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Dubai International Financial Centre courts allow referral of a foreign judgment for enforcement in Dubai

The Dubai International Finance Centre (DIFC) court has issued a decision that could let foreign businesses enforce rulings in Dubai that have been made by courts in other countries, without having to go directly to the Dubai court system, an expert has said.09 Mar 2016

The DIFC is an international financial centre and free zone in Dubai. It is a separate jurisdiction with its own systems of laws, based largely on English common law, and its own courts, the DIFC courts.

The DIFC courts have a mechanism for reciprocal recognition of judgements with the Dubai courts. In the recent decision, the DIFC courts allowed the referral of an English court judgement to the Dubai courts under this mechanism. Previously, the DIFC court had held that it would be necessary to approach the Dubai courts directly in order to enforce the foreign judgement, which would be a more difficult process, said Dubai-based litigation expert Damian Crosse of Pinsent Masons, the law firm behind Out-Law.com.

The case concerned a judgement that Norwegian financial services group DNB had obtained in the Commercial court in London against two shipping companies in Dubai, for $8.7 million.

DNB sought to enforce that award in Dubai using the DIFC courts, on the basis of the reciprocal enforcement mechanism. The DIFC courts also have a memorandum of understanding on enforcement with the English Commercial court, Crosse said.

The DIFC court of appeal held that it had a wide power to enforce foreign judgements and could accept jurisdiction and refer the matter to the Dubai courts, even where the matter had no connection to the DIFC.

Reversing an earlier decision, it said that "[f]rom the perspective of the DIFC courts, it is not wrong to use the DIFC courts as a conduit jurisdiction to enforce a foreign judgment and then use reciprocal mechanisms to execute against assets in another jurisdiction".

The Court, however, held that holder of the judgement would "enforce at its own risk" before the Dubai courts, which retain some discretion despite the reciprocal enforcement mechanism, Crosse said.

"While the decision will be welcomed in so far as it allows for enforcement against assets and debtors in Dubai, it remains to be seen whether the Dubai courts and other foreign courts with which the DIFC courts have reciprocal enforcement mechanisms will react to the decision in light of the fact that the case has no real connection to the DIFC and the main reason for approaching the DIFC courts was to take the benefit of these mechanisms," he said.