Headnote

Arbitration – Enforcement – Foreign awards – New York Convention

Summary of facts

The Petitioner filed a commercial action against the Respondent before the Abu Dhabi Court of First Instance in which the Petitioner requested the ratification of a foregin arbitration award issued in Paris under the auspices of the ICC Rules.

The Respondent argued that the award contradicted a criminal judgment in which the Petitioner had been ordered to pay a fine of AED 5,000 for fraud.

The Abu Dhabi Court of First Instance decided to defer its judgment pending resolution of the criminal case. Thereafter, the Petitioner submitted a certificate issued by the public prosecution in which it was found that the criminal case had lapsed due to expiry of time. The Abu Dhabi Court of First Instance consequently issued its judgment and refused to ratify the award. The Petitioner appealed to the Abu Dhabi Court of Appeal, which upheld the decision of the Court of First Instance. Thereafter, the Petitioner filed a petition before the Abu Dhabi Court of Cassation.

Held

The judgment of the Court of Appeal was overturned.

The provisions of the New York Convention apply to the enforcement of foreign awards in the UAE. Articles 235 and 236 of the UAE Civil Procedure Code would only apply in the event that the foreign award was issued in a country that was not a signatory to the New York Convention or some other international treaty ratified by both the UAE and the foreign jurisdiction.

Judgment

The challenge was based on the ground that the court misapplied the law in upholding the decision of the Court of First Instance, which rejected the ratification of the award on the basis of the non-fulfilment of one of the conditions laid down in Article 235 of the Civil Procedure Code. In doing so, it ignored Article 3 of the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”). The Convention, to which the UAE is a signatory, requires its contracting parties to refrain from applying stricter provisions for recognizing and enforcing foreign awards than those they apply for ratifying and executing domestic arbitral awards.

The Court of Cassation stated that Articles 235, 236 and 238 of the Civil Procedure Code require courts to abide by the provisions of any international conventions entered into between the UAE and other foreign states and any international treaties that have been ratified by the UAE and have thus become binding.

Conversely, if a foreign award was rendered in a state that is not a signatory to an international convention or a treaty entered by the UAE, the court of enforcement in the UAE must ascertain that the conditions set forth in Article 235 have been met.

Since the UAE ratified the New York Convention in 2006, its provisions have become mandatory laws of the state, even though they run counter to previous laws.

The Court of Appeal referred to Article 235 of the Civil Procedure Code instead of the Convention and refused to ratify the award on the basis that one of the conditions of Article 235 was not fulfilled. In doing so, the Court of Appeal erred in the application of the law.

Accordingly, the judgment of the Court of Appeal was overturned.