The most recent case law of the Dubai International Financial Centre (DIFC) Court of First Instance (the CFI) (see Chenshan Liu v Dubai Waterfront LLC) shows that the DIFC as a conduit is alive and kicking. This is despite fears that the DIFC Courts’ role as a conduit jurisdiction for the recognition and enforcement of onshore non-DIFC awards in offshore DIFC for onward execution against assets of award debtors in onshore Dubai might be moribund.
Even the Dubai-DIFC Joint Judicial Tribunal (the JT), which was originally established by the Ruler of Dubai to deal with conflicts of jurisdiction between the onshore Dubai and offshore DIFC Courts (see Decree No. (19) of 2016 establishing the Dubai-DIFC Judicial Tribunal) appears to have come full circle, following an almost imperceptible correction of course. So far the JT has found systematically in favour of the onshore Dubai court’s jurisdiction on the basis of the latter’s purported general jurisdiction.
As I previously reported, a ruling of the CFI from earlier this year (see Isai v Isabelle) already provided some welcome clarity on the seemingly limited scope of the DIFC Courts’ status as a conduit jurisdiction at the crossroads between the jurisdictional competence of the onshore Dubai and the offshore DIFC Courts. More specifically, in Isai v Isabelle, the CFI confirmed the concurrent jurisdiction of the onshore Dubai and the offshore DIFC Courts for recognition and enforcement of a DIFC-LCIA award rendered in onshore Dubai (as the seat of the arbitration) even in the absence of any assets of the award debtor offshore.
By way of reminder, in that case, the CFI based its findings in favour of its own jurisdiction on Article 42(1) of the DIFC Arbitration Law, read together with Article 5(A)(1)(e) of the Judicial Authority Law as amended (see Dubai Law No. (12) of 2004 as amended) and Article 8(2) of Dubai Law No. 9 of 2004 (as amended by Dubai Law No. 7 of 2011). According to the CFI, neither the Judicial Authority Law as amended, nor the DIFC Arbitration Law contained a threshold requirement in the form of a connection with the DIFC as a pre-requisite for the DIFC Courts’ competence to hear an action for recognition and enforcement. Instead, Article 7 of the Judicial Authority Law as amended, which establishes an onshore-offshore area of free movement of judicial instruments issued by the Dubai and DIFC Courts (including each other’s ratified awards), was found to support the concurrent jurisdiction of both the onshore and offshore courts, one complementing the jurisdiction of the respectively other.
The CFI’s ruling in Isai v Isabelle followed the JT’s ruling in Assas Investments Limited v Fius Capital Limited (see Cassation No. 6/2017 (JT)). In that case, the JT conceded that, on the basis of the proper operation of Article 7 of the Judicial Authority Law as amended, both the onshore Dubai and offshore DIFC Courts enjoyed concurrent jurisdiction over the recognition, enforcement and execution of a DIFC-LCIA award rendered in the DIFC as the seat of arbitration provided the presence of assets both onshore and offshore.
A more recent JT decision (see Sinbad Marine In LLC v Essam Abdulameer Hamadi Alfadli Al Tamimi) pushed the boundaries of the DIFC’s jurisdictional competence further. In this case, the JT granted jurisdiction to the DIFC Courts for the recognition and enforcement of a non-DIFC award rendered in an onshore Dubai seat under the DIFC-LCIA Rules of Arbitration. The award creditor, Mr Al Tamimi, sought recognition and enforcement of a DIFC-LCIA award for onward execution against a Dubai-based award debtor, Sinbad Marine. In the arbitration, Sinbad Marine was found to have failed to renovate a yacht that Mr Al Tamimi had purchased from Sinbad Marine. Sinbad Marine filed for annulment of the award before the onshore Dubai courts and contended for a conflict of jurisdiction that required resolution in favour of the onshore Dubai Courts on the basis that there was no automatic offshore DIFC Court jurisdiction and that both parties were based in onshore Dubai. Mr Al Tamimi moved for dismissal of the application, given that a DIFC Court order for recognition and enforcement had already been issued.
Against this background, the JT concluded as follows:
“Despite the fact that the DIFC and the DIFC-LCIA […] are separate entities, yet the DIFC-LCIA Arbitration Centre had been established in the DIFC. Accordingly, the supervising court of the arbitration should be the DIFC court [sic] and not Dubai Court.” (Cassation No. 1/2018, at p. 5)
The JT’s finding in favour of the DIFC Courts’ jurisdiction is, in principle, correct for the very reasons adduced by the CFI in its ruling in Isai v Isabelle. However, it is difficult to follow the logic of the JT when it concludes from the offshore location of the DIFC-LCIA as the arbitration institution in charge of the administration of the reference in favour of the DIFC Courts’ status as the “supervising” court. This was a conclusion from which the DIFC Courts’ minority of the JT correctly dissented (a dissent that is presently still pending publication).
For the avoidance of doubt, the geographic location of an arbitration institution does not assist in the identification of a competent enforcement court: a court’s jurisdictional competence and, more specifically, its competence to determine whether it is empowered to hear actions for recognition and enforcement, is ultimately a question to be addressed by each court by reference to its own laws on jurisdiction. That said, the JT could have dismissed the application for annulment with relative ease. It could have done so on the basis that the DIFC Court proceedings for ratification and enforcement had already been closed; therefore, in the absence of two sets of proceedings pending in parallel before the Dubai and DIFC Courts, there was no conflict of jurisdiction within the meaning of Article 4 of Decree No. (19) of 2016 to start (although, arguably, within the meaning of the Article, potentially divergent outcomes of the onshore and offshore courts, such as a successful annulment on the one hand and an order for enforcement on the other, suffice to accord the JT proper jurisdiction). Be that as it may, Sinbad Marine provides good authority for the continued role of the DIFC Courts’ role as a conduit for the offshore recognition and enforcement of a non-DIFC DIFC-LCIA award for onward execution against assets of an award debtor in onshore Dubai.
To be continued…