Recognition Of Foreign Arbitral Awards And Judgments In The UAE – Legal Framework & Tools

  1. Enforceable decision: What is it? An overview.

A common and general definition of «enforceable decision» does not exist.

The concept of «decision» is defined by the rules which govern recognition and enforcement in the jurisdiction where a foreign award or judgement shall be enforced.

The applicable rules for recognition and enforcement of a foreign decision are: (1) domestic law; (2) bilateral treaties; (3) multilateral conventions.

In the absence of a bilateral treaty or of a multilateral convention, the domestic law of the State addressed shall apply.

Therefore, the definition of «enforceable decision» depends on the legal framework where it is expressed.

2. Arbitral Awards and orders: What are they?

«Awards» are decisions of an Arbitral Tribunal (AT) which disposes of disputed matters between litigant parties.

Awards may be interim, provisional, partial, final, consent, default. All of them may be recognized and enforced.

Orders issued by an AT pending the related arbitration may be also recognized and enforced

A practical example of an enforceable Order issued by an AT was regulated by art. 24. (6)(7) of the DIFC – LCIA Rules 2021 which allowed the LCIA Court to direct the other party or parties to make a further Advance Payment for costs in an equivalent amount (payment in substitution).

The Rule above-mentioned allowed the party effecting the further Advance Payment for costs to request the Arbitral Tribunal to make an Order or an Interim Award to recover that amount as a debt immediately due and payable (enforceable) to that party by the defaulting party.

3. Foreign Judgements: The sources governing recognition and enforcement in the UAE.

Broadly speaking a “judgement” is “A formal decision made and pronounced by a Court of Law or other tribunal” (Dictionary of Law – Pearson Longman) although each international treaty / agreement adopts a specific definition of judgment.

The United Arab Emirates are party to the Riyadh Arab Convention for Judicial cooperation 1983 (“Riyadh Convention”) and to the GCC Convention for the Execution of Judgments, Delegations and Judicial Notifications 1996 (“GCC Convention”).

The Federal Decree No. 53/1999 ratified the Riyadh Arab Convention for Judicial Cooperation.

4. Recognition and Enforcement: are they bound to each other?

Although the NY Convention 1958 regulates «recognition & enforcement» of foreign arbitral awards, the two institutions have each their own regulation. 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 defense 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 to fulfill the AT’s order.

Therefore, the successful party may ask the Court to «recognize» or to «recognize and enforce» the award.

Once an order or judgment is recognized but remains unsatisfied, an application for enforcement must be made.  In DNB Bank Asa v Gulf Eyadah Corporation (DIFC Case 043/2014), the DIFC Court of First Instance considered a foreign (UK) judgment case and distinguished between the consequential ‘registration’ and ‘ratification’ according to article 24 of the DIFC Court Law (see below).

5. Domestic and Foreign Awards – The place or seat of the arbitration (lex arbitri).

Domestic award: to be recognized 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 the arbitration: it is usually chosen by the parties in the arbitration agreement. In International Commercial Arbitrations the place of arbitration should be a «neutral forum» where the parties have no connection.

“Lex Arbitri”: is the law of the seat of arbitration. It is applied except at the stage of enforcement of an award.

6. The International Conventions for judicial cooperation of which the UAE are a signatory country.

The United Arab Emirates accessed the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards (1958) on 21st August 2006.

According to art. 1(1) of the NY Convention 1958:

“1. This Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought”.

7. Other international conventions, treaties, or agreements between the UAE and third countries in civil judicial matters.

Afghanistan (Federal Decree No. 23 / 2009)        

Algeria (Federal Decree No. 12/1984)

Azerbaijan (Federal Decree No. 37/2007)

China (Federal Decree No. 55/2004)

Egypt (Federal Decree No. 83/2000)

France (Federal Decree No. 31/1992)

India (Federal Decree No. 33/2000)

Jordan (Federal Decree No. 106/1999)

Kazakhstan (Federal Decree No. 117 / 2009)

Kyrgyzstan (Federal Decree No. 113/2015)

Morocco (Federal Decree No. 57/2006)

Nigeria (Federal Decree No. 40/2018)

Pakistan (Federal Decree No. 12/2005)

Somalia (Federal Decree No. 95/1982)

Sudan (Federal Decree No. 8/2005)

Syria (Federal Decree No. 12/1980)

Tajikistan (Federal Decree No. 69/2007)

United Kingdom (Federal Law No. 38/2007)

Ukraine (Federal Decree No. 139/2013)

8. Onshore and offshore UAE: What does it mean?

Broadly speaking, in the UAE «onshore» is a synonym of mainland. Mainland is the territory of the UAE excluding the 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: DIFC and ADGM. Both are «Financial Free Zones».

They are «Common law» jurisdictions with an Independent Judiciary. The official language of DIFC and ADGM is English. Both are offshore jurisdictions.

