THE CONDUIT JURISDICTION OF THE DUBAI INTERNATIONAL FINANCIAL COURTS: A SLOW DECLINE?
A creditor of an arbitral award or of a foreign judgement seeking enforcement in the United Arab Emirates (UAE) may commence enforcement proceedings either before the UAE courts located onshore or through the Dubai International Financial Centre (DIFC) courts (offshore courts). Furthermore, the DIFC courts can be used as a gateway or a ‘conduit jurisdiction’ for the recognition of awards and judgements and subsequent enforcement of decisions in onshore UAE, regardless of whether assets are located in the DIFC.
The DIFC is a financial free zone whose courts have their own jurisdiction and are part of both the Dubai judiciary and the federal UAE judicial system. A reference to ‘the Dubai courts’ includes the DIFC courts. However, both courts have adopted relatively different approaches toward the enforcement of foreign decisions.
On the one hand, the DIFC courts have consistently demonstrated a pro-enforcement approach toward domestic and foreign decisions. On the other hand, although there have been improvements in recent years, the onshore courts are considered both slower and less receptive to the enforcement of arbitral awards and foreign court judgements.
For example, to enforce a foreign judgement, the onshore courts rely on the principles of the Civil Procedures Law, which permits the court to execute a foreign judgement “under the same conditions decided in the law of that country for executing the decisions and the orders delivered”. Generally, however, the UAE onshore courts will refuse to recognise and enforce a foreign judgement, unless a bilateral treaty is in place between the UAE and the country from which the judgement was issued. Furthermore, the onshore courts must be satisfied that the foreign judgement is not contrary to UAE public policy, which can be a difficult and unpredictable test.
Apr-Jun 2019 issue
King & Spalding LLP