ENFORCEMENT OF FOREIGN JUDGMENTS IN THE UAE BY KUSHAGRA ARORA
Simplifying and contributing to the judicial nexus worldwide: In a globalised era, where business operations transcend geographical boundaries, countries and governments enter into bilateral/multilateral conventions or treaties to aid reciprocal recognition and enforcement of foreign judgments. With people and assets easily operating across borders, there are a multitude of disputes affecting corporates and PSUs that span multifarious jurisdictions. In this regard, another astounding foresightedness championed with prodigious effort, has orchestrated the United Arab Emirates as an integral part of the international comity.
The recognition and enforcement of foreign judgments has garnered great practical significance across all legal frameworks over the decades, and continues to evolve exponentially. For instance, in the 19th century, there existed 39 treaties between German States, and fewer with foreign countries. While the early treaties solely provided for a comprehensive mutual recognition of any judgment, the modern ones began to require additional elaborate conditions such as timely notice, jurisdiction, and compatibility of public policy with the enforcing State.
It was in the 20th century that we started to see attempts to move beyond bilateral agreements to multilateral conventions. The Uniform Enforcement of Foreign Judgments Act, originally announced in 1948, and later revised in 1964 applied only to sister states in the US and federal judgments. However, both the 1962 and 2005 Recognition Acts provided that, once a foreign country judgment was recognised, it was enforceable in the same manner and to the same extent as a sister state judgment.
In the late 1900s, the Hague convention intended to develop a standardised procedure by which countries involved in international commerce, could resolve conflicts in a forum where foreign judgments be recognised and enforced by courts. Subsequently in 2005, the Uniform Foreign-Country Money Judgments Recognition Act facilitated the recognition of a foreign judgment in United States of America Courts to provide legal certainty that helped aid the recognition and enforcement of United States judgments abroad.
In a contemporary today, we are privy to countries being liberal in recognising and enforcing foreign judgments; thereby providing a legally robust, revolutionary and enterprising platform to accelerate cross-border trade and transactions throughout the world.
RECOGNISING & ENFORCING A FOREIGN JUDGMENT
The United Arab Emirates (UAE) has a rich tapestry of varied cultures and nationalities. And to ensure reciprocal recognition and reinforcement of foreign judgment, spearheading the leadership’s progressive vision, the UAE has signed several bilateral legal and judicial cooperation treaties with countries like France, Afghanistan, Egypt, Jordan, Nigeria, Morocco, India, Iran, Pakistan, and the United Kingdom, among others.
The UAE is also party to numerous multilateral conventions on the recognition and enforcement of foreign judgments, which include the Riyadh Convention on the Judicial Cooperation between the States of the Arab League 1983 (entered into without reservations) and the Gulf Cooperation Council (GCC) Convention for the Execution of Judgments, Delegations and Judicial Notifications of 1996 (entered into without reservations). The enforcement of judgments follow different processes under each convention:
Riyadh Convention: A formal request must be made to the competent court by the contracting party. Enforcement process begins after the request has been approved.
GCC Convention: The procedure is governed by the law of the state where the judgment is executed. Important documentation includes true copy of the judgment, a certificate declaring the judgment to be final and documents, which confirms that the defendant was properly notified in cases where ex-parte judgment is given.
Paris Convention: No specific legal framework has been recognised. The application for recognition and enforcement of the foreign judgment shall be submitted before the competent court of first instance within the jurisdiction in which the party wants to enforce the judgment by following the usual procedure of bringing a claim under article 235(2) of the UAE Civil Procedures Code.
The application of the above treaties entered into by the UAE extends to the Dubai International Financial Centre (DIFC) Courts under Article 24(2) of the DIFC Court Law. The DIFC Courts themselves have entered into several memoranda of guidance related to reciprocal enforcement arrangements with several courts and authorities, such as the UAE Ministry of Justice, the Ras Al Khaimah Courts, the Federal Court of Australia, the Supreme Court of Singapore, the Supreme Court of New South Wales and the Commercial Court of England and Wales.
Arabic is used as the official language in the Emirati courts and any documentation submitted to the court must be translated and certified by a legally-sworn translator licensed by the UAE Ministry of Justice. However, proceedings in the DIFC and the recently established Abu Dhabi Global Market (ADGM) are in English and in a historic move to ensure justice is accessible to all, Hindi has been included as the third official language by the ADGM.
