DNB Bank ASA v (1) Gulf Eyadah Corporation (2) Gulf Navigation Holdings Pjsc [2015] DIFC CA 007 (25 February 2016)

Claim No: CA 007/2015

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

Court

In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler

Ruler

of Dubai

IN THE COURT

Court

OF APPEAL

BEFORE THE CHIEF JUSTICE

Chief Justice

MICHAEL HWANG SC, JUSTICE SIR DAVID STEEL AND H.E. JUSTICE OMAR AL MUHAIRI

BETWEEN

DNB BANK ASA

Claimant

/ Appellant

and

(1)GULF EYADAH CORPORATION

(2)GULF NAVIGATION HOLDINGS PJSC

Defendants / Respondents

Hearing: 9 December 2015

Counsel: Tom Montagu-Smith (24 Old Buildings) assisted by Tarek Shrayh, Robert Karrar-Lewsley and Muhammad Mahmood (Al Tamimi & Co) for the Appellant

Teresa Starr assisted by Alessandro Tricoli (Fichte & Co) for the Respondents

Judgment: 25 February 2016

JUDGMENT

Summary of Judgment

The Appellant (the Claimant in the original proceedings), DNB Bank ASA, sought recognition and enforcement of a judgment order (the “English Order”) issued on 30 September 2014 in the English High Court

Court

of Justice that required the Respondents (the Defendants in the original proceedings), Gulf Eyadah Corporation and Gulf Navigation Holding PJSC to pay USD 8.7 million plus costs under various finance documents and a guarantee. The Respondents contested the DIFC Courts

DIFC Courts

’ jurisdiction to enforce a foreign court judgment on the basis that none of the jurisdictional “gateways” under Article 5(A) of the judicial authority law

Judicial Authority Law

(“JAL”), Dubai Law No. 12 of 2004, as amended by Law No. 16 of 2011, were satisfied. Alternatively, the Respondents also argued that the Claimant’s claim constituted an abuse of process and finally, sought to have the claim determined in private and/or for their details to be anonymised in any judgment pursuant to Rule 35.4 of the Rules of the DIFC

DIFC

Courts (“RDC”).

The Court of First Instance (“CFI") judgment of H.E. Justice Ali Al Madhani dated 2 July 2015 dismissed the Respondents’ application to contest the jurisdiction of the DIFC Courts. It was concluded that the English Order constituted a “foreign” court order within the meaning of Article 7(6) of the Judicial Authority Law, Dubai Law No. 12 of 2004 as amended by Dubai Law No. 16 of 2011 (“the JAL”) and Article 24(1) of the DIFC Courts Law No. 10 of 2004. The English Order fell under Article 5(A)(1)(e) of the JAL and therefore the jurisdictional “gateway” was satisfied. Justice Ali held that the judgment order must therefore be accepted by the Court for recognition or execution within the DIFC in accordance with the RDC. However, while the Court had jurisdiction to enforce and recognise foreign judgments, the power rested within the DIFC and could not be transferred to refer “recognised foreign judgments” to the Dubai Courts

Dubai Courts

for execution. On the Respondents’ alternative submission alleging abuse of power, Justice Ali held that the argument was without merit. Lastly, in regard to the issue of privacy, he ruled that the Respondents had failed to satisfy the test in RDC 35.4 andArqaam Capital Ltd v DFSA

DFSA

(CFI 006/2010).

The Appellant appealed against the CFI judgment, claiming that the learned Judge

Judge

had erred in finding that the DIFC Courts had no power to refer a foreign judgment to the Dubai Courts for execution. The Appellant’s main contention was that the enforcement of a foreign judgment by the DIFC Courts would result in a local judgment of the DIFC Courts which could then be executed in accordance with Article 7 of the JAL. The Respondents cross-appealed that the learned Judge had erred in law in finding jurisdiction in the DIFC Courts for recognition and enforcement of the English Order and that there had been an abuse of process by the Appellant in its claim. The Respondents also appealed on costs, submitting that there was serious procedural irregularity. The Respondents later dropped their cross-appeal on jurisdiction and abuse of process. The Court of Appeal examined these issues for the sake of completeness.

