Obtaining an arbitral award is not the end of the road to redress. Execution or recognition is the subsequent phase, and this phase can be complex and prodigious especially if enforcement is supposed to be beyond the jurisdiction from where the award was obtained. Implementation of foreign arbitral awards in UAE challenging, particularly in cases where the award debtor tries to evade from his obligations. Arbitration Lawyers of Dubai invariably advise their clients or award creditor to formulate strategies for enforcement of the award.
An automatic acknowledgement is offered to the applicability of the New York Convention on Recognition and enforcement of Foreign Arbitral Awards (NYC), in case of implementing foreign arbitral awards. UAE is a signatory to New York Convention since 2006 and posts acceding the treaty, UAE courts have customized their approach towards enforcement. In a nutshell, UAE after signing the treaty have also implemented foreign awards which although doesn’t meet the requirements of the Civil Procedure Code but comply with New York Convention.
NYC in UAE
Article 5 of the BYC states that “a foreign arbitral award will be recognized and enforced in any country signatory to NYC, post the application to the competent court by the party to the award, and the opposing party fails to satisfy the court orders in the following manner:
- The arbitration agreement is not valid in accordance with the law of the country in which award was passed or cannot be arbitrated, or parties are incapable of entering into the agreement;
- Failure of issuing a proper notice to the parties regarding arbitration proceedings;
- The law is not binding upon the parties;
- The matter of the dispute cannot be referred to arbitration;
- Arbitral authority was not appointed pursuant to the law of the seat of arbitration;
- Enforcement of the award will oppose the public policy of the territory.
New York Convention has incited crucial discussions while changing the UAE courts protocol towards enforcing arbitral awards especially in the absence of concrete legislation explicitly implementing the clauses of NYC in UAE law. A trend favouring NYC can be witnessed through various court’s decisions issued in accordance with NYC principles.
Fujairah Court of First Instance in Case Number 35 of 2010 passed a decision for the enforcement of foreign arbitral award pursuant to the NYC. The concerned judgment the first of its kind and explicitly recognized the treaties or conventions signed by UAE. The judgment struck down numerous traditionally used principles for enforcing an arbitral and set an example for further cases.
A strong impression was created by Macsteel International vs Airmech judgment of the Dubai Court of Cassation in 2012, which decided to not apply the provisions of Civil Procedure Law while enforcing the foreign arbitral awards. Thus, application of NYC was imposed. However, a dissenting view was observed in CCI vs Ministry of Irrigation of the Democratic Republic of the Sudan where Dubai Court of Cassation opined that the enforcement of an award can be refused obtained in NYC signatory countries due to lack of a place of residence or if the courts lack the jurisdiction to entertain the matter.
In 2014 Reyami vs BTI Court of Cassation decision regarding ratification of an award issued in Germany, mentioned that UAE had issued a law ratifying the NYC and thus, the provisions of NYC should be applied while enforcement of arbitration awards.
On the contrary to the foregoing, the enforcement of awards from countries which are not signatory to NYC. In such cases, a bilateral treaty between UAE and the concerned country is a potential route for enforcing the award. UAE has signed numerous bilateral treaties with countries such as Egypt, Syria, Jordan, Riyadh, France and GCC.
New Arbitration Law
Federal Law Number 6 of 2018 regarding Arbitration Law governs arbitration in UAE. However, the law is silent on procedures regarding enforcement of foreign arbitral awards in UAE. We still stand inert in determining the laws which will be applicable in recognizing the foreign awards and how. In reference to Article 3 of the New York Convention, the contracting parties or states should not impose any rigorous preconditions on the recognition and enforcement of awards compared to the conditions of enforcing domestic awards. We believe that the provisions of the New Law will be applicable to the foreign awards. However, we wait for such a precedent. Pursuant to Article 55 of the new Law and Article 4 of the New York Convention, the party seeking for enforcement of foreign award shall submit a request fulfilling the conditions outlined in the foregoing provisions.
Whereas, any party desiring to challenge the enforcement of a foreign award can file their defence claim in the competent court ratifying the award pursuant to Article 55 of the Law. The new Law does not allow parties to file a request to set aside the award in accordance with Article 53 of the new Law, as UAE courts lack jurisdiction to set aside a particular award.
Following some underlying hesitance, there is a positive pattern creating for the UAE courts to perceive the supremacy of the New York Convention, and apply it. These court decisions demonstrate a positive move for the implementation routine in the UAE for those looking to uphold outside arbitral awards in the UAE. However, it is essential to hold up under as a primary concern that the UAE has a civil law system wherein precedents do not hold importance. Ergo, a decision passed by one judge does not tie another, and he is free not to consider the judgments passed by another court.