On 15 August 2024, Justice Rene Le Miere dismissed Nazeer’s application to set aside an arbitral award, ordering the Claimant to pay USD 132,000 in indemnity costs. The dispute, centered on the validity of an 'Allotment Agreement' for two Saudi Arabian hotels, saw the Claimant attempt to introduce Saudi law arguments that were explicitly disclaimed during the underlying arbitration. Justice Le Miere’s ruling serves as a stark reminder of the finality of arbitral proceedings when parties attempt to pivot their legal strategy post-award.
For arbitration counsel, this decision reinforces the critical importance of pleading and evidence management during the arbitral process. By confirming that a party cannot introduce foreign law arguments to challenge an award when they previously disclaimed their relevance, the Court has effectively narrowed the scope for 'fundamental flaw' challenges under Article 41 of the DIFC Arbitration Law. The ruling underscores that the DIFC Courts will not permit parties to use the set-aside process as a second chance to litigate issues they consciously abandoned before the tribunal.
How Did the Dispute Between Nazeer and Noah Arise?
The commercial friction that ultimately required the intervention of Justice Rene Le Miere in the Dubai International Financial Centre (DIFC) Courts exposes a structural vulnerability inherent in cross-border hospitality management. When hotel owners and international operators bind themselves to long-term management contracts, the survival of the relationship frequently hinges on rigid performance metrics. If those metrics are achieved through opaque third-party wholesale or allotment agreements, the line between aggressive commercial strategy and actionable dishonesty becomes fiercely contested.
The conflict originated from two separate hotel operation and management agreements (OMAs) executed on 30 November 2014 and subsequently amended on 11 April 2019. The claimant, Nazeer, a corporate entity incorporated in the Kingdom of Saudi Arabia, owned two properties: the Nestor and the Naayil hotels. The defendant, Noah, a Hong Kong-incorporated entity operating within a global hospitality management group, was contracted to manage these assets. In such arrangements, the operator’s continued tenure—and its entitlement to lucrative management fees—is typically contingent upon satisfying specific revenue per available room (RevPAR) or gross operating profit thresholds.
The catalyst for the breakdown in trust was the introduction of Nadeem, a third-party travel agency specialising in pilgrimages to the Holy Sites in Saudi Arabia. Nazeer alleged that Noah, facing potential performance shortfalls under the Nestor OMA, orchestrated a fraudulent arrangement with Nadeem. This arrangement allegedly took the form of a sham "Allotment Agreement," supplemented by two extensions dated 17 and 24 December 2019, designed to allocate blocks of rooms at the Nestor to the travel agency.
From Nazeer’s perspective, the Allotment Agreement was entirely illusory. The Saudi hotel owner claimed the contract was manufactured for the sole purpose of falsely inflating Noah's performance metrics, thereby allowing the Hong Kong operator to artificially meet its contractual targets and avoid termination for underperformance. Characterising this conduct as fundamentally dishonest, Nazeer unilaterally terminated the OMAs, triggering a high-stakes arbitration. Noah vehemently denied the allegations, maintaining that the Allotment Agreement was a genuine commercial contract, and counterclaimed for damages arising from Nazeer’s wrongful termination of the management rights.
The core of the dispute before the arbitral tribunal was whether the alleged dishonesty justified the termination of the management contracts. Proving a contract is a "sham" under English law—which governed the dispute—requires satisfying a notoriously high evidentiary burden. The party alleging the sham must demonstrate that all parties to the impugned agreement shared a common intention to create a false impression of legal rights and obligations, masking the true nature of their arrangement.
Following a rigorous five-day evidential hearing before the arbitral tribunal commencing on 24 April 2023, the Tribunal dismantled Nazeer’s primary factual premise. The arbitrators concluded that the Allotment Agreement was not a facade; rather, it was a binding contract intended to create reciprocal rights and obligations. Because the agreement generated genuine legal exposure for both Noah and Nadeem, it could not be classified as a sham transaction. Consequently, Nazeer’s immediate termination of the OMAs was deemed unlawful. The Tribunal dismissed Nazeer’s claims and upheld Noah’s counterclaim, ordering the Saudi owner to pay SAR 49,041,954 in damages, alongside substantial legal and arbitration costs.
Defeated on the factual battleground of the arbitration, Nazeer initiated proceedings in the DIFC Courts on 27 May 2024, attempting to nullify the outcome through a procedural mechanism. The claimant pivoted away from the factual question of whether the Allotment Agreement was a sham, and instead mounted a jurisdictional and public policy challenge based on the governing law of the underlying asset's jurisdiction.
The Claimant seeks an order setting aside the Award pursuant to Article 41(2)(b)(iii) of the DIFC Arbitration Law on the ground that the Award is fundamentally flawed as a result of the Tribunal's failure to consider critical matters of Saudi law, in particular in relation to the validity and enforceability of the Allotment Agreement.
This strategic pivot is a familiar feature of complex international arbitration enforcement, echoing the procedural maneuvering observed in ARB-009-2019 ARB 009/2019 Ocie v Ortensia. When a party fails to prove commercial fraud on the facts, it will often search for a mandatory local law—in this case, Saudi Arabian formalities regarding contract validity—to argue that the tribunal failed to apply the correct legal standard, thereby rendering the award offensive to public policy or outside the scope of the submission to arbitration.
However, the DIFC Courts have consistently maintained a strict boundary between reviewing an award for procedural integrity and reopening the substantive merits. Justice Le Miere scrutinised the arbitral record and identified a fatal flaw in Nazeer’s set-aside application: the Saudi law argument had been explicitly disclaimed during the arbitration itself. The parties had agreed that English law governed the dispute, and Nazeer had never instructed the Tribunal to evaluate the Allotment Agreement through the lens of Saudi regulatory formalities.
Neither the Claimant nor the Respondent has pleaded, sought to make submissions or adduced any evidence that the Allotment Agreement and Addenda are (either) enforceable or unenforceable pursuant to formalities under Saudi law.
By attempting to introduce Saudi law only after the Award was rendered, Nazeer ran afoul of the fundamental principle of waiver in international arbitration. A party cannot hold a legal argument in reserve, participate fully in an evidential hearing under an agreed legal framework, and then deploy the reserved argument to attack an unfavourable outcome. The DIFC Arbitration Law (DIFC Law No. 1 of 2008) is designed to protect the finality of arbitral awards against exactly this type of retrospective legal engineering.
Furthermore, Nazeer’s reliance on Article 41(2)(b)(iii)—the public policy exception—required meeting an exceptionally stringent standard. The DIFC Courts do not equate a mere error of law, or a failure to apply a specific foreign statute, with a breach of UAE public policy. To succeed, the applicant must prove that the enforcement of the award would violate the most fundamental normative principles of the forum state. Justice Le Miere reinforced this high threshold by referencing established DIFC jurisprudence on the matter.
Justice Shamlan Al Sawalehi held that to meet the test in Article 41(2)(b)(iii), the applicant must show that the award fundamentally offends the most basic and explicit principles of justice and fairness in the UAE.
89.
The failure of the Tribunal to spontaneously apply unpleaded Saudi law to a contract governed by English law did not come close to offending the basic principles of justice in the UAE. In fact, intervening in the Award on such grounds would have undermined the autonomy of the arbitral process, a cornerstone of the DIFC’s pro-arbitration stance, as extensively documented in cases like ARB-027-2024: ARB 027/2024 Nalani v Netty.
