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Developments in enforcement ease - An update on the reciprocity arrangements between the Courts of the UAE and England & Wales

  • UAE
  • Litigation - Middle East
  • Litigation and dispute management

12-10-2022

On 13 September 2022, the UAE Ministry of Justice to the Director of the Dubai Courts issued a letter (the “Letter”), confirming that moving forwards, English court judgments should be capable of enforcement in the UAE pursuant to the principle of reciprocity following the English Court’s enforcement of a Dubai Court judgment1 (the “Lenkor Judgment”).

Historically, given the absence of a bilateral treaty for reciprocal recognition and enforcement of judgments (excluding the memoranda relevant to the DIFC and ADGM), both courts were reluctant to enforce each others’ judgments. Prior to this development, a party seeking to enforce an English judgment in the UAE, would be required to request the UAE court to review the merits of the judgment. The court would then decide on the judgment’s enforceability. This second layer of litigation brought with it additional time, risk and expense and created overall uncertainty about the ultimate value of the originating English judgment.

The Letter therefore brings about a well-received shift in the position, with English court judgments now being enforceable on the basis of reciprocity in line with Article 85 of Cabinet Decision No. 57 of 20182  (the “Resolution”).

Article 85(1) of the Resolution states that judgments issued in a foreign country may be enforced in the UAE under the same conditions stipulated by the law of that country for execution of judgments issued in the state. This in effect means that absent a treaty for enforcement, the party seeking to enforce the foreign judgment in the UAE must show that there is reciprocity between the UAE and the country in which the foreign judgment was issued. Although, the Letter now satisfies this requirement, confirming reciprocity of foreign judgments in respect of the UAE and England and Wales, parties wishing to enforce a foreign judgment will still need to comply with the requirements of Article 85(2) of the Resolution. This states that no execution may be ordered until the following is confirmed:

a) The courts of the UAE do not have an exclusive jurisdiction over the dispute on which the judgment or order was issued and that the foreign courts that issued it have jurisdiction over the same in accordance with the rules of international jurisdiction stipulated by its law;

b) The judgment or order was issued by a court according to the law of the country where it was issued, and is duly authenticated;

c) The litigants in the case on which the foreign judgment was issued were summoned to appear and duly represented;

d) The judgment or order has acquired the force of res judicata according to the law of the court that issued it, provided a certificate stating that the judgment has acquired the force of res judicata is submitted or this is stated in the judgment itself; and

e) The judgment does not conflict with any judgment or order already issued by a court in the UAE and does not include anything contrary to its public order or morals.

Lenkor Judgment

This recent process arises out of the 2020 English High Court judgment in Lenkor. In this case, the High Court held that a Dubai Court of Cassation judgment (the “Dubai Judgment”) should be recognised in England and granted summary judgment accordingly. The Dubai Judgment in question related to the enforcement of bounced cheques of approximately USD 55 million, given by the Defendant to Lenkor Dubai. The Defendant challenged enforcement on the basis that recognition of the judgment would be contrary to English public policy because the underlying contract was “tainted by illegality”. However, the Court rejected the challenge, stating that the issue was not whether the contract was legal, but whether the Dubai Judgment was enforceable. In other words, it refuse to re-examine the merits of the case.

The Defendant appealed and the Court of Appeal upheld the High Court’s decision finding that the Dubai Court of Cassation had jurisdiction to hear the case and that the Dubai Judgment was final and conclusive. It therefore issued an enforceable judgment against the Defendant for USD 55m plus interest at 9 per cent.

Implications

The full impacts of the Letter will no doubt be monitored with interest. It is not binding on the Courts and the UAE onshore Courts do not in any event have a system of legal precedent, as other jurisdictions do. However, it does seem inevitable that creditors armed with positive English judgments will seek to enforce their judgments against asset rich UAE defendants in reliance on the principle of reciprocity arising out of the Letter. In time, we may also see an increased willingness for parties to agree to English jurisdiction clauses in UAE related commercial contracts.


1 Lenkor Energy Trading DMCC v Puri (2021) EWCA Civ 770
2 Amending the Civil Procedure Code (as amended by Cabinet Decision No. 75 of 2021)