Enforceability of Arbitration Awards in the UAE
International arbitration in the United Arab Emirates (“UAE”) has developed significantly in recent years with both domestic and international parties increasingly drawn to many of its advantages over conventional court litigation. A critical factor in the UAE’s jurisdictional development as a credible hub for international arbitration is the introduction of a streamlined and efficient enforcement regime for both domestic and foreign arbitral awards. The UAE introduced federal law No.6 of 2018 on Arbitration in 2018. It clarifies the procedures to challenge the enforcement of an arbitral award before the onshore UAE courts. The arbitration law struck out Articles 203 to 218 of the UAE Civil Procedure Law No. 11 of 1992 and handled a few arbitration provisions in the UAE. The new arbitration law contains 61 articles and it applies to the arbitration conducted in UAE. The UAE has a well-established civil law “onshore” court system which consists of the federal judicial system in place in the Emirates of Abu Dhabi, Ajman, Fujairah, Sharjah and Umm Al-Quwain as well as the separate court systems retained by Dubai and Ras Al Khaimah, as well as a common law “offshore” court system based in the Dubai International Financial Centre (“DIFC”) and the Abu Dhabi Global Markets (“ADGM”).
Domestic Award - Onshore Courts.
Article 52 of the Arbitration Law states that an arbitral award made per the Arbitration Law has the same binding force on the parties as a court ruling. The award can be enforced directly before the UAE federal or local Courts of Appeal and an enforcement order should be given by the Court within 60 days of an enforcement request. under Article 53 however, there are eight grounds on which an award debtor may apply to the court challenging the execution proceedings within 30 days from receipt of notification of the award (Article 54(2)). In this event, the court may suspend enforcement proceedings for up to 60 days to allow the Tribunal to eliminate grounds for setting aside the award, where appropriate, (Article 54(6)). Any remaining grounds will be referred to the Court of Appeal, which will review the submissions and evidence of the parties before deciding whether to ratify or annul the arbitral award. In making this decision, the court should not consider the merits of the arbitral tribunal’s findings and should only annul an award if one of the procedural grounds contained in Article 53 of the Arbitration Law is applicable. As with the enforcement of judgments, the losing party is entitled to appeal the court’s decision with a single round of appeal provided for in Article 54(1) to the Court of Cassation.
Foreign Award - Onshore Courts
The UAE arbitration law does not apply to the recognition and enforcement of foreign arbitral awards in onshore UAE. The substantive law and procedure for the recognition and enforcement of foreign arbitral awards in onshore UAE are set out in Articles 85 and 86 of the Cabinet Regulations Number 57 of 2018 of the UAE Civil Procedure Law.
A party seeking the recognition and enforcement of a foreign arbitral award in onshore UAE will need to submit either an application for recognition of the foreign arbitral award or file an ex-parte petition directly with the execution court following which, the execution judge will render an order within three days. However, for a foreign arbitral award to be recognised in the UAE, the conditions set out in Article 85 (2) of the Executive Regulations must be satisfied as these conditions can form the basis of any challenge. The conditions in Article 85 (2) are as follows:
- The UAE Courts do not have exclusive jurisdiction on the subject matter of the judgment;
- The judgment has been issued by a court having jurisdiction under the law of the country in which it was issued and was duly attested;
- The opposing parties in the case have been summoned to appear and were represented before the court or tribunal;
- The judgment or order acquired the force of res judicata under the law of the court where it was issued (proof may be required through a certificate or the judgment itself might prove such); and
- The judgment does not contradict the public order or morals of the UAE.
Therefore, parties need to ensure that the above conditions are met before submitting an application for enforcement as failure to do so may lead the application to being rejected.
Arbitral awards in the offshore court system.
The DIFC and the ADGM are financially free zones within the UAE with their own civil and commercial laws. In particular, the DIFC has its own Arbitration Law, DIFC Law No. 1 of 2008 which governs arbitrations seated in the DIFC and is entirely separate from the UAE Arbitration Law (UAE Federal Law No. 6 of 2018) which governs arbitrations seated in onshore UAE. Part IV of the DIFC Law No. 1 of 2008 covers the rules relating to the Recognition and Enforcement of Awards.
