The conduit jurisdiction of the DIFC Courts
Recent rulings of the Judicial Tribunal for the Dubai Courts and DIFC Courts (the JT) undermine the ability of the DIFC Courts to aid enforcement of foreign court judgments and arbitration awards in onshore UAE. These rulings do not, however, impact the 'short-cut' enforcement route between the DIFC Courts and the onshore Dubai Courts for substantive DIFC Court judgments and DIFC seated arbitral awards. Accordingly, where Dubai is likely to be the enforcement jurisdiction, the claimant party is likely to benefit from a dispute resolution clause that refers disputes to arbitration with a DIFC seat or to the DIFC Courts.
The DIFC Courts had shown a willingness to act as a 'conduit jurisdiction' for the enforcement of arbitral awards and foreign court judgments in onshore Dubai, offering potential benefits to award/judgment creditors by providing an enforcement route into onshore Dubai which avoided the often time-consuming and unpredictable processes of onshore Dubai Court proceedings.
We reported previously on the decisions of the JT, which appeared to threaten the ability of the DIFC Courts to act as a conduit jurisdiction for enforcement actions in onshore UAE.1
Subsequently, nine decisions of the JT have been published confirming that the DIFC Courts' ability to act as a conduit jurisdiction has been undermined in relation to the enforcement in onshore UAE of:
arbitral awards in arbitrations where the arbitration seat is in onshore UAE;
foreign arbitral awards; and
foreign court judgments.
To date, the JT has repeatedly found that the onshore Dubai Courts have prevailing jurisdiction (and the DIFC Courts must halt their proceedings) where there are any parallel proceedings in relation to the same matter in the onshore Dubai Courts. There has been a consistent split between the decisions of the onshore Dubai judges who sit in the majority on the JT and the DIFC Court judges who are in the minority.
Although the pure conduit jurisdiction of the DIFC Courts has been undermined by the JT decisions, it should be noted that these decisions should not have any impact on:
the enforcement of foreign arbitral awards in the onshore Dubai Courts under the New York Convention;
the enforcement of DIFC seated arbitral awards in the onshore Dubai Courts; and
the enforcement of substantive DIFC Court judgments (ie judgments that determine the merits of the dispute) in the DIFC and in the Dubai Courts.
This case summary is part of the Allen & Overy Legal & Regulatory Risk Note, a quarterly publication. For more information please contact Karen Birch – firstname.lastname@example.org, or tel +44 20 3088 3710.