Chief Justice

Michael Hwang SC (with H.E. Justice Omar Al Muhairi and Justice Sir David Steel concurring) allowed the appeal. In relation to the issue of jurisdiction, the Court of Appeal found that the DIFC Courts had jurisdiction to hear claims on the enforcement of foreign judgments pursuant to Article 24(1) of the DIFC Courts Law, read with Articles 5(A)(1)(e) and 7(4) to 7(6) of the JAL. However, Articles 7(4) to 7(6) did not apply to the present matter. Instead, Article 7(2) of the JAL, which provides for the execution of judgments, decisions and orders rendered by the DIFC Courts was relevant. The judgment sought to be enforced was a foreign money judgment, which was enforceable by the DIFC Courts. Once the judgment was enforced, it would become an independent local judgment. The Court of Appeal held that the Memorandum of Guidance entered into between the DIFC Courts and the Commercial Courts of England and Wales (the “English MOG”) served as a useful starting point to guide the Court in the recognition and enforcement of a foreign judgment. The English Order fulfilled one of the four common law requirements under the MOG. The Court of Appeal referred to the common law principle that a foreign money judgment could be sued upon in a common law action and held that the English Order was a foreign money judgment which could be enforced as an independent judgment of the DIFC Courts. Accordingly, the judgment issued by the DIFC Courts was a judgment within the scope of Article 7(2) of the JAL. The Court also found that the presence of assets in the DIFC was not a condition to the enforcement of foreign court judgments. Accordingly, the DIFC Courts could be used as a conduit jurisdiction to enforce a foreign judgment. Reciprocal mechanisms could then be applied to execute against assets in another jurisdiction. The DIFC Courts would not be concerned with what happens in the next jurisdiction in which the Appellant seeks to enforce its local judgment as they had no jurisdiction to dictate what the next jurisdiction should do. The Court rejected the Respondents’ argument that there was an abuse of process by the Appellant in its claim. The Respondents failed to demonstrate that enforcement of the English Order was manifestly unfair or that it would bring the administration of justice into disrepute. Accordingly, since the Respondents were the unsuccessful party to the appeal, their costs appeal was dismissed.

In his brief judgment, Justice Sir David Steel explained the view that the essential issue of the appeal is the nature of the judgment issued by the DIFC Courts on recognition and enforcement of a foreign judgment. His Honour held that the judgment issued by the DIFC Courts is a domestic judgment and therefore falls within the scope of Article 7(2) of the JAL. His Honour also clarified that the recognition of a foreign arbitral award

Arbitral Award

does not necessarily give rise to a judgment on the terms of the award. Pursuant to Rule 43.75 of the RDC, the applicant must seek enforcement of the foreign award by obtaining a judgment. However, since it is a discretionary remedy, there may be situations where a foreign award is recognised but there is no consequent judgment on its terms.

This summary is not part of the Judgment and should not be cited as such

ORDER

UPONhearing Counsel for the Appellant and Counsel for the Respondents on 9 December 2015

AND UPONreading the submissions and evidence filed and recorded on the Court file

IT IS HEREBY ORDERED THAT:

The Appellant’s appeal is allowed.

As the Respondents have been unsuccessful in this appeal, their costs appeal is accordingly dismissed. The Respondents remain liable to pay the costs awarded by the Judge in the Court of First Instance.

Issued by:

Natasha Bakirci

Assistant Registrar

Registrar

Date of Issue: 25 February 2016

At: 4pm

JUDGMENT

Chief Justice Michael Hwang:

Introduction

1. This is an appeal by both the Appellant and the Respondents against the decision of H.E. Justice Ali Al Madhani (the “Judge”) dated 2 July 2015 dismissing the Respondents’ application to challenge the jurisdiction of the Dubai International Financial Centre (“DIFC”) Courts to enforce a foreign court judgment. The said judgment was in the Appellant’s favour against the Respondents made by Mr Justice Cooke in the Commercial Court of England and Wales on 30 September 2014 (“English Order”).

2. While the Judge had ruled in favour of the Appellant’s claims, he held that the DIFC Courts had no power to refer what he termed “recognised foreign judgments” to the Dubai Courts for execution. The Appellant appealed against this finding for an order that the DIFC Courts had the power to refer foreign judgments to the Dubai Courts for execution, concluding that the judgment obtained upon the recognition and enforcement of a claim would be a DIFC Courts judgment instead of a foreign judgment.

3. The Respondents appealed against the award of costs against them.

The Facts

4. The Appellant is the successful party on a claim in the Commercial Court of England and Wales (“the English Court”) for monies due under a number of financial agreements made between the Appellant and the First Respondent, with the Second Respondent contracting as a guarantor. The sums ordered to be paid by the Respondents to the Appellant were USD 8.7m plus costs.

