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Arbitration clause defeats court claim in multi-party claim in UAE

Arbitration analysis: In Case No 136 of 2025, the Abu Dhabi Commercial Court held that a subcontractor’s AED 103m claim reacting to two Abu Dhabi projects was inadmissible due to a valid and timely invoked arbitration agreement in the subcontract. The court rejected attempts to circumvent arbitration by joining the project owner on the basis of signed undertaking letters, finding that the letters did not create an independent obligation separate from the subcontract framework. The court found that the arbitration clause prevented it from accepting jurisdiction, and that any recourse against the owner was premature pending the arbitration. The decision is a clear reaffirmation that UAE onshore courts will not accept jurisdiction where the arbitration defence is raised at the appropriate time. The decision also emphasizes the UAE courts’ growing reluctance to allow procedural structuring, such as by joinder of non-signatory parties, to bypass agreed arbitral mechanisms. To be clear, the court did not address whether an arbitral tribunal might ultimately decide that the project owner itself is bound by the arbitration agreement. By characterising the claim against the project owner as premature, the court implicitly contemplated that such a claim could be brought before it at the appropriate stage. Conversely, the court’s express concern to avoid fragmentation of disputes may be a relevant consideration for the tribunal if and when it is asked to determine any application to join the project owner to the arbitration. Written by Antonia Birt, partner at Reed Smith LLP.

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