Validity of legal actions conducted by an unauthorized person

Dear Mr Mohamed,

Thank you for getting in touch with me on this.

You have raised a very valid and legally relevant query about the position of no power of attorney holder binding a company for arbitration or court purpose.

Article 4 (1) of Federal Law No. 6 of 2018 governing Arbitration Law in UAE, stipulates that only a person having specific power (via power of attorney or resolution) to bind organisation into an arbitration agreement will be valid. Thereby, failing to exhibit any such power of attorney or resolution would result in the arbitration agreement being invalid.

However, the previous arbitration rule under the Civil Procedure Law has a similar provision, but the courts construed it widely and treated the arbitration agreement as valid if signed by partner, manager or person having ostensible authority. The courts have shown a view pro-arbitration rather than treat it invalid.

The same rule applies to court cases. If the person is an employee or agent of the company and company seal exists, then yes, the agreement will be binding upon parties.

The above being said, the UAE does not follow precedents and every case is a new case, hence, these defences (no power of attorney holder) can be taken and leave it to the Judge to determine the question of law.

I trust you will find this helpful and I would be happy to assist you further if needed.

Regards,

Hari Wadhwana

052-9495731