UK-UAE Trade and Investment Promoted by Memorandum between English Commercial Court and Dubai’s DIFC Court

by Dechert LLP
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The Commercial Court of England and Wales and the Dubai International Financial Centre Courts (DIFC Courts) signed a Memorandum of Guidance (MoG) on 23 January 2013 concerning the enforcement of judgments between the two Courts. While there remains no treaty between England and Wales and the UAE providing for the reciprocal enforcement of court judgments between the two, the MoG clarifies the current regime for reciprocal enforcement of court judgments between the key commercial court in each jurisdiction. The MoG is designed to assist UK and UAE businesses and investors who wish to develop closer trade and investment ties.

The Commercial Court of England and Wales

The Commercial Court is a specialist court within the Queen’s Bench Division of the High Court of England and Wales. It deals with complex cases arising out of business and financial disputes, both national and international, which fall within its jurisdiction. The Court is internationally recognised for its experience and expertise in commercial dispute resolution.

The DIFC Courts

The DIFC Courts are civil and commercial courts which comprise the independent judicial system of the Dubai International Financial Centre (DIFC). Dubai and the DIFC are widely recognized as the commercial hub of the Middle East, and increasingly a springboard for investment not only into the Middle East and North Africa but Sub-Saharan Africa and India too.

The DIFC Courts are an independent, common law judicial system with exclusive jurisdiction over all civil and commercial disputes within the DIFC financial district, with procedural rules which closely follow and are modeled on the English Civil Procedure Rules. The DIFC Courts have a judicial panel consisting of internationally-renowned commercial and civil law judges, led by the Chief Justice, Michael Hwang, SC, the President of the Law Society of Singapore.

In 2012 the jurisdiction of the DIFC Courts was widened. While previously jurisdiction was limited to that over natural persons or entities with a connection or presence in the DIFC, the DIFC Courts now have jurisdiction over entities and persons outside of the DIFC and who ‘opt in’ to the jurisdiction of the DIFC Courts.

The Memorandum of Guidance

There is currently no treaty between the UK and UAE providing for the reciprocal enforcement of court judgments between courts of the two jurisdictions. Nor does the MoG constitute any such treaty or legislation or have any binding legal effect.

Rather, the MoG seeks to explain and clarify the existing legal rules that the English Commercial Court and the DIFC Courts apply when considering the enforcement of each other's 'money' judgments. Money judgments are those that require a person to pay a sum of money to another person. The MoG does not extend to court judgments ordering a party to pay taxes, fines or penalties.

As the MoG confirms, the legal requirements for enforcement of DIFC judgments in the Commercial Court, and vice versa, are the same. The two key requirements are that:

  • in order to be sued on, the judgment must be final and conclusive (it may be so even if subject to appeal); and
  • the court whose judgment is subject to enforcement must have had jurisdiction to determine the subject matter of the dispute.

Helpfully, the MoG also explains the limited grounds upon which the Commercial Court or DIFC Courts will entertain a challenge to a judgment on application for recognition and enforcement. The MoG states that those limited grounds for challenge are:

  • where the judgment was obtained by fraud;
  • where the judgment is contrary to the public policy of the jurisdiction in which it is being enforced; or
  • where the proceedings were conducted in a manner which the enforcing jurisdiction considers to be contrary to the principles of natural justice.

No challenge may be brought on the ground of error of fact or law. It will be a comfort to those seeking enforcement that neither court may open the judgment of the other to re-examine the merits of the judgment.

In a further aid to parties and their lawyers, the MoG also outlines the procedures for enforcement of Commercial Court judgments in the DIFC Courts and vice versa. As the MoG explains, the procedures that both courts apply are very similar. Ultimately, if the claim on the Commercial Court or DIFC Court judgment is successful, the judgment creditor will have the benefit of, respectively, a DIFC Court judgment or Commercial Court judgment.

The MoG can be found here.

The MoG is a commendable achievement, and confirms the respect in which the Commercial Court and DIFC Courts hold each other and their mutual spirit of reciprocity. The clarity that the MoG brings will assists parties and their lawyers, and aid in the efficient processing of enforcement claims and in the prevention of duplicitous litigation of the same dispute between the Commercial Court and DIFC Courts. While it does not have legal effect, the MoG will no doubt be relied on and clearly signals a mutual desire to ensure straightforward enforcement between the two institutions.

Enforcement of UK & UAE Arbitral Awards

Finally, it should be noted that the MoG concerns only court judgments from the English Commercial Court and the DIFC Court. The recognition and enforcement of foreign arbitral awards made in arbitrations seated in the UK and the UAE are instead enforceable pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the “New York Convention”), to which both the UK and the UAE are parties. The New York Convention, which has now been ratified by over 140 states, entitles the holder of a foreign arbitral award to recognition and enforcement of its award in the courts of New York Convention states in the same way as a domestic court judgment.

Dechert International Dispute Resolution

Dechert LLP is an international law firm with 26 offices worldwide, including in London and the DIFC in Dubai. Our specialist international disputes lawyers have deep and broad experience of complex multijurisdictional litigations and international arbitrations, as well the enforcement of court judgments and arbitral awards in a multitude of jurisdictions globally.

To browse our library of legal updates, please visit dechert.com/publications

For more information about our international dispute resolution group, please visit our website.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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