The Court’s dismissal of the set-aside application was accompanied by a severe costs sanction, reflecting judicial intolerance for unmeritorious challenges that seek to relitigate arbitral findings under the guise of public policy. Noah sought its costs on an indemnity basis, arguing that Nazeer’s application was not merely unsuccessful, but fundamentally misconceived and pursued in disregard of the clear procedural history of the arbitration.
Justice Le Miere agreed with the defendant's characterisation of the proceedings. The attempt to ambush the Award with an unpleaded foreign law objection justified a departure from the standard basis of costs assessment.
In all the circumstances, I consider that the justice of the case requires that Nazeer should pay Noah’s costs on an indemnity basis.
Quantum of costs
116.
The financial consequence of this failed strategy was quantified precisely by the Court, serving as a tangible deterrent to future litigants contemplating similar post-award maneuvers.
The Claimant shall pay the Defendant’s costs of the Claim in the sum of USD 132,000.
The order to pay the Defendant’s costs of the Claim in the sum of USD 132,000 on an indemnity basis underscores the peril of treating the DIFC Courts as an appellate venue. The dispute between Nazeer and Noah, which began as a commercial disagreement over hotel performance metrics and third-party travel agency allotments, ultimately crystallised into a definitive statement on the limits of arbitral challenges. When sophisticated commercial parties agree to arbitrate their disputes under a specific governing law, they are bound by the factual determinations of the tribunal and cannot later invoke foreign regulatory frameworks to escape the consequences of their commercial bargains.
How Did the Case Move From the Arbitral Tribunal to the DIFC Court of First Instance?
The trajectory of the dispute from a private arbitral forum to the public docket of the DIFC Court of First Instance exposes the severe doctrinal limitations placed on parties attempting to re-litigate substantive arbitral findings under the guise of procedural or public policy challenges. The transition from arbitration to court intervention demonstrates the narrow window for challenging awards on the basis of procedural fairness, particularly when a party attempts to introduce novel legal theories that were expressly disclaimed during the underlying proceedings.
The underlying arbitration concerned two hotel operation and management agreements (the "OMAs") for the Nestor and Naayil hotels in Saudi Arabia, entered into by Nazeer and Noah in November 2014 and subsequently amended in April 2019. The commercial relationship fractured when Nazeer alleged that Noah had orchestrated a fraudulent "Allotment Agreement" with a third-party travel agency, Nadeem. Nazeer contended that this arrangement was a sham designed to artificially inflate Noah's performance metrics, thereby justifying Nazeer's immediate termination of the OMAs. Following a rigorous five-day evidential hearing that commenced on 24 April 2023, the arbitral tribunal systematically dismantled Nazeer's allegations. The tribunal concluded that the Allotment Agreement was intended to create reciprocal rights and obligations and did not constitute a sham transaction that would permit the termination of the OMAs. Consequently, the tribunal dismissed Nazeer's claims and upheld Noah's counterclaim for wrongful termination, ordering that Nazeer shall pay the sum of SAR 49,041,954 in damages, alongside substantial legal costs amounting to USD 1,446,063.
Faced with a devastating financial liability and a comprehensive defeat on the merits, Nazeer initiated proceedings in the DIFC Court of First Instance. The procedural mechanism for this challenge was formally triggered by an Arbitration Claim Form dated 27 May 2024. By invoking the supervisory jurisdiction of the DIFC Courts, Nazeer sought to bypass the substantive factual findings of the tribunal by framing its grievance as a fundamental defect in the arbitral process itself. The specific statutory anchor for this maneuver was Article 41(2)(b)(iii) of the DIFC Arbitration Law (DIFC Law No. 1 of 2008), which permits the setting aside of an award if it is in conflict with the public policy of the United Arab Emirates.
The Claimant seeks an order setting aside the Award pursuant to Article 41(2)(b)(iii) of the DIFC Arbitration Law on the ground that the Award is fundamentally flawed as a result of the Tribunal's failure to consider critical matters of Saudi law, in particular in relation to the validity and enforceability of the Allotment Agreement.
The core of Nazeer's application rested on the assertion that the tribunal's failure to apply Saudi Arabian law to determine the formal validity of the Allotment Agreement constituted a breach of UAE public policy. This argument formed the focal point of the hearing held on 29 July 2024 before Justice Rene Le Miere. During this hearing, the Court was tasked with determining whether a tribunal's omission to consider a specific body of foreign law—one that the parties had not actively pleaded during the arbitration—could elevate a standard legal grievance to the level of a public policy violation.
The DIFC Courts have consistently maintained a high threshold for public policy challenges, treating them as an exceptional remedy rather than a backdoor for appellate review. Justice Le Miere's analysis of the Article 41(2)(b)(iii) standard relied heavily on established DIFC jurisprudence, which strictly limits the scope of what constitutes a fundamental flaw in an arbitral award.
Justice Shamlan Al Sawalehi held that to meet the test in Article 41(2)(b)(iii), the applicant must show that the award fundamentally offends the most basic and explicit principles of justice and fairness in the UAE.
89.
Applying this stringent test, the transition of the dispute into the judicial arena quickly exposed the fatal weakness in Nazeer's strategy. The Court scrutinized the arbitral record and identified a glaring inconsistency between Nazeer's posture during the arbitration and its arguments before the Court of First Instance. Throughout the underlying arbitration, the parties had proceeded on the mutual understanding that the dispute was governed by English law. Crucially, Nazeer had explicitly informed the tribunal that Saudi law was not relevant to the determination of the claims. The attempt to resurrect Saudi law formalities at the set-aside stage was not merely an afterthought; it was a direct contradiction of the procedural framework that Nazeer had previously endorsed.
Neither the Claimant nor the Respondent has pleaded, sought to make submissions or adduced any evidence that the Allotment Agreement and Addenda are (either) enforceable or unenforceable pursuant to formalities under Saudi law.
The Court's refusal to entertain Nazeer's belated reliance on Saudi law reinforces a critical tenet of international arbitration practice within the DIFC: parties are bound by the strategic choices they make during the arbitral proceedings. A party cannot deliberately withhold a legal argument or fail to plead a specific body of foreign law, only to weaponize that omission later as a ground for annulment. This principle of waiver is deeply embedded in Article 9 of the DIFC Arbitration Law, which precludes a party from objecting to procedural non-compliance if they proceed with the arbitration without raising the objection without unjustified delay. By failing to plead Saudi law before the tribunal, Nazeer had unequivocally waived its right to challenge the award on that basis.
This strict policing of procedural boundaries aligns with the broader doctrinal posture of the DIFC Courts, which fiercely protect the autonomy and finality of the arbitral process. The approach taken by Justice Le Miere echoes the judicial philosophy seen in cases like ARB-009-2019 ARB 009/2019 Ocie v Ortensia, where the Court emphasized the necessity of maintaining the integrity of proceedings against collateral attacks. Similarly, the ruling resonates with the principles articulated in ARB 027/2024 Nalani v Netty, which highlighted the severe consequences of procedural obstruction and the absolute limits of arbitration appeals disguised as jurisdictional or public policy complaints. The DIFC Courts operate on the presumption that commercial parties, represented by sophisticated counsel, must bear the consequences of their tactical decisions. The supervisory jurisdiction of the Court is not a safety net for failed legal strategies.
The financial repercussions of Nazeer's unmeritorious challenge further underscore the Court's intolerance for speculative set-aside applications. Having dismissed the claim in its entirety, Justice Le Miere turned to the issue of costs. The Court did not merely award standard costs to Noah; it imposed a punitive costs order, mandating that the Claimant pay the sum of USD 132,000 on an indemnity basis.
In all the circumstances, I consider that the justice of the case requires that Nazeer should pay Noah’s costs on an indemnity basis.