Based on the amendment to Article 121, each Emirate government is permitted to create its independent free zones. To encourage trade and economic activities, a company established in any of the free zone is permissible to have hundred per cent foreign ownership (among many other benefits), in contrast to a requirement of an Emirati or local sponsor for a company established outside any of the free zone. Since the DIFC was established as a Financial Free Zone in the emirate of Dubai, the Dubai Law No 9/2004 recognizes the administrative and financial independence of DIFC. And therefore, DIFC Courts have their own civil and commercial laws strictly structured on the principles of common law and international standards, where the legal independence is derived from Dubai and the federal laws; this makes DIFC a dominant free zone in the UAE, a favourable choice for foreign investors.
RECOGNITION OF FOREIGN JUDGMENTS IN THE UAE
The UAE’s decision to enter into these treaties and memoranda leads us to the fact that the enforcement of foreign judgments in the UAE is based on the provisions of the treaty that apply. When the UAE is party to a treaty, whether bilateral or multilateral, the recognition and enforcement of foreign judgments in the UAE will be followed as per the provisions of such a treaty. However, in the absence of such a treaty, relevant provisions from the UAE Civil Procedures Code take effect; specifically Articles 235 to 238 of Federal Law No. 11 of 1992. UAE Courts recognise all judgments that correspond to these treaties and prefer to emphasise requirements within treaties for enforcing judgments rather than using civil procedure laws.
Article 235 of the UAE Civil Procedures Code provides all the requirements for the recognition of foreign judgments, especially as relevant to the Emirati UAE Courts, and it lays down the following conditions:
Article 235(1): the judgment creditor must prove that the foreign state issuing the judgment for which enforcement is sought would also agree to enforce a UAE court order/judgment.
Article 235(2)(a): the UAE Court will not enforce a foreign judgment if it deems that it had original jurisdiction to hear the dispute. The UAE Civil Procedures Code specifies instances in which the UAE Courts are likely to claim original jurisdiction over a dispute (Articles 20, 21 and 33). The UAE has also provided a broad interpretation of the concept of “original jurisdiction” for this purpose. For instance, the UAE Courts will most likely claim jurisdiction in the event that a defendant has a place of residence or domicile in the UAE. The same applies if the assets that constitute the subject matter of the dispute are located in the UAE.
Article 235(2)(b): the UAE Courts will determine whether the foreign judgment or order was issued by a court with jurisdiction in per the law of its home jurisdiction.
Article 235(2)(c): the UAE Courts must examine the service of process to ensure that it has been carried out in the correct manner. Aspects such as the verification of the parties, whether they were duly summoned to attend and had legal representation at the proceedings, are especially emphasised. To satisfy this requirement, the judgment creditor must submit an Arabic translation before the UAE courts.
Article 235(2)(d): the foreign judgment or order should be a final non-appealable order or judgment.
Article 235(2)(e): there should be no conflicting judgments and no violation of public policy and morals.
CONNECTION TO THE JURISDICTION
The UAE Courts establish whether the assets in dispute or the contract that was performed are located within its jurisdiction. According to the provisions of Article 235, the UAE courts in order to enforce the foreign judgment, take into consideration the principle of reciprocity.
As per Article 235(2)(c) of the UAE Civil Procedures Code requires for a proper service of proceeding: the UAE courts will look into the service of process, specifically regarding the verification of the parties that if they were properly summoned to attend and had legal representation at the proceedings. To satisfy this requirement, the judgment creditor needs to submit before the UAE courts an Arabic translation. As the UAE courts have a strict interpretation of the requirements which are laid down in Article 235 of the UAE Civil Procedures Code, it is implausible that the UAE courts may grant enforcement of ex-parte foreign judgments or foreign default judgments.
- Per Article 253(2)(d) it is stated that the foreign judgment or order should be a final non appealable order or judgment.
- There should be no conflicting judgment as per Article 235(2)(e).
- There should be no violation of public policy and morals as per stated under Article 235(2)(e)
Though no different procedures for the enforcement of a foreign judgment exist between the UAE courts and DIFC Courts, ultimately, the courts issue a domestic judgment for this purpose. DIFC courts, however, require the judgment to be final and for it to be for a pre-determined amount, and that the foreign court, which delivered the judgment had jurisdiction to hear the dispute.
