Important development in recognition and enforcement of DIAC awards

28 May 2014

Banyan Tree Corporate PTE Ltd v Meydan Group LLC (Claim No.: ARB-003-2013)

The DIFC Court has held that it can recognise and enforce DIAC awards where neither the parties nor the dispute have any connection with the DIFC and before ratification by the Dubai courts

In Banyan Tree Corporate PTE Ltd v Meydan Group LLC (Claim No.: ARB-003-2013) the DIFC Court of First Instance (H.E. Justice Omar Al Muhairi) held that the DIFC Court has jurisdiction to hear an application to recognise and enforce a Dubai International Arbitration Centre (DIAC) arbitration award notwithstanding that the parties and the dispute have no connection with the DIFC and notwithstanding that the award had not yet been ratified by the Dubai Courts.

The decisions was a preliminary decision on jurisdiction: the Judge held that there is no doubt that the DIFC Courts have jurisdiction under Article 5(A)(1)(e) of the Judicial Authority Law as amended and Articles 42, 43 and 44 of the DIFC Arbitration Law to hear the application. He directed that further submissions be filed on the question of whether or not the award should be recognised and enforced.

Banyan Tree was the beneficiary of an award in its favour made by an arbitrator appointed under the auspices of DIAC and sought recognition and enforcement of the award in the DIFC. Meydan claimed that the Dubai Courts and not the DIFC Courts were the proper and exclusive forum to deal with the claim. In rejecting Meydan’s arguments the Judge held that:

  1. It was important to note that Article 42(1) of the DIFC Arbitration Law provides that “An arbitral award, irrespective of the State or jurisdiction in which it was made, shall be recognized as binding within the DIFC …” [Judge’s emphasis];

  2. Article 5(A)(1)(e) of the Judicial Authority Law (which provides that the DIFC Court of First Instance shall have exclusive jurisdiction to hear and determine any claim or action over which the Courts have jurisdiction in accordance with DIFC Laws and DIFC Regulations) is the gateway whereby Articles 42, 43 and 44 of the DIFC Arbitration Law confer jurisdiction on the DIFC Courts to recognize that the arbitral award in question is binding within the DIFC;

  3. UAE Federal Law No. 11 of 1992 concerning Civil Procedure has no application to the jurisdiction of the DIFC Courts which is to be decided in accordance with the Centre’s own laws in accordance with Article 8(2) of Dubai Law No. 9 of 2004 as amended by Dubai Law No. 7 of 2011;

  4. A connection with the DIFC to hear an application for recognition of an Award is not required as no such requirement is to be found in Article 5(A)(1)(e) of the Judicial Authority Law;

  5. The doctrine of forum non conveniens only applies where the alternative court is a foreign (as opposed to UAE) court – Al Khorafi v Bank Sarasin-Alpen Ltd [2011-12] DIFC. C.L.R. 9; Corinth Piepworks SA v Barclays Bank plc [2011-12] DIFC. C.L.R. 6; Allianz Risk Transfer AG v Al Ain Ahlia Insurance Co., 2013 Unreported;

  6. The New York Convention is not applicable to the enforcement or recognition of UAE awards in the DIFC;

  7. There is no abuse of process in the form of circumvention of the requisite Dubai Court of First Instance and Dubai Court of Appeal ratification procedure as it is clear from Articles 7(2) and 7(3) of the Judicial Authority Law that both the DIFC Courts and the Dubai Courts may recognize and/or enforce the same arbitral award.

This is an important decision. The ratification process in the Dubai Courts can be a protracted process often involving two layers of appeal. It should not (but sometimes does) involve a review of the merits of the underlying dispute. The decision avoids a “double exequatur” whereby a Dubai award must first be ratified by the Dubai Courts before being recognised or enforced within the DIFC and in this respect follows the spirit of the New York Convention, although the Convention is clearly not applicable as between two jurisdictions within the same State.

The decision permits Award-Creditors to have Dubai awards enforced and recognised in the DIFC. This in turn permits Award-Creditors, for example, to seek enforcement orders against any international banks registered as Centre Establishments in accordance with the Corinth Pipeworks Case and may permit the award to be taken abroad under the New York Convention as a UAE award.

Michael Black QC of XXIV Old Buildings leading Sapna Jhangiani of Clyde & Co., represented Banyan Tree Corporate PTE Ltd

Tim Taylor QC of King & Wood Mallesons (MENA) LLP represented Meydan Group LLC