Reciprocity Between English & UAE Courts: Recent Developments in Foreign Judgment Enforcement

Background: Recognition of Foreign Judgments in England & Wales

Enforcement of UAE Court Judgments in the UK

In Lenkor Energy trading v Irfan Iqbal Puri [2020] EWHC 75 (QB), the High Court held that in accordance with the law on recognition of foreign judgments, a decision of a Dubai court of competent jurisdiction is enforceable in the UK, provided the judgment, and not the “underlying transaction upon which the judgment is based” did not offend public policy. On the facts, the Court deemed that enforcement of the Dubai Court judgment in the Lenkor case would not be contrary to public policy. Lenkor was and continues to be significant for it established that enforcement of judgments issued by UAE courts are not contrary to public policy per se, paving the way for the possibility of further enforcement on a case by case basis.

Criteria for UAE Court Judgment Enforcement

Article 85 of UAE Cabinet Resolution No. 57 of 2018 (hereafter referred to as “Article 85”) contains the law on enforcement of foreign judgments. It sets out the following criteria which must be satisfied cumulatively for a foreign judgment to qualify for enforcement in the UAE:

1. Judgments and orders delivered by a court in a foreign country to be executed in the UAE in accordance with the same conditions prescribed in the law of that foreign country for executing judgments and orders issued within the State (Article 85(1)).

2. The courts of the UAE must not have exclusive jurisdiction over the dispute for which the foreign judgment or order was issued and the foreign courts that issued the judgment or order have jurisdiction as prescribed within their own law (Article 85(2)(a)).

3. The judgment or order must be issued by a court in accordance with the law of the country in which it was issued and must be duly ratified (Article 85(2)(b)).

4.The litigants involved in the case in which the foreign judgment was delivered must have been summoned and adequately represented (Article 85(2)(c)).

5. The judgment should have acquired the force of res judicata (Article 85(2)(d)).

6. The judgment does not conflict with any judgment or order issued by a court of the UAE and is not otherwise contrary to public policy or morals (Article 85(2)(e)).

On September 13, 2022, in response to the decision in Lenkor, the UAE Ministry of Justice drafted a directive addressed to Dubai courts in which it opined that the condition of reciprocity set out in Article 85(1) of UAE Cabinet Resolution No. 57 of 2018 had been satisfied by the decision in Lenkor, which arises as precedent within the English common law system and therefore encouraged Dubai courts to find Article 85(1) fulfilled when considering whether to enforce English court judgments or orders.

Recent development: Emirates NBD Bank

Concerns that Lenkor was no more than an isolated decision have been in large part dispelled by the recent decision in Emirates NBD Bank PJSC v Rashed Abdulaziz Almakhawi and Others [2023] EWHC 1113 (Comm). The background to the case is as follows:

Mr. Almakhawi, a citizen of the UAE, held the position of beneficial owner and director of a Dubai-based company that went into liquidation in September 2014. To secure a loan from Emirates NBD Bank on behalf of the company, Mr. Almakhawi and other directors (referred to as "the Guarantors") provided personal guarantees to the Bank.

During the liquidation process, the Bank initiated legal proceedings in the Dubai Courts against both the company and the Guarantors to recover the outstanding sums. The case was escalated to the Dubai Court of Cassation, which ruled in favor of the Bank. The Guarantors were ordered to pay AED 211.3 million (approximately £47.5 million).

Having failed to recover the sums due in the UAE, the Bank decided to pursue Mr. Almakhawi’s UK assets by seeking enforcement of the Dubai Court's judgment in England and Wales. However, before the Dubai Court of First Instance entered judgment against him, Mr. Almakhawi gifted his assets to his son while retaining the beneficial title. The bank argued that his actions were fraudulent, carried out with the intent of defrauding his creditors. Mr. Almakhawi argued that the Dubai Court Judgment should not be enforced because it breached the rules of natural justice in that reports submitted by an expert appointed by the Dubai Court referred to a law that had no longer been in force.

Confirming Lenkor, the Court held that the Dubai Judgment was enforceable by precedent. It refused to withhold recognition of the Dubai Court judgment on the basis argued by Mr. Almakhawi, deeming that reference to the repealed law was no more than a “procedural irregularity”. Accordingly, the Court entered monetary judgment against Mr. Almakhawi. The Court also found that the assets gifted by Mr. Almakhawi to his son were in part made to defraud his creditors.

Analysis on the future of reciprocal enforcement in the UK & the UAE

Emirates NBD Bank is a welcome development providing more certainty with respect to the enforcement of UAE court judgments in England and Wales. In addition to affirming the principle of reciprocity upheld in Lenkor, Emirates NBD Bank suggests that English courts will not readily impeach a foreign judgment on the ground that its enforcement or recognition would be contrary the rules of natural justice. As such, we can expect the trend set by Lenkor to continue in so far as English courts are concerned, giving creditors that have secured judgments in their favor in the UAE the confidence to pursue enforcement in England and Wales.

There is yet to be a case in which a UAE court has either recognised or enforced an English court judgment. While the directive issued by the UAE Ministry of Justice is promising and can signal future symbiotic enforcement in the UAE, the reciprocity established by English courts in Lenkor and Emirates NBD are not on their own sufficient to satisfy Article 85. The conditions for the enforcement of foreign judgments set out in Article 85 are cumulative and may be difficult obstacles to overcome. In addition to the conditions set out in Article 85, UAE courts must consider whether a judgment is contrary to public order, a doctrine enshrined in Article 3 of the UAE Federal Law No. 5 of 1985 on Civil Transactions which provides that a decision or order must not conflict with the fundamental principles of the Shari’ah.

It must also be borne in mind that the UAE is a civil law jurisdiction in which courts are not bound by precedent. Accordingly, while English courts may consider UAE Judgments to be enforceable as a matter of precedent, UAE judges have wider discretion to find otherwise.

As matters stand, there is no bilateral enforcement treaty between the UK and UAE with respect to reciprocal enforcement of court judgments.

Key Takeaways:

Emirates NBD confirms the decision in Lenkor further affirming the enforceability of UAE court decisions in England and Wales.
There have been advances across both jurisdictions towards reciprocity.
Absent a bilateral treaty between the UK and UAE providing for reciprocal enforcement, enforcement of UK court judgments in the UAE will be subject to the criteria set out in Article 85 and the requirement of Shari’ah compliance.
UAE courts operate within a civil law jurisdiction and therefore have wider discretion to decide on enforceability on a case by case basis.