5. On 3 December 2014, the Appellant filed a Claim Form with the DIFC Courts for the recognition and enforcement of the English Order, which was served on 17 December 2014. The remedies sought by the Appellant were:

(a) A declaration that the Commercial Court Order is enforceable by the Appellant against the Respondents.

(b) An award of damages in favour of the Appellant against the First and Second Respondents of USD8,730,236.09 and GBP8,281.84, respectively.

6. On 14 January 2015, the Respondents filed an application with the DIFC Courts seeking to (a) challenge the jurisdiction of the DIFC Courts to try the claim and (b) to set aside

Set aside

the Appellant’s Claim Form and/or service of the same.

7. In its application, the Respondents contended that the DIFC Courts lacked jurisdiction over the Appellant’s claim as none of the jurisdictional “gateways” under Article 5(A) of the Judicial Authority Law (Dubai Law No. 12 of 2004, as amended by Dubai Law No. 2011) (“JAL”), were satisfied.

8. The Appellant argued that the DIFC Courts had the jurisdiction to hear the claim, pursuant to Article 7(6) of the JAL. The Appellant took the position that the English Order was an order of a court other than the Dubai Courts, and therefore fell within the meaning of Article 7(6) of the JAL. Accordingly, the DIFC courts

DIFC Courts

were mandated to recognise and enforce the English Order.

9. The Appellant claimed that Article 24(1) of the DIFC Courts Law No. 10 of 2004 (the “DIFC Courts Law”) conferred jurisdiction on the DIFC Courts to ratify foreign court orders.

10. The Appellant further submitted that the provisions of Article 7(6) of the JAL and Article 24(1) of the DIFC Courts Law were reflected in the jurisdictional “gateways” under Article 5(A) of the JAL.

11. The Appellant also argued that the DIFC Courts had signed a number of Memoranda of Guidance with foreign courts to facilitate the reciprocal enforcement of judgments. These memoranda affirmed the fact that the DIFC Courts have jurisdiction to enforce foreign court judgments.

12. On 16 March 2015, the hearing for the Appellant’s claim took place, with judgment being reserved after the hearing.

13. On 2 July 2015, the Judge dismissed the Respondents’ application, finding for all three of the Appellant’s claims. His Excellency concluded that the English Order constituted a “foreign” court order within the meaning of Article 7(6) of the Judicial Authority Law No. 12 of 2004, as amended by Law No. 16 of 2011 and Article 24(1) of the DIFC Courts Law. It followed that the Order fell within the jurisdiction conferred by Article 5(A)(1)(e) and therefore this jurisdictional “gateway” was satisfied.

14. The Judge further held that the judgment order must therefore be accepted by the Court for recognition or execution within the DIFC in accordance with the Rules of the DIFC Courts 2014 (“RDC”). However, he found that the DIFC Courts had no power to refer what he termed “recognised foreign judgments” to the Dubai Courts for execution.

15. The Judge ordered costs to be paid to the Appellant by the Respondent “on a standard basis, the amount of which shall be assessed, if not agreed, by the Registrar”.

16. On 15 July 2015, the Appellant filed an Appeal Notice against the Judge’s decision dated 2 July 2015 (the “Appeal”). The Appellant claimed that the Judge had erred in law in finding that the DIFC Courts had no power to refer “recognised foreign judgments” to the Dubai Courts. The Appellant contended that, upon recognition and enforcement of a foreign judgment, the DIFC Courts would enter a judgment for the amount of the foreign judgment. The resulting DIFC Courts judgment could then be referred to the Dubai Courts for execution pursuant to Article 7 of the JAL.

17. On 20 July 2015, the Respondents filed an Appeal Notice and their Grounds of Appeal against the Judge’s order as to costs. The Respondents also filed their Skeleton Argument on Costs on the same date.

18. The Respondents also filed an Appeal Notice to cross-appeal the Judge’s finding on the following grounds.

(a) The Judge erred in law in finding that Article 24(1)(a) of the DIFC Courts Law referred to Article 7(6) of the JAL or that Article 7(6) applied to recognition and enforcement generally, as opposed to execution in the DIFC.

