Foreign court judgments could now be enforceable in onshore UAE via the DIFC Courts
DNB Bank ASA v Gulf Eyadah Corp and Gulf Navigation Holding PJSC, 25 February 2016. The DIFC Court of Appeal has decided that the DIFC Courts can be used as a "conduit jurisdiction" for the enforcement of foreign court judgments in onshore UAE and beyond. This is a significant new development which overturns the July 2015 judgment of the DIFC Court of First Instance in the same case.
Key points from the DIFC Court of Appeal judgment are:
- a judgment creditor can use the DIFC Courts as a "conduit jurisdiction" for enforcement, by making an application to the DIFC Courts for enforcement and then using reciprocal mechanisms to execute against assets in onshore UAE and other jurisdictions;
- once a foreign court judgment is granted recognition in the DIFC Courts, the foreign judgment becomes a local judgment of the DIFC Courts and should be treated as such by the onshore UAE Courts and the courts of other jurisdictions;
- there is no requirement for the judgment creditor to show that there are any assets of the judgment debtor within the DIFC.
This ruling means that judgment creditors can now use the DIFC Courts as a "conduit" for the enforcement of foreign court judgments directly in the onshore execution courts of the UAE without any rehearing of the merits of the dispute.
The benefit of this enforcement route to judgment creditors is significant, since it effectively bypasses the usual route for enforcement of foreign court judgments in the onshore UAE Courts, which can lead to a full rehearing of the dispute plus appeal proceedings.
Although the DNB Bank judgment will be of great interest to any creditor who is seeking to enforce a foreign court judgment in onshore UAE, the DIFC Court of Appeal warned that its decision does not guarantee the approach of the onshore UAE Courts:
"The DIFC Courts are not concerned with what happens in the Dubai Courts in which the Claimant seeks to enforce its judgment as it does not have the jurisdiction to dictate what they should do. However, the holder of a DIFC Courts judgment recognising a foreign judgment will seek enforcement of the DIFC Courts judgment at its own risk."
DIFC law and practice on the enforcement of foreign court judgments is now in line with the DIFC law and practice on the enforcement of arbitral awards. The DIFC Court of Appeal has confirmed previously (in the case of Banyan Tree Corporate PTE Ltd v Meydan Group LLC) that the DIFC Courts are prepared to act as a "conduit jurisdiction" for the enforcement of arbitral awards – following DNB Bank, the same now applies in respect of foreign court judgments.