Enforcing foreign arbitral awards and judgments in Dubai

The UAE (of which Dubai is part) ratified the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), without reservations, in 2006. The New York Convention provides very limited grounds for refusing to enforce international arbitral awards. It also requires that:
 
“there shall not be imposed substantially more onerous conditions or high fees or charges on the recognition or enforcement of arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitration awards”.
 
Accordingly, the default position within Dubai should be that foreign arbitral awards are enforced by the courts relatively quickly and easily save where the relatively limited preconditions within the New York Convention are not satisfied.
 
This is far easier for parties than the position pre-2006 when the UAE Civil Procedure Laws (which still govern the enforcement of foreign judgments) applied. Potential reasons to set aside an award within the Civil Procedure Laws (chapter four of which covers foreign arbitral awards) include, by way of example:
 
“Execution may not be ordered unless the following was verified:-

1. State courts have no jurisdiction over the dispute on which the judgment or the order was passed and that the issuing foreign courts have such jurisdiction in accordance with the International Judicial Jurisdiction Rules decided in its applicable law.
2. Judgment or order was passed by the competent court according to the law of the country in which it was passed.
3. Adversaries in the lawsuit on which the foreign judgment was passed were summoned and duly represented.
4. Judgment or order had obtained the absolute degree in accordance with law of the issuing court.
5. It does not conflict or contradict with a judgment or order previously passed by another court in the State and does not include any violation of moral code or public order.”

 
Public policy considerations also, historically, made the enforcement of foreign arbitral awards difficult within the UAE and Dubai specifically. Public policy, which also imports Sharia law, comes through a range of provisions with the Civil Code. This, combined with the lack of binding precedent within the civil system, meant that predicting the outcome of cases was difficult. Perhaps the most well-known example of this was the case ofInternational Bechtel Co Ltd v Department of Civil Aviation of the Government of Dubai.[4]In that case the UAE courts refused to enforce a US$25 million arbitration award won by Bechtel on the grounds that the arbitrator had failed to swear in witnesses in the manner prescribed by the Civil Procedure Code.
 
The UAE’s position on enforcement has not, however, been entirely straightforward since the New York Convention was ratified. Indeed, it took until 2011 for the UAE courts to enforce their first foreign award under the New York Convention.
 
More positively, in 2012 the case of Airmech v Macsteel was widely welcomed by practitioners as evidence that a more pro-arbitration culture was developing in Dubai. In that case a payment dispute had arisen under a contract governed by the law in the Dubai International Financial Centre (“DIFC”) but which provided for a DIFC-LCIA arbitration with a seat in London. After several appeals, the Court of Cassation (the highest court in Dubai) enforced the award with an unequivocal ruling that foreign arbitral awards would be enforced in Dubai under the New York Convention.
 
Then in 2013 the Court of Cassation refused to recognise two foreign arbitral awards under the New York Convention. The awards in question arose out of the case of CCI v Ministry of Irrigation of the Democratic Republic of Sudan and related to awards made in the late 1980s in an arbitration seated in Paris. Some questioned whether this was retreat from the pro-arbitral stance seen in Airmech v Macsteel. However, the debtor in this case had no assets in the jurisdiction or indeed any physical presence in the jurisdiction. As such the Dubai Court’s reluctance to enforce is not unusual as such. Indeed, the US courts operate a similar policy.
 
September 2015, however, saw a much more positive development. In a shipping case an award from an ad hoc arbitration seated in London was enforced by the Dubai Court of Appeal. Arguments as to whether the arbitration clause within a charterparty bound the party resisting enforcement (which had already been examined in the London arbitration) were rejected. The judgment acknowledged the applicability of the New York Convention and upheld the award.
 
In contrast, trying to enforce foreign judgments in Dubai outside the DIFC area remains difficult. The Dubai courts remain extremely reluctant to enforce judgments from courts in jurisdictions with whom they do not have a bilateral treaty in place.
 
However, a recent judgment from the DIFC courts in 2015 offers a potential way in. Unlike the courts in the rest of Dubai, the DIFC courts (which have their own legal and regulatory framework for civil and commercial matters) are required to recognise and enforce final and binding foreign court judgments (see Article 7 of Law No. 12 of 2004 as amended).
 
In the recent DIFC case of DNB Bank ASA v Gulf Eyadah Corporation and Gulf Navigation Holdings, the Court of Appeal confirmed that the DIFC courts can have jurisdiction to enforce a foreign judgment, even where the party against whom enforcement is sought does not have assets in the DIFC jurisdiction. This is potentially very useful as the Court of Appeal also confirmed that this means the foreign judgment is essentially converted into a DIFC judgment. The DIFC courts can then refer the judgment recognising the foreign judgment to the Dubai courts, allowing (at least in theory) it to be enforced in “onshore” Dubai much more easily. This has the potential to greatly increase the speed and reliability of enforcing foreign judgments (using the DIFC courts as a conduit) within Dubai.

Enforcing arbitral awards and foreign judgments in Dubai is not then straightforward but in the case of international arbitral awards it is much easier than it was pre-2006. It remains to be seen what the Dubai courts make of the DIFC decision in DNB Bank ASA v Gulf Eyadah and others and whether that eases the process of enforcing foreign judgments in Dubai.