Dubai Court of Cassation affirms inadmissibility of appeal and clarifies arbitration–assignment interplay in decision 1685/2025/445

4 min 36 sec January 16, 2026 (Edited) الترجمة العربية

Introduction

The Dubai Court of Cassation (“DCC”) issued a significant decision in case number 1685/2025/445 delivered on 30 December 2025. The judgment concerns a commercial dispute concerning the interaction between an assignment of rights, the effect of arbitration clauses upon non-parties and successors, and the non-appealability of interlocutory rulings under Article 152 of the Civil Procedure Law. The Court ultimately ruled the cassation appeal inadmissible and affirmed the lower courts’ treatment of the arbitration objection.

This judgment crystallizes three key strands of commercial litigation in Dubai: first, the strict statutory limits on appealing interlocutory decisions before a final judgment; second, the principle of privity of contract and its recognized extensions to successors under assignments; and third, the evidentiary and legal consequences of a pre-contract letter of award that is silent on arbitration when contradicted with a later contract containing an arbitration clause. The DCC held that the challenged ruling was not final and did not fall within the statutory exceptions that allow an immediate appeal, leading to a finding of inadmissibility; at the same time, the Court endorsed the lower courts’ reasoning that the assignment in favour of the bank rendered the arbitration objection untenable on the facts presented.

Background

The dispute arose from banking facilities extended to a contractor and a subsequent assignment by the contractor in favour of the bank of all present and future receivables under a project with the employer (the appellant). The bank, as assignee, sued the employer before the Dubai Court of First Instance seeking a declaration of validity and enforceability of the assignment and recovery of the assigned sums with interest. The appellant resisted jurisdiction, invoking an arbitration clause in the  post-dated Construction Contract, and argued that the bank was bound to arbitrate. The Court of first instance  rejected the arbitration objection and appointed a panel of experts. The employer appealed this decision before the Court of Appeal which was dismissed; The employer then filed an appeal before the Court of Cassation.

Key findings

The DCC reiterated its settled position that the question whether a judgment is amenable to appeal is a matter of public order. It emphasized the rule in Article 152 of the Civil Procedure Law that judgments issued during the course of proceedings (i.e., interlocutory rulings) are generally not appealable until a final judgment terminates the entire dispute, save for narrow exceptions such as urgent or interim orders, stays of proceedings, decisions amenable to compulsory enforcement, and rulings on jurisdiction or non-jurisdiction where the court lacks jurisdiction to rule on the case. .

The Court further clarified that, even with respect to stand-alone jurisdictional rulings, immediate appealability requires that the lower court’s decision entails the absence of judicial authority to adjudicate the dispute, such as when the court usurps the jurisdiction of another adjudicatory body or contravenes statutory jurisdictional rules. If the record does not demonstrate such a lack of adjudicatory authority, the interlocutory ruling is not independently appealable.

On the contractual framework, the Court reaffirmed the doctrine of privity: contracts bind and benefit only their parties and do not, as a rule, produce effects vis-à-vis third parties. However, it equally confirmed the established exceptions concerning succession and assignment: arbitration agreements, though binding inter partes, can extend to a universal or a particular successor in respect of the transferred personal right, unless the original contract provides otherwise. In the case of assignments of rights or contracts, the arbitration agreement passes with the assigned right as one of its accessories, enabling the assignee to invoke arbitration, and correspondingly allowing the obligor to plead the arbitration clause against state-court litigation.

At the same time, the DCC set out the general law of assignment as recognized in Dubai practice: assignment transfers the claim from assignor to assignee by consent without the debtor’s approval, but is not enforceable against the debtor until  it is notified or otherwise has knowledge of it. It clarified also that in the absence of specific statutory provisions in Dubai governing assignment vis-à-vis debtors and third parties, general principles apply and proof of the debtor’s knowledge by any means suffices. The interpretation of the assignment and its effect is a matter for the trial court so long as its reading is plausible on the record.

Applying these principles, the DCC upheld the lower courts’ conclusion that the employer’s arbitration objection failed for two reasons. First, the letter of award governing the project relationship between the employer and the contractor contained no arbitration clause and did not clearly incorporate one by reference, which undermined the employer’s reliance on arbitration at the threshold stage of the bank’s assignment-based claim. Second, the assignment in favour of the bank predated the subsequent contractor–employer contract that allegedly included an arbitration clause; after notification of the assignment, the employer’s later agreement with the contractor could not be set up to diminish the assignee bank’s position.

The Court also rejected the employer’s characterization that the instrument was not a true assignment but merely a guarantee supporting banking facilities, reiterating that assignment is perfected by consent between assignor and assignee without the debtor’s approval, and that the contractor’s initiation of arbitration did not alter the legal effect of the prior assignment in transferring the right to the bank.

Having determined that the appealed ruling did not terminate the litigation and did not fall within any of the statutory exceptions for immediate appeal, the Court held that the cassation appeal was inadmissible pursuant to Article 152 of the Civil Procedures Law.