“Closing the Deal” for Arbitration in the UAE: The Signature and Signatory Conundrum

In recent times, the UAE has made positive strides on the global arbitration charts. According to the ICC Dispute Resolution Statistics 2024, the UAE advanced from eighth to fifth place globally as a preferred arbitration seat—its first-ever entry into the top five. This progress, along with recent procedural reforms such as the simplified signature rule, underscores the UAE’s shift towards efficiency and alignment with global practices.

A key development is the recent decision of the UAE Commission for the Unification of Local and Federal Judicial Principles (Request No. 1/2025) (“Commission Unification Decision 2025”), which eliminated the long-standing requirement for arbitrators to sign every page of an arbitral award. This was a major point of conflict between the Dubai Court of Cassation and the Ras Al Khaimah Court of Cassation. By clarifying that only the last page of the award needs to be signed by the tribunal, the UAE removed an unnecessary procedural hurdle.

Despite these advancements, one persistent challenge remains: the strict rules on the ‘capacity of signatories’ to arbitration agreements. Just as the signature requirement has been modernised, a re-examination of the capacity rules is warranted to close gaps and reinforce the UAE’s reputation as an arbitration-friendly jurisdiction.

The ‘Capacity of Signatories’ Requirement and Why it Matters

Consent is one of the key pillars of international arbitration. It legitimises a process derived from the parties’ agreement to resolve disputes privately. For that agreement to be valid, the parties must possess the requisite legal capacity and authority. A deficiency in capacity can invalidate the arbitration clause and jeopardise the enforceability of the proceedings or award.

Both the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration (“Model Law”) (Article 7) and the New York Convention (“NYC”) (Article II (1)-(3)) implicitly require the parties to have capacity to enter into an arbitration agreement. Capacity is treated as essential both to the ‘validity’ of the agreement and as a safeguard for consent. Similarly, the lack of capacity constitutes grounds to set aside or refuse recognition and enforcement of an award (see Articles 34(2)(a)(i) and Article 36(1)(a)(i) of the Model Law and Article V(1)(a) of the NYC). Capacity may be established expressly, impliedly or through apparent authority, with approaches varying across jurisdictions.

UAE’s Legislative Approach to ‘Arbitration Capacity’

In line with the Model Law and NYC, Federal Law No. 6/2018 (the UAE Arbitration Law-“FAL”) recognises a signatory’s legal capacity as essential for a valid arbitration agreement (Article 4(1)). It also permits annulment of awards where such capacity is lacking (Article 53(1)(c)).

A recurring UAE-specific issue arises when a representative of a legal person signs the arbitration agreement. Article 4(1) of the FAL stipulates: “Only the natural person, who has the capacity to exercise its rights, or the representative of the legal person, who is authorized to conclude the agreement on arbitration, may enter into an agreement on arbitration, otherwise the agreement shall be null and void.” (emphasis added). Under this provision, an individual signing on behalf of a UAE legal entity, i.e., a company/body corporate, must have ‘specific authority’ to bind the entity to arbitration.

This strict approach is reinforced  by Article 154 of Federal Law No. 2 of 2015 (“UAE Commercial Companies Law”), which provides that a company’s board of directors may only agree to arbitration if ‘the company’s articles of association expressly authorize it’ or if a ‘special resolution’ grants a director the relevant authority. Although seemingly straightforward, these statutory requirements have given rise to several judgments.

UAE’s Judicial Approach to ‘Arbitration Capacity’

Challenges typically arise where the arbitration agreement is signed by CEOs, general managers or senior executives who, despite their operational roles, are not board members and lack express authority to bind the company to arbitration. Objections have also arisen where the contract names an authorised representative but a different individual is the signatory.

Recent Dubai court decisions reveal a more flexible approach, relaxing strict statutory formalities by applying the doctrine of ‘apparent authority.' The courts have held that a signatory of an arbitration clause had the necessary capacity where, although the signatory is not expressly named in the contract, their association with the company substantiates implied authority. The courts have also upheld arbitration agreements where the contract names an authorised representative but the signature is illegible, treating it as that of the named representative. Conversely, where the contract expressly identifies an authorised signatory and another individual signs with a legible signature, the company may challenge the arbitration agreement for lack of capacity. (See DCC Case No. 236/2019 – Real Estate, 11 December 2019; DCC Case No. 293/2019 – Commercial, 30 June 2019; DCC Case No. 581/2019 – Commercial, 15 September 2019; DCC Case No. 51/2020 – Real Estate, 14 May 2020; and DCC Case No. 276/2020 – Commercial, 20 May 2020).

