Reed Smith Client Alerts

One of the most paramount questions on any claimant’s mind when entering into a dispute resolution process in the Middle East (such as an arbitration) might be the eventual enforceability of a successful award against some tangible assets of the other party, should this become necessary.

With that consideration in mind the Enforcement Protocol between the DIFC Courts and the Courts of Dubai has been in place for five years. The purpose of this protocol was to provide a simplified enforcement mechanism for the execution of the DIFC Court’s judgments and ratified arbitration awards in the Emirate of Dubai (and vice versa).

A DIFC arbitration award initially requires ratification by the DIFC Court. Once ratified, the award becomes enforceable within the DIFC pursuant to Article 42(1) of the DIFC Court’s Law. Outside the DIFC the enforcement can take place through the execution judge of Dubai Courts pursuant to the Protocol subject to the conditions identified in the Protocol. The Dubai Courts are not allowed to review the merits of the judgments rendered by the DIFC Courts and this would also apply to the execution of an arbitral award that has been ratified by the DIFC Courts.

In a recent development in Banyan Tree Corporate PTE v Meydan Group LLC (ARB003/2013) the DIFC court decided that it also has jurisdiction to ratify non-DIFC arbitration awards (in this case DIAC) despite the fact that the parties (or their assets) had no connection with the DIFC.

Potentially, this is a significant development as it would allow the successful claimant in a non-DIFC arbitration to circumvent the re-examination of the arbitration procedures by the Dubai Courts and get the award enforced through the DIFC route against the assets located elsewhere in Dubai.

At the moment this development has been met with some caution in legal circles on the basis that just because the DIFC courts have jurisdiction as a matter of construction of the various DIFC laws, it does not mean that this discretion will actually be exercised. It remains to be seen how the DIFC courts will approach this matter. Even if the DIFC courts do exercise this discretion, another layer of difficulty might be expected from challenges made in the Dubai Courts, who may be resistant to what could be seen as a procedural attempt to sidestep their jurisdiction.

Once the recognition of the DIFC Court’s ratified award is obtained from the Dubai Courts such an award could then be enforced in other emirates pursuant to what is known as a “referral” to the enforcement judge of the other relevant Emirate. As such the developments in the DIFC also have ramifications in other emirates in the UAE notwithstanding the absence of mutual enforcement protocols being in place between the DIFC and such emirates.

Client Alert 2014-237