UAE recognises reciprocal enforcement of English court judgments

In a significant step for the recognition of English court judgments, the UAE Ministry of Justice (the “MOJ”) has issued a communiqué to the Director General of the Dubai Courts (the “communiqué”) confirming that judgments issued by the English Courts should now be enforced in the UAE based on the principle of reciprocity.

In the absence of a treaty between the UK and the UAE providing for the mutual recognition and enforcement of judgments, the ability to enforce an English court judgment in the UAE is entirely a matter of the domestic law of the UAE.

The enforceability of foreign judgments in the UAE is governed by Article 85 of Federal Cabinet Decision No. 57 of 2018 (implementing the UAE Civil Procedure Code) (the “Cabinet Decision”). This provides that a foreign judgment may be executed in the UAE:

“under the same conditions as prescribed in the law of that [foreign] country for the execution of judgments and orders issued in the UAE”.

In short, this means that the UAE will enforce a foreign judgment where there is reciprocity of enforcement between the UAE and the relevant foreign jurisdiction.

The recent communiqué follows the (now final) English High Court decision in Lenkor Energy Trading DMCC v Puri [2020] EWHC 75 (QB), which considered the enforcement of a judgment issued by the Dubai courts.

In the instant case the English courts were asked not to enforce a Dubai court judgment on the basis it would be contrary to public policy on various grounds, including that the underlying contract was tainted by illegality. However, the public policy arguments made before the court were not accepted, the High Court making it clear that, in order to rely on a public policy defence as a matter of English law, “it is the judgment and not the underlying transaction upon which the judgment is based which must offend English public policy”.

It therefore matters not that the fact pattern on which a foreign judgment is based might generate a different outcome had the same facts been tried before the English courts, so long as recognising the judgment itself would not offend English public policy. The judgment of the Dubai courts in its original form was therefore enforceable in England and it is this that has led the MOJ to determine there is reciprocity of enforcement by the English courts.

However, reciprocity alone does not mean that the UAE courts will now automatically enforce English court judgments. Article 85(2) of the Cabinet Decision also requires the UAE courts to look at (i) whether the UAE courts have (or had) exclusive jurisdiction over the dispute, (ii) whether the judgment to be enforced conflicts with a judgment of the UAE courts, and (iii) whether the judgment is consistent with public policy in the UAE.

These additional requirements could therefore serve to limit (at least in some way) the extent to which English court judgments are recognised in the UAE. In particular:

• the UAE courts have historically tended to assume jurisdiction in any case involving a UAE national or entity, irrespective of the terms of any underlying document (although the criteria in the Cabinet Decision that jurisdiction needs to be “exclusive” ought to be helpful);
• concurrent proceedings may result in conflicting judgments, in which case any judgment of the UAE courts will likely prevail; and
• the UAE courts have very broad discretion on matters of public policy, which also extends to any outcome that would be incompatible with Shari’a (Islamic) principles.

It is also worth noting that there is nothing in the Cabinet Decision that expressly prohibits a UAE court from reviewing the merits of an English court judgment, even if the criteria in Article 85 are otherwise satisfied. 

To date, it has been common to include an arbitration clause in contracts with a nexus to the UAE due to the uncertainty with respect to the enforcement of foreign court judgments by the UAE courts. Parties looking to enforce an English judgment in the UAE may take some comfort from MOJ’s “desire to strengthen fruitful cooperation in the legal and judicial field”, but, at least in the short term, we expect cross-border agreements to still feature arbitration provisions until it is clear how the UAE courts give effect to this communiqué (particularly given it does not have any binding legal effect).