9. Recognition and enforcement of a foreign judgment and arbitral award in onshore UAE.

The Federal Law No. 6 of 2018 («UAE Arbitration Law») does not apply to the recognition and enforcement of foreign arbitral awards in onshore UAE.

The substantive law and procedure for the recognition and enforcement of foreign judgments and arbitral awards in onshore UAE is set out in Articles 85 and 86 of the Cabinet Regulations No. 57 of 2018 Concerning the UAE Civil Procedure Law (“Executive Regulations”).

A party seeking the recognition and enforcement of a foreign arbitral award in onshore UAE will need to submit either an application for recognition of the foreign arbitral award or file an ex-parte petition directly with the Execution Court following which, the execution judge will render an order within three days.

For a foreign arbitral 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.

10. Art. 85 of the Executive Regulations Enforceable decision – Right of Challenge

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

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

11. Art. 86 of the Executive Regulations

According to art. 86 of the Executive Regulations «The provisions of article 85 shall apply to arbitral awards delivered in a foreign Country».

12. Applicable Rules for recognition and enforcement in offshore Dubai – The “DIFC Arbitration Law n. 1 / 2018”.

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 (named «The recognition and enforcement of awards»), in articles 42 & 43 regulate the matter.

Art. 42 (1): «An arbitral award, irrespective of the State or jurisdiction in which it was made, shall be recognized as binding within the DIFC and, upon application in writing to the DIFC Court, shall be enforced subject to the provisions of this Article and of Articles 43 and 44».

Art. 42 (4): «Awards issued by the DIFC Court may be enforced within the DIFC in the manner prescribed in this Law and any rules of Court made for this purpose. Awards recognized by the DIFC Court may be enforced outside the DIFC in accordance with the Judicial Authority Law and recognition under this Law includes ratification for the purposes of Article 7 of the Judicial Authority Law ».

13. The Rules of DIFC Courts (RDC) – 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”.

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

Once a DIFC Court ratifies a foreign judgment or arbitral 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”.

Pursuant to 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.

14. Art. 24 of DIFC Courts Law n. 10 of 2004 – Ratification of judgements.

Pursuant to Article 7(4) of the Judicial Authority Law, the Court of First Instance has jurisdiction to ratify any judgment, order, or award of any recognized:

(a) Foreign court.

(b) Courts of Dubai or the United Arab Emirates.

(c) Arbitral Award.

(d) Foreign Arbitral Award; or

(e) Orders for the purposes of any subsequent application for enforcement in the courts of Dubai.

15. 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 Court of First Instance shall solely hear and settle “any request or action headed by the Courts by virtue of the laws and regulations of the Centre”.

16. Art. 7(2) of the Dubai Law No. 12 of 2004 as amended by art. 1 of Dubai Law No. 16 of 2011 (the Judicial Authority Law):

«The judgments, decisions and orders issued by the Courts and arbitration awards ratified thereby shall be enforced by the Courts».

17. Grounds for refusal of recognition and enforcement.

Recognition and enforcement can only be refused if the DIFC Courts believe that:

1) the judgment or the award has been obtained by fraud.

2) the judgment or the award is contrary to UAE public policy; or

3) the proceedings has been conducted in a manner that the Commercial Court regards as contrary to the principles of natural justice.

Violation of art. V of the New York convention 1958 is a ground for refusal of recognition and enforcement of arbitral awards.

18. “Public policy” concept.

Although «Public Policy» does not have a uniform definition, the concept has been crystallised in the form of rules protecting the essential /fundamental moral, social, political and economic values in a given society.

According to the ILA (International Law Association) final report (approved in 2002 New Delhi conference), the main categories constituting parts of public policy are the following:

  1. Fundamental principles of justice and morality.
  2. Lois de police (a mandatory rule containing provision for the protection of essential political, social and or economic interests that the recognition of an award that violates the rule would undermine such interest, i.e. The competition law of the EU, rules relevant to embargos, currency control, etc.).
  3. Duties of States to respect their obligations towards other States or international 

    Organizations.

19. Enforcement of foreign arbitral awards: application of the UAE Law – Two practical cases.

  • In case No. 403/2020 (dated 15 April 2020), the Court of Cassation refused to enforce an award rendered in a foreign-seated arbitration, which contained the signature of the arbitrator on the last page only and not on the pages containing the reasoning of the award. The Court held that the arbitrator’s signature should have included both dispositive and reasoning sections. Missing the signature on all parties of the award, it was deemed invalid, and enforcement would have been contrary to UAE Public Policy.
  • Similarly, in case No. 109/2022 the Court of Cassation confirmed the position previously taken by the same judicial body in case No. 403/2020 (above).

20. Right of challenge

  • The right to challenge a foreign arbitral award in the DIFC Courts complies with the requirements of the New York Convention.
  • The UAE Courts may refuse enforcement if the subject-matter of the dispute is not capable of settlement by arbitration under the relevant laws of either the DIFC, or if the enforcement of the award would be contrary to public policy in the UAE.

For any further information, please email us.