UNIFORMITY IN THE LAW ON ENFORCEMENT OF FOREIGN JUDGMENT AMONG DIFFERENT JURISDICTIONS, WITHIN THE UAE
The UAE, a global business hub, is a federation of seven Emirates and consists of civil law jurisdictions. Apart from DIFC, UAE has a single substantive law and has various courts for the different emirates. Article 104 of the UAE Constitution (post amendment) states that, each Emirate shall have its own independent judicial system except on matters assigned to the Union. All Emirates, except Emirates of Dubai, Ras Al Khaimah and Abu Dhabi, have agreed to incorporate their judicial system with the Union’s and submit their exclusive right to an independent judicial system to the union. Dubai, Ras Al Khaimah and UAE’s capital, Abu Dhabi each have their own court, whereas, the other emirates have a unified federal court structure, where the court of final appeal is the Federal Supreme Court.
The DIFC and the ADGM constitute common law legal enclaves within the civil law system of the UAE. Judgments by the DIFC Courts are binding irrespective of where the parties are from. According to Article 24(1)(a) of DIFC and Article 7(6) of the Judicial Authority Law, DIFC Courts also have the authority to ratify foreign judgments of a foreign court.
In a seldom occurrence of a disagreement between the DIFC and the onshore Dubai courts, a joint judicial committee known as the “Judicial Tribunal” or the “Joint Judicial Committee” is created, which comprises of seven members: three judges from the Dubai courts, three from the DIFC courts, presided over by the Chief Justice of the Dubai Court of Cassation as the Chairman. To recapitulate, the first ruling handed down by the Judicial Tribunal was in the case of a dispute concerning a real estate enterprise versus an established building contractor, putting an end to a much stretched standing litigation. The real estate company won a favourable judgment, which was related to an asset located in the Business District of Dubai.
Typically, an application for recognition and enforcement of a foreign judgment needs to be submitted before the competent Court Of First Instance within the jurisdiction in which the party wants to enforce the judgment. This is to be done by following the usual procedure of bringing a claim under Article 235(2) of the UAE Civil Procedures Code.
ENFORCEMENT OF FOREIGN JUDGMENT
The legislative framework in the UAE facilitates the process of securing enforcement of foreign judgments through two separate institutions: the UAE Federal System and the DIFC Courts. DIFC Courts are legally obligated with the terms of the treaties for mutual enforcement of the judgment; it presumes a foreign judgment to be conclusive and does not look into the merits of the case. On the other hand, it is possible for UAE Courts to re-examine a case’s merits.
Once the foreign judgment is recognised, the first step the UAE Courts shall take in the process of enforcing it in the jurisdiction is the issue of domestic judgment for the purpose of enforcement and after the foreign judgment has been recognised, an enforcement file will be opened for the enforcement proceedings.
Now under DIFC Courts, when a foreign judgment has been recognised and enforced a separate enforcement application is required to be made to the DIFC Courts’ Enforcement Division. The procedure for enforcement depends upon whether enforcement is sought against assets within the DIFC or against assets onshore in the wider UAE. If the enforcement is to be sought against assets within the DIFC, then the enforcement methods are same as those available under the rules of the DIFC courts, and the said rules in DIFC court are similar to those of English rules.
If enforcement is to be sought against assets onshore in the wider UAE, an execution letter will be issued by the DIFC courts to the Chief Justice of the Court of First Instance of the Dubai Courts. The Dubai courts will then enforce against assets within Dubai or deputise the courts of an alternative Emirate to enforce the judgment against assets within that Emirate.
Both, the domestic UAE courts and the DIFC courts, have to carefully examine that the foreign judgments comply with UAE public policy before approving to its enforcement. With respect to procedural and substantive matters, given that there is no statutory definition of public policy under UAE laws, Emirati courts usually derive the interpretation of public policy in the context of Sharia rules and principles, which are elaborately developed and favourably comply across a comprehensive ideological spectrum.
The same applies to DIFC Courts, which will take into consideration UAE public policy while enforcing a foreign judgment. Typically, an application to recognise and enforce a foreign judgment that is more than 15 years old is not entertained.
To conclude, having a treaty increases incentives to cooperate and enforce foreign judgments for a stable multinational community. With a combination of multilateral and bilateral treaties, memoranda of guidance for reciprocal enforcement arrangements with several international courts and provisions in UAE Federal Law, the UAE Courts and the DIFC Courts have created an efficacious structure to recognise and enforce foreign judgments with minimal complications for the affected party. Under remarkable sovereign governance, the embodiment of this system has led to a highly conducive environment for businesses to invest in the country. In conjunction to witnessing stupendous growth, they have the assurance that, should the situation arise, judgments passed by competent courts situated outside the UAE on parties or assets located within it, can be executed with the force of law.