In Brief:
- Two recent DIFC Courts cases in which our firm has been involved: Princeton v Persephone and Oliwia v Omysha illustrate the DIFC Courts’ changing approach to the supervision of arbitrations seated in the DIFC and the recognition and enforcement of foreign awards.
- In Princeton v Persephone, Hadef acted for the successful Claimant in the first DIFC Courts decision to set-aside an arbitral award at first instance, and the first in general to set aside an award in full.
- Justice Pelling applied the Oheo Bank v Parker framework to set-aside the Final Award after finding that the majority tribunal had decided the case on issues that were never pleaded, denying Princeton any opportunity to be heard.
- The DIFC Courts’ judgment in Princeton reiterates the principle that a tribunal's mandate is defined by what the parties have actually pleaded, and that arbitrators must invite submissions on any unpleaded point before deciding such point or risk having their award set aside under the DIFC Arbitration Law.
- In Oliwia v Omysha, the DIFC Courts rejected the Claimant's contention that they should recognise a USD 628 million Russian arbitral award under the summary procedure in RDC Part 43, holding that where the validity of the underlying arbitration agreement is challenged, a trial may be necessary to determine the question.
- Read together, the two decisions confirm that the DIFC Courts will neither defer uncritically to tribunals that stray beyond the pleaded case nor enforce awards summarily where the Defendant raises a credible challenge to the existence of the arbitration agreement itself.
The DIFC Courts have long been regarded as one of the most arbitration-friendly curial courts in the world. That reputation has been well-earned: the Courts have consistently adopted a “maximum support, minimum interference” approach to the supervision of DIFC-seated arbitrations, and for many years that approach extended, in practice, to a near-total reluctance to set aside arbitral awards under Article 41 of the DIFC Arbitration Law, as challenges were almost invariably dismissed.
That perception changed decisively in April 2026, when the DIFC Court of Appeal handed down its judgment in Oheo Bank v Parker. For the first time at appellate level in the DIFC, the Court of Appeal set aside parts of an arbitral award under Articles 41(2)(a)(ii) and (iii), and in doing so articulated a comprehensive framework for analysing such challenges.
That framework has now been applied at first instance in Princeton v Persephone, decided by H.E. Justice Mark Pelling in August 2026. Hadef & Partners acted for the Claimant, Princeton, in these proceedings.
The decision is significant not only because it is the first first-instance application of the Oheo Bank framework, but also because it goes further than Oheo Bank itself: whereas Oheo Bank resulted in a partial set aside of specific paragraphs of the award, Princeton resulted in a full set aside of the entire Final Award.
Background of the Dispute
The dispute concerned the sale of diesel (the “Cargo”). Following execution of the Contract in early February 2024, the Defendant (Persephone) paid approximately 85% of the agreed Purchase Price but left the balance unpaid. As a consequence of Persephone’s failure to pay the entire Purchase Price, Princeton served a notice of material breach on Persephone and ultimately resold the Cargo to third parties in mitigation of its losses.
Princeton then refunded part of the Purchase Price and kept the balance as compensation for the damages it had suffered as a result of Persephone’s breach.
Persephone commenced arbitration seeking full recovery of the sums it had paid.
The Arbitration
The arbitration was conducted entirely on paper. The facts were undisputed, the central issue of the arbitration was a point of law: whether Persephone's admitted failure to pay the full Purchase Price constituted a repudiatory breach entitling Princeton to terminate the contract. Persephone admitted non-payment but contended that the payment obligation was a warranty rather than a condition, and that the only remedy for late payment was contractual interest. Critically, Persephone never pleaded that the parties had, by their conduct, waived the agreed payment date, varied the contract, or created any estoppel, nor that it was ready, willing, and able to pay the balance.
The Majority Award and Dissenting Opinion
By a majority, the Tribunal issued an award in January 2026 in favour of Persephone. The majority's reasoning rested on conclusions that had never been pleaded: that there was no agreed date for payment by reference to the parties' conduct; that the parties had, by their conduct, rendered the contractual deadline “moot”; and that Princeton had no valid reason to doubt Persephone's ability to pay the balance.
The dissenting arbitrator disagreed with the majority on the central issues, finding that full payment of the Purchase Price was a condition of the contract, that Persephone's conditioning of further payment on the “authorisation of final receivers” constituted a repudiatory breach, and that Princeton’s termination was proper at common law and under section 48 of the Sale of Goods Act 1979. The dissenting arbitrator opined that the majority had “decided an unpleaded case” and had “wrongly sought to improve the Claimant's pleaded case.”
Justice Pelling noted that the dissenting opinion was of limited assistance because it was “intermingled” with allegations of errors of law and fact over which the supervisory court has no jurisdiction; nonetheless, the dissent lent support to Princeton's contention that the majority had strayed beyond the pleaded case.
