IJAA Vol 7 No. 2 - Hazem Hussein -

TABLE OF CONTENTS
International Journal of Arab Arbitration, Volume 7, N°2 - 2015
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International Journal of Arab Arbitration
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Volume 7 - No. (2) 2015
Table of Contents
Page
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- Arbitration in the Dubai International Financial Center – By Natasha Bakirci,
Mahika Hart, Reza Mohtashami and Shamlan Al Sawalehi ................................................... 5
- The Requirements for an Effective Multi–Party Arbitration Clause in Construction
Contracts–By Hazem Hussein.......................................................................................................... 15
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- Cairo Court of Appeals – 62 Commercial Area –Appeal No. 14 of the year 130 –
Session of 10 September 2014  Arbitral Award – Dissenting Opinion –
Challenge Against the Award – Alleged Non-Application of the Law Agreed Upon
by the Parties by Disregarding Egyptian Law No.112/1985 – Dissenting Opinion
not Included in the Award – Egyptian Law as Applicable Law – Arbitral Tribunal
Applied Egyptian Law No.43/1979 – Egyptian Law Duly Applied – No Power for the
Court to Rule on the Correct Application of the Egyptian Law – Signature of the
Majority of the Arbitrators Sufficient for the Validity of the Award – Inclusion of the
Dissenting Opinion not Required – Challenge Dismissed....................................................... 21
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- Federal Court of Cassation, Decision No. 112/B/2013 – 18 November 2013 
Arbitral Award – Request for Confirmation Before the Commercial Court of First
Instance – Request Dismissed – Court’s Decision to Set Aside the Award Instead
Based on Article 272 of the Iraqi Arbitration Law – Award Rendered Without
Supporting Evidence – Material Procedural Default – Award Exceeding the Scope
of the Arbitration Agreement – Appeal Before the Federal Court of Appeals in

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Bagdad – Alleged Misapplication of the Law by the Court of Appeals – Court of
Appeals Having Duly Applied the Law – Appeal Dismissed – Challenge of the
Appeal Decision Before the Court of Cassation – Challenge Dismissed........................... 27
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- Board of Grievances – Commercial Court of Appeals (undated)  Consultancy and
Design Agreement – Arbitration Clause – Rules of Arbitration of the Saudi Council of
Engineers – Cancellation of the Agreement – Refusal by One of the Parties to
Appear Before the Saudi Council of Engineers – Recourse to the Commercial Court
of Appeals – Request to Refer the Parties to Arbitration – Relationship Between the
Parties not Commercial – Lack of Jurisdiction – Request Dismissed.................................... 29
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- President of the Court of First Instance in Beirut – Decision 13/46 – 30 March 2015 
Arbitration Agreement – Ex Aequo Et Bono Arbitration – Sole Arbitrator – No
Agreement Between the Parties on the Sole Arbitrator – Obstacles as to the
Appointment of the Sole Arbitrator – Jurisdiction of the President of the First
Instance Court in Beirut Under Article 764 of the Lebanese Code of Civil
Procedure – Encountered Obstacles Not Affecting the Validity of the Arbitration
Agreement – Obstacles not Due to the Ambiguity of the Arbitration Agreement –
Appointment of the Arbitrator by the President of the First Instance Court....................... 31
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- Tunis Court of Appeals – Case No.1003053 – Session of 7 November 2013 
Distribution Agreement Relating to a Tunisian Trademark – Arbitration Clause –
Request for the Extension of the Arbitration Clause to Include Several Companies
Before the Tunis Court of Appeals – The Companies’ Alleged Participation in the
Formation and Execution of the Contract – Arbitral Tribunal’s Exclusive
Jurisdiction Regarding the Extension of the Arbitration Clause to Third Parties –
Request Dismissed............................................................................................................................... 35
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- Dubai Court of Cassation – Challenge No. 212 in 2014 – Civil Session of 8
January 2015  Institutional Arbitration – Dubai International Arbitration Center
(DIAC) – Arbitrator’s Immunity – Arbitrator’s Issuance of the Award Outside the
Arbitration Time-Limit – Action for Liability Against the Arbitrator Before the Dubai
Merits Courts – Action Dismissed by the First Degree Courts – Recourse to the
Dubai Court of Cassation – Principle of the Immunity of the Arbitrator Under Article
24 of the DIAC Statutes – Exception in Case of Gross Professional Fault or
Excessive Negligence – Estimation of the Gross Professional Fault within the
Discretionary Powers of the Merits Courts – None Established – Action Dismissed..... 41