Quantum of costs
116.
The award of indemnity costs serves a dual purpose in the context of DIFC arbitration jurisprudence. First, it fully compensates the successful party for the expense of defending an award that should have been recognized as final and binding. Second, it acts as a powerful deterrent against the deployment of set-aside applications as a delay tactic or a tool for commercial leverage. When a party transitions a dispute from arbitration to the Court of First Instance based on arguments that were expressly waived or never pleaded, they do so at significant financial peril. The Court's willingness to deploy indemnity costs in such scenarios sends an unequivocal message to the arbitration community: the statutory grounds for challenging an award are exceptionally narrow, and attempts to artificially expand them will be met with severe cost sanctions.
Ultimately, the movement of Nazeer v Noah from the arbitral tribunal to the DIFC Court of First Instance provides a masterclass in the limits of post-award maneuvering. The timeline—from the adverse arbitral findings in 2023 to the filing of the claim in May 2024, culminating in the decisive dismissal in August 2024—illustrates the efficiency with which the DIFC Courts dispose of unfounded challenges. By strictly enforcing the doctrines of waiver and the high threshold for public policy violations, the Court preserved the finality of the arbitral award and reaffirmed the DIFC's status as a jurisdiction that rigorously defends the integrity of the arbitral process against opportunistic litigation.
What Is the 'Fundamental Flaw' Test Under Article 41(2)(b)(iii) and Why Did It Fail Here?
The statutory architecture of the Dubai International Financial Centre (DIFC) Arbitration Law provides a deliberately narrow corridor for challenging arbitral awards. When Nazeer mounted its challenge to the underlying award, it bypassed allegations of procedural irregularity or jurisdictional overreach, opting instead to invoke the public policy exception enshrined in Article 41(2)(b)(iii) of the DIFC Arbitration Law. The Claimant’s strategy hinged on characterizing the tribunal’s treatment of the governing law as not merely erroneous, but fundamentally offensive to the integrity of the arbitral process.
The core of the dispute traced back to the operation of two Saudi Arabian hotels, the Nestor and the Naayil, managed by the Defendant, Noah. Nazeer alleged that Noah had colluded with a third-party travel agency, Nadeem, to execute a sham contract known as the Allotment Agreement. According to Nazeer, this arrangement was designed for the purpose of falsely inflating Noah's performance to meet contractual targets under the hotel management agreements. When the tribunal rejected this fraud narrative, Nazeer pivoted its legal theory before the DIFC Court of First Instance, arguing that the tribunal had fatally ignored mandatory provisions of Saudi law regarding the validity of the Allotment Agreement.
Justice Rene Le Miere summarized the Claimant's precise grievance:
The Claimant seeks an order setting aside the Award pursuant to Article 41(2)(b)(iii) of the DIFC Arbitration Law on the ground that the Award is fundamentally flawed as a result of the Tribunal's failure to consider critical matters of Saudi law, in particular in relation to the validity and enforceability of the Allotment Agreement.
To evaluate this claim, Justice Le Miere was required to delineate the boundaries of the "fundamental flaw" doctrine within DIFC jurisprudence. The court does not sit as an appellate chamber to correct errors of fact or law made by arbitral tribunals. Instead, the court maintains an exceptionally high bar for public policy challenges, requiring proof that the award offends the most basic principles of justice. To articulate this standard, Justice Le Miere relied upon established precedent governing the interpretation of Article 41(2)(b)(iii):
Justice Shamlan Al Sawalehi held that to meet the test in Article 41(2)(b)(iii), the applicant must show that the award fundamentally offends the most basic and explicit principles of justice and fairness in the UAE.
This stringent test serves as a bulwark against the relitigation of substantive disputes. It aligns the DIFC with global pro-enforcement jurisdictions, ensuring that the public policy exception cannot be weaponized by dissatisfied award debtors to secure a second bite at the cherry. The standard requires more than a demonstration that the tribunal misunderstood the law or misapplied a contractual provision; the applicant must prove that enforcing the award would shock the conscience of the court or violate deeply entrenched moral and legal norms of the forum state. Similar strictures on post-award interference have been observed in cases like ARB-009-2019 ARB 009/2019 Ocie v Ortensia, where the DIFC Courts fiercely protected the integrity of arbitral proceedings from collateral attacks.
Applying this rigorous framework to Nazeer's application, the fundamental flaw argument rapidly disintegrated. The fatal weakness in Nazeer's position was not necessarily its interpretation of Saudi law, but the procedural reality of how the arbitration had been conducted. During the five days commencing on 24 April 2023, when the evidential hearing took place, the parties operated under the shared premise that the dispute was governed by English law.
Justice Le Miere scrutinized the arbitral record and identified a glaring omission in the Claimant's strategy: the tribunal was never actually asked to apply Saudi law to the Allotment Agreement. The court observed:
Neither the Claimant nor the Respondent has pleaded, sought to make submissions or adduced any evidence that the Allotment Agreement and Addenda are (either) enforceable or unenforceable pursuant to formalities under Saudi law.
A tribunal cannot be faulted—let alone accused of fundamentally offending the basic principles of justice—for failing to rule on a legal theory that was never pleaded, briefed, or argued before it. The arbitral mandate is defined by the parties' submissions. By explicitly disclaiming the relevance of Saudi law during the arbitration, Nazeer had effectively waived its right to raise the issue post-award. Article 9 of the DIFC Arbitration Law codifies the principle of waiver, preventing parties from keeping jurisdictional or choice-of-law objections in reserve as an insurance policy against an unfavorable outcome.
Because the tribunal was not required to consider Saudi law, its conclusion that the Allotment Agreement was intended to create reciprocal rights and obligations remained unassailable. The tribunal's finding that the agreement was not a sham meant that Nazeer's termination of the hotel management agreements was wrongful, directly leading to the tribunal's order that Nazeer pay SAR 49,041,954 to Noah in respect of the counterclaim.
The court's dismissal of the set-aside application was accompanied by a severe costs sanction, reflecting the judiciary's intolerance for unmeritorious challenges that waste court resources and delay enforcement. Justice Le Miere determined that the standard costs regime was insufficient to address the Claimant's conduct in bringing a fundamentally flawed application.
In all the circumstances, I consider that the justice of the case requires that Nazeer should pay Noah’s costs on an indemnity basis.
The imposition of indemnity costs serves a dual purpose: it fully compensates the successful party for the expense of defending a baseless claim, and it acts as a powerful deterrent against future litigants contemplating speculative set-aside applications. The final quantification of this penalty was substantial:
The Claimant shall pay the Defendant’s costs of the Claim in the sum of USD 132,000.
Nazeer attempted to resist the indemnity costs order by pointing to procedural missteps committed by Noah's legal team during the set-aside proceedings. Specifically, Nazeer argued that Noah had failed to comply with the strict timelines set out in the Rules of the DIFC Courts (RDC) regarding the service of costs schedules.
In breach of RDC 38.36 Noah sent that schedule in an email to the Claimant half an hour before the Hearing.
While Justice Le Miere acknowledged the breach of the procedural rule, he adopted a pragmatic approach to the infraction. The underlying purpose of RDC 38.36 is to ensure that the opposing party has sufficient time to review the costs claimed and make informed submissions to the court. Because Nazeer's counsel was still able to address the court regarding the costs schedule during the hearing, the late service did not result in any material prejudice that would justify overturning the indemnity costs order. The court refused to allow a minor procedural technicality to shield the Claimant from the financial consequences of its unmeritorious set-aside application.
