04 September 2023
A positive development for the UAE arbitration community has emerged lately as the legal framework is set to enforce foreign and domestic arbitral awards in the UAE. We highlight herein the grounds to accept or refuse enforcement of foreign arbitral awards, and the related approach as followed by the Courts in the country to enforce against assets in the mainland in light of the UAE Arbitration Law and the Cabinet Decision.
Dubai: The United Arab Emirates (UAE) boasts several jurisdictions that recognize and enforce arbitral awards, each operating under distinct legal frameworks and procedures. The primary legislation governing arbitral proceedings and the enforcement of domestic arbitral awards in the UAE is the UAE Federal Arbitration Law no. 6 of 2018, issued on May 15, 2018, commonly referred to as the "Arbitration Law." While this law introduced significant changes in the enforcement of domestic arbitral awards, it remained silent on the process for foreign arbitral awards.
To address this gap, the UAE enacted Federal Decree-Law No.42 of 2022 on October 3, 2022, to provide clearer guidelines for the enforcement of foreign arbitral awards. Consequently, the UAE now operates under two distinct regimes for the recognition and enforcement of arbitral awards: one for domestic awards and another for foreign awards.
The UAE is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention, with 158 countries. Under this Convention, signatory countries recognize and enforce arbitral awards issued by other Convention signatories in accordance with their respective rules and procedures for recognizing and enforcing foreign arbitral awards. Therefore, any award from International Arbitration Centre is recognized and enforceable in the UAE, subject to UAE rules on foreign arbitral awards.
PROCEDURE FOR RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS:
The process for executing a foreign arbitral award is detailed in Article 222 of Federal Decree-Law number 42/2022, and it unfolds as follows:
1. A petition for enforcement must be filed with the Court of Execution where execution is being pursued.
2. The execution judge is required to issue an order within a maximum of five (5) days from the date of filing.
3. The order issued by the execution judge is subject to standard judicial appeal processes.
The execution judge will only grant an order of execution after ensuring that specific conditions are met, mirroring those outlined in the New York Convention:
Parties dissatisfied with the initial application outcome have the option to appeal the Execution Court's decision within 30 days, directing their appeal to the competent Court of Appeal.
It's essential to note that the aforementioned process took effect only on January 2nd, 2023, with the aim of streamlining the execution process. However, since this is a relatively new procedure, it hasn't been extensively tested by the courts, leading to some degree of judicial uncertainty.
In summary, the new regime established by the Federal Law presents a more streamlined approach to enforcement, closely resembling the enforcement of local court judgments. However, given that both regimes are relatively new, there remains some ambiguity concerning the courts' interpretation and application of the new procedures.
ALKETBI team frequently provides legal assistance and advice on issues pertaining to arbitration and enforcement of domestic and foreign arbitral awards, should you have further questions and or believe you require a consultation regarding a related matter, let us know.
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