TABLE OF CONTENTS
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- ICSID Award – Case No ARB/11/33 – 3 November 2015 – Adel Hamdi El Tamimi
against Sultanate of Oman  Investment Agreement Between Two Companies
Owned by Adel El Tamimi (An American Citizen) and an Omani State Entity for
Extraction of Stone Materials – Lease Agreement Between One of the Two
Companies and the State Entity – Works Completed – Termination by the State
Entity of both Agreements – Recourse to ICSID Arbitration Against the State of
Oman on the Basis of a Convention Between Oman and the USA – Convention’s
Effective date Being 1 January 2009 – Convention Applicable the Termination of
the Investment Agreement – Requirements for the State to Be Liable for the Acts
of One of its Entities – Effective Supervisory or Administrative Powers – Not
Satisfied – State of Oman not Liable for the State Entity’s Acts. Commentary by
Hady Slim................................................................................................................................................. 45
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I. Updates on New and Recent Laws, Cases and State Activities........................................... 243
II. Conferences, Trainings and Seminars.......................................................................................... 246
III. Miscellaneous News about Lawyers, Law Firms and Other Institutions......................... 247
IV. Books, Articles and Other Publications....................................................................................... 248

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Disputes arising from construction agreements usually encounter multiple
contentions, claims, and parties, which are very apt to avail from the well organized nature
of the arbitration proceedings. In order to accomplish the advantages sought in the view of
the disputing parties, an arbitration agreement has to be properly drafted. This is in order to
encompass all the potential disputes between all the related parties to the construction
project under the ambit of one proceeding.
The contractor may find himself in an odd position if the obligations owed by him
according to the main contract are different from the obligations of the subcontractor
according to the corresponding subcontract. In order for the contractor to mitigate the risks
arising from this situation, he may enter into a 'back-to-back agreement' with the
subcontractor. This is where the subcontractor will be obliged to observe all the
obligations of the contractor in his relation with the client with regards to the parts of the
project which have been entrusted by the contractor to the subcontractor.
The contractor may fail, in some instances, to enter into a ‘back to back agreement'
with the subcontractor. This may occur in situations where the subcontracted party is
required for a very technical obligations which other subcontractors are incapable of
delivering. In this case, the subcontractor may be in a strong negotiating position which
will enable him to negotiate and deny the ‘back-to-back agreement'. Additionally, the
contractor may fail to impose the ‘back-to-back agreement’ on the subcontractor if he is
nominated or designated by the client. In such a case, the Contractor may be rendered
liable before the Employer if there are differences between the provisions governing the
obligations of the subcontractor under the main contract and the same provisions under
the corresponding subcontract.
∗ PhD in Law – Senior Associate, Al Tamimi Co, Qatar.

