Significant changes have recently taken place in the way the UAE judicial system honors foreign judgments.
Seeking to strengthen judicial continuity, on September 13, 2022, the Ministry of Justice of the United Arab Emirates (UAE) sent a letter to the Director General of Courts in Dubai. In this letter, the Ministry of Justice of the United Arab Emirates confirmed the principle of enforcement of judgments issued in the courts of the United Kingdom (UK) on the basis of reciprocity.
The UAE-UK Mutual Assistance Agreement in Civil and Commercial Matters does not specifically address the enforcement mechanism. Therefore, in the absence of a relevant treaty or memorandum of understanding between the UAE and the UK on enforcement procedures, the provisions of the Federal Law of Civil Procedure Act No. 11 of 1992 and Cabinet Decision No. 57 of 2018, as amended, will be the applicable law to be used in such cases.
Article 85 of the Decision of the Council of Ministers No. 57 of 2018, as amended, provides for the principle of reciprocity, according to which:
"Judgments and orders issued by a foreign state may be enforced in the UAE under the same conditions as those provided under UAE law for the enforcement of judgments and orders issued by courts in the United Arab Emirates."
This recent change in the legal model in this regard follows the Lenkor Energy Trading DMCC v Puri [2020] EWHC 75 (QB) decision and subsequent appeal which reiterated the high standard required for a UK court to challenge enforcement of a foreign judgment.
The proceedings were based on a tripartite agreement, which was later shown to have governed a transaction which was flawed by the illegality. Nevertheless, under this tripartite agreement, the defendant issued two checks in the name of the commissioning company, which were disgraced when presented for payment. As part of the Dubai Court proceedings, the plaintiff obtained a favorable judgment against the defendant, who was held personally liable for unhonored checks under Art. 599 sec. 2 of the Federal Act No. (18) of 1993 on the Law of Commercial Transactions. In subsequent proceedings in the United Kingdom, the court confirmed prima facie that a final judgment given by a competent foreign court could be enforced in the United Kingdom, except where such enforcement would be contrary to public policy in the United Kingdom. The UK court also clarified the scope of public policy defense under which a UK court can challenge a foreign judgment, stating that the enforcement of a foreign judgment would itself have to be against English public policy and not the underlying transaction on which the judgment was based.
In the absence of a binding agreement between the UAE and the UK, the recent announcement by the Ministry of Justice is not yet formally binding on the UAE courts, but it represents an important step in the enforcement of judgments made by the UAE. At the same time, this solution provides some comfort to creditors who want to enforce a judgment issued by the courts in the United Kingdom against a debtor in the United Arab Emirates.
For more information on the enforcement of foreign judgments in the United Arab Emirates, please contact our firm. The Eberhard Advisory team will be happy to assist you in this regard.