The ruling in Nazeer v Noah reinforces a critical doctrinal boundary within DIFC arbitration law. The "fundamental flaw" test under Article 41(2)(b)(iii) cannot be satisfied by pointing to a tribunal's failure to apply a law that the parties themselves chose to ignore during the arbitral proceedings. The decision echoes the judicial philosophy seen in ARB-027-2024: ARB 027/2024 Nalani v Netty, where the courts similarly penalized procedural obstruction and reaffirmed the strict limits placed on arbitration appeals. By holding Nazeer to the strategic choices it made before the tribunal and penalizing its post-award pivot with indemnity costs, Justice Le Miere has further cemented the DIFC's reputation as a jurisdiction that fiercely protects the finality of arbitral awards against speculative and retroactive legal engineering.
How Did Justice Le Miere Reach the Decision to Dismiss the Claim?
The foundation of Justice Rene Le Miere’s dismissal lies in a strict application of the doctrine of waiver, anchored firmly to the parties’ own procedural conduct during the underlying arbitration. Nazeer’s application to the Dubai International Financial Centre (DIFC) Courts represented a classic, albeit fundamentally flawed, attempt to retrofit a legal strategy after suffering an adverse arbitral outcome. The court’s analysis systematically dismantled the Claimant’s position by demonstrating that the failure to apply Saudi law was not an oversight by the arbitral tribunal, but rather the direct result of Nazeer’s explicit procedural choices.
To understand the court’s reasoning, one must examine the procedural posture that led to the set-aside application. The underlying dispute involved two hotel operation and management agreements (OMAs) for properties in Saudi Arabia. Nazeer had originally commenced arbitration pursuant to an arbitration agreement alleging that Noah had entered into a fraudulent "Allotment Agreement" with a third-party travel agency to falsely inflate performance metrics. During the five-day evidential hearing before the arbitral tribunal, Nazeer’s primary argument was that the Allotment Agreement was a sham. The Tribunal rejected this, finding that the contract was intended to create reciprocal rights and obligations and upheld Noah’s counterclaim for wrongful termination.
Having failed on the facts regarding the sham allegation, Nazeer pivoted in the DIFC Courts, attempting to weaponize the governing law of the jurisdiction where the hotels were located. The exact nature of this pivot was captured in the Claimant's primary submission:
The Claimant seeks an order setting aside the Award pursuant to Article 41(2)(b)(iii) of the DIFC Arbitration Law on the ground that the Award is fundamentally flawed as a result of the Tribunal's failure to consider critical matters of Saudi law, in particular in relation to the validity and enforceability of the Allotment Agreement.
Justice Le Miere’s rejection of this argument was rooted in the principle of party autonomy, which dictates that an arbitral tribunal’s mandate is defined by the case referred to it by the disputants. The parties had explicitly agreed that the dispute was governed by English law. More fatally for Nazeer’s application, the Claimant had previously informed the tribunal on the record that Saudi law was irrelevant to the proceedings.
The court observed that a tribunal cannot be faulted for failing to apply a legal standard that both parties have actively disclaimed. Justice Le Miere noted the complete absence of any Saudi law arguments in the underlying arbitration record:
Neither the Claimant nor the Respondent has pleaded, sought to make submissions or adduced any evidence that the Allotment Agreement and Addenda are (either) enforceable or unenforceable pursuant to formalities under Saudi law.
By attempting to introduce Saudi law formalities only after the Award was issued, Nazeer ran directly into the preclusive effect of Article 9 of the DIFC Arbitration Law (DIFC Law No. 1 of 2008). Article 9 serves as a statutory codification of the waiver doctrine, providing that a party who knows that any provision of the Arbitration Law or any requirement under the arbitration agreement has not been complied with, and yet proceeds with the arbitration without stating an objection without undue delay, shall be deemed to have waived the right to object.
Justice Le Miere held that Nazeer was precluded from raising the Saudi law objection precisely because of this statutory waiver. A party cannot hold a jurisdictional or choice-of-law objection in reserve, participate fully in the evidentiary phase under an agreed legal framework, and then deploy the reserved objection only when faced with an order to pay the sum of SAR 49,041,954 in counterclaims. The integrity of the arbitral process requires parties to advance their full legal theories before the tribunal, not before the supervisory court.
Furthermore, Nazeer attempted to elevate this alleged failure to apply Saudi law into a breach of UAE public policy, invoking Article 41(2)(b)(iii) of the Arbitration Law. The DIFC Courts have consistently maintained an exceptionally high threshold for public policy challenges, viewing them as a narrow safety valve rather than an appellate backdoor. Justice Le Miere relied on established DIFC precedent to define this threshold, citing previous jurisprudence to underscore the severity required to trigger a set-aside on these grounds:
Justice Shamlan Al Sawalehi held that to meet the test in Article 41(2)(b)(iii), the applicant must show that the award fundamentally offends the most basic and explicit principles of justice and fairness in the UAE.
Applying this stringent test, Justice Le Miere found that a tribunal’s adherence to the parties’ agreed choice of English law—and its corresponding refusal to unilaterally investigate unpleaded Saudi law formalities—could not possibly offend the basic principles of justice in the UAE. On the contrary, respecting the parties' procedural choices is a cornerstone of UAE arbitration policy.
This strict approach to procedural finality aligns with the broader trajectory of DIFC jurisprudence, which heavily penalizes parties who attempt to re-litigate arbitral findings through creative jurisdictional or public policy arguments. Similar to the court's stance in ARB-009-2019 ARB 009/2019 Ocie v Ortensia, where the integrity of the recognition process was fiercely protected against collateral attacks, Justice Le Miere’s ruling in Nazeer v Noah reinforces the finality of the arbitral mandate. The DIFC Courts will not allow the set-aside mechanism to function as a de facto appellate review of a tribunal's legal findings, a principle further echoed in cases like ARB-027-2024: ARB 027/2024 Nalani v Netty, which similarly addressed the limits of arbitration appeals and the price of procedural obstruction.
The ultimate consequence of Nazeer’s post-award pivot was not merely the dismissal of the claim, but a severe costs sanction. Because the application was fundamentally unmeritorious and contradicted the Claimant's own conduct during the arbitration, Justice Le Miere determined that standard costs would be insufficient to remedy the prejudice suffered by the Defendant. The court scrutinized the motivations behind the set-aside application, noting that attempts to delay enforcement through baseless challenges warrant punitive cost measures:
If that was the reason for Nazeer bringing the Application, and Mr Napoleon did not submit it was, that would be a circumstance justifying an award of indemnity costs if the application was otherwise unmeritorious. In such circumstances the cost to an applicant making an unmeritorious application should be to pay all of the costs of the respondent, reasonably incurred and in a reasonable amount.
Consequently, the court ordered Nazeer to bear the financial burden of its failed strategy on an indemnity basis. The ruling serves as a stark warning to practitioners regarding the financial risks of advancing set-aside applications that lack a genuine foundation in procedural unfairness or jurisdictional overreach:
In all the circumstances, I consider that the justice of the case requires that Nazeer should pay Noah’s costs on an indemnity basis.
By ordering that the Claimant’s Claim is dismissed and imposing a USD 132,000 indemnity costs order, Justice Le Miere cemented the principle that a party's procedural conduct before the tribunal binds them before the supervisory court. The decision illustrates that the DIFC Courts will rigorously enforce the waiver provisions of Article 9, ensuring that the arbitration remains the primary and final forum for resolving the substantive dispute, rather than merely a preliminary hurdle before judicial litigation.
How Does the DIFC Approach Compare to English High Court Standards on Arbitral Challenges?
