DIFC court moves on foreign judgments

In one of its most important decisions of the year, the Dubai International Financial Centre (DIFC) Court of Appeal has held that parties may enforce foreign judgments in the DIFC Courts and then take the resulting order for execution in the Dubai courts outside of the DIFC. The DIFC Court of Appeal’s decision paves the way for the enforcement of foreign judgments throughout the UAE.

Previously, the enforcement of foreign judgments in the UAE (non-DIFC) courts was notoriously difficult. This difficulty arose from the high threshold set on the enforcement of foreign judgments under article 235 of the UAE Civil Procedures Law (Federal Law No. 11 of 1992 as amended).

As a prerequisite for enforcement of a foreign judgment, article 235(2)(a) requires that the UAE courts have no jurisdiction to try the dispute in respect of which the judgment has been issued by the foreign court. This precludes a large number of foreign judgments from enforcement. The UAE courts, like many others, are quick to assume jurisdiction over a dispute. Under the Civil Procedures Law, the UAE courts will assume jurisdiction over disputes in which, inter alia, the defendants are domiciled or incorporated in the UAE, or which arise out of a contract entered into or performed in the UAE. The effect of this expansive jurisdiction of the UAE courts is that parties would fall foul of the requirement under article 235(2)(a) for the enforcement of foreign judgments.

Muhammad Mahmood is an associate at Al Tamimi & Company