proceedings. I cannot find any evidence of procedural unfairness. The Applicant has not pointed to any specific instance of unfairness other than its claim that the use of an undisclosed contingency fee arrangement has tainted the whole of the proceedings. I cannot agree with this allegation. The contingency fee agreement was disclosed at an appropriate time and furthermore, the Applicant did not make any objection to this arrangement during the arbitral proceedings, once it was revealed. While I will not determine whether any such objection has therefore been waived, considering I find no instance of procedural unfairness to begin with, I find this is indeed further evidence of a lack of unfairness in the proceedings.
46. In sum, the Applicant’s Set Aside Claim seeking to set aside the Award for a violation of UAE public policy must fail. As I have found that there is no public policy specifically against contingency fees within the DIFC and that the contingency fee in question was deemed reasonable by the Arbitral Tribunal without any procedural mischief, there is no need to move on to the question of waiver or the question of the effect of breach of public policy. These issues are no longer relevant to the dispute based on the above findings.
The Respondent’s Cross-Application for Recognition and Enforcement
47. The Applicant’s main defence against the Respondent’s Cross-Application for Recognition and Enforcement is essentially the same as its argument in favour of its Set Aside Application: the Award cannot and should not be recognised and enforced due to its violation of public policy of the UAE in its giving effect to a contingency fee arrangement. As I have noted above, this argument cannot stand either as an active attempt to set aside the Award nor as a defence against recognition and enforcement.
48. For this reason, the Respondent’s Cross-Application for Recognition and Enforcement must be granted. The Applicant has admittedly provided no other defence against recognition and enforcement and has acknowledged that its failure on the Set Aside Application would involve success for the Respondent on the Cross-Application.
Costs
49. The Applicant shall pay the Defendant
Conclusion
50. In summary, the Applicant’s Set Aside Application is dismissed and the Respondent’s Cross-Application for Recognition and Enforcement of the Award is granted. The Applicant shall be responsible for the Respondent’s costs of these proceedings.
Issued by:
Nour Hineidi
Deputy Registrar
Date of issue: 20 June 2019
Time: 1pm