The Oheo Bank v Parker Framework
Before considering the Court of First Instance’s decision, it is useful to consider the guidance on the grounds for setting aside an award under Articles 41(2)(a)(ii) and (iii) of the DIFC Arbitration Law, which was provided by the DIFC Court of Appeal (comprising Chief Justice Wayne Martin and Justices Sir Peter Gross and Patrick Keane) in Oheo Bank v Parker. The DIFC Court of Appeal distilled the following principles:
- The Courts will be slow to intervene and will not seek to find errors in an award. The starting principle is to minimise court interference in the interests of arbitral autonomy and finality.
- The touchstone for intervention is whether the applicant can demonstrate “real unfairness or real practical injustice” involving a failure to meet “minimum standards of due process and substantive fairness.”
- Article 41(2)(a)(ii) (which allows the Courts to set aside an award where a party was unable to present its case) protects a party from injustice, not from the consequences of its own decisions. There is a distinction between a party not having an opportunity to present its case and a party not recognising or taking an opportunity which exists to do so.
- When considering whether an aware should be set aside (under Article 41(2)(a)(iii)) because it deals with matters beyond the scope of submission to arbitration, the Courts should “look at matters in the round”, having regard to the “five sources” (pleadings, agreed lists of issues, opening statements, evidence adduced, and closing submissions) to determine what issues are in play and the scope of the submission to arbitration.
- While the power to set aside is discretionary, the Court of Appeal doubted whether the Courts would refuse to exercise that discretion where an applicant has otherwise clearly brought his claim within the scope of one or more of the grounds.
- The Court of Appeal endorsed the test that “it suffices for that party to show that the submissions it would have made (had it been granted the opportunity to make them) were reasonably arguable and could reasonably (not fancifully) have made a difference.”
The Princeton Decision: First Application at First Instance
Princeton v Persephone is the first decision at first instance to apply the Oheo Bank framework. Justice Pelling's analysis tracks the Court of Appeal's guidance and provides a model application of the principles to a fact pattern that is, in many respects, more stark than Oheo Bank itself.
In respect of Article 41(2)(a)(ii), Justice Pelling accepted Princeton's submission that the majority had decided the case on issues that had never been pleaded and in respect of which Princeton had been denied any opportunity to be heard. He identified three distinct unpleaded issues:
- The majority concluded that there was no agreed date for payment, despite this being common ground between the parties. Persephone had throughout the arbitration accepted that payment was due no later than February 2024.
- The majority concluded that the parties' conduct had rendered the contractual deadline “moot”, despite no party having pleaded waiver, variation, or estoppel.
- The majority concluded that Princeton had no valid reason to doubt Persephone's ability to pay, despite Persephone never having pleaded readiness, willingness, or ability to pay.
Justice Pelling held that, had the Tribunal invited submissions on these points, Princeton would have been able to deploy a “battery of submissions and possibly evidence” addressing each point. In particular, Princeton would have relied on the express payment terms of the February 2024 agreement, the entire agreement clause (which prohibited changes other than in writing), and the terms of Persephone's own February 2024 email, which made clear that the balance would be paid only “after authorisation of final receivers of payments”, a statement that, on its face, contradicted any suggestion of present ability to pay.
As for the ground under Article 41(2)(a)(iii), Justice Pelling applied the Oheo Bank “matters in the round” approach. He confined his analysis to the four documents that mattered: each party's pleading and each party's response to the Tribunal's questions. He concluded that none of the issues on which the majority relied were in play when those four documents were considered together. The unpleaded issues “simply did not feature at all in any of them.”
Full Set-Aside versus Partial Set Aside
A notable point of contrast between the two decisions lies in the scope of the relief granted. In Oheo Bank, the Court of Appeal set aside only specific paragraphs of the Partial Final Award, leaving the remainder of the Award intact. The Bank's appeal under Article 41(2)(a)(iii) was dismissed, and the Court of Appeal was careful to emphasise that it was not revisiting the merits of the successful claim. The partial set aside reflected the fact that the offending paragraphs could be excised without destabilising the Award's overall structure.
In contrast, in Princeton, Justice Pelling ordered a full set aside of the Final Award. He considered whether severance was possible but concluded that it was not: the unpleaded conclusions formed the foundation of the Tribunal's reasoning on the central issues, and excising them would leave the parties with an award that “neither party wants or which none of the arbitrators considered appropriate.”
The contrast illustrates an important practical point: while Article 41(2)(a)(iii) expressly contemplates partial set aside where offending decisions can be separated from those that are properly within the scope of the submission, partial set aside will not be available where the unpleaded issues permeate the tribunal's dispositive reasoning. Practitioners advising on set-aside applications should therefore consider at the outset whether the challenge is capable of being confined to discrete parts of the award or whether it goes to the award's foundation.
