Last year we reported that the DIFC had successfully established itself as a so called ‘conduit’ jurisdiction for the enforcement of foreign and domestic arbitral awards as well as foreign money judgements.
This status could now be in jeopardy after the newly established Dubai Judicial Tribunal has issued its first decisions, which significantly curtail the DIFC’s jurisdiction.
What has happened so far…
In recent years the DIFC Courts have established a good track-record of enforcing arbitral awards (foreign and domestic) and foreign money judgments even when the relevant assets against which the award or judgment was to be enforced were located outside the DIFC and within the jurisdiction of Dubai’s ‘onshore’ courts. On the back of those decisions, the DIFC has become popular as a so-called ‘conduit’ jurisdiction.
- Meydan Group LLC v. Banyan Tree Corporate Pte Ltd [CA-005-2014] – concerning a domestic arbitration award
- (1) Egan, (2) Eggert v. (1) Eava, (2) EFA1 [ARB 002/2013] – concerning a foreign arbitral award
- DNB Bank ASA v. Gulf Eyadah and Gulf Navigation Holdings PJSC [CA-007-2015] – concerning a foreign money judgment
Reasons why parties prefer to take this additional step through the DIFC Courts rather than the direct route through the Dubai Courts include the ease of doing so and the prospects for enforcement, which are considerably greater in the DIFC Courts than in the Dubai Courts. Once the DIFC Courts have issued the enforcement order, the order (as a final judgment of the DIFC Courts) is then referred to the Dubai Courts for execution outside the DIFC under Article 7(2) of Dubai’s Judicial Authority Law (Law No. 12 of 2004).
The legitimacy of this conduit route has now been thrown into question by recent decisions issued by the newly established Judicial Body of the Dubai Courts and DIFC Courts (the Judicial Tribunal). As a consequence of those decisions, it is at least questionable whether the DIFC will remain as a viable conduit route in the future, at least in so far as the enforcement of domestic arbitral awards is concerned.