The process by which a party will apply for the recognition and enforcement of an arbitral award in the UAE will depend on whether the arbitral award is “domestic” or “foreign”. Domestic arbitral awards are those which are rendered by an arbitration institution in the UAE such as Dubai International Arbitration Centre (“DIAC”) and Abu Dhabi Commercial Conciliation and Arbitration Centre (“ADCCAC”). Whereas foreign arbitral awards are those which are rendered by an arbitration institution outside of the UAE.
While it has predominantly been difficult to enforce foreign arbitral awards in the UAE, the outlook changed significantly when the country became a signatory to the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 or “the New York Convention” (NYC) in November 2006. Further, many of the bilateral or multilateral treaties to which the UAE is a party such as ‘The Riyadh Arab Agreement for Judicial Co-operation 1983 (“Riyadh Convention”)’ and the ‘GCC Convention for the Execution of Judgments, Delegations and Judicial Notifications 1996’ (“GCC Convention”) deal with the enforcement of arbitral awards and, where one of these is applicable, this may provide an alternative route of enforcement.
Under the NYC, the enforcement of a foreign award may only be refused on the following grounds:
- The parties to the arbitration agreement were under some incapacity or the arbitration agreement is not valid under the law to which the parties subjected it or the law of the country where the arbitral award was made;
- The party against whom the arbitral award is invoked was not given proper notice of the appointment of an arbitrator or the proceedings, or was otherwise unable to present its case;
- The arbitral award deals with a difference not contemplated or falling within the terms of the submission to arbitration;
- The composition of the arbitral authority or the arbitral procedure was not following the parties’ agreement or the law of the seat of arbitration;
- The arbitral award has not yet become binding on the parties or has been set aside or suspended by the courts at the seat of arbitration;
- The subject matter of the difference is not capable of settlement by arbitration under the law of The country where enforcement is sought (ie UAE law in this case); or
- Enforcement would be contrary to the public policy of the state in which enforcement is sought (ie the UAE),
The recognition and enforcement of financial free zone seated arbitral awards
- DIFC: To enforce an arbitral award in the DIFC, the successful party must make an application to the DIFC Courts according to Article 42(1) of the DIFC Arbitration Law. A party can make such an application for enforcement either with or without notice to the other party. Provided the DIFC Court decides to recognise the award, it will issue an order in both English and Arabic. The award creditor must then serve the DIFC Court order on the award debtor.
- ADGM: The ADGM follows a similar procedure to the DIFC, which is set out in Part 4 of the ADGM Arbitration Regulations 2015 and provides that upon the application of a party for the recognition or enforcement of an arbitral award, the court decides that if an award shall be recognised or enforced, it shall issue an order to that effect. The party seeking the recognition or enforcement of an award would need to provide to the court:
- The original or a duly certified copy of the arbitral award; and
- A copy of the arbitration agreement pursuant to which that arbitral award was rendered.
- If the award or the agreement is not in English, the ADGM Court may order the provision of a translation. Right of Challenge
The right to challenge an arbitral award in the courts of the DIFC or the ADGM complies with the requirements of the New York Convention. However, the courts may refuse enforcement if the subject matter of the dispute is not capable of settlement by arbitration under the relevant laws of either the DIFC or ADGM or if the enforcement of the award would be contrary to public policy in the UAE. The process for the recognition and enforcement of a foreign arbitral award in the DIFC and ADGM is the same as the recognition and enforcement of domestic arbitral awards seated in the free zones as set out above.
The ability to enforce a favourable arbitral award is of fundamental importance. The UAE Arbitration
Law has improved the enforcement regime of arbitration awards. There has been a great positive shift and impact which have paved paths for new developments in arbitration such as the monopolising and unifying of the various arbitration centres which will continue to strengthen Dubai’s position as a Global Hub for Alternate Dispute Resolution.
This article’s material should not be construed as legal advice. Hassan Al Reyami Attorneys and legal experts are happy to answer your questions during a 30-minute free legal consultation session that is being given to you if you are facing any issues pertaining to the following subject or have any other inquiries.