September 16, 2026

Olan v Obelix DIFC Court Builds on Oheo Bank v Parker with First Guidance on Exercising the Article 41 Set Aside Discretion

Authors:

Introduction

In our 9 July 2026 legal update on Oheo Bank v Parker, we examined the DIFC Court of Appeal's landmark decision to set aside parts of a DIAC arbitral award—the first such ruling under the DIFC Arbitration Law. That decision established that the Court will intervene where there has been "real unfairness or real practical injustice" involving a failure to meet minimum standards of due process.

Olan v Obelix now complements that decision. Where Oheo Bank v Parker addressed when the Court will set aside an award, Olan v Obelix provides the first substantive guidance on how the Court should exercise its discretion once an Article 41 ground is established—and, critically, when it should decline to do so.

In this case, the DIFC Courts dismissed an application to set aside a DIFC-seated DIAC arbitral award. The Court set out a structured framework for the treatment of "errors and omissions" under Article 41 of the DIFC Arbitration Law, along with a rationale as to how the Court is likely to exercise its set aside discretion.

This is the first DIFC authority offering substantive guidance on that discretion, and its framework will govern all future set aside applications heard under the DIFC Arbitration Law. Together with Oheo Bank v Parker, these two decisions form the emerging framework for set aside applications in the DIFC.

Background

The underlying arbitration arose out of a contract for the development of a mall in Dubai. The contract was governed by Dubai and UAE law, and contained a DIAC arbitration clause with the DIFC as the seat. The tribunal ultimately found in favour of Obelix, ordering Olan to pay AED 144,256,287.49—being the balance Obelix argued was owed to it under the contract.¹

Olan applied to set aside the award under Article 41; Obelix cross-applied for recognition and enforcement. The Court consolidated the proceedings and stayed enforcement pending determination of the set aside application.

Olan advanced five grounds for set aside:

the tribunal failed to determine extension-of-time and liquidated-damages issues;
Olan was denied the right to authenticate a notice of variation it alleged was forged;
the tribunal refused to appoint its own delay expert;
the tribunal exceeded its authority in deciding allegedly premature retention and final-account claims; and
the award conflicted with UAE public policy because the tribunal relied on the allegedly forged notice.

The DIFC Court's reasoning

Article 41 of the DIFC Arbitration Law

Article 41(1) makes an application to the DIFC Court the exclusive recourse against a DIFC-seated award. Article 41(2) sets out two categories of grounds: those the applicant must prove (Article 41(2)(a)), and those the Court may find of its own motion (Article 41(2)(b)). In either case, the Court "may" set aside the award—the language is discretionary, not mandatory.

Grounds requiring proof by the applicant

Under Article 41(2)(a), an applicant must prove that:

a party to the arbitration agreement lacked capacity, or the arbitration agreement was invalid under the applicable law;
the applicant was not given proper notice of the appointment of an arbitrator or the arbitral proceedings, or was otherwise unable to present its case;
the award decided a dispute outside the terms or scope of the submission to arbitration, subject to the possibility of setting aside only the separable portion dealing with matters not submitted; or
the tribunal's composition or the arbitral procedure did not comply with the parties' agreement, unless that agreement conflicted with a mandatory provision of the Law, or, absent agreement, did not comply with the Law.

Grounds the court may find on its own motion

Article 41(2)(b) additionally permits the Court to set aside an award if it finds that the subject matter is not capable of settlement by arbitration under DIFC law; the dispute is mandatorily referred to another body or tribunal; or the award conflicts with the public policy of the UAE.

The Court's guidance on the exercise of discretion

The Court noted that Article 41(2), "is framed in the language of discretion, not obligation."² However, the Court observed that the DIFC Arbitration Law does not prescribe how that discretion should be exercised. Although Lachesis v Lacrosse had confirmed that the Court possesses that discretion, it did not explain the principles governing that exercise.

Thus, the Court filled the gap, and drew a distinction between two categories of errors and omissions:

Category 1: errors and omissions (whether formal, technical or otherwise) that fall within the scope of Article 41(2) which cannot be shown to have had at least a possible material effect on the terms of the challenged award; and
Category 2: errors and omissions which either had or may have had such an effect.

