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United Arab Emirates: Enforcement of foreign arbitral awards back on track – but risk of inconsistent judgments remains

This article considers a welcome Dubai Court of Cassation ruling which overturned a Dubai Court of Appeal decision earlier this year in which it had refused to enforce a London ICC arbitral award.  The decision had caused concerns about the enforcement of foreign arbitral awards in the U.A.E.  

Earlier this year we reported that the Dubai Court of Appeal had refused to enforce a London ICC arbitral award. In that case, Fluor v Petrixo Oil & Gas, the Dubai Court of Appeal applied a principle of reciprocity found in the UAE Civil Procedure Law, finding that no evidence had been submitted to prove that the UK had signed and ratified the New York Convention and that such evidence was necessary to show that the UK courts would reciprocate by enforcing a UAE arbitral award in the UK. 

The Court of Appeal's decision was overturned by the Dubai Court of Cassation in June. The Court of Cassation confirmed that, as the UAE and the UK are both signatories of the New York Convention, the UK award must be recognised and enforced according to the provisions of that convention. The provisions of the UAE Civil Procedure Law relating to reciprocity would therefore not apply.

As we have previously reported, the reciprocity reservation contained in Article I(3) of the New York Convention was not adopted by the UAE and, as such, the UAE should not refuse to enforce an arbitral award on such grounds in any event.

The Court of Cassation's decision is a welcome one, restoring the UAE's developing track record of positive enforcement of foreign arbitral awards. The Dubai Court of Cassation has previously delivered a clear message that the UAE courts ought to apply the New York Convention to the enforcement of foreign arbitral awards, with no regard to the challenges available under the Civil Procedure Law when enforcing domestic awards (in the 2012 Macsteel case).

Nevertheless, the Court of Appeal's decision, so obviously in conflict with previous UAE court decisions, is another reminder of the inherent risk of inconsistent decisions in a civil law jurisdiction not bound by judicial precedent. 

Of further note, we have previously reported on the development of the Dubai International Financial Centre (DIFC) as a "conduit" for the enforcement of foreign arbitral awards and foreign court judgments in onshore Dubai. Dubai Decree 19 of 2016 has now established a Judicial Committee of the Dubai Courts and DIFC Courts. The Committee is tasked with resolving matters of conflicts of jurisdiction arising between the two court systems. We will be watching closely to see how the rulings of the Committee are implemented in practice and the impact that those rulings have on the DIFC's role as a conduit jurisdiction for the enforcement of foreign arbitral awards and foreign court judgments in onshore Dubai, the rest of the United Arab Emirates and, potentially, the wider Middle East. 

Further information 

This case summary is part of the Allen & Overy Legal & Regulatory Risk Note, a quarterly publication.  For more information please contact Karen Birch, or tel +44 20 3088 3710. 

Legal and Regulatory Risk Note
Middle East