Dubai Courts Shed Further Light on Competence-Competence
December 9, 2025
The principle of competence-competence is widely recognized in international arbitration. In the UAE, it is codified in Article 19.1 of the Federal Law No. 6 of 2018 on Arbitration (“Arbitration Law”), which states that the arbitral tribunal rules on its own jurisdiction. In a judgment rendered on 16 October 2025 in Cassation No. 481/2025 (civil), the Dubai Court of Cassation (“COC”) examined this principle in the context of arbitrator appointments made by the courts. This blog post examines how the COC applied the principle of competence-competence.
Summary of the Proceedings
The parties to the dispute had concluded a distribution agreement in 2019 (“Distribution Agreement”) related to the Kuwaiti market. The Distribution Agreement contained an arbitration clause, which stipulated that the arbitration would be seated in the UAE and be governed by the “rules of the Chamber of Commerce” (“Arbitration Clause”). The same parties subsequently concluded a settlement agreement in 2022 (“Settlement Agreement”), which provided for the jurisdiction of the Kuwaiti courts. In 2023, the principal in the Distribution Agreement (“Claimant”) filed an application before the Dubai courts for the appointment of an arbitrator. The application was made on the basis of the Arbitration Clause. The claim was for an amount exceeding four million United States Dollars, which the Claimant alleged was owed by the distributor (“Respondent”).
As per Article 11.5 of the Arbitration Law, a party may file a request to the Court of Appeal (“COA”) for the appointment of arbitrators. It has become customary for the COA in such cases to send instructions to the Dubai International Arbitration Centre (“DIAC”) for the latter to appoint an arbitrator. In this specific case, however, the COA dismissed the application on the grounds that the Arbitration Clause no longer existed given that the Distribution Agreement was terminated upon the execution of the Settlement Agreement.
The Claimant appealed the decision of the COA to the COC. The latter issued a decision in Cassation No. 512/2023 (civil) reversing the decision of the COA. The COC’s decision was based on Article 6 of the Arbitration Law, which states that “[a]n arbitration clause shall be treated as an agreement independent from the other terms of the contract. The nullity, rescission or termination of the contract shall not affect the arbitration clause if it is valid per se, unless the matter relates to an incapacity among the Parties.” The COC found that the termination of the Distribution Agreement did not affect the Arbitration Clause, which remained valid as per Article 6 of the Arbitration Law (for an analysis of Dubai courts’ position on the separability of an arbitration clause, see here). The COC further explained that the Settlement Agreement did not explicitly provide for the termination of the Arbitration Clause. The COC referred the matter back to the COA and the latter ordered, in 2024, the appointment of an arbitrator by the DIAC.
Pursuant to the order of the COA, an arbitrator was indeed appointed (“Arbitrator”) and issued an award declining jurisdiction (“Award”). The Arbitrator found the COC decision flawed on the basis of Article 19 of the Arbitration Law and further explained that the Claimant and the Respondent had terminated the Distribution Agreement and such termination covered all of its provisions, including the Arbitration Clause. It was the Arbitrator’s view that the Settlement Agreement governed the respective rights of the Claimant and the Respondent. As the Settlement Agreement stipulated the jurisdiction of Kuwaiti courts, the Arbitrator concluded that he lacked jurisdiction.1
The Claimant filed, in 2025, a petition for the annulment of the Award before the COA in Appeal No. 22/2025 (annulment of arbitral award). The latter annulled the Award on the ground that the COC’s decision concluding that the Arbitration Clause was still applicable has res judicata effect. According to the COA, the Arbitrator’s determination that he lacked jurisdiction was a “jarring violation of the principle of the res judicata effect” and the Arbitrator did not have the power to decide on his jurisdiction as the COC decision was final and binding. The Respondent challenged the decision of the COA before the COC.
The COC Decision
The COC issued a decision reversing the COA decision in Cassation No. 481/2025 (civil). The COC explained when and how courts can decide on the jurisdiction of an arbitrator. The starting point is the principle of competence-competence enshrined in Article 19 of the Arbitration Law, which grants an arbitrator the power to determine first whether they have jurisdiction or not.
Accordingly, when an application for the appointment of an arbitrator is made before the courts, and the respondent challenges the existence of the arbitration agreement, the court should decide on the existence of the arbitration agreement on a prima facie basis. The courts should not engage in an in-depth examination of the question of jurisdiction because of the competence-competence principle, which leaves it to the tribunal, once appointed, to determine their own jurisdiction. The courts have the power to subsequently exercise control over the question of jurisdiction during the process of ratification, set-aside or execution of the award.
On the basis of the above sequence and principle, the COC concluded that the Arbitrator did not violate the res judicata effect of the COC decision given that the COC had not made a final determination on the question of jurisdiction and was not in any case empowered to do so. It was for the Arbitrator to determine the question first. Finally, it explained that the Arbitration Clause had been canceled and had become inoperable given that the Distribution Agreement was terminated and replaced by the Settlement Agreement, which provided for the jurisdiction of Kuwaiti courts. Accordingly, the COC rejected the annulment application.
Analysis
The COC decision clarifies and applies what is characterised in arbitration jurisprudence as the negative effect of the competence-competence principle. The positive effect of this principle is to grant the arbitrators the power to determine their jurisdiction while the negative effect is to allow the arbitrators to exercise such power before the courts: “It is to allow the arbitrators to be not the sole judges, but the first judges of their jurisdiction."2
This clarification made by the COC is a very welcome step. Prior to this decision, the COA treated its appointment decisions as binding upon the appointed arbitrator, depriving the latter from deciding on their own jurisdiction. For example, in a decision rendered by the COA in Appeal No. 40/2024 (annulment of an arbitral award), the arbitrator was appointed by the COA on the basis of a petition made by the claimant. The arbitrator declined jurisdiction and the claimant filed a petition for the annulment of the award before the COA. The latter annulled the award on the basis that the arbitrator’s decision that it lacked jurisdiction violated the arbitrator’s appointment decision rendered by the courts. The COA further stated that the arbitrator should not have examined the question of its appointment as this issue had been previously determined by the court.
The same approach was followed in a decision rendered by the Ras Al Khaimah Court of Cassation (“RAK COC”) in Cassation No. 31/2022 (commercial). The arbitrators had concluded that they did not have jurisdiction but the RAK COC annulled their award on the basis that the award violated public policy as it did not comply with the arbitrator appointment order issued by the courts.
This decision of the COC is the first reported decision, which applies and explains the negative effect of the competence-competence principle. With this decision, the Dubai courts have demonstrated once again that they are up to date with international arbitration concepts and that they have a sufficient understanding of how these concepts should be applied.
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