The UAE has taken steps to strengthen commercial ties with the UK by clarifying the rules on the enforcement of money judgements. A Memorandum of Guidance was signed earlier this year by Chief Justice Hwang of Courts of the Dubai International Financial Centre (the DIFC Courts) and Mr Justice Cooke, the Judge in Charge of the UK Commercial Court, ahead of the ninth meeting of the UK-UAE Task Force.

What the agreement means

The purpose of the Memorandum is to set out the procedures for the enforcement of judgments ordering a party to pay a sum of money handed down in one court, by the other court.  Currently, there is no treaty between the UAE and the UK for the reciprocal enforcement of court judgments.

Prior to the Memorandum it was unclear how the existing provision in DIFC Law relating to judgments of a recognised foreign court (Article 24 of DIFC Law No.10 of 2004) would be applied. The Memorandum is therefore a significant step in contributing to the DIFC Courts’ and Dubai’s global status.

 It is now clear that provided a money judgment of the DIFC Courts or the UK Commercial Court is final and conclusive (notwithstanding any right of appeal), is not a judgment for the payment of a penalty or fine and the court that made the decision had jurisdiction to hear the matter in the first place then the judgment will be enforced by the other Court.

Challenging a judgement

 If these requirements are satisfied then enforcement of a judgment can only be challenged on grounds that the judgment was obtained by fraud, or that it is contrary to public policy (in the jurisdiction of the enforcing court), or that the proceedings were conducting before the court that gave the judgment in a manner that is regarded as contrary to the principles of natural justice by the enforcing court. These are limited grounds for challenging enforcement. The merits of the actual judgment cannot be challenged in the enforcing court.

There also appear to be broader implications of the development with the possibility of enforcing judgments of the UK Commercial Court in the rest of Dubai, outside of the DIFC, and the wider UAE. At least theoretically, there may be an application for the enforcement of a foreign court judgment in the DIFC Courts and then a subsequent application for the execution of that judgment in the Dubai Courts and, by extension, the courts of the other Emirates.

Providing clarification

Although the Memorandum is not intended to have binding legal effect, or supersede existing legislation, the clarification it offers to the rules and procedure available is important to trade and the business community, as well as strengthening ties between the two jurisdictions. Increasingly investors are looking to Dubai once again and a development demonstrating a commitment to justice in commercial matters can only bring confidence to those looking to do business in the region.

Khadija S Ali is a barrister at the Dubai office of Afridi & Angell.