(b) The Judge erred in law by failing to consider whether there had been an abuse of process or whether he should otherwise exercise his discretion to decline jurisdiction in the specific circumstances of this case, where there was uncontested evidence that the Respondent had no assets in the DIFC or any intention of bringing the same into the DIFC and an express acknowledgement by the Appellant that the DIFC Courts was being used as a “conduit jurisdiction” and not for any purpose relating to the DIFC. Had he done so, he would have found that there was an abuse of process or would otherwise have declined jurisdiction in exercise of his discretion. Alternatively, his finding in relation to abuse of process was incorrect as a matter of law.

19. On 30 July 2015, the Appellant filed its Skeleton Argument in support of its application for permission to appeal (“Appellant’s Skeleton Argument”).

20. On 9 September 2015, Justice Sir Richard Field issued an order granting leave to appeal pursuant to Rule 44.14 of the RDC, on the basis that both the Appellant and Respondents had a real prospect of success.

21. On 12 October 2015, the Respondents filed their Skeleton Argument in response to the Appellant’s Appeal and Cross-Appeals (“Respondents’ Skeleton Argument”).

22. On 26 November 2015, the Appellant filed its Skeleton Argument in response to the Respondents’ Costs Appeal and Cross-Appeals (“Appellant’s Reply Skeleton Argument”).

23. On 6 December 2015, the Respondents filed their Supplementary Skeleton Argument (“Respondents’ Supplementary Skeleton Argument”).

24. On 9 December 2015, the hearing for the Appeal was held. At the hearing, the Court of Appeal put certain questions to the Respondents.

25. On 21 December 2015, the Respondents filed written submissions in response to the questions from the Court of Appeal (“Respondents’ Written Submissions”).

26. I now proceed to discuss and analyse the issues and arguments.

The Statutory Provisions

27. The relevant provision of the JAL as originally enacted (“the original JAL”) was as follows:

“Article 7 – The Enforcement

(1) Should the subject of execution fall within the Centre, judgements, awards and orders issued by the Courts and Arbitral Awards ratified by the Courts shall be enforced by the executive judge at the Centre.

(2) Should the subject of execution fall outside the Centre, judgements, awards and orders issued by the Courts and Arbitral Awards ratified by the Courts shall be enforced by an executive judge at Dubai Courts, subject to the following:

(a) The judgement, award or order is final and is appropriate for enforcement; and

(b) The judgment, award or order has been translated into Arabic.

(3) The executive judge at Dubai Courts has no jurisdiction to review the merits of a judgement, award or order of the Courts.

(4) Judgements, awards and orders of any court outside the Centre may be enforced within the Centre in the manner prescribed in the Centre’s Laws.”

28. The relevant provisions of the JAL (as amended by Dubai Law No. 16 of 2011) are as follows:

“Article 2 – Definitions

DIFC Laws:Any laws issued by the Ruler in relation to DIFC.

Article 5 – Jurisdiction

Jurisdiction

(A) The Court of First Instance:

(1) The Court of First Instance shall have exclusive jurisdiction to hear and determine:

…

(e) Any claim or action over which the Courts have jurisdiction in accordance with DIFC Laws and DIFC Regulations.

…

Article 7 – Execution

(1) The execution judge assigned pursuant to Paragraph (D) of Article (5) of this Law shall have jurisdiction over execution of the judgments, decisions and orders rendered by the Courts and the Arbitral Awards ratified by the Courts if the subject matter of execution is situated within DIFC, and such execution shall be in accordance with the Rules of the Courts.

(2) Where the subject matter of execution is situated outside the DIFC, the judgments, decisions and orders rendered by the Courts and the Arbitral Awards ratified by the Courts shall be executed by the competent entity having jurisdiction outside DIFC in accordance with the procedure and rules adopted by such entities in this regard, as well as with any agreements or memoranda of understanding between the Courts and these entities. Such execution shall be subject to the following conditions:

(a) The judgment, decision, order or ratified Arbitral Award

Arbitral Award

to be executed is final and executory;

(b) The judgment, decision, order or ratified Arbitral Award is translated into the official language of the entity through which execution is carried out;

(3) In addition to Paragraphs (a), (b) and (c) of Clause (2) of this Article, when executing the judgments, decisions and orders issued by the Courts or Arbitral Awards ratified by the Courts through Dubai Courts, the following must be observed:

(a) the Courts shall issue an execution letter to the Chief Justice of the Court of First Instance of Dubai Courts stating the procedure to be carried out;

(b) the person requesting execution shall submit to the execution judge of Dubai Courts an application accompanied by a copy of the judgment, decision or order, legal translation of the same, and the execution letter;

(c) the execution judge of Dubai Courts shall apply the execution procedure and rules stipulated in the aforementioned Federal Civil Procedure Code, including any objections to the execution; the execution judge may not reconsider the merits of the judgment, decision or order;

(d) Dubai Courts shall collect the execution fees for each execution request submitted to them in accordance with the aforementioned Dubai Courts Fees Law.