The DIFC Arbitration Law (DIFC Law No. 1 of 2008) is heavily predicated on the UNCITRAL Model Law, creating a natural doctrinal symmetry with the English Arbitration Act 1996. Both statutory regimes prioritize party autonomy and the strict finality of the arbitral process, severely limiting the grounds upon which a disgruntled party can attack an award. In Nazeer v Noah [2024] DIFC ARB 011, Justice Rene Le Miere confronted a classic attempt to relitigate a lost arbitration by introducing new legal theories post-award. The Court’s decisive rejection of this tactic mirrors the robust approach taken by the English Commercial Court, reinforcing the principle that parties cannot treat the supervisory court as a forum to repair defective arbitral strategies.
The underlying dispute originated from two separate hotel operation and management agreements concerning the Nestor and Naayil hotels in the Kingdom of Saudi Arabia. The Claimant, Nazeer, alleged that the Defendant, Noah, had entered into a fraudulent arrangement with Nadeem, a travel agency specializing in pilgrimages. Nazeer contended that an "Allotment Agreement" between Noah and Nadeem was a sham designed to artificially inflate Noah's performance metrics, thereby preventing Nazeer from terminating the management contracts for underperformance.
During the arbitration, the parties agreed that the dispute was governed by English law. Following an evidential hearing before the arbitral tribunal that spanned five days in April 2023, the tribunal dismissed Nazeer's claims of fraud and sham contracting. Instead, the tribunal upheld Noah's counterclaim for wrongful termination, ordering Nazeer to pay the sum of SAR 49,041,954 in damages.
Faced with a substantial liability, Nazeer pivoted its legal strategy before the DIFC Court of First Instance. Abandoning the English law framework it had accepted during the arbitration, Nazeer argued that the tribunal had fundamentally erred by failing to assess the validity of the Allotment Agreement under Saudi Arabian law formalities.
The Claimant seeks an order setting aside the Award pursuant to Article 41(2)(b)(iii) of the DIFC Arbitration Law on the ground that the Award is fundamentally flawed as a result of the Tribunal's failure to consider critical matters of Saudi law, in particular in relation to the validity and enforceability of the Allotment Agreement.
English arbitration jurisprudence, particularly under section 73 of the Arbitration Act 1996, strictly prohibits "sandbagging"—the tactical withholding of jurisdictional, procedural, or substantive arguments during the arbitration only to deploy them if the resulting award is unfavorable. The DIFC Courts enforce an identical standard under Article 9 of the DIFC Arbitration Law, which dictates that a party who knows that any provision of the Arbitration Law or any requirement under the arbitration agreement has not been complied with, and yet proceeds with the arbitration without stating its objection without undue delay, shall be deemed to have waived its right to object.
Justice Le Miere’s analysis focused acutely on the scope of the reference to the tribunal. In English practice, a tribunal's jurisdiction is strictly bounded by the pleadings and the agreed terms of reference. A tribunal cannot be faulted for failing to decide an issue that was never put before it. The Court found that Nazeer had not only failed to plead Saudi law during the arbitration but had explicitly informed the tribunal that Saudi law was irrelevant to the dispute.
On that assumption:
(1) Neither the Claimant nor the Respondent has pleaded, sought to make submissions or adduced any evidence that the Allotment Agreement and Addendums are (either) enforceable or unenforceable pursuant to formalities under Saudi law.
By attempting to introduce Saudi law at the set-aside stage, Nazeer was asking the supervisory court to penalize the tribunal for respecting the boundaries of the parties' own pleaded case. The DIFC Court's refusal to entertain this post-award pivot aligns perfectly with the English High Court's traditional reluctance to allow parties to rewrite their terms of reference retrospectively. When a party makes a deliberate tactical election during the arbitral proceedings—such as choosing to argue a case under English law rather than Saudi law—it is bound by the consequences of that election.
Nazeer attempted to elevate its belated Saudi law argument to a matter of UAE public policy, invoking Article 41(2)(b)(iii) of the DIFC Arbitration Law. The public policy exception is notoriously narrow in both the DIFC and English jurisdictions. It is not a backdoor for appealing errors of law or fact. To succeed, an applicant must demonstrate that the award violates the most fundamental normative principles of the forum state. Justice Le Miere relied on established DIFC precedent to define this high threshold.
Justice Shamlan Al Sawalehi held that to meet the test in Article 41(2)(b)(iii), the applicant must show that the award fundamentally offends the most basic and explicit principles of justice and fairness in the UAE.
89.
A tribunal's failure to apply foreign law formalities to a commercial contract, particularly when those formalities were never pleaded by the parties, comes nowhere near the threshold of offending the basic and explicit principles of justice and fairness in the UAE. The Court's swift dismissal of the public policy argument reinforces the DIFC's reputation as a pro-arbitration jurisdiction that protects awards from creative but unmeritorious statutory challenges. This approach is consistent with the broader trajectory of DIFC jurisprudence, as seen in cases like ARB-009-2019 ARB 009/2019 Ocie v Ortensia, where the courts have consistently insulated the arbitral process from collateral attacks disguised as public policy grievances.
The alignment with English standards extends beyond substantive doctrine to the procedural penalization of unmeritorious challenges. In the Commercial Court in London, parties who bring baseless set-aside applications routinely face adverse costs orders, often on an indemnity basis, to deter the misuse of supervisory jurisdiction. Justice Le Miere adopted this exact posture, ordering Nazeer to pay the sum of USD 132,000 in costs.
Nazeer attempted to resist the imposition of indemnity costs by pointing to a procedural foot-fault by Noah. Under the Rules of the DIFC Courts (RDC), a Statement of Costs must be filed and served 24 hours prior to the hearing. Noah had breached this rule, serving its schedule only half an hour before the hearing commenced. Nazeer argued this procedural breach should mitigate the costs order. The Court, however, maintained focus on the substantive lack of merit in Nazeer's underlying application.
If that was the reason for Nazeer bringing the Application, and Mr Napoleon did not submit it was, that would be a circumstance justifying an award of indemnity costs if the application was otherwise unmeritorious. In such circumstances the cost to an applicant making an unmeritorious application should be to pay all of the costs of the respondent, reasonably incurred and in a reasonable amount.
104.
The award of indemnity costs serves a dual function: it compensates the successful party for the expense of defending a final and binding award, and it signals to the broader market that the DIFC Courts will not tolerate the weaponization of the set-aside process. As explored in ARB 027/2024 Nalani v Netty, the financial consequences of procedural obstruction in the DIFC are severe and designed to uphold the integrity of the arbitral seat.
Ultimately, Justice Le Miere’s judgment in Nazeer v Noah confirms that the DIFC Courts interpret the Model Law through a lens heavily influenced by English commercial pragmatism. The tribunal is the master of the facts and the law as pleaded by the parties. The supervisory court exists to ensure fundamental procedural fairness, not to save a party from its own strategic decisions. By strictly enforcing the doctrines of waiver and the narrow scope of public policy, the DIFC continues to offer international commercial actors a predictable, final, and highly autonomous arbitral environment.
Which Earlier DIFC Cases Frame This Decision?
Justice Rene Le Miere’s dismissal of the set-aside application in Nazeer v Noah [2024] DIFC ARB 011 does not merely resolve a bilateral commercial dispute; it actively reinforces the doctrinal boundaries of the Dubai International Financial Centre (DIFC) as a pro-arbitration jurisdiction. By anchoring his judgment in established precedent, Justice Le Miere confirms that the DIFC Courts will not entertain post-award attempts to re-litigate substantive issues under the guise of public policy violations. The applicant, Nazeer, sought to annul the arbitral award by invoking Article 41(2)(b)(iii) of the DIFC Arbitration Law (DIFC Law No. 1 of 2008). This specific statutory provision allows for an award to be set aside if it conflicts with the public policy of the United Arab Emirates. However, the threshold for such a challenge is notoriously high, a standard that the DIFC Courts have meticulously guarded over the past decade.
