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Legal Developments

Abu Dhabi Global Market Courts now open for business

The ADGM Courts are now operational and open for business. A memorandum of understanding signed between the ADGM Courts and the UAE Ministry of Justice in May includes the following commitments:

  • the enforcement of ADGM Courts' judgments and ADGM seated arbitral awards in onshore UAE without re examining the merits of the dispute;
  • clear procedures for the recognition and enforcement of ADGM Court judgments in onshore UAE and in countries that have entered into reciprocal enforcement treaties with the UAE; and,
  • recognising the "opt in" jurisdiction of the ADGM Courts, so that parties with no connection to the ADGM can agree to refer disputes to the ADGM Courts.

Once these commitments materialise in new legislation, the ADGM Courts are likely to be comparable to the DIFC Courts as a hub for arbitration and litigation in the Middle East that will appeal to international businesses.

The new legislation also has the potential to create new routes for the enforcement of foreign court judgments and foreign arbitral awards in the UAE and, potentially, the wider Middle East.

The DIFC Court holds that the DIFC is the implied choice of arbitration seat

A recent DIFC Court judgment1 illustrates the broad approach it takes to the scope of its own jurisdiction and the circumstances in which it is prepared to find that the DIFC is the implied choice of arbitration seat.

The agreement between the parties provided for submission to "the jurisdiction of the courts in Dubai the UAE" and "arbitration per the law of the United Arab Emirates2".

The DIFC Court held that a letter in which the parties arranged a meeting in the DIFC to discuss an addendum to an agreement amounted to "… quite clear evidence … that the parties transacted business in the geographical territory of the DIFC"3. As a result, the DIFC Court held that it had jurisdiction to determine disputes arising out of the agreement through the jurisdictional gateway in Article 5(A)(1)(c) of the DIFC Judicial Authority Law (which states that the DIFC Court has exclusive jurisdiction in respect of an action "… arising out of or relating to any incident or transaction that has been wholly or partly performed within DIFC and is related to DIFC activities"). On this basis, the DIFC Court held that the interpretation of the wording "… the courts in Dubai the UAE … must mean the DIFC Courts …".4 

Since both parties had demonstrated an intention to refer the relevant claims to arbitration, the DIFC Court considered whether any choice of seat could be implied into the arbitration clause. The DIFC Court looked for "… the Seat with the most connection with the Agreement, the parties, the transaction or any other relevant consideration". Taking that approach, the DIFC Court held that the "reference to Dubai, UAE Law as the applicable substantive and procedural law, and reference to the Dubai, UAE Courts, which this Court earlier interpreted to be both DIFC Laws and Courts, give ample support to an implied Seat of Arbitration in Dubai (DIFC5)".

We have reported previously on DIFC Court cases that show the DIFC Courts are willing to interpret references to the UAE or Dubai Courts, as including a reference to the DIFC Courts.6  This recent judgment provides a further example of the DIFC Courts' willingness to accept jurisdiction for both court litigation and arbitration.

Reported recognition and enforcement of a foreign award in Saudi Arabia

In June 2016 it was reported7 that the Enforcement Court in Riyadh enforced a foreign ICC arbitral award rendered in London for USD 18.5 million in favour of the UAE subsidiary of a Greek telecom company.

Although Saudi Arabia has been a party to the New York Convention since 1994, there have been no publicly reported examples of foreign awards being enforced successfully in Saudi Arabia. As a result, international businesses have been wary of referring disputes to arbitration seated in Saudi Arabia or with Saudi Arabian counterparties.

The recent decision of the Enforcement Court in Riyadh is significant as it is the first publicly reported example of a court decision to enforce a foreign award in Saudi Arabia since new arbitration and enforcement laws were introduced in 2012. These new laws provided for, among other things, recognition and enforcement of awards without any review of the merits of the underlying dispute (although elements of the award that conflict with Shari'ah principles or public policy must still be excluded).

While the decision appears to be an encouraging development for parties considering enforcement of foreign awards in Saudi Arabia, it should be noted that the decision is not necessarily the final step in the process. The respondent may still initiate an enforcement dispute proceeding, followed by an appeals process, which could lengthen the proceedings considerably and lead to a review of the merits of the underlying dispute. It remains unclear whether the recent decision in the Enforcement Court in Riyadh  has been subject to an enforcement dispute proceeding or has been appealed.

 Footnotes

1. Gavin v Gaynor , DIFC CFI 017/2015, http://difccourts.ae/11838-2.
2. Para. 3 of the judgment.
3. Para. 64 of the judgment.
4. Para. 66 of the judgment.
5. Para. 74 of the judgment.
6. https://www.aohub.com page 47
7. http://globalarbitrationreview.com; http://kluwerarbitrationblog.com.

 

Legal and Regulatory Risk Note
Middle East