We don’t often discuss enforcement of judgments. It isn’t as interesting as discussing substantive disputes but it is the essential final link in any plan to recover contractual damages. Whatever smart provisions you have on governing law and dispute resolution, only local courts are able to enforce against a judgment debtor’s assets in any given jurisdiction. And that is sometimes a problem.
Enforcement factors influence decisions on governing law and disputes resolution in the Gulf region, and we should look at a positive development in relation to enforcement through the UAE courts.
Although many construction contracts in the Gulf are governed by English law, the preferred disputes resolution method is arbitration in one of the international arbitration centres. This is partly because arbitration has historically offered more certainty on enforcement, than would be the case with a foreign court judgment. Saudi Arabia, UAE, Kuwait, Bahrain, Qatar and Oman (and many others) are signatories to the New York Convention On The Recognition and Enforcement of Foreign Arbitral Awards.
In contrast, there is no equivalent global treaty or convention on the recognition and enforcement of foreign court judgments – and no bilateral treaty between the UAE and the UK.
The recognition in the UAE of foreign court awards is based on reciprocity. Article 85(1) of the implementing procedures of the Civil Procedure Code states:
“Judgments and orders issued in a foreign country may be ordered to be enforced in the UAE under the same conditions prescribed in the law of the foreign country for the enforcement of judgments and orders issued in the UAE.”
This means that the UAE courts will enforce foreign court judgments in the same way and to the same extent as the relevant foreign courts are willing to enforce UAE court judgments. This sounds fair in principle but there is the practical problem of a foreign court system not having had the opportunity to evidence that willingness – and this has historically been the case with English courts, leading to real uncertainty about whether an English court decision would be enforced in the UAE.
That situation has changed recently, with the successful enforcement in England, of a UAE court judgment. This arose from a dispute between Lenkor Energy Trading DMCC and a Mr Puri. This dispute went to the Dubai Court of Cassation which gave judgment for Lenkor, and Lenkor then sought to enforce that judgment against Mr Puri’s assets in England.
The enforcement proceedings were opposed by Mr Puri but the English High Court ordered in Lenkor’s favour and, upon Mr Puri’s appeal, the Court of Appeal did the same. The main argument in opposition to enforcement was that it would be against English public policy to enforce the Dubai court judgment because (it was alleged) the underlying transaction was tainted with illegality. The English courts rejected the premise of this argument, stating that the relevant question was whether there was a public policy reason not to enforce the judgment itself – and there was not. Public policy indeed favours enforceability and finality.
Because of the nature of the arguments in opposition to enforcement, it is helpful that the English courts had the opportunity to demonstrate their focus on the Dubai court judgment as opposed to re-examination of the underlying dispute.
This outcome has been duly noted in the UAE Ministry of Justice, which, on September 13, 2022, issued a circular to the Dubai courts referencing the English decisions and stating that the ministry finds the reciprocity principle to have been met, in light of these decisions, and their binding nature according to the English principle of judicial precedent. The ministry expressed the hope that
“in the event of requests for the enforcement of judgments and orders rendered by the English courts, the requisite legal steps are taken in accordance with the laws in force in both countries, in order to consolidate the principle of reciprocity initiated by the English courts, and to ensure its continuity between the English courts and the UAE courts.”
Whilst this circular is not binding on the UAE courts, it is persuasive and we can hope to see the UAE courts taking a positive and consistent approach when dealing with reciprocal enforcement applications on English judgments.
We should note that reciprocity is not the only factor for the UAE courts to consider: Article 85(2) of the above Civil Procedure Code implementing procedures, sets out other criteria including:
• Whether the foreign judgment conflicts with an existing judgment from the UAE courts;
• Whether the foreign judgment is consistent with UAE public policy (public order and morality);
• Whether the foreign judgment was issued correctly in accordance with the laws of that relevant foreign state; and
• Whether the parties to the dispute were called to attend and were legally represented.
This is a helpful step forward, which might influence parties in their decisions on contractual provisions for disputes resolution.
* Stuart Jordan is a partner in the Global Projects group of Baker Botts, a leading international law firm. Jordan’s practice focuses on the oil, gas, power, transport, petrochemical, nuclear and construction industries. He has extensive experience in the Middle East, Russia and the UK.