To define this threshold, Justice Le Miere looked directly to the jurisprudence shaped by his peers, specifically citing the formulation articulated by Justice Shamlan Al Sawalehi in earlier proceedings. The court reiterated the strict parameters required to successfully invoke the public policy exception:
Justice Shamlan Al Sawalehi held that to meet the test in Article 41(2)(b)(iii), the applicant must show that the award fundamentally offends the most basic and explicit principles of justice and fairness in the UAE.
This reliance on a narrow interpretation of public policy aligns seamlessly with the approach taken in ARB-009-2019 ARB 009/2019 Ocie v Ortensia. As explored in The Limits of Disclosure: Ocie v Ortensia and the Integrity of Ex Parte Recognition, the DIFC Courts consistently reject attempts to stretch the concept of public policy to cover mere errors of law, misapplication of facts, or procedural dissatisfaction. The explicit requirement that an award must offend the "most basic and explicit principles of justice and fairness" ensures that the public policy defense cannot be weaponized by a losing party seeking a second bite at the apple. The consistency of this standard is vital for international commercial actors who select the DIFC as a seat, relying on the finality of the arbitral process.
The factual matrix of Nazeer v Noah provided a classic scenario of a party attempting to pivot its legal strategy after an unfavorable outcome. Nazeer, a company incorporated in the Kingdom of Saudi Arabia, owned two hotels in Saudi Arabia – the Nestor and the Naayil. These properties were managed by the Defendant, Noah, under two separate Hotel Operation and Management Agreements (OMAs). The core of the underlying arbitration centered on Nazeer's allegation that Noah had entered into a fraudulent "Allotment Agreement" with a third-party travel agency, Nadeem. Nazeer contended that this agreement was a sham designed to artificially inflate Noah's performance metrics, thereby justifying Nazeer's immediate termination of the OMAs.
During the five-day evidential hearing before the arbitral tribunal, the dispute was argued under English law, which the parties had agreed governed the OMAs. Under English law principles, proving a sham requires demonstrating a common intention between the parties to create a document that does not reflect their true legal rights and obligations. The Tribunal ultimately found that the Allotment Agreement was intended to create reciprocal rights and obligations and was therefore not a sham. Consequently, Nazeer's termination of the OMAs was deemed wrongful, and Noah succeeded on its counterclaim for damages.
Faced with this defeat, Nazeer initiated the set-aside application before the DIFC Court of First Instance, fundamentally altering its argument. Instead of challenging the Tribunal's application of English law regarding sham agreements, Nazeer argued that the Tribunal had committed a fatal error by ignoring the formalities required under Saudi law for the Allotment Agreement to be valid. The exact nature of this pivot was captured in the court's summary of the Claimant's position:
The Claimant seeks an order setting aside the Award pursuant to Article 41(2)(b)(iii) of the DIFC Arbitration Law on the ground that the Award is fundamentally flawed as a result of the Tribunal's failure to consider critical matters of Saudi law, in particular in relation to the validity and enforceability of the Allotment Agreement.
Justice Le Miere’s analysis of this argument exposes the fatal flaw in Nazeer's strategy: the failure to raise the issue during the arbitration itself. The court scrutinized the arbitral record and found that Nazeer had not only failed to plead Saudi law but had explicitly disclaimed its relevance during the proceedings. The Tribunal was never asked to determine the validity of the Allotment Agreement under Saudi law, nor was any expert evidence on Saudi law adduced by either party. The court highlighted this evidentiary void, noting the complete absence of any such arguments in the underlying record:
Neither the Claimant nor the Respondent has pleaded, sought to make submissions or adduced any evidence that the Allotment Agreement and Addenda are (either) enforceable or unenforceable pursuant to formalities under Saudi law.
By attempting to introduce Saudi law only at the set-aside stage, Nazeer ran afoul of Article 9 of the DIFC Arbitration Law, which governs the waiver of the right to object. Article 9 stipulates that if a party proceeds with an arbitration knowing that a provision of the law or the arbitration agreement has not been complied with, and fails to state an objection without unjustified delay, they are deemed to have waived their right to object.
The application of Article 9 in this context reinforces a critical pillar of DIFC arbitration jurisprudence: procedural objections must be raised in a timely manner to be preserved. The DIFC Courts operate on the principle that arbitral tribunals must be given the opportunity to address and rectify potential errors during the proceedings. Allowing a party to hold a legal argument in reserve, only to deploy it if the final award is unfavorable, would undermine the efficiency and finality of the arbitral process. Justice Le Miere's strict enforcement of the waiver principle ensures that the DIFC remains a hostile environment for such procedural ambushes. The court found that because Neither the Claimant nor the Respondent has pleaded the issue previously, the Tribunal committed no error in omitting it from the Award.
The finality of the court's approach is perhaps most starkly illustrated in its treatment of costs. Having dismissed the set-aside application as entirely lacking in merit, Justice Le Miere turned to Noah's request for costs on an indemnity basis. Nazeer attempted to resist this order by pointing to a procedural misstep by Noah regarding the filing of its Statement of Costs. Specifically, Nazeer argued that Noah had failed to file and serve its Statement of Costs 24 hours prior to the hearing, as required by the Rules of the DIFC Courts (RDC).
Nazeer raised a further argument against the award of indemnity costs – that the Defendant failed to file and serve its Statement of Costs (“SOC”) 24 hours prior to the Hearing of the set aside Application.
The court acknowledged the procedural reality that In breach of RDC 38.36 Noah sent that schedule in an email to the Claimant half an hour before the hearing. However, Justice Le Miere refused to allow this minor procedural infraction to shield Nazeer from the financial consequences of bringing a baseless challenge. The court analyzed the purpose of the rule, which is to enable parties to make informed submissions on costs, and determined that Nazeer had not suffered any genuine prejudice that would negate the appropriateness of an indemnity award. The overarching reality was that Nazeer had forced Noah to defend an unmeritorious application designed solely to delay enforcement. The court articulated the rationale for imposing heavy cost sanctions in such scenarios:
If that was the reason for Nazeer bringing the Application, and Mr Napoleon did not submit it was, that would be a circumstance justifying an award of indemnity costs if the application was otherwise unmeritorious. In such circumstances the cost to an applicant making an unmeritorious application should be to pay all of the costs of the respondent, reasonably incurred and in a reasonable amount.
Consequently, the court exercised its discretion to penalize the Claimant's conduct, concluding that the broader interests of justice demanded a robust cost order to deter future speculative litigation.
In all the circumstances, I consider that the justice of the case requires that Nazeer should pay Noah’s costs on an indemnity basis.
The resulting order was unequivocal, mandating that the Claimant pay the sum of USD 132,000 to cover the Defendant's legal expenses.
The Claimant shall pay the Defendant’s costs of the Claim in the sum of USD 132,000.
The imposition of indemnity costs acts as a structural deterrent within the DIFC's legal framework. By forcing the losing party to bear the full financial weight of a speculative challenge, the court protects the integrity of the arbitral process and ensures that the public policy exception remains a narrow safeguard rather than a routine appellate mechanism.
What Does This Mean for Practitioners Regarding Costs and Procedural Compliance?
