May 19, 2024

Tullio Corradini

Trusted Legal Source

UAE Ministry of Justice confirms Reciprocity with the English Courts

UAE Ministry of Justice confirms Reciprocity with the English Courts

UAE Ministry of Justice confirms Reciprocity with the English Courts

On September 13, 2022, Judge Abdul Rahman Murad Al-Blooshi, Director of the Global Cooperation Division of the UAE Ministry of Justice, issued a communiqué to His Excellency Tarish Eid Al-Mansoori, Director Common of the Dubai Courts, directing the Dubai Courts to enforce judgements issued by the English Courts (the “Directive”).  This follows the English Courts’ selection in Lenkor Electricity Trading DMCC v Puri [2021] EWCA Civ 770 to implement a judgment of the Dubai Courts about dishonored cheques.

The professional-enforcement Directive could possibly foreshadow an rising quantity of enforcement steps by judgement creditors of the English Courts towards property domiciled in Dubai.

The Specifics: Iranian Sanctions Evasion and Bounced Cheques

The Lenkor situations anxious the enforcement of a Dubai Courts judgment buying the defendant, Mr. Irfan Puri, to spend AED 123,272,048 (USD ~33.5 million and GBP ~30 million) furthermore desire at 9% to Lenkor Energy Buying and selling DMCC.

In overview, the fundamental transaction was the sale of oil by Lenkor to a Pakistani buyer, Mr. Puri. 50 % of the cargo worth was to be compensated beneath a USD-denominated letter of credit, and the other 50 percent by a USD-denominated wire transfer.  The port of discharge was Port Qasim, Karachi.  Even so, the judgement information that, though Lenkor was meant to be providing UAE origin “High Velocity Diesel” (HSD), it in fact provided Iranian origin “Heavy Stop Product” (HEP).  To conceal that actuality, Lenkor “alter[ed] shipping and delivery files, falsif[ied] loadport exam benefits and forg[ed] a certificate of origin.”  This misled Mr. Puri, customs authorities, and the commercial banks involved in processing the transactions.  Later on, Mr. Puri’s bank arrived to know that the vessel had referred to as into an Iranian port and Mr. Puri unilaterally made a decision to pay Lenkor in instalments only when or after he experienced on-marketed the merchandise to 3rd get-togethers and been given payment for all those onward gross sales.

Finally, Lenkor sought to cash two cheques that Mr. Puri had issued in Lenkor’s favor underneath the initial deal demanding Mr. Puri to promise 100% of the cargo’s value.  Nevertheless, the account on which Mr. Puri had drawn the cheques was insufficiently funded and the cheques have been not honored.  Lenkor commenced civil proceedings from Mr. Puri less than Article 599(2) of the Dubai Industrial Transactions Regulation, a statutory provision that imposes own legal responsibility on the drawer of a cheque in circumstances in which the account on which the cheque is supposed to draw has inadequate resources to deal with the sum because of.  On Could 30, 2017, the Dubai Courts issued judgment in favor of Lenkor.  That judgment was subject matter to various appeals and reached the maximum courtroom, the Dubai Court docket of Cassation, on two events, where by it was in the long run upheld on August 5, 2018, exhausting Mr. Puri’s rights of attractiveness in Dubai.  Lenkor sought enforcement in England & Wales.

The Choice: The English Courts Reject the Widespread Law “Public Policy” Defense

Mr. Puri advanced a number of arguments to resist enforcement, but by the time the circumstance received to the English Court docket of Charm, only a single argument remained reside: the assertion that it would be opposite to general public policy to implement the judgment because the underlying contract pursuant to which the cheques ended up issued was tainted by illegality.  In individual, Lenkor experienced deceived Mr. Puri about the character of the item, which was HEP fairly than HSP, and the origin of the product or service, which was Iran relatively than the UAE, and had acted in undesirable faith by building fraudulent documentation.  The English Courtroom of Appeal rejected this argument, emphasizing that the difficulty was “not a problem of enforcing a contract [but was instead] a issue of enforcing a judgment provided by a foreign courtroom of competent jurisdiction.”  Lord Justice Lewison gave the lead judgment, with which Arnold LJ and Edis LJ agreed.

The Establishment of Reciprocity involving the Courts of Dubai and England & Wales

Reciprocity is usually recognized by bilateral or multilateral treaties.  For illustration, the UAE is a party to GCC Conference for the Execution of Judgments, Delegations and Judicial Notifications 1996 (the GCC Convention) and the Riyadh Convention on the Judicial Cooperation involving the States of the Arab League 1983 (the Riyadh Conference), both of those of which facilitate the enforcement of judgments involving the signatory states. 

The UAE and the British isles are functions to a treaty on Judicial Help in Civil and Business Matters, dated December 7, 2006, but that treaty does not address mutual enforcement of judgments.  As a result, a bash in search of to implement a judgment of the English Courts in the UAE should present proof of reciprocity.  Right up until now, the Dubai Courts have not been happy that this sort of evidence existed.  Even so, the Directive confirms that the basic principle of reciprocity as concerning the Courts of Dubai and England & Wales has now been set up in the type of the Lenkor scenario.

Other Enforcement Demands

It is vital to note that reciprocity by itself is not ample to implement a judgment of the English Courts (or any other international courtroom).  In addition to reciprocity, Write-up 85(2) of the UAE Civil Technique Code demands that the UAE Courts also be glad that:

  • The UAE Courts did not have unique initial jurisdiction above the dispute and the overseas court that issued the judgment did have skilled jurisdiction
  • The foreign judgment complies with the law of the country in which it was issued
  • The functions topic to the foreign judgment had been summoned and duly represented
  • The foreign judgment has res judicata position and
  • The foreign judgment does not conflict with a UAE judgment or buy and does not contravene UAE community policy.

Additional Considerations

The precise software of the Directive stays to be noticed and significantly no matter whether it extends to all the Courts of the UAE.  Even though the Directive is addressed to the Dubai Courts, it does point out reciprocity among the two international locations (the UAE and the United kingdom), suggesting that its cure may possibly lengthen further than the Dubai Courts.  Nevertheless, in standard conditions, the Directive marks a significant development in judicial cooperation concerning the UAE and the British isles.  Even though it is not legally binding and does not warranty enforcement, it should engender self confidence on the component of Uk traders who may need to implement judgment debts in the UAE.  In addition, the Lenkor case could guide to additional early settlements, on the foundation that litigants may possibly be far more involved than right before about probable enforcement from their abroad property, though the obvious availability of those overseas assets could final result in an improve in third celebration funding activity.

Please do not be reluctant to arrive at out if ever you have any issues relating to recognition and enforcement.  It is normally finest to look at those people subjects prior to commencing likely high-priced litigation, to ensure as considerably as doable that possible judgment debtors possess adequate property or prosperity in favorable spots to fulfill any judgment you may well attain.  On top of that, we can support you to get hold of urgent ancillary relief—including freezing injunctions, search and seizure orders, disclosure orders and passport surrender orders before knowledgeable courts in virtually every significant financial centre all-around the world—which is critical for the reason of preventing potential judgment debtors from irritating the enforcement of any long run judgment in your favor by obfuscating assets or dissipating them to fewer favorable jurisdictions.