Most readers of this blog will be aware of the status and operation of the Dubai International Financial Centre (DIFC), the Dubai-based financial free zone, as a seat of arbitration in its own right. The DIFC has its own, stand-alone arbitration law, the DIFC Arbitration Law, which, in turn, is modeled on the UNCITRAL Model Law. Its self-contained system of common law courts, the DIFC Courts, double as curial courts in DIFC-seated arbitrations. By virtue of their wide discretionary powers under Article 42 of the DIFC Arbitration Law, read together with Article 5A of DIFC Law No. 12 of 2004 as amended (the Judicial Authority Law), the DIFC Courts have grown into sophisticated apparatus of enforcement with respect to both domestic and foreign arbitral awards, both inside and outside the DIFC.
In this vein, despite pending controversies, the DIFC Courts have gone as far as to acquire the mantle of a conduit jurisdiction, which facilitates the recognition and enforcement of awards (irrespective of their origin, whether DIFC or non-DIFC) through the DIFC Courts for onward execution against assets of the award debtor in onshore Dubai. This process has been assisted by the establishment of a regime of mutual recognition between the onshore Dubai and the offshore DIFC Courts in the form of Article 7 of the Judicial Authority Law. Article 7 allows the free movement of judicial instruments, including ratified arbitral awards, between the two courts.
The Abu Dhabi Global Market (ADGM), created through Ruler’s Decree in 2013, is a financial free zone of more recent origin. It is essentially designed to become for Abu Dhabi what the DIFC is for Dubai. Most importantly, this includes an endeavour to develop into a fully-fledged common law judicial alternative to litigation onshore. Like the DIFC, the ADGM has its own common law courts and a standalone arbitration law, the ADGM Arbitration Regulations 2015. The regulations govern arbitrations seated in the ADGM and confer upon the ADGM Courts curial functions in support of ADGM arbitration proceedings. So far, given its young age, the ADGM Courts have not yet had a chance to prove their mettle in the enforcement game. As such, they are far from rivaling the DIFC Courts as a conduit between onshore and offshore.
That said, following earlier memoranda laying the foundation for deeper cooperation between the onshore and offshore courts (in particular, the Memorandum of Understanding concerning cooperation in legal and judicial matters, entered into between the Abu Dhabi Judicial Department (ADJD) and the ADGM Courts, dated 16 April 2016), the ADJD and the ADGM Courts have now adopted a memorandum of understanding to facilitate the reciprocal enforcement of judicial instruments, including judgments, orders and ratified awards between the two courts (see Memorandum of Understanding between the Judicial Department of the Emirate of Abu Dhabi and Abu Dhabi Global Market Courts concerning the Reciprocal Enforcement of Judgments, dated 11 February 2018 (the ADJD-ADGM MoU)).
This, no doubt, is a step into the right direction, which will assist in promoting the full mutual judicial integration of the Abu Dhabi and ADGM Courts. Comparatively speaking, the ADJD-ADGM MoU takes after, and seeks to emulate, the regime of mutual recognition in place between the onshore Dubai and offshore DIFC Courts, ensuring the free movement of judgments, orders and ratified awards between onshore and offshore. This will essentially require the courts to trust each other’s judgement and recognise the respectively other court’s judicial instruments as such, without looking into the merits. In the terms of Clause 2 of the MoU, the courts are bound to facilitate the enforcement of each other’s ratified awards “without re-examining the substance of the dispute on which they have been issued.”
In essence, the MoU creates a regime of mutual recognition between the onshore Abu Dhabi Courts and the offshore ADGM Courts, whereby a ratified award (read: an order for recognition and enforcement) issued by the onshore Abu Dhabi Courts will be executed offshore, that is, by the ADGM Courts, and vice versa, subject to satisfaction of the following two conditions:
- The apposition of an executory formula onto the ratified award stating that “[t]he authorities and competent bodies must proceed to execute this instrument and to carry out the requirements thereof, and they must give assistance in the execution thereof even by force if so requested”.
- A legal translation of the ratified award into English or Arabic (depending on whether execution is sought offshore or onshore) (Clauses 7 and 12).
The ADJD-ADGM MoU emphasises that this process does not permit a reexamination of the merits of the subject ratified award (Clauses 10 and 15). This also stands confirmed by the definition given to the term “ratified award”, which provides that “[a] ratified or recognised arbitral award by ADJD [read: Abu Dhabi Courts] or ADGM Courts has the same force as a judgment of either of the Courts and therefore does not require any further ratification or recognition by the other court” (Clause 5(a)(ii)). In addition, the Abu Dhabi/ADGM execution division may call for the support of the respectively other court’s enforcement judge by ordering the taking of measures or actions required to complete the execution process onshore or offshore, as the case may be (Clauses 9 and 14).
The ADJD-ADGM MoU also expressly makes the above-described procedure applicable in a conduit jurisdiction context, in the sense that this procedure is designed to apply “where the subject of enforcement is situated within/outside ADGM” (Clauses 6 and 11), in other words where the assets of the award debtor, against which execution is sought, are within the respectively other jurisdiction, that is, within the ADGM for execution of an award ratified by the Abu Dhabi Courts, and within Abu Dhabi for execution of an award ratified by the ADGM Courts. In this sense, the ADJD-ADGM MoU confirms the operation of both the Abu Dhabi and the ADGM Courts as conduit jurisdictions.
Taken in the round, the ADJD-ADGM MoU is a welcome instrument that will assist the continuing integration of the common law free zone courts into the wider UAE civilian law environment. Time will tell whether the practical operation of recognition and enforcement under the ADJD-ADGM MoU will give rise to the same jurisdictional controversies as the application of Article 7 of the Judicial Authority Law.