Headnote

Arbitration – ICC arbitration rules - Enforcement of foreign award – New York Convention for recognition and enforcement of foreign awards – Jurisdiction of local courts – Application of domestic laws

Summary of facts

The Petitioner filed an action before the Dubai Court of First Instance for the enforcement of a foreign arbitral award rendered under the ICC rules ordering the Respondent to pay damages with interest to the Petitioner on the ground that the arbitral award was issued in a matter that was capable of settlement by arbitration under UAE law, and was enforceable under the Agreement on Judicial Cooperation and Enforcement of Judgments between the UAE and France and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 to which both France and the UAE were parties.

The Dubai Court of First Instance dismissed the Petitioner’s action on the ground that it had no jurisdiction to hear the matter. The Petitioner appealed to the Court of Appeal which upheld the lower court’s decision.

The Petitioner filed a petition to cassation.

Held

The petition to cassation was dismissed.

The international jurisdiction of courts is a matter of public policy. UAE courts have no jurisdiction to enforce a foreign award against an individual/entity who maintains no domicile or residence in the UAE unless the case involves an obligation concluded, performed or was supposed to be performed in the UAE or, in the case of a foreign juridical person whose head office is abroad, it has a branch in the UAE and the dispute relates to a matter pertaining to that branch.

Judgment

On 8 May 2013, the Petitioner appealed to the Court of Cassation on the following grounds:

The Petitioner argued that the New York Convention and the Judicial Cooperation Agreement between the UAE and France should have been applied with regards to all procedures and conditions for enforcement of foreign arbitral awards issued in both states, according to Article 238 of the UAE Civil Procedure Law and Article 22 of the UAE Civil Transactions Law. The terms of said two agreements are less onerous than the conditions set forth in UAE domestic law.

The Court of Appeal failed to take note of this substantive point and held that the enforcement of the award was subject to Articles 21 and 235 of the UAE Civil Procedure Law and that the Dubai Courts had no jurisdiction over the matter on the ground that the Respondent had no domicile or place of residence in the UAE and the obligation was concluded and performed outside the UAE.

However, the Petitioner’s claim is for the recognition and enforcement of a foreign arbitral award in the UAE and does not seek any substantive relief against the Respondent for Articles 21 and 22 of the Civil Transactions Law to apply.

This court states that the general provisions of law covering enforcement of awards are set out in Book III — Chapter I of the UAE Civil Procedure Law. Articles 235-238 of Section IV of that Chapter contain rules relating to the enforcement of foreign decisions, orders and documents. Article 238 states that “The rules provided for in the preceding articles shall apply without prejudice to applicable treaties signed between the UAE and other states.” This indicates, as consistently held by this Court, that the [Page115:] provisions of treaties signed between the UAE and other states and international conventions which the UAE has ratified shall apply to the enforcement of foreign court decisions and arbitral awards notwithstanding that the conditions of Chapter IV are not satisfied. Under Federal Decree No. (43) of 2006 which was published in the Official Gazette on 28 June 2006, the UAE acceded to the New York Convention of 1958. Accordingly, the New York Convention of 1958 ought to apply to the action at stake.

Article III of the New York Convention of 1958 states: “Each Contracting State shall recognise arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following articles. There shall not be imposed substantially more onerous conditions or higher fees or charges on the recognition or enforcement of arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitral awards.” Article 15 of the UAE Judicial Cooperation Agreement with France which the UAE ratified by Federal Decree No. (31) of 1992, as published in the Official Gazette on 10 December 1992 confirms that: “The procedure for obtaining enforcement of a judicial decision shall be governed by the law of the State of which the request is made. The subject matter of the decision shall not be subject to any examination by the judicial authorities of the Requested State.” In other words, foreign decisions and arbitral awards are enforced in accordance with the rules of procedure of the requested state. Article 21 of the UAE Civil Transactions Law provides that: “The rules relating to jurisdiction, and all procedural matters, shall be governed by the law of the State in which the action is brought or in which the procedures are carried out.” Article 19-1 of the Civil Procedure Law states: “The provisions of this Law apply to all civil, commercial and personal status cases as filed before the courts of law in the UAE,” and Article 21 states: “The courts shall have jurisdiction to examine claims against an individual/entity who maintains no domicile or residence in the UAE in the following cases: 1- If he has elected domicile in the UAE; 2-[…]; 3- If the proceedings involve an obligation that was made, performed or was supposed to be performed in the UAE”. Article 93-2(d) of the UAE Civil Transactions Law states: “The domicile of a juridical person shall be deemed to be the place in which it has its administrative centre, and so far as concerns juridical persons whose head office is abroad but which carry on an activity in the UAE, their administrative centre, and so far as concerns juridical persons whose head office is abroad but which carry on an activity in the State, their administrative centre, with regard to the law of the State, shall be deemed to be the place at which the local administration is situated.” Taken together, these articles indicate, as consistently held by this Court, that the international jurisdiction of courts is a matter of public policy. UAE courts have no jurisdiction over cases against an individual/entity who maintains no domicile or residence in the UAE unless the case involves an obligation concluded, performed or was supposed to be performed in the UAE or, in the case of a foreign juridical person whose head office is abroad, it has a branch in the UAE and the dispute relates to a matter pertaining to that branch.

The Court of First Instance whose decision was upheld on appeal based its finding on the ground that the Dubai courts lacked jurisdiction on the following reasoning:

The documents confirm that the Respondent does not have a domicile or place of residence in the UAE and that the obligation was concluded and performed abroad.

These reasons are sound, supported by the documents, and are consistent with the correct interpretation of the rules of procedure of the UAE, the New York Convention, and the Judicial Cooperation Treaty. The challenges raised are entirely baseless and the Petition is dismissed.