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July 21, 2019
UAE legislative framework empowers courts to enforce judgments issued by foreign courts under specific conditions. This is in accordance with Article 21 of the Federal Law Number 11 of 1992 concerning the issuance of Civil Procedures Law (the Civil Procedures Law) which states that:
"The courts shall have jurisdiction to examine the actions against the foreigner who has no residence or domicile in the state in the following cases:
1). If he had an elected domicile.
2). If the action is related to real estates in the state, a citizen's heritage, or an open estate therein.
3). If the action is concerned with an obligation concluded, executed, or its execution was conditioned in the state or related with a contract required to be authenticated therein or with an incident occurred therein or bankruptcy declared at one of its courts.
4). If the action has been prosecuted from a wife, who has a residence in the state, against her husband who had a residence therein.
5). If the action is concerned with an alimony of one of the parents or the wife or with a sequestered or with a minor, or with his relationship or with a custody on fund or on person, in case that the claimer of the alimony, the wife, the minor or the sequestered has a residence in the state.
6). If the action is concerned with the civil status and the plaintiff is a citizen or a foreigner who has a residence in the state, provided that the defendant had not a determined residence abroad or the national law is imperatively applicable on the action.
7). If one of the defendants has a residence or domicile in the state."
The courts can hear claims against the parties based in other jurisdictions if the conditions above are met. Although Dubai courts fall outside the purview of the UAE Federal Court system, the approach towards enforcement of the judgment and other procedures with regards to civil proceedings are in accordance with the Civil Procedures Law. Parties to the contract often refer to the courts or independent authorities who will have jurisdiction in the case of dispute. However, the Law of UAE supersedes the agreement between the parties, if the courts of UAE inherits the authority on the said matter under the Civil Procedures Law. It has been held by Dubai Court of Cassation that jurisdiction clauses are void if the subject matter opposes the public policy of the country, accordingly, Dubai court will have exclusive jurisdiction.
Be Careful before finalising Commercial Contracts!
Whether the judgments issued by foreign courts will hold a practical stance in Dubai courts is still a moot discussion. Thus, parties must carefully opt for competent jurisdiction bearing in mind the enforcement procedure. The probability of any difficulty during execution would reduce to nil if the civil proceedings were initiated before the right court. Parties must, therefore, appoint Corporate Lawyers of UAE to draft and finalise the contracts. Further, parties having claims against entities registered in Dubai might feel forced to initiate proceedings in a foreign jurisdiction due to the agreement in their contract, even though Dubai Courts will be apt for trying such matters. They may also seek redress from the courts in their home country, considering the language barrier in UAE.
In the event, the claimant for any reason obtain a foreign court's judgment against an entity registered in Dubai, they still hold an option to enforce the foreign judgment in Dubai Courts. Article 235 of the Civil Procedures Law envisage such enforcement in a way the original court has passed it. As understood from Article 21, Dubai courts have jurisdiction in claims where parties reside in Dubai or if assets are in Dubai. It is further noted from Article 235 that the foreign court judgments shall be final and enforceable. Otherwise, Dubai Courts will not be able to enforce such judgments against parties residing in Dubai.
Furthermore, the conditions for enforcement set out in Article 235 will apply to decisions of an Arbitration Centre registered in the foreign country, subjected that the decision should be on the matter possible to arbitrate. This is in accordance with Article 236 of the Civil Procedures Law which is highlighted as below:
"The terms of the enforcing foreign judgment shall be applied on the arbitrators' decisions delivered in a foreign country and the arbitrators' decision should be delivered in a matter in which it shall be possible to arbitrate according to the law of the state and should be liable to the execution in the country which has delivered it."
In Dubai Court of Cassation judgment Number 269 of 2006, the plaintiff obtained a civil judgment from UK courts to be enforced against the defendant who was residing in Dubai. The request for enforcement was rejected by both the Court of First Instance and the Appeal Court of Dubai. The matter was thereafter, presented before the highest court of Dubai, Court of Cassation. Unfortunately, the case was again rejected, and the court opined that since the plaintiff has failed to submit a substantial proof evidencing a collaboration between UAE and UK regarding enforcement of the foreign judgment, the case shall be rejected. On a similar note in Dubai Court of Cassation, case number 517 (civil) 28 August 2016, a judgment issued by the Californian court was presented before Court of First Instance in Dubai against a party residing in Dubai. The petition was rejected by the Court of First Instance on the basis that there was no treaty in this regards between the United States and UAE. However, the Appeal Court reversed the decision passed by the lower court on the grounds that the conditions outlined in Article 235 of the Civil Procedure Code were met. The defendant filed an appeal before the Court of Cassation, wherein the judgment was again reversed on the same note as that of the Court of First Instance.
The judgments of Dubai courts affirm that, while it might be conceivable to enforce the foreign judgment by virtue of mutual collaboration or treaty, the absence of such a treaty will create a hindrance towards its implementation. It is indeed true that sometimes even the presence of a treaty will not guarantee the enforcement of a foreign judgment and UAE courts are renowned for declining such enforcement in such cases. Parties must bear in mind the difficulty of enforcing such judgment against a party residing in Dubai, where the court has rejected to entertain the case due to lack of mutual arrangements between the countries.
As a general practice, the courts in Dubai will have jurisdiction over the matter if either party is residing in Dubai, irrespective of terms of the commercial contract, subject to the clause that the countries have mutual collaboration or agreement in that regards. Claimants must carefully consider prior to bringing any claims against Dubai-based party. In addition, obtaining a judgment from the foreign court will somehow not suffice the requirement. Thus, seeking advice from Commercial Lawyers of Dubai is utmost.