19 Jun 2017

Loud & Clear?

Authored by: Mark O'Flynn

In brief

  • This article examines the recent Memorandum of Understanding between the DIFC Courts and the Abu Dhabi Judicial Department.
  • Discussed within the article is the opportunity for the DIFC Courts and the Abu Dhabi Judicial Department to clarify whether it is necessary to use the Dubai Courts as an intermediary when enforcing a DIFC Court judgment in the Abu Dhabi Courts and to develop this principle further  

Background

On April 20 2017, a Memorandum of Understanding (“MOU”) was entered into between the DIFC Courts and the Abu Dhabi Judicial Department. The question now arises as to the effect of the MOU.

Article 2(2) of the MOU refers to the objective of establishing a strategic partnership between the DIFC Courts and the Abu Dhabi Judicial Department which facilitates “litigation procedures”. The meaning of “litigation procedures” is not clear from the MOU, but Article 3 does clarify that the MOU does not amend or repeal any laws, regulations, rules and requirements currently in force.  

This means that Article 7(2) of Dubai Law No 12 of 2004 (as amended) remains unaffected. Article 7(2) states:

Where the subject matter of execution is situated outside the DIFC, the judgments, decisions and orders rendered by the Courts and the Arbitral Awards ratified by the Courts shall be executed by the competent entity having jurisdiction outside the DIFC in accordance with the procedure and rules adopted by such entities in this regard, as well as with any agreements or memoranda of understanding between the Courts and these entities. Such execution shall be subject to the following conditions:

(a) The judgment, decision, order or ratified Arbitral Award to be executed is final and executory; 

(b) The judgment, decision, order or ratified Arbitral Award is translated into the official language of the entity through which execution is carried out;

(c) The Courts affix the executory formula on the judgment, decision, order or ratified Arbitral Award.

Where one has obtained a DIFC Court Default Judgment enforceable in Abu Dhabi, an issue that arises is whether it is possible to apply for enforcement of the DIFC Court Default Judgment directly to the Abu Dhabi Courts, without using the Dubai Courts as an intermediary – a process that takes a significant amount of time.

According to the DIFC Courts’ Enforcement Guidelines dated January 3, 2016, it may be best “to opt for the ‘tried and tested’ means provided by Article 221(1).” The “tried and tested means” involves making an application for enforcement to the Dubai Courts, pursuant to Article 221(1) of Federal Law No 11 of 1992 – the Civil Procedure Code (as amended), to enforce the DIFC Court Default Judgment. The Dubai Courts should then refer the application for enforcement to the competent execution judge in Abu Dhabi, it being the relevant jurisdiction. 

Article 4(4) of the MOU states that the DIFC Courts and the Abu Dhabi Judicial Department shall cooperate in the “[f]acilitation of the procedures of judicial cooperation, particularly in terms of judgment enforcement in accordance with all applicable laws & regulations”. Does this mean that when one has obtained a DIFC Court Default Judgment it is no longer necessary to use the Dubai Courts as an intermediary to apply to enforce the DIFC Court Default Judgment in the Abu Dhabi Courts? The answer is unclear, and the DIFC Courts and the Abu Dhabi Judicial Department could have used this as an opportunity to clarify this point when the MOU was being drafted. This may happen in the future, and we will wait to see what transpires.

Conclusion

The introductory paragraphs of the MOU make it clear that the intention is to “establish coordination and cooperation in all fields of common interest” between the DIFC Courts and the Abu Dhabi Judicial Department. There is some degree of comfort in that intention but what that intention means in reality for the direct recognition and enforcement of DIFC Court judgments, decisions, orders and ratified Arbitral Awards in the Abu Dhabi Courts remains to be seen.

(Originally published in the June edition of the Oath)

 

This article, including any advice, commentary or recommendation herein, is provided on a complimentary basis without consideration of any specific objectives, circumstances or facts. It reflects the views of the writer which may, in some cases, differ from those of the firm, especially in the developing jurisdiction of the UAE.