DIFC Courts approved as conduit for foreign judgements and arbitrations

The Judicial Tribunal for the Dubai Courts and DIFC Courts ruled in favour of institutions attempting to enforce English court judgements. Sarah Dea / The National

A key Dubai judicial committee has given the go ahead to two companies to use the DIFC Courts as a “conduit jurisdiction” for the enforcement of foreign judgements and arbitrations in Dubai’s onshore courts, in a move that may prompt an uptick in similar claims.

In decisions related to two separate cases, the Judicial Tribunal for the Dubai Courts and DIFC Courts ruled in favour of institutions attempting to enforce English court judgements worth millions of dirhams against UAE-based entities by way of the DIFC Courts.

In the first case, Standard Chartered filed in 2014 a claim against Sharjah-based IGPL seeking the enforcement of a US$129 million English commercial court judgement against IGPL over two alleged defaulted loan agreements dating from 2009 and 2010.

In the second, filed in the same year, DNB Bank filed a claim against Gulf Navigation and two associated companies seeking the enforcement of an English high court judgement that ordered the shipping company to pay the bank US$8.7 million plus costs after Gulf Navigation defaulted on loan agreements from July 2013.

Standard Chartered and DNB Bank had sought recognition of their English commercial court judgements in the DIFC Courts, because of a formal agreement between the two institutions to ratify each others judgements. No similar agreement exists between the English commercial courts and the UAE’s onshore courts.

Furthermore, the free zone’s courts signed an agreement with Dubai Courts in 2011 to allow for the mutual enforcement of each other’s judgements, in theory enabling Standard Chartered and DNB to seek enforcement of their judgements in the Dubai Courts once the DIFC Courts had recognised them.

The Judicial Committee dismissed an application by Gulf Navigation to annul a judgement by the DIFC Courts enabling DNB to use the free zone’s courts as a conduit jurisdiction, noting that there were no grounds to do so given a lack of proceedings in the Dubai Courts.

In the case of Standard Chartered v IGPL, the committee remitted the case to the DIFC Courts and ordered that the Dubai Court “cease from entertaining the case”, following an attempt by IGPL to appeal against Standard Chartered in the Dubai Courts. The committee reasoned that IGPL had already made a concession that the DIFC Courts had jurisdiction in the case.

Separately, the committee also dismissed an attempt to stop the enforcement of a London-seated arbitration, namely Marine Logistics Solutions LLC and other v Wadi Woraya LLC, in the DIFC Courts, reasoning that there were no parralel proceedings in the Dubai Courts.

In a recent briefing note, Dubai-based lawyers from Herbert Smith Freehills described the decisions as “encouraging” with regard to the enforcement of foreign awards and judgements but noted that they were based on an absence of onshore Dubai proceedings rather than a positive affirmation of the DIFC Courts’ jurisdiction to hear such claims.

“Despite the positive signs, it remains to be seen how the Judicial Tribunal will decide in cases involving, for example, enforcement of an NY Convention award, where the award debtor situated in Dubai has contrived grounds to file parallel proceedings before the Dubai Courts,” Herbert Smith Freehills said in a recent briefing note.

Lawyers further noted that the decisions of the Judicial Committee at this stage provided no clear prediction as to how future cases would be treated.

“The limited number of cases decided so far, the very limited reasoning provided by the Judicial Tribunal and the fact that the decisions have been translated from Arabic (as the official language) into English, all taken together, prevent any reliable prediction as to the future of the DIFC as a conduit jurisdiction,” noted DLA Piper in a recent briefing.

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