The DIFC Courts have consistently demonstrated a low tolerance for parties attempting to relitigate arbitral findings under the guise of a set-aside application. In Nazeer v Noah [2024] DIFC ARB 011, Justice Rene Le Miere reinforced this boundary by imposing a severe financial penalty on the Claimant, ordering Nazeer to pay USD 132,000 in indemnity costs. The Claimant shall pay the Defendant’s costs of the Claim in the sum of USD 132,000. The outcome sends a definitive message to practitioners: deploying unmeritorious challenges to delay enforcement or pivot legal strategies post-award carries substantial financial risk. The court's willingness to shift the entire cost burden onto the unsuccessful applicant reflects a broader judicial policy aimed at protecting the finality of arbitral awards and deterring speculative satellite litigation.
The threshold for indemnity costs in the DIFC is notoriously high, typically reserved for conduct that takes a case out of the norm. Here, the Claimant's application hinged on the Tribunal's alleged failure to consider Saudi law—a legal framework the Claimant had explicitly disclaimed during the underlying arbitration. Justice Le Miere viewed the strategy not merely as a weak argument, but as an inherently flawed procedural maneuver that wasted the court's and the Defendant's resources. The Claimant's attempt to introduce arguments that were never pleaded or adduced as evidence was a fatal error. The record clearly showed that Neither the Claimant nor the Respondent has pleaded, sought to make submissions or adduced any evidence regarding the enforceability of the Allotment Agreement under Saudi law formalities.
If that was the reason for Nazeer bringing the Application, and Mr Napoleon did not submit it was, that would be a circumstance justifying an award of indemnity costs if the application was otherwise unmeritorious. In such circumstances the cost to an applicant making an unmeritorious application should be to pay all of the costs of the respondent, reasonably incurred and in a reasonable amount.
By awarding costs on an indemnity basis, the court removes the standard requirement of proportionality, shifting the burden of proof regarding the unreasonableness of the costs onto the paying party. The shift acts as a powerful deterrent. When an applicant brings a challenge that fundamentally lacks merit—especially one predicated on a manufactured grievance about the governing law—the DIFC Courts will ensure the successful respondent is not left out of pocket.
In all the circumstances, I consider that the justice of the case requires that Nazeer should pay Noah’s costs on an indemnity basis.
The DIFC Courts apply a stringent test for setting aside awards under Article 41(2)(b)(iii) of the DIFC Arbitration Law. As noted in the judgment, Justice Shamlan Al Sawalehi held that to meet the test in Article 41(2)(b)(iii), the applicant must demonstrate that the award fundamentally offends the most basic and explicit principles of justice and fairness in the UAE. Nazeer's attempt to elevate a waived argument about Saudi law formalities to the level of a public policy violation fell drastically short of the required standard. To bring a set-aside application based on the Tribunal's failure to consider an unpleaded issue is a textbook example of an unmeritorious claim that justifies an indemnity costs order.
However, the costs debate in Nazeer v Noah was not entirely one-sided. The Defendant, Noah, faced its own procedural hurdles, specifically regarding the timely filing of its Statement of Costs. Under Rule 38.36 of the Rules of the DIFC Courts (RDC), parties are required to file and serve their statement of costs at least 24 hours before the hearing. The rule is designed to prevent trial by ambush and to afford the opposing party sufficient time to review the claimed amounts and prepare objections. Noah failed to meet the deadline.
In breach of RDC 38.36 Noah sent that schedule in an email to the Claimant half an hour before the Hearing.
The procedural failure provided Nazeer with a tactical opening to challenge the costs order entirely. Nazeer argued that the late service prejudiced its ability to properly scrutinize the USD 132,000 claim. Nazeer raised a further argument against the award of indemnity costs based precisely on the timing of the submission.
Nazeer raised a further argument against the award of indemnity costs – that the Defendant failed to file and serve its Statement of Costs (“SOC”) 24 hours prior to the Hearing of the set aside Application.
Justice Le Miere's handling of the breach offers critical guidance on how the DIFC Courts balance procedural strictures against substantive justice. The court had to determine whether a breach of RDC 38.36 automatically disentitles a party to its costs, or whether the court retains the discretion to assess the impact of the breach on the proceedings.
In my view, the purpose of the rule is to enable the parties to make submissions to the Court on the Hearing of the Application about the costs claimed and for the Court to be able to assess the costs at the Hearing.
Because the late filing did not ultimately prejudice Nazeer's ability to contest the quantum or the basis of the costs—given that the court could still assess the costs fairly and Nazeer was able to make submissions during the hearing—the breach did not invalidate Noah's entitlement to recovery. The court recognized that penalizing Noah by denying its costs entirely would be a disproportionate response to a procedural misstep, particularly when Nazeer's underlying application was fundamentally flawed. The core of the dispute remained that The Claimant seeks an order setting aside the Award pursuant to Article 41(2)(b)(iii) on grounds that lacked any substantive merit.
Nevertheless, practitioners must view the outcome as a narrow escape rather than a permissive precedent. Relying on the court's discretion to overlook a breach of the 24-hour rule is a high-risk strategy. As seen in related jurisprudence like ARB-009-2019 ARB 009/2019 Ocie v Ortensia, procedural missteps can severely undermine a party's position, even when the substantive law is on their side. The DIFC Courts expect strict compliance with the RDC, and repeated or egregious failures to adhere to timelines can result in adverse cost orders or the exclusion of evidence.
The quantum awarded—USD 132,000—also warrants scrutiny. The court found the amount to be reasonable and proportionate to the work required to defend against a set-aside application of the nature presented by Nazeer. Defending an arbitral award against a multi-pronged attack involving allegations of public policy violations and procedural unfairness requires significant legal heavy lifting. The court's willingness to award the full amount claimed underscores its recognition of the commercial realities of arbitration practice in the DIFC.
The decision aligns with the DIFC's overarching philosophy of deterring satellite litigation. Similar to the dynamics observed in ARB 027/2024 Nalani v Netty, where procedural obstruction was met with firm judicial resistance, Nazeer v Noah establishes that the cost of launching a speculative attack on an award will be borne entirely by the aggressor. The DIFC Courts are acutely aware of the tactics employed by losing parties to delay enforcement, and they are prepared to use their cost-allocation powers to neutralize the strategies.
For arbitration practitioners, the takeaways are twofold. First, the substantive grounds for challenging an award under Article 41(2)(b)(iii) of the DIFC Arbitration Law are exceedingly narrow. Attempting to shoehorn a new legal theory—such as the applicability of Saudi law to the Allotment Agreement—into a public policy or procedural fairness challenge will likely trigger indemnity costs. Second, procedural compliance remains paramount. While Noah survived its late filing under RDC 38.36, the resulting dispute over the Statement of Costs consumed valuable hearing time and judicial resources. Practitioners must ensure that all procedural deadlines, particularly those relating to costs, are strictly observed to avoid unnecessary complications and potential financial penalties. Justice Le Miere's order reinforces the commercial reality of DIFC arbitration: the courts will robustly defend the finality of arbitral awards and will utilize their cost-allocation powers to penalize those who treat the set-aside mechanism as an appellate back door.
What Issues Remain Unresolved in the Wake of Nazeer v Noah?
The dismissal of Nazeer’s application by Justice Rene Le Miere in Nazeer v Noah [2024] DIFC ARB 011 provides a robust reaffirmation of the waiver doctrine under Article 9 of the DIFC Arbitration Law (DIFC Law No. 1 of 2008). By holding that a party cannot expressly disclaim the relevance of foreign law during the arbitration only to weaponise it in a set-aside application, the Court of First Instance fortified the finality of arbitral awards. Yet, beneath the surface of this procedural estoppel lies a complex doctrinal frontier. The interaction between unpleaded foreign law and local public policy remains a fertile ground for future litigation, leaving several critical questions unanswered for practitioners navigating cross-border disputes in the Dubai International Financial Centre.
