On 13 September 2022, the UAE Ministry of Justice issued a directive which confirms that judgments issued by the English Courts can be enforced by the UAE Courts under the principle of reciprocity (the "Directive"). The enforcement of English Court judgments in the UAE was historically difficult given the absence of a formal treaty between the UAE and the UK for the mutual recognition and enforcement of civil judgments. The Directive provides confidence to judgment creditors looking to enforce English Court judgments in the UAE and also widens the options for suitable choice of forum clauses in contracts with a UAE counterparty or where assets in the UAE are concerned.
Introduction
As foreign investment and cross-border trade increases, disputes before foreign courts or in international arbitration are more likely to arise. Parties to contracts with foreign parties or in respect of cross-border transactions will want to ensure that any judgment or award they obtain is enforceable against the counterparty. Where there is a bilateral treaty or convention for the reciprocal recognition of judgments, enforcement of the foreign judgment will be subject to the terms of the treaty or convention. Where no treaty or convention exists, local domestic law generally governs the recognition and enforcement of foreign judgments.
The approach to the enforcement of English Court judgments in the UAE has historically been uncertain given the absence of a treaty between the two countries. The English Courts were generally hesitant to enforce UAE judgments and the UAE Courts relied on the lack of reciprocity to refuse the enforcement of English Court judgments.
The Directive issued by the Ministry of Justice confirms that judgments issued by the English Courts can be enforced by the UAE Courts under the principle of reciprocity. This is expected to result in a more consistent approach to the enforcement of English Court judgments in the UAE.
Framework for the recognition of foreign judgments in the UAE
Under UAE law, the enforcement of foreign judgments is governed by Cabinet Decision No. 57/2018 on the Regulations of Federal Law No. 11/1992 on the Civil Procedure Code (as amended) (the "Cabinet Resolution").
Article 85(1) of the Cabinet Resolution provides that judgments and orders issued in a foreign state can be enforced in the UAE under the same conditions for the enforcement of judgments and orders provided for in the law of that foreign state. In other words, in the absence of a treaty for enforcement, there is a need for reciprocity between the UAE and the state issuing the judgment in respect of which recognition and enforcement is sought.
Article 85(2) of the Cabinet Resolution sets out the conditions for the enforcement of foreign judgments. In particular, Article 85(2) of the Cabinet Resolution provides, amongst other things, that:
- the foreign judgment and/or order being enforced must have been issued by the foreign court in accordance with the law of that foreign state;
- the parties to the foreign judgment and/or order had been required to appear before the relevant foreign court and were properly represented;
- the foreign judgment and/or order being enforced does not conflict with a judgment and/or order previously issued by the UAE Courts; and
- the foreign judgment and/or order being enforced does not involve anything that violates public order or morality.
The first hurdle to the enforcement of foreign judgments in the UAE is demonstrating reciprocity exists between the UAE and the issuing jurisdiction, as required by Article 85(1) of the Cabinet Resolution. Where this requirement is satisfied, the UAE Courts will also need to be satisfied that the foreign judgment meets the other requirements set out in Article 85(2) of the Cabinet Resolution.
Mutual Recognition between the UAE and England
There is no treaty between the UAE and England for the mutual recognition of civil judgments. As a result, it was historically challenging to demonstrate to the UAE Courts that reciprocity exists between the UAE and England in respect of the recognition and enforcement of judgments.
Until recently, the absence of reciprocity has been a bar to the enforcement of English Court judgments in the UAE. For example, in Dubai Court of Cassation No. 269 of 2006, the Court of Cassation declined to enforce a civil judgment from English Courts against a defendant residing in Dubai. The Court of Cassation found that the plaintiff had failed to submit evidence of reciprocity between the UAE and England for the mutual recognition of judgments.
Similar to the approach taken by the UAE Courts, the English Courts were also reluctant to enforce UAE Court Judgments – that is, until the English High Court's decision in Lenkor Energy Trading DMCC v Puri (2020) EWHC 75 (QB). In this case, the English High Court enforced a judgment of the Dubai Court of Cassation in respect of a bounced cheque. On appeal, the Court of Appeal dismissed arguments made by Mr Puri that the judgment offended English public policy. The Court of Appeal found that the Dubai Court of Cassation had jurisdiction, and the judgment issued by the Dubai Court of Cassation was final and conclusive (Lenkor Energy Trading DMCC v Puri [2021] EWCA Civ 770).
The ground-breaking decision of Lenkor has now demonstrated reciprocity between the UAE and England.
The UAE Ministry of Justice Directive
As a result of the Lenkor decision, on 13 September 2022 the Ministry of Justice issued the Directive which requested the Dubai Courts to:
"…take the relevant legal actions regarding any requests for enforcement of judgments and orders issued by the English Court, in accordance with the laws in force in both countries, as a confirmation of the principle of reciprocity initiated by the English Courts and assurance of its continuity between the English Courts and the UAE Courts".
The Directive therefore:
- confirms that, in the absence of a treaty for mutual recognition of judgments, the Lenkor decision establishes the principle of reciprocity required for enforcement of an English Court judgment in the UAE; and
- directs the UAE Courts to enforce judgments and orders rendered by the English Courts in order to confirm this principle of reciprocity.
Although the Directive confirms that the principle of reciprocity is established as between the UAE and England – being one of the most difficult hurdles for the enforcement of a foreign judgment – any foreign judgment being enforced in the UAE must still comply with the other requirements set out in Article 85(2) of the Cabinet Resolution.
Implications of the Directive
While the extent to which the Directive will facilitate the enforcement of English Court judgments in the UAE remains to be seen, the Directive signifies a positive development in the enforcement of English Court judgments in the UAE. Further, the Directive will likely increase the confidence of parties agreeing to English Court jurisdiction clauses where their counterparty is located in the UAE or has assets in the UAE.
Likewise, the Directive also expands the means by which parties can enforce foreign arbitration awards in the UAE. Rather than applying to the UAE Courts to recognise and enforce London-seated arbitration awards under the New York Convention, it may now be open to parties to London-seated arbitrations to enforce their award before the English Courts and then seek to enforce the English Court judgment enforcing the award in the UAE under Article 85 of the Cabinet Resolution.
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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
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