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Each contract, either the main contract and/or the subcontract, should contain an
independent dispute resolution clause. If a dispute arises from the subcontract, then a
dispute may arise between the client and the contractor and another dispute may arise
between the contractor and the subcontractor. With regard to the first potential
proceedings, any award resulting from such proceedings shall not be binding on the
subcontractor.
For instance, if the arbitral award rules that the subcontracted part of the works has
been inappropriately executed by the subcontractor, then the tribunal may order the
contractor to provide the client with an adequate remedy or compensation pursuant to the
provisions of the main contract. If the subcontractor refuses to comply voluntarily with the
award, then the contractor will have no choice but to file an arbitration case against the
subcontractor under the dispute resolution clause mentioned in the subcontract. However,
the arbitral tribunal, constituted under the subcontract, is free to adopt a new factual and
legal position regarding the case before it. This is only if the findings reached by the
arbitral tribunal are different to those that have been constituted under the main contract.
Therefore the tribunal constituted under the subcontract may decide that the subcontractor
has satisfactorily fulfilled its contractual obligations under the subcontract. This decision
will be in contrary to the previous decision rendered by the tribunal, constituted under the
main contract, which considered that the subcontracted part was improperly executed. In
this scenario, the contractor shall be compelled to indemnify the client and remain without
any relief or remedy from the subcontractor. Even the ‘back-to-back agreement’ in this
assumption will not avail the contractor.
From the other side of the spectrum, the subcontractor may be in a similar position to
the contractor. For example, the subcontractor may file an arbitration case against the
contractor to request for financial claims resulting from prolongation costs or any other
reason. If the tribunal upheld the subcontractor’s claims, then the contractor will be
obligated to indemnify the subcontractor even if the default of the contractor was
attributable to the client. At this time, the contractor will require to be reimbursed by filing a
case against the client. The arbitral tribunal composed under the main contract may adopt
a totally different approach other than the award rendered by the tribunal constituted under
the subcontract.
In order to dispel all problems that may arise from the above situations, the best
solution would be to have a sole arbitration proceeding where all the disputants are
gathered under the ambit of one arbitral tribunal. This optimal solution will secure the
consistency of all the relevant awards and will resolve all the disputes among all the
contentious parties in one case. This will also have the benefit of saving time and money.
However, in order to do so, all three parties (client, contractor and subcontractor) agree to
submit to such arbitration proceedings. Essentially, third parties cannot be compelled to an

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arbitration to which they did not agree pursuant to the underlying arbitration clause in
accordance with the principle of the privity of contracts. Therefore, it is ultimately difficult
for the contractor to obtain the consent of both the client and the subcontractor to submit to
a sole arbitration procedure.
The client will also be reluctant to give his consent to the same arbitration procedure
with the contractor and the subcontractor. The client may justify his refusal by his
reluctancy to enter into any direct and legal relationship with the subcontractor.
Additionally, the client may not wish to enter into such proceedings in order not to consider
this as a limitation for the contractor’s liability under the main contract.
For the subcontractor, the acceptance for the multi-party arbitration is heavily
dependent on the leverage the contractor may have on the subcontractor. In fact, the
subcontractor is generally only concerned with the scope of the subcontract alone and
therefore may not wish to involve himself with further complexities arising from the entire
project which might result from the main contract.
In light of the above, should the contractor wish to include an arbitration clause
that would alleviate the risks the latter may encounter from the dual relationship
between the client and the subcontractor, such clause should take into consideration
the following:
1) It is recommended that the arbitration be conducted under the auspices of an
internationally recognized arbitration Center. As this type of arbitration is
complicated enough to the extent that necessitates the management of the
arbitration case by an independent and well-established independent body.
2) The subcontractor shall undertake to help the contractor in providing any
substantial documents or relevant information to the contractor to assist the latter
in substantiating his arguments against the client.
3) If there is an arbitration dispute between the contractor and the client, and the
contractor believes that such dispute is pertaining to the subcontract, then the
contractor may be eligible to request from the subcontractor –in writing – to
participate in the appointment of an arbitrator. This arbitrator will sit on the tribunal
constituted under the arbitration clause of the main contract.
It would be advantageous for the subcontractor to agree to the contractor's
proposal. Should the subcontractor refuse to cooperate with the contractor in
this scope, then the factual and legal findings of the tribunal constituted under
the main contract relating to the subcontract relationships would bind the

