15 May 2018

New York judgment is enforced by the DIFC Courts

Authored by: Hadef & Partners, Sector Groups

Summary

The enforcement of arbitral tribunal decisions in the UAE under the New York Convention may be old news, but the decision by the DIFC Court to enforce a New York court judgment back in April 2017 may not have had the recognition it perhaps deserved. In this article we run though the headline facts of this case which lead to the affirmation of the DIFC Courts’ jurisdiction to enforce the judgments of foreign courts in some circumstances.

New York Case

The Defendant, Essar Global Fund Limited (“EGFL”) had agreed to cover its liability under two contracts, provided that such payments were received in accordance with an agreed payment schedule. Should payments not be received according to the schedule, a larger settlement amount would become due from EGFL.

EGFL was notified that it had defaulted under the payment schedule and the Claimants applied to the Supreme Court of the State of New York for a ‘Judgment by Confession’. A ‘Judgment by Confession’ allows for judgment to be entered for a sum of money ‘confessed by a defendant to be due in an affidavit, and authorising the entry of judgment. The NY Supreme Court accordingly issued judgment (the “NY Judgment”).

DIFC Case

This dispute before the DIFC Courts arose out of one of the Claimants in this case (‘Midtown’) applying for enforcement of the NY Judgment, which was followed by an application for immediate judgment. The Defendant applied for a stay of Midtown’s application and a declaration that the DIFC Courts did not have jurisdiction to enforce judgments of foreign courts.

DIFC Judgment

In his judgment, Justice Sir Richard Field granted the Claimant’s application to enforce the NY Judgment and allowed immediate judgment.

The Judge’s decision clearly stated that the DIFC Courts do indeed have jurisdiction to enforce the judgments of foreign courts and confirmed that:

  • recognition of foreign judgments by the DIFC Courts is not a matter of ‘foreign affairs’ (which would mean that the matter was exclusively reserved to the UAE Federation) but a rule of private commercial law, based on a private consensual contractual arrangements; and
  • a previous DIFC Court of Appeal precedent that the DIFC Courts have jurisdiction to recognise and enforce foreign judgments, remains a binding precedent.

The Judge also helpfully clarified that the DIFC is still able to enforce judgments if:

  • the foreign judgment did not result from adversarial proceedings (as was the case in the NY Judgment which rather had resulted from a Judgment by Confession); and
  • there is a theoretical possibility of appeal (as was the case in the NY Judgment where there were pending motions to vacate the judgment).

Case reference

(1) Barclays Bank PLC (2) Credit Suisse Loan Funding L.L.C. (3) Midtown Acquisitions L.P. (4) Special Situations Investing Group Inc. v Essar Global Fund Limited [2016] DIFC CFI 036

For more information, please contact us on sectors@hadefpartners.com.