Under Article 235 of Federal Law No. 11 of 1992, foreign judgments may be enforced in the UAE if (among other things) the UAE courts do not have jurisdiction in the proceedings. However, it is important to note the following:
- The Dubai Court of Cassation has previously refused to uphold a foreign court judgment (and a foreign arbitration award – albeit before the UAE’s accession to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention)) where it considered that the UAE courts would have had jurisdiction in the matter – because the case involved UAE nationals.
- In actions against UAE parties or foreign parties with a domicile or place of residence in the UAE, the laws may allow the UAE court (in its discretion) to re-hear the substance of the matter which is the subject of the foreign court judgment.
In contrast to the above, it should be noted that DIFC Court judgments are enforceable by UAE Courts without a right of review of the merits of the case. In light of the recent expansion of the jurisdiction of the DIFC Courts, parties to a contract should consider whether submission to the jurisdiction of the DIFC Courts would be of benefit in the context of future enforcement actions in the UAE.
Since 2006, the UAE has been a party to the New York Convention and – subject to certain criteria set out in the New York Convention being satisfied – UAE courts should allow the enforcement of foreign arbitral awards. However, this is relatively untested. That said, there is evidence of a trend towards an increasing willingness within the UAE to recognise foreign awards.
In January 2011 the Dubai Court of First Instance ordered the recognition and enforcement of an arbitral award made in London under the New York Convention. The details are not publicly available, but we understand that the enforcement action was fully contested. We also understand that the case may be appealed. If the first instance decision is upheld on appeal this should increase confidence in Dubai as a jurisdiction that will recognise foreign arbitral awards.
Further, in 2010, an arbitral award was enforced under the New York Convention by a court of first instance in Fujairah – but such a court decision would not be binding on courts in other Emirates and, in addition, the enforcement action was uncontested within the UAE.
The enforceability of an arbitration award can also be challenged on the grounds of bias/natural justice and/or certain procedural issues, albeit not on its merits. There is, therefore, always a risk that a court will fail to enforce a foreign arbitration award based on procedural grounds. Despite this, it is generally agreed that foreign arbitral awards will be easier to enforce in the UAE than foreign court judgments.