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contractor, the subcontractor and the tribunal which may be constituted under
the provisions of the subcontract.
Accordingly the subcontractor may be ordered by the tribunal, constituted under
the subcontract, to render the contractor not responsible for any compensation that
was paid by the latter to the client in execution of the award, which had been
rendered by the tribunal constituted under the main contract. This occurs if such
tribunal realized that the subcontractor has defaulted in the execution of the
subcontract. Conversely, the contractor shall be obligated to compensate the
subcontractor with any payments which he would have received from the client
regarding the part of the project entrusted to the subcontractor in the application of
the arbitral award rendered under the main contract.
The fourth point deals with the situation where the arbitration proceedings have
commenced between the contractor and the subcontractor and where, on any
party's request, the tribunal would find that the dispute relates to the rights and
obligations in the main contract. In this situation, if the tribunal agrees to this
request, it shall be authorized to stay the procedure for the related part of the
proceedings. They will be stayed until such time as it takes for the arbitral tribunal
to be composed under the main contract and has rendered a final award on this
question. The contractor shall then be given a short period to begin the arbitration
proceedings against the client. If no proceedings are initiated by the contractor
before the end of such period, the arbitral tribunal constituted under the
subcontract would resume the proceedings and render its award.
4) The last point of this arbitration agreement relates to the case where the
subcontractor, who did not initiate arbitration proceedings under the subcontract,
requests the contractor to make a claim against the client. In this case, the
contractor may choose between two alternatives. The first alternative is that the
contractor may honor the subcontractor's request. In this case, the arbitrator who is
supposed to be appointed by the contractor, shall be actually selected by the
subcontractor or at least by a joint decision from the contractor and the
subcontractor. The second alternative is that the contractor may refuse the
subcontractor's request and accordingly the contractor would have to pay a
suitable remedy for the subcontractor regarding his thwarted claim. In order for the
contractor to avoid that, he will need to justify that his refusal to initiate any
arbitration proceedings against the client is reasoned by the fact that the
subcontractor's claim is not sufficiently substantiated.
Although an arbitration clause between the client and the main contractor is not
binding upon the subcontractor for being a third party thereto, an arbitral award, rendered

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based on an arbitration clause that has been agreed between the client, main contractor
and the subcontractor is valid by virtue of the principle of party autonomy.
Therefore, nothing would preclude the contractor and the subcontractor from agreeing
mutually in the subcontract that the arbitral award, which may be rendered under the
provisions of the main contract, should be binding to their relationship. Therefore, all the
factual and legal findings that have been reached by the tribunal appointed to decide the
dispute between the client and the contractor shall be binding to the tribunal appointed to
decide the dispute between the contractor and the subcontractor.
Consequently, if the tribunal under the main contract decided that the contractor is
responsible to compensate the client for the contractor’s default of his execution, then the
contractor may agree with the subcontractor that the latter shall indemnify the contractor
for any compensations he has paid to the client for his default in executing his obligations.
This will be the case if such default is attributable to the subcontractor in executing his
obligations under the subcontract.
On the other hand, although the subcontractor has no legal or contractual ties with the
client he may, contractually, be entitled to request from the contractor that he will be
reimbursed with any indemnities that have been received by the contractor from the client.
This will be in the execution of the subcontract pursuant to the award rendered by the
tribunal constituted under the main contract.
In order to put such consequences in the appropriate legal framework, the contractor
has to, legally, enable the subcontractor to defend his claims against the client in the same
capacity as if he is a party to the dispute against the client. Accordingly, the subcontractor
has to contribute in the appointment of the arbitrator selected by the contractor under the
main contract. He must be authorized to address all the factual and legal points which are
necessary to substantiate his claims. If all the pre-mentioned conditions are met, then the
contractor will avoid any potential blame from the subcontractor if the contractor has been
ordered to compensate the client regarding the part of the project which has been
entrusted to the subcontractor. Conversely, the contractor shall be blameless if the
subcontractor’s claims have been denied by the tribunal appointed under the main
contract.
Taking into consideration the contractor’s relationship with both the client and the
subcontractor, the proposed terms of a standard arbitration clause for such a relationship
will ensure a fair and equitable settlement procedure to both the contractor and the
subcontractor. Therefore, this clause may aid a smoother implementation of the project in
the interest of the involved parties.

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