Article 9 Waiver
Justice Pelling briefly addressed and rejected Persephone's reliance on Article 9 of the Arbitration Law (waiver of right to object). Persephone had argued that Princeton should have raised its concerns during the arbitration proceedings, and by not doing so had waived its right to challenge the Award. Justice Pelling held that the points giving rise to the challenge could not have been known to the parties prior to receipt of the Award, and that Princeton had taken the steps permitted by law within the prescribed time.
Oliwia v Omysha [2026] DIFC ARB 003
The changing approach of the DIFC Courts is also obvious from another case in which our firm is involved, namely Oliwia v Omysha [2026] DIFC ARB 003, which concerns an application for recognition and enforcement of a USD 628 million Final Arbitral Award issued under the auspices of the International Commercial Arbitration Court (MKAS) at the Chamber of Commerce and Industry of the Russian Federation. The Defendant, represented by Hadef, resisted enforcement on the basis that the arbitration agreements had been forged and that he had never agreed to arbitrate. Justice Roger Stewart accepted that the Defendant has a good arguable case that his signature had been forged and that the matter should be determined at a trial. The Claimant contended that the Courts should nonetheless recognise the Award under the summary procedure in RDC Part 43, with the Defendant's remedy being to apply under RDC 43.70 to set aside the recognition order within 14 days of service. rejected that approach. The Courts rejected the Claimant's contention that there could never be a trial of disputed issues in DIFC enforcement proceedings, holding that where the validity of the arbitration agreement itself is challenged, the entire basis of the Award is in issue and a trial may be necessary to determine the question. Drawing on the UK Supreme Court's decision in Dallah v Ministry of Religious Affairs of Pakistan [2011] 1 AC 507, the Courts emphasised that an arbitral tribunal's decision as to its own jurisdiction cannot bind a party who disputes that any valid arbitration agreement ever existed.
The decision is significant because it marks a further evolution in the DIFC Courts supervisory approach: while the Courts remain committed to the pro-enforcement policy embodied in the New York Convention, it will not automatically recognise or enforce an award where it is arguable that a party never entered into the underlying arbitration agreement. Read alongside Princeton, the decision confirms that the DIFC Courts will neither defer uncritically to tribunals that stray beyond the pleaded case nor enforce awards summarily where the Defendant raises a credible challenge to the existence of the arbitration agreement itself.
Takeaways for Arbitrators and Parties
Princeton and Oliwia are two recent cases in which our firm has been involved that, taken together, illustrate the DIFC Courts’ changing approach to the supervision of arbitrations seated in the DIFC and the recognition and enforcement of foreign awards.
The central lesson of Princeton is that the tribunal's mandate is defined by what the parties have actually pleaded. Arbitrators must therefore confine their reasoning to the issues raised in the pleadings and, if an unpleaded point arises, invite submissions before deciding it. Parties, in turn, must plead every available position expressly, including waiver, variation, estoppel and readiness, willingness and ability to pay, so as to preserve those arguments and to define the boundaries of the tribunal's jurisdiction.
The Oheo Bank threshold remains high: intervention is reserved for “real unfairness or real practical injustice” involving a failure to meet minimum standards of due process and substantive fairness. Arbitrators must ensure that each party has a fair opportunity to address every issue on which the award ultimately rests. Parties preparing a set-aside application should focus their evidence on demonstrating concrete prejudice rather than on challenging the merits of the tribunal's reasoning. Where possible, the Courts will set aside an Award in part rather than in full.
The Princeton decision demonstrates that the DIFC Courts’ mantra of “maximum support, minimum interference” does not mean uncritical deference. The DIFC Courts still apply proportionate scrutiny where minimum standards of procedural fairness have not been met. This evolution reinforces rather than dilutes the DIFC's arbitration-friendly reputation, because parties can now have confidence that the supervisory court will intervene where fundamental fairness requires it.
That care was equally visible in Olan v Obelix (ARB 053/2025 and ARB 054/2025) where only a month earlier Justice Pelling dismissed an application to set aside a DIAC final award after applying the Oheo Bank framework. Read together, the two decisions show that the DIFC's supervisory court will intervene decisively where minimum standards of fairness are not met, but will not allow Article 41 to be used as a backdoor merits appeal.
The DIFC’s somewhat changing approach is also obvious from Oliwia v Omysha where the DIFC Courts rejected the Claimant’s rather ambitious argument that the DIFC Court should recognise an award even if the very existence of an arbitration agreement was in issue.
For further information related to this article, please contact Zarghona Fazal, Partner, Arbitration and Head of DIFC/ADGM Litigation at z.fazal@hadefpartners.com and Michael Farchakh, Senior Associate, Dispute Resolution at m.farchakh@hadefpartners.com.
This article is intended for general informational purposes only and does not constitute legal advice. Readers should seek independent legal counsel in relation to their specific circumstances.