The core tension arises from the extent to which an arbitral tribunal must sua sponte investigate foreign law when it is not pleaded by the parties. In the underlying arbitration, the dispute concerned an 'Allotment Agreement' and two operation and management agreements for the Nestor and Naayil hotels located in the Kingdom of Saudi Arabia. The parties had agreed that English law governed the dispute. During the five-day evidential hearing commencing on 24 April 2023, Nazeer explicitly informed the Tribunal that Saudi law was irrelevant to the proceedings. Consequently, the Tribunal did not apply Saudi law formalities to determine the validity of the agreement.
Justice Le Miere noted the precise procedural posture adopted by the parties during the arbitration:
Neither the Claimant nor the Respondent has pleaded, sought to make submissions or adduced any evidence that the Allotment Agreement and Addenda are (either) enforceable or unenforceable pursuant to formalities under Saudi law.
The Tribunal's restraint aligns perfectly with the adversarial tradition of English and DIFC law, where foreign law is treated as a question of fact that must be expressly pleaded and proved by expert evidence. An arbitral tribunal seated in the DIFC is not an inquisitorial body; it draws its mandate from the parties' submissions. However, the judgment leaves open the critical question of how the DIFC Courts would treat a situation where the unpleaded foreign law is mandatory in nature—often referred to in private international law as lois de police or overriding mandatory rules.
If a contract violates the mandatory laws of the place of performance (in this case, Saudi Arabia), does a tribunal seated in the DIFC have an independent duty to apply those mandatory rules to ensure the award's enforceability, even if the parties, exercising their autonomy, chose English law and deliberately omitted Saudi law pleadings? This dilemma strikes at the heart of international arbitration theory. Arbitrators must respect party autonomy, yet they also bear an implicit duty to render an enforceable award. If a tribunal ignores mandatory foreign law, it risks rendering an award that offends the public policy of the enforcing state.
In the present dispute, the Claimant attempted to bridge this gap by arguing that the Tribunal's failure to consider Saudi law rendered the award fundamentally flawed, thereby triggering the public policy exception under the DIFC Arbitration Law.
The Claimant seeks an order setting aside the Award pursuant to Article 41(2)(b)(iii) of the DIFC Arbitration Law on the ground that the Award is fundamentally flawed as a result of the Tribunal's failure to consider critical matters of Saudi law, in particular in relation to the validity and enforceability of the Allotment Agreement.
Justice Le Miere rejected this attempt, primarily on the grounds of waiver. Because Nazeer had expressly disavowed reliance on Saudi law during the arbitration, it was precluded from raising the objection post-award. But the substantive public policy argument requires careful dissection. To succeed under Article 41(2)(b)(iii), the threshold is exceptionally high, requiring a demonstration of egregious procedural or substantive failure.
Justice Shamlan Al Sawalehi held that to meet the test in Article 41(2)(b)(iii), the applicant must show that the award fundamentally offends the most basic and explicit principles of justice and fairness in the UAE.
The unresolved issue is whether the circumvention of mandatory foreign law could ever rise to the level of offending the most basic and explicit principles of justice and fairness in the UAE. The UAE has strong public policy interests in maintaining comity with its neighbours, particularly Saudi Arabia. If an agreement is an illegal sham under Saudi law, does enforcing it in the DIFC violate UAE public policy?
In the underlying arbitration, Nazeer claimed that Noah entered into a fraudulent arrangement with a third-party travel agency, Nadeem, to falsely inflate Noah's performance metrics. The Tribunal, however, found as a matter of fact that the Allotment Agreement was intended to create reciprocal rights and obligations and was therefore not a sham. Because the factual premise of illegality failed, the public policy argument collapsed entirely. But the theoretical vulnerability remains for future litigants to exploit. The tension between party autonomy and the court's duty to uphold public policy will continue to be tested in future set-aside applications where the factual matrix of illegality is more firmly established.
Litigants facing unfavourable awards will inevitably search for mandatory rules of the place of performance that were overlooked during the arbitration. The DIFC Courts' approach suggests a strong presumption against allowing such post-award pivots, heavily penalising parties who attempt them. The financial consequences of such unmeritorious applications are severe, serving as a structural deterrent against speculative set-aside claims. Justice Le Miere did not merely order the dismissal of the claim; he awarded indemnity costs against Nazeer.
Nazeer attempted to resist the indemnity costs order by pointing to procedural irregularities by the Defendant, specifically regarding the late filing of the Statement of Costs.
In breach of RDC 38.36 Noah sent that schedule in an email to the Claimant half an hour before the Hearing.
Despite this technical breach of the Rules of the DIFC Courts (RDC), the Court maintained its focus on the substantive lack of merit in the set-aside application itself. Justice Le Miere clarified the pragmatic purpose behind the procedural rule regarding costs schedules:
In my view, the purpose of the rule is to enable the parties to make submissions to the Court on the Hearing of the Application about the costs claimed and for the Court to be able to assess the costs at the Hearing.
Because Nazeer was still able to make submissions on the costs, the late filing did not save it from the punitive financial consequences of its unmeritorious challenge. The Court's reasoning on indemnity costs establishes a clear baseline for how the DIFC Courts view attempts to re-litigate arbitral findings under the guise of public policy challenges.
If that was the reason for Nazeer bringing the Application, and Mr Napoleon did not submit it was, that would be a circumstance justifying an award of indemnity costs if the application was otherwise unmeritorious. In such circumstances the cost to an applicant making an unmeritorious application should be to pay all of the costs of the respondent, reasonably incurred and in a reasonable amount.
Consequently, the Court issued a definitive financial penalty:
The Claimant shall pay the Defendant’s costs of the Claim in the sum of USD 132,000.
This punitive costs order aligns with the DIFC Courts' broader strategy of protecting the integrity of arbitral proceedings from collateral attacks, a theme similarly explored in ARB-009-2019 ARB 009/2019 Ocie v Ortensia and ARB 027/2024 Nalani v Netty. The message to the arbitration bar is unequivocal: the DIFC Courts will not serve as an appellate forum for parties seeking to correct their own strategic omissions made during the arbitral process.
Yet, procedural deterrence does not resolve the substantive legal ambiguity. What happens when a party does plead mandatory foreign law, but the tribunal, applying the chosen governing law, ignores it? Or what if the tribunal sua sponte applies mandatory foreign law against the parties' wishes, leading to a challenge that the tribunal exceeded its mandate under Article 41(2)(b)(i)? These scenarios represent the next frontier of DIFC arbitration jurisprudence.
The decision effectively punts the hardest questions about transnational public policy down the road. By resolving the case on the firm grounds of waiver and factual findings regarding the nature of the Allotment Agreement, the Court avoided having to delineate the exact boundaries of UAE public policy regarding foreign illegality. Future tribunals seated in the DIFC must navigate this minefield carefully. When faced with contracts performed in jurisdictions with stringent mandatory rules, arbitrators must balance their duty to respect the parties' choice of law with their duty to render an enforceable award. While they are not required to act as inquisitors hunting for unpleaded foreign law, they cannot entirely blind themselves to glaring illegalities that might trigger public policy scrutiny at the enforcement stage. The underlying doctrinal questions regarding the interplay of party autonomy, mandatory foreign law, and UAE public policy remain unresolved, waiting for a case where the procedural facts do not so heavily favour the respondent.