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Court of Cassation - Civil & Trade Division - Number: 57 /2008

Ruling Summary Record: The Court: Court of Cassation Circuit: Civil & Trade Division Number: 57Year: 2008Session Date: 6/17/2008

The Court Panel :Abdulla Bin Ahmed Al-Saadi - Abd AlRaouf Ahmed Al-Bekeey - Ibraheem Mohamed Al-Taweela - Mounir Ahmed El Sawy - Mubarak Bin Naser Al-Hagry -

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إنشاء قائمة تشغيل جديدة

إدخال اسم لقائمة التشغيل...

Arbitration - Arbitration Agreement - Asserting the Arbitration Clause in the form of a defence against admission or acceptance of suit, which may be asserted in any stage of the suit. Abatement of the Arbitration Agreement by express or implied agreement by one of the Arbitration Agreement parties resorting to the State judiciary and the other party conducts himself in a way as to show - undoubtedly- his acquiescence and waiver of his right to arbitration. Defendant's motion before the first step court for a decision of non-acceptance of suit for being against a party of no locus standi or standing, and for not providing its documents in Arabic, and for denial of the claim for rescission for want of warning, and for compensation for absence of the elements of fault liability; and the judgment dismissing the two defences, and the appointment of and expert who performed his job in presence of the two parties - all that confirms meeting of the minds and assent to go through judicial remedies and waiver of the arbitration agreement, hence, neither of the parties may decide alone to reassert the arbitration clause.

Session: 17/6/2008

Appeal No. 57, 2008 Civil Cassation (First Circuit)

1- Arbitration - Arbitration Agreement - Asserting the Arbitration Clause in the form of a defence against admission or acceptance of suit, which may be asserted at any stage of the suit.

Provision in Article (192/2) Procedures, that: ((if a dispute on performance of a contract with an arbitration clause, and one of the parties instituted suit before the competent court, the other party may assert the arbitration clause in the form of defence for non-acceptance of suit)) and the provision in Article (71) of the same Code that: ((the defence against admission ... or for any other reason, may be raised at any stage of the suit)). That means agreement on arbitration means waiver by the parties of their right of resort to the State judiciary, so that if one of the parties instituted suit in court, the other may assert the arbitration clause in the form of a defence against admittance of suit, which may be raised- as a general rule - at any stage of the suit.

2- Abatement of the Arbitration Agreement by express or implied agreement by one of the parties resorting to the State judiciary and the other party conducts himself in a way as to show - undoubtedly- his acquiescence and waiver of his right to arbitration.

An Arbitration Agreement abates and becomes without effect and the parties may waive it by express or implied agreement by one of the Arbitration Agreement parties resorting to the State judiciary and the other party conducts himself in a way as to show - undoubtedly- his acquiescence and waiver of his right to arbitration and may not revert to arbitration except by new agreement of the two parties.

3- Defendant's written motion before the first step court asking for judgment of suit not acceptable as against a party of no locus standi or standing, and for not providing its documents in Arabic, and for denial of the claim for rescission for want of warning, and for compensation in absence of the elements of fault liability; and the judgment passed by the court dismissing the two defences, and the appointment of an expert who performed his job in the presence of the two parties - all that confirms meeting of the minds and assent on going through judicial remedies and waiver of the arbitration agreement, hence, neither of the parties may decide alone to reassert the arbitration clause.

That being the case, and as Respondent presented to the first step court on 26/11/2006 a written statement asking for judgment of suit not acceptable for not providing its documents in Arabic, and for denial of the claim for rescission for want of warning, and for compensation for absence of the elements of fault liability; and the court passed judgment dismissing the two defences, and the appointment of and expert who performed his job in the presence of the two parties - all that confirms meeting of the minds and assent to go through judicial remedies and waive the arbitration agreement, hence, neither of the parties may, after this, decide alone to reassert the arbitration clause. Therefore, the defence against admission of suit for the existence of an arbitration clause made by Respondent on 28/10/2007 is not acceptable and judgment diverting from this view is liable to cassation.