By contrast, in 2024, the Abu Dhabi Court of Cassation in ADCC Case No. 902/2024 annulled an award under Article 4(1) of the FAL where a CEO signed the contract (containing an arbitration clause) without express authorisation in the articles of association. Although, a CEO’s role might typically be viewed as encompassing implied authority to sign such clauses, the Court rejected that view. These diverging outcomes highlight deeper inconsistencies within the UAE's framework governing capacity.

Conflicting Provisions Within the UAE Law and its Impact on ‘Arbitration Capacity’

Beyond Article 154, capacity issues in arbitration also reflect the interplay between Article 70 and Article 210(1) of Federal Law No. (5) of 1985 (the UAE Civil Transactions Law or “CTL”). Article 70 reflects the principle of good faith, precluding a company from denying arbitration agreements it has acted upon— whether by performing the contract or by participating in the arbitration—and later challenging capacity. On this basis, UAE courts have enforced awards that did not strictly comply with Article 4(1) of the FAL.

However, this approach conflicts with Article 210(1) of the CTL, that does not allow enforcing or ratifying void agreements. Applied to arbitration, Article 210(1) suggests that agreements signed by unauthorized individuals are void ab initio and incapable of ratification. This tension creates a potential for clashes. While Article 210(1) invalidates arbitration clauses signed without proper authority, Article 70 may still allow UAE courts to uphold them where ‘apparent authority’ or subsequent conduct indicates acceptance. This unresolved tension underscores the need to clarify a clear threshold for establishing capacity.

Judicial Flexibility and the Case for Reform

Despite the strict requirements of Article 4 of the FAL, UAE courts have often adopted a flexible approach, recognising implied and apparent authority based on principles of fairness and good faith. Yet the inconsistent position across statutes leaves room for capacity-based challenges. Without a unified test for determining capacity, the law remains unsettled, requiring clear legislative or judicial guidance to ensure consistency and confidence in the UAE arbitral framework.

The Position Regarding ‘Capacity’ in Other Jurisdictions

Popular  arbitration seats, such as London, Singapore, and France, recognise that signatories can be authorised not only expressly but also through agency relationships or implied and apparent authority. In England, the High Court (Commercial Court) in Habas Sinai Ve Tibbi Gazlar Istihsal Endustrisi AS v. VSC Steel Company Ltd upheld an arbitration agreement on the basis that agents had ostensible authority to bind the principal, rejecting the challenge. In Singapore, the Court of Appeal in Reliance Infrastructure Limited v. Shanghai Electric Group Co Ltd, upheld a lower court’s decision to refuse or to set aside a SIAC award, holding that the employee had apparent authority to bind the company to the arbitration agreement based on prior dealings and the company’s conduct. In France, legal scholarship recognises that arbitration agreements may bind non-signatories where their conduct evidences a common intention to be bound, without requiring express authority.

Unlike Article 4 of the FAL, the arbitration laws of those jurisdictions do not prescribe strict formalities for capacity. Instead, capacity is addressed where a deficiency is invoked as a ground to challenge or resist enforcement, consistent with the NYC and Model Law framework (see Section 103(2)(a) of the English Arbitration Act, 1996 and Section 31(2)(a) of the Singapore International Arbitration Act, 1994).

While some UAE courts apply principles of agency and implied/apparent authority similar to those jurisdictions, the UAE's statutory framework remains stricter, creating a divergence between legislative text and commercial reality. In light of global practice, it may be timely for the UAE to revisit Article 4 to enhance predictability.

What is the Verdict for the ‘Arbitration Capacity’ Issue in the UAE?

While some UAE courts have maintained a relatively consistent stance on capacity, potential conflicts persist due to a lack of harmonisation among the FAL, the CTL and the UAE Commercial Companies Law. The Commission Unification Decision 2025 brought clarity and global conformity to award formalities in the UAE. A similar clarification or amendment addressing capacity for legal entities would strengthen the UAE’s arbitration framework.

In practice, senior executives and CEOs routinely bind companies to arbitration clauses, even without express authorisation in the articles of association or a special resolution, and the law should evolve accordingly. Although capacity-based challenges can typically be raised only by the party whose representative allegedly lacked authority, counterparties may still exploit the issue indirectly at the enforcement stage or through procedural objections. Formal recognition of apparent and implied authority would better align the statutory framework with commercial realities and existing judicial practice, reduce capacity-based challenges, and cement the UAE’s standing as a predictable and pro-arbitration jurisdiction.

Until such clarity is achieved through judicial guidance or legislative amendment, parties in the UAE should ensure that the signatory’s authority is expressly grounded in the articles of association or a special resolution. Any insufficiency in capacity can undermine even the most diligently drafted arbitration agreements.