Obtaining an arbitration award is not the end of the road to reparation. Enforcement or recognition is the subsequent phase, and this phase can be complex and prodigious, especially if the enforcement is supposed to be outside the jurisdiction from which the award was made. Implementation of foreign arbitral awards in the UAE challenge, particularly in cases where the award debtor attempts to evade its obligations. Dubai Arbitration Lawyers invariably advise their clients or the award creditor to formulate strategies for the enforcement of the award.
Automatic recognition of the applicability of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (NYC) is offered, in the event of implementing foreign arbitral awards. The UAE has been a signatory to the New York Convention since 2006 and after acceding to the treaty, the UAE courts have customized their approach to enforcement. In a nutshell, the UAE after signing the treaty has also implemented foreign awards which, while not meeting the requirements of the Code of Civil Procedure, are in compliance with the New York Convention.
New York in the United Arab Emirates
Article 5 of the BYC states that “a foreign arbitral award shall be recognized and enforced in any signatory country of NYC, application shall be made to the competent court by the party to the award and the opposing party fails to comply with court orders in the following manner :
- The arbitration agreement is invalid under the law of the country in which the award was made or cannot be submitted to arbitration, or the parties are unable to enter into the agreement;
- Failure to provide adequate notice to the parties regarding arbitration proceedings;
- The law does not bind the parties;
- The subject matter of the dispute cannot be submitted to arbitration;
- the arbitration authority was not designated in accordance with the law of the place of arbitration;
- The execution of the award will oppose the public order of the territory.
The New York Convention has sparked crucial debates by changing the protocol of the UAE courts to enforce arbitral awards, especially in the absence of concrete legislation that explicitly implements the NYC clauses in UAE law. A trend in favor of New York City can be seen through various court decisions issued in accordance with the New York City principles.
The Fujairah Court of First Instance in Case Number 35 of 2010 passed a decision for the enforcement of a foreign arbitral award pursuant to the NYC. The aforementioned ruling is the first of its kind and explicitly recognizes the treaties or agreements signed by the UAE. The ruling overturned many principles traditionally used to enforce arbitration and set an example for other cases.
The Macsteel International v Airmech judgment of the Dubai Court of Cassation in 2012 made a strong impression, deciding not to apply the provisions of the Civil Procedure Law while foreign arbitral awards were enforced. Thus, the NYC application was imposed. However, a dissenting opinion was noted in ICC v. the Ministry of Irrigation of the Democratic Republic of the Sudan, where the Dubai Court of Cassation held that enforcement of an award obtained in the signatory countries of New York City may be denied due to lack of a place of residence or if the courts lack jurisdiction to hear the matter.
In 2014, the Reyami vs. BTI Court of Cassation decision regarding the ratification of an award issued in Germany, mentioned that the United Arab Emirates had issued a law ratifying New York City and therefore the provisions of the City of New York should apply when enforcing arbitral awards.
Contrary to the above, the execution of awards from countries that are not signatories of NYC. In such cases, a bilateral treaty between the UAE and the country in question is a potential route to enforce the award. The UAE has signed numerous bilateral treaties with countries such as Egypt, Syria, Jordan, Riyadh, France, and the GCC.
New Arbitration Law
Federal Law Number 6 of 2018 on Arbitration Law governs arbitration in the UAE. However, the law is silent on procedures related to the enforcement of foreign arbitral awards in the UAE. We remain inert in determining the laws that will be applicable in the recognition of foreign awards and how. Referring to article 3 of the New York Convention, contracting parties or states should not impose stringent preconditions on the recognition and enforcement of awards compared to the enforcement conditions of domestic awards. We believe that the provisions of the New Law will be applicable to foreign awards. However, we look forward to such an earlier one. Pursuant to article 55 of the new Law and article 4 of the New York Convention, the party that seeks the enforcement of a foreign award must submit a request that meets the conditions indicated in the previous provisions.
Considering that, any party wishing to challenge the enforcement of a foreign award may file its defense claim before the competent court ratifying the award in accordance with article 55 of the Law. The new Law does not allow the parties to file an application for annulment of the award pursuant to Article 53 of the new Law, as the UAE courts lack jurisdiction to annul a particular award.
After some underlying hesitation, a positive pattern is being created for the UAE courts to perceive the supremacy of the New York Convention and apply it. These court decisions demonstrate a positive move to the implementation routine in the UAE for those seeking to defend foreign arbitration awards in the UAE. However, it is essential to maintain as a primary concern that the UAE has a civil law system in which precedent does not matter. Ergo, a decision issued by one judge does not bind another, and he is free not to consider the sentences issued by another court.