The facts

On 23/4/2008 an appeal for cassation of judgment of the Court of Appeal No. 831/2007 passed on 26/3/2008 by a statement of appeal asking for accepting the appeal in form and in substance by allowing cassation of the appealed judgment and determine subject matter. On the same day Appellant deposited an explanatory memo and document folder. On 27/04/2008 Respondent was served with the statement of appeal. And on 4/5/2008 Respondent filed his statement of defence asking for dismissal of the appeal. On 8/5/2008 Appellant deposited statement of reply with a document folder. In court session on 20/05/2008 the appeal was put before the court in the consultation room which it opined as worth considering and fixed a date for hearing. And in court session on 03/06/2008 the court heard the appeal as stated in the session record and the court adjourned judgment for today's session.

Court
After reviewing the papers and hearing the report, read by the reporting judge, the pleading, and deliberation.
Whereas the appeal has satisfied its formal conditions.
The facts - as stated in the appealed judgment and the papers in suit - are that Appellant filed Suit No. 959/2006 against Respondent asking for judgment to rescind the contract dated 27/8/2004 made between them and obliging him to pay $ 132,000 or equivalence in QR, being the amount paid for performance of the contract and rental covering the period from the date of contracting until judgment in the suit at the rate of 15,480 riyals monthly and the sum of 1,320,000 riyals as expected profits plus the sum of one million riyals in compensation for for moral damage incurred; explaining this by saying that by contract dated 27/8/2004 Respondent contracted Appellant to design and establish a restaurant for serving Japanese meals and the décor works in his premises in Royal Plaza Building for consideration of 183,000 riyals, provided that this should be finalized within seventy five days, however, Respondent did not perform his contractual obligation, thereby inflicting material and moral injury to Appellant, so he filed suit. The court appointed an expert and after submitting his report, Respondent defended by not accepting suit for existence of an arbitration clause and absence of locus standi. The court rejected both defences and rescission of the contract dated 27/8/2004 and obligated Respondent to pay to Appellant the sum of 16,073 riyals and 973,270 riyals in compensation for all losses, material or moral. Respondent appealed this judgment by Appeal No. 831/ 2007 and on 26/3/2008 the court cancelled the appealed judgment and refused to accept suit for existence of arbitration agreement. Appellant filed appeal for cassation of this judgment and the appeal was put before this court in the consultation room, which fixed a date for hearing it.
Whereas the appeal is based on two grounds on which Appellant argues against the appealed judgment for misapplication of law in that it accepted the initial defence by refusing to accept the suit for existence of an agreement for arbitration, whereas Appellant replied by asserting lapse of this agreement after Respondent provided their substantive defence and appointment of an expert, therefore, being contrary to the provision if Article (192) Civil Procedures, which taints the judgment and render it liable for cassation.

Whereas this argument is in place, for the provision in Article (192/2) of the civil procedures code that: ((if a dispute on performance of a contract with an arbitration clause, and one of the parties instituted suit before the competent court, the other party may assert the arbitration clause in the form of defence for non-acceptance of suit)) and the provision in Article (71) of the same Code that: ((the defence against admission ... or for any other reason, may be raised at any stage of the suit)). That means agreement on arbitration means waiver by the parties of their right of resort to the State judiciary, so that if one of the parties instituted suit in court, the other may assert the arbitration clause in the form of a defence against admittance of suit, which may be raised- as a general rule - at any stage of the suit. An Arbitration Agreement abates and becomes without effect and the parties may waive it by express or implied agreement by one of the Arbitration Agreement parties resorting to the State judiciary and the other party conducts himself in a way as to show - undoubtedly- his acquiescence and waiver of his right to arbitration and may not revert to arbitration except by new agreement of the two parties. That being the case, and as Respondent presented to the first step court on 26/11/2006 a written statement asking for judgment of suit not acceptable for not providing its documents in Arabic, and for denial of the claim for rescission for want of warning, and for compensation for absence of the elements of fault liability; and the court passed judgment dismissing the two defences, and the appointment of and expert who performed his job in the presence of the two parties - all that confirms meeting of the minds and assent to go through judicial remedies and waive the arbitration agreement, hence, neither of the parties may, thereafter, decide alone to reassert the arbitration clause. Therefore, the defence against admission of suit for the existence of an arbitration clause made by Respondent on 28/10/2007 is not acceptable and judgment diverting from this view is liable to cassation.
Therefore, the court allowed cassation of the appealed judgment and decided expenses to be borne by Respondent, and transferred the suit back to the Court of Appeal to pass a new judgment by a panel with different judges.

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