Legal capacity to enter into Arbitration Agreement

The arbitration agreement is an agreement between parties who have explicitly agreed on an arbitrator jurisdiction to settle a dispute inter se outside of court. Therefore, signatory shall have the capacity to sign the agreement that includes an arbitration clause or an arbitration provision.

Sheikh Khalifa bin Zayed Al Nahyan (God bless him), President of the United Arab Emirates

Issued the Federal Law (6) of 2018.

And article (4) defined the legal capacity to enter into Arbitration Agreement and decided that: an arbitration agreement may only be concluded, on pain of nullity, by a natural person having the legal capacity to dispose of his rights or on behalf of a juridical person by a representative with specific authority to arbitrate.

As an arbitration agreement involves a serious situation  in case of any company waives its right to file a case before the state judiciary and the guarantees that judiciary maintains for litigants, then, recourse to arbitration is valid only to those who have ‏ legal capacity to dispose of the disputed right and not only the legal capacity to resort to judicial authority, therefore, as the arbitration is considered to be an exceptional form of dispute resolution it requires from the legislator a special power of attorney to be agreed upon. Only the manager of a company L.L.C    – in this capacity- can enter into an arbitration agreement to act on behalf of its name and account unless the contract of the establishment bids his authority through depriving him to do specific actions or explicitly preventing him from forming arbitration agreements.

A distinction must be made between two cases:

• In the event that a name of a specific company was mentioned in the preamble of the contract even though it was signed by another person, that would be a legal presumption that the signatory signed on behalf of the company, then, effects of the contract as rights and obligations are added to the company, regardless of the signatory name is associated with the company one  or added thereto.

If the name of a juridical person is included in the preamble of the contract coupled with a name and capacity of his\ her legal representative in addition to the arbitration clause and a readable signature of another person, in such case, the juridical person may invoke the nullity of the clause of arbitration as the contract  was signed by a non-legal representative  who has not the legal capacity to enter into arbitration agreement. In the concept of contravention, if only the name of a legal person is included in the preamble of the contract  and it is not associated with the name and capacity of his legal representative, and the contract contains the arbitration clause and an unreadable signature; in such case, a legal presumption arises that the signature belongs to the  legal representative  who has capacity and  right to enter into arbitration agreement. In this case, the challenge of claiming that the signature is not attributed to the legal representative who has the right to enter into an arbitration agreement shall not be accepted. Due to that Contracts must be duly concluded in good faith. and under the article (70) of the civil transaction law: He who challenges what has been done from his part his attempt shall turn against him and It is not permissible for a litigant to create evidence for himself.