Article 5 of Law No. 12 of 2004 on the Judicial Authority of the DIFC Courts was amended in October 2011 by Dubai Law No. 16 of 2011, which means that parties from anywhere in the world now have the choice to ‘opt in’ to the DIFC Court’s jurisdiction for resolution of disputes in commercial and civil matters.
In the last eighteen months, there has been a slow but significant increase in the frequency of DIFC Courts’ jurisdiction clause being included in agreements executed between parties based outside of the DIFC (most notably in the Middle East Region but not necessarily with any connection to the DIFC itself).
As yet, no enforcement of any judgments originating from the DIFC Courts has been reported outside of the UAE. However, given the formal systems that are now in place to facilitate such enforcement, it is considered that it should only be a matter of time until they are.
It is quite apparent that, with the possibility of DIFC Courts’ judgments being recognized and enforced abroad, such a forum is worth considering for resolution of disputes, particularly in the GCC region. It might be preferred particularly by foreign parties who are most comfortable with a judiciary and procedure which is based on common law principles, as provided, in the English language, by the DIFC Courts.
Paragraph (A)(2) of the new Article 5 provides a new “jurisdictional gateway” for civil or commercial claims in circumstances where the parties have agreed to the jurisdiction of the DIFC Courts when settling any disputes arising between them. An agreement to ‘opt in’ must be confirmed in writing either before the dispute arises or after it has arisen.
Nevertheless, the real limit to its jurisdiction, as well as its viability as an appropriate forum for parties ‘outside’ of the DIFC, will ultimately depend upon the extent to which courts of other jurisdictions would be willing to recognize and enforce judgments of the DIFC Courts.
The mechanisms for the enforcement of judgments in the GCC region, and beyond, are already in place. Article 7 of Dubai Law No. 16 of 2011 codified the enforcement protocol that had existed between the DIFC Courts and the local Dubai courts since 2004.
Pursuant to such provisions, any judgment issued by the DIFC Courts will be recognized by the local Dubai courts if three conditions are satisfied, namely that the judgment:
- is final and executory;
- has been translated into Arabic by a Ministry of Justice-approved legal translator; and
- has been certified by the DIFC Courts for execution.
Once recognized, the judgment of the DIFC Courts can then be enforced as a judgment of the Dubai courts meaning that, pursuant to Article 11 of the UAE Federal Law No. 11 of 1973, it can be enforced throughout the UAE and, importantly, can also be subsequently enforced under any enforcement treaties to which the UAE is a party. The relevant treaties in this regard to which the UAE is a signatory are:
- The GCC Protocol on the Enforcement of Judgments 1996 (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates);
- The Riyadh Arab Agreement for Judicial Cooperation 1983 (Algeria, Bahrain, Djibouti, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Somalia, Sudan, Syria, Tunisia, United Arab Emirates and Yemen);
- The Agreement on Judicial Cooperation, Execution of Judgments and Extradition of Criminals between the United Arab Emirates and the Tunisian Republic 1975;
- The Convention on Judicial Assistance, Recognition and Enforcement of Judgments in Civil and Commercial Matters signed between France and the UAE 1992;
- The Agreement on Juridical Cooperation in Civil and Commercial Matters with India 2000; and
- The Convention on Judicial Assistance in Civil and Commercial Matters between the United Arab Emirates and the Republic of China (PRC) 2004.
Given that such a system already exists, albeit, as yet, untested, it can only be a matter of time before judgments of the DIFC Courts start to be recognized and enforced in other foreign jurisdictions.
When they are, the established and tried and tested forums of New York or London (where appropriate) or arbitration tribunals which are considered by and large to be the preferred choice of forum by many international parties inwardly investing in the Region (although only arbitration awards would be considered enforceable in most Middle East jurisdictions pursuant to the provisions of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958) may no longer be considered so attractive compared to the DIFC Courts. This may be particularly so, given that the DIFC Courts also comprise a small claims tribunal process.
The first foreign enforcement of a judgment of the DIFC Courts is, therefore, eagerly awaited and with it, perhaps, a significant change to the legal landscape relating to the enforcement of foreign judgments.