For Category 1, the Court "should generally refuse" to set aside arbitral awards.³ However, for Category 2, the Court will "likely"⁴ set aside an arbitral award subject to the following qualifications:

The applicant must first establish an Article 41 ground: Before the Court considers the possible effect of an error or omission on the award, the applicant must establish that the error or omission falls within one of the statutory grounds at Article 41(2).⁵
The applicant then needs to demonstrate that, but for the error or omission, the tribunal may well have come to a different view and produced a significantly different outcome: That is, the counterfactual outcome must be "significantly different." The practical effect of this is that the court will be concerned with real prejudice and not errors or omissions that could have affected only an immaterial aspect of the tribunal's reasoning or conclusions.⁶ If the applicant can demonstrate this, then set is aside is likely to be the "appropriate response."⁷
Only the affected part may be set aside where severance is available: The Court referred to setting aside "the award (or if and to the extent it is permissible, the relevant part of the award)." That qualification reflects Article 41(2)(a)(iii), which permits the Court to set aside only the portion of an award that is affected by the error or omission. This is also consistent with the Court's characterisation of setting aside as a remedial, not punitive, measure—as to which, see below.
Set aside is remedial, not punitive: The Court explained that setting aside will likely be appropriate where the qualifying error or omission might have produced a "significantly different" outcome because it may be the only effective remedy for the resulting substantial injustice.⁸ Conversely, refusing to set aside in such circumstances could undermine confidence in the DIFC Courts as an effective supervisory court for DIFC-seated arbitrations.
In any event, setting aside remains discretionary, rather than automatic: Even where the applicant can satisfy these qualifications, the judgment states that setting aside is "likely" to be the appropriate response—not that it must invariably follow.⁹ The Court's choice of language preserves judicial discretion and allows account to be taken of the circumstances of the particular case.

While not discussed in the judgment, it is also important to note that Article 41(4) provides a further option: where appropriate and requested by a party, the Court may suspend proceedings to allow the tribunal to cure the error or omission, preserving the award while remedying the procedural injustice. Accordingly, even where an error or omission falling within the scope of Article 41(2) and satisfying these qualifications has been established, immediate setting aside is not necessarily the only available response.

Application to the grounds

The Court applied this framework to the grounds relied upon by Olan, and rejected them all, reasoning as follows:

Ground 1 (EOT and liquidated damages): The claims had been withdrawn or otherwise dealt with by the tribunal, and the complaint did not identify an omission capable of producing a "significantly different" outcome. Whether the tribunal was right or wrong in its dealing these claims was a merits issue, not an Article 41(2) error. The Court held this was "no more than an impermissible attempt to appeal from factual and legal findings made by the Tribunal."¹⁰
Ground 2 (document authentication/forgery): Olan had presented its forgery case in the arbitration, including handwriting evidence, and the tribunal rejected it. Disagreement with that assessment did not establish inability to present one's case. Nor was there evidence that access to the original document would have produced a "significantly different" outcome.
Ground 3 (tribunal-appointed expert): The tribunal had discretion to appoint its own expert but no obligation to do so. Olan had submitted its own delay expert and could challenge Obelix's expert—the refusal to appoint a further expert did not deny equal treatment or prevent Olan from presenting its case.
Ground 4 (excess of authority): The issue concerned quantification of existing claims submitted to the arbitration, not decisions on matters outside the submission. Article 41(2)(a)(iii) is concerned with the latter, not the former.
Ground 5 (UAE public policy): the public-policy exception is reserved for exceptional circumstances requiring very strong evidence—the award must "'fundamentally offend the most basic and explicit principles of justice and fairness,' or [demonstrate] 'intolerable ignorance or corruption on the part of the arbitral tribunal.'" Olan's case was simply another formulation of its disagreement with the tribunal's assessment.

Thus, the Court dismissed Olan's set aside application, and lifted the stay on the enforcement and recognition order with immediate effect.

Practical implications

Olan v Obelix fills a previously unresolved gap in DIFC arbitration jurisprudence. It goes beyond recognising the existence of the Article 41 discretion and provides a structured framework for its exercise.

The key takeaways for practitioners are as follows:

Identify the specific Article 41(2) ground. Criticism of the tribunal's reasoning or findings will not suffice. The applicant must connect the alleged error or omission to one of the exhaustive statutory grounds.
Set aside applications must be framed around materiality. The applicant must show that the error could have produced a "significantly different" outcome. Applications that cannot clear this hurdle are unlikely to succeed.
Do not treat Article 41 as a merits appeal. The Court made clear that disagreement with the tribunal's interpretation of the contract, assessment of evidence, or quantification of claims is not a basis for set aside. Article 41 is not a back door for dissatisfied parties to re-litigate the merits.
Article 41 remains, above all, a discretionary remedy. Even where an applicant clears every hurdle, the Court retains discretion to refuse set aside.The Court's use of "likely" rather than "must" preserves room for the Court to consider the circumstances of the particular case, including whether a lesser remedy (such as remission under Article 41(4)) would be more proportionate. Applicants should not assume that proving an error or omission guarantees relief.