XXIV on both sides of first ever DIFC appeal on enforcement of judgments under GCC and Riyadh Conventions

3 June 2020

XXIV on both sides of first ever DIFC appeal on enforcement of judgments under GCC and Riyadh Conventions

DIFC Court of Appeal clarifies regime for enforcement of foreign judgments under the GCC and Riyadh Conventions

The decision in Arabian Construction Company WLL v Credit Suisse Bank [2019] DIFC CA 008 (29 March 2020) marks the first occasion in which the DIFC Court of Appeal has considered the circumstances in which foreign judgments can be enforced in the DIFC under the Riyadh Arab Convention for Judicial Cooperation 1983 or the Gulf Cooperation Council Convention for the Execution of Judgments, Delegations, and Judicial Notifications 1997.

Background

The claimant, a Kuwaiti company, brought proceedings in the Kuwaiti courts against the defendant, a Swiss bank, for recovery of funds said to be due from the bank. The Kuwaiti Court of First Instance entered judgment for the claimant in the sum of c.US$5m. The bank’s appeals to the Kuwaiti Court of Appeal and Court of Cassation failed. At all stages of the Kuwaiti proceedings the bank maintained an objection to the jurisdiction of the Kuwaiti courts, but also fought the merits.

The claimant obtained an order ex parte permitting enforcement of the Kuwaiti judgment in the DIFC. H.E. Justice Ali Al Madhani set aside the enforcement order on the grounds that:

  • The Kuwaiti courts did not have jurisdiction under Article 28(c) of the Riyadh Convention or Articles 4(c) of the GCC Convention; and
  • The claimant had failed to give full and frank disclosure on the ex parte

The claimant appealed those findings and on a further ground, namely that the bank had submitted to the Kuwaiti court’s jurisdiction.

Enforcement under the Riyadh and GCC Conventions

Absent any ground for refusing enforcement under the Conventions, the Court of Appeal (Chief Justice Zaki Azmi, Justice Roger Giles and H.E. Justice Shamlan Al Sawalehi) held that the DIFC Courts must enforce judgments issued by courts in Riyadh and GCC Convention states, if those courts had jurisdiction under either:

  • The jurisdictional rules contained in Article 28 of the Riyadh Convention or Article 4 of the GCC Convention; or
  • The DIFC Court’s rules of international jurisdiction.

The Court of Appeal confirmed that, in this context, the “rules of international jurisdiction” are the common law rules of international jurisdiction applied by the DIFC Court in a claim to enforce a foreign judgment at common law; not the gateways under Article 5(A) of the Judicial Authority Law.

The Appeal

The Court of Appeal dismissed the appeal on the ground that the Kuwaiti courts lacked jurisdiction. First, the Kuwaiti courts only had jurisdiction under Article 28(c) or Article 4(c) of the Riyadh and GCC Conventions if Kuwait was the place of performance of the contractual obligation in dispute. The Court accepted the bank’s submission that, on a proper analysis, the Kuwaiti proceedings were not concerned with a contractual obligation and so the Kuwaiti courts could not have had jurisdiction under these Articles.

Second, the Court rejected the claimant’s case that the bank had submitted in Kuwait according to the DIFC Court’s rules of international jurisdiction. The claimant contended that the bank submitted in two ways: (1) by contesting jurisdiction and losing; and (2) by contesting the merits before the Kuwaiti courts.

The Court of Appeal held that the bank’s mere unsuccessful objection to jurisdiction could not, without more, amount to submission. However, the Court left open whether the English decisions in Harris v Taylor [1915] 2 KB 580 and Henry v Geoprosco International Ltd [1976] QB 726, providing for submission by conditional appearance, are good law in the DIFC, where statute has since overturned them in England.

On submission by contesting the merits, after a detailed review of the English case law, the Court of Appeal concluded the essential question is whether the defendant to the foreign proceedings waived its objection to jurisdiction; a question of fact determined by an objective review of the defendant’s conduct. An important factor was whether the defendant had a choice whether to engage with the merits before its jurisdiction objection is finally determined.

Whilst the Court considered there was evidence that the bank had submitted by contesting the merits in Kuwait, the Court of Appeal declined to make that finding. The issue of submission had not been raised at first instance. The bank had therefore not had an opportunity to adduce evidence that it had been forced to contest the merits in Kuwait if it wished to maintain its jurisdiction objection.

Whilst that conclusion disposed of the appeal, the Court of Appeal went on to consider whether the judge was wrong to find that there was a duty of full and frank disclosure on ex parte applications to enforce judgments under the Conventions. Clarifying comments made by Justice Sir David Steel in Giacinta v Gilam LLC [2016] DIFC Arb 004 (20 September 2016) that suggested the contrary, the Court of Appeal held that the obligation of full and frank disclosure arose on such applications.

Comment

The Court’s judgment is an essential read for DIFC practitioners enforcing judgments from Convention states. It makes clear that questions of the foreign court’s jurisdiction will involve consideration of more than just the express heads of jurisdiction in Articles 28 of the Riyadh Convention and Article 4 of the GCC Convention. The judgment also provides useful guidance on the sort of evidence a future court would require to find submission. Nevertheless the common law authorities raise some questions, answered by statute in England, with which a future DIFC Court will need to grapple.

Michael Black QC, Matthew Watson and Tom-Stewart Coats (instructed by Global Advocates) acted for the claimant on appeal.

Tom Montagu-Smith QC (instructed by Al Tamimi & Co) acted for the defendant at first instance and on appeal. 

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