How foreign arbitration awards are recognised in the UAE

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Recognition and Enforcement: are they bound to each other? Although the NY Convention 1958 regulates the “recognition & enforcement” of foreign arbitration awards, the two institutions each have their own associated regulations. The successful party seeks recognition and enforcement for different purposes.

  • Recognition of an award without subsequent enforcement is generally sought by the successful party by way of defence or set-off against a credit brought by the losing party against it in other proceedings.
  • Enforcement of an award is sought when the losing party, despite the notification and recognition of the award, refuses to pay or fulfil the AT’s order.

Therefore, the successful party may ask the Court to “recognise” or to “recognise and enforce” the award and request ‘ratification’ according to Article 24 of the DIFC Court Law (see below).

Definitions related to domestic and foreign arbitration awards.

  • Domestic award: awards recognised and enforced in the state in which it was made.
  • Foreign award: recognition and enforcement are sought in a state other than that in which it was made.
  • Place of arbitration: this is a ‘neutral forum’ where both parties have no connection, usually chosen by the parties in the arbitration agreement.
  • “Lex Arbitri”: is the law of the seat of arbitration. It is applied at all stages, except during the enforcement of an award.

Onshore and offshore UAE.

Broadly speaking, in the UAE, “onshore” means the mainland. This is the territory of the UAE that excludes its “Free Zones”. By contrast, “offshore” areas are those belonging to the Free Zones. When we refer to judicial matters and arbitration, the concepts of onshore and offshore are quite different.

In the UAE there are two offshore jurisdictions each regulated by a different set of laws & rules. These are the DIFC and the ADGM. It should be noted that:

  • Both of these are “Financial Free Zones”
  • They are “common law” jurisdictions with an independent judiciary.
  • The official language of the DIFC and the ADGM is English.

Recognition and enforcement of a foreign arbitration award onshore in the UAE.

Federal Law No. 6 of 2018 (the UAE Arbitration Law) does not apply to the recognition and enforcement of foreign arbitration awards in onshore UAE. The law and procedure for the recognition and enforcement of foreign judgments and arbitration awards onshore in the UAE are set out in Articles 85 and 86 of the Cabinet Regulations No. 57 of 2018, concerning the UAE’s Civil Procedure Law (the Executive Regulations).

A party seeking the recognition and enforcement of a foreign arbitration award onshore will need to submit either an application for recognition of the foreign arbitration award or file an ex-parte petition directly with the Execution Court following which the judge will render an order within three days. For a foreign arbitration award to be recognised in the UAE, the conditions set out in Article 85 (2) of the Executive Regulations must be satisfied as these conditions can form the basis of any challenge.

“Broadly speaking, in the UAE, “onshore” means the mainland. This is the territory of the UAE that excludes its “Free Zones.”

Art. 85 of the Executive Regulations Enforceable Decision – Right of Challenge

The conditions in Article 85 (2) are the following:

  • The UAE Courts do not have exclusive jurisdiction on the subject matter of the judgment.
  • The judgment has been issued by a court that has jurisdiction, according to the law of the country in which it was issued and was duly attested.
  • The opposing parties in the case have been summoned to appear and were represented before the court or tribunal (right to be heard).
  • The judgment or order acquired the authority of res judicata under the law of the court where it was issued (however, proof may be required through a certificate or the judgment itself might prove such); and
  • The judgment does not violate the public order or morals of the UAE.

Art. 86 of the Executive Regulations

According to Article 86 of the Executive Regulations, “The provisions of Article 85 shall apply to arbitration awards delivered in a foreign country”.

Applicable Rules for recognition and enforcement offshore in Dubai

The DIFC has its own Arbitration Law (No.1 of 2008) as amended by the DIFC Law No. 6 of 2013.

Part 4 of the above-mentioned law (known as “The Recognition and Enforcement of Awards”) in Articles 42 & 43 regulates the matter.

DIFC Courts as “conduit courts”.

According to RDC 43.61, “Rules 43.62 to 43.74 apply to awards made in arbitration proceedings wherever the seat”.

The DIFC courts have jurisdiction for recognition and enforcement wherever the seat of the arbitration is for the purposes of any subsequent application for enforcement in the courts of Dubai.

Once a DIFC Court ratifies a foreign judgment or arbitration award, the DIFC ratification order can then be taken to the Dubai Courts for enforcement in onshore Dubai or elsewhere in the United Arab Emirates. Basically, in this context, DIFC Courts act as “conduit courts”. Under article 5(A)(1)(e) of the JAL (Judicial Authority Law) No. 12 of 2004, as amended by Dubai Law No. 16 of 2011, art. 1, the DIFC CFI has jurisdiction.

Article 24 of DIFC Courts Law, n. 10 of 2004 – Ratification of Judgements

Under Article 7(4) of the Judicial Authority Law, the Court of First Instance has the right to ratify any judgment, order, or award of any recognised:

  • Foreign court.
  • Courts of Dubai or the United Arab Emirates.
  • Arbitration award.
  • Foreign Arbitration award; or
  • Orders for any subsequent application for enforcement in the courts of Dubai.