(4) Where the subject matter of execution is situated in DIFC, the judgments, decisions and orders rendered by Dubai Courts or Arbitral Awards ratified by Dubai Courts shall be executed by the execution judge of the Courts subject to the following conditions:

(a) The judgment, decision or order to be executed is final and executory;

(b) The judgment, decision or order is translated into English by the person requesting execution;

…

(6) The judgments, decisions, orders and ratified Arbitral Awards rendered outside DIFC by any court other than Dubai Courts shall be executed within DIFC in accordance with the procedure prescribed in the Rules of the Courts.”

29. The relevant provisions of the DIFC Courts Law (DIFC Law No. 10 of 2004) are as follows:

“24. Ratification of Judgments

(1) Pursuant to Article 7(4) of the Judicial Authority Law, the Court of First Instance has jurisdiction to ratify any judgment, order or award of any recognised:

(a) Foreign court”

30. The relevant provisions of the Law on the Application of Civil and Commercial Laws in the DIFC (DIFC Law No. 3 of 2004) are as follows:

“8. Application

(1) Since by virtue of Article 3 of Federal Law No.8 of 2004, DIFC Law is able to apply in the DIFC notwithstanding any Federal Law on civil or commercial matters, the rights and liabilities between persons in any civil or commercial matter are to be determined according to the laws for the time being in force in the Jurisdiction chosen in accordance with paragraph (2).

(2) The relevant jurisdiction is to be the one first ascertained under the following paragraphs:

(a) so far as there is a regulatory content, the DIFC Law or any other law in force in the DIFC; failing which,

(b) the law

the Law

of any Jurisdiction other than that of the DIFC expressly chosen by any DIFC Law; failing which,

(d) the laws of any Jurisdiction which appears to the Court or Arbitrator to be the one most closely related to the facts of and the persons concerned in the matter; failing which,

(e) the laws of England and Wales.”

31. The relevant provisions of the Rules of the DIFC Courts 2014 (“RDC”) are as follows:

“II RECOGNITION AND ENFORCEMENT OF ARBITRAL AWARDS

43.75

After conclusion of the period referred to Rule 43.70(2), in relation to any award in respect of which the Court has made an Order enforcing the award:

(1) the award may be enforced within the DIFC in the same manner as a Judgment or Order of the Court to the same effect; and

(2) the Court may enter Judgment in the terms of the award.

Enforcement of awards of Bodies other than the Court

45.8

Rules 45.10 to 45.17 apply, subject to Rule 45.9, if:

(1) an award of a sum of money or other decision is made by any court, tribunal , body or person other than the Court ; and

(2) an enactment provides that the award may be enforced as if payable under a Court order, or that the decision may be enforced as if it were a Court order.”

32. The relevant provisions of the Memorandum of Guidance as to Enforcement between the DIFC Courts and the Commercial Court, Queen’s Bench Division, England and Wales (“the English MOG”) are as follows:

“1. The purpose of this memorandum is to set out the parties’ understanding of the procedures for the enforcement of each party’s money judgments in the other party’s courts. This memorandum is concerned only with judgments requiring a person to pay a sum of money to another person.

2. This memorandum has no binding legal effect. It does not constitute a treaty or legislation, is not binding on the judges of either party and does not supersede any existing laws, judicial decisions or court rules. It is not intended to be exhaustive and is not intended to create or alter any existing legal rights or relations.

…

The Commercial Court must have had jurisdiction, according to the DIFC rules on the conflict of laws, to determine the dispute. The DIFC Courts will generally consider the Commercial Court to have had the required jurisdiction only where the person against whom the judgment was given:a. was, at the time the proceedings were commenced, present in the jurisdiction; or
b. was the claimant, or counterclaimant, in the proceedings; or
c. submitted to the jurisdiction of the Commercial Court; or
d. agreed, before commencement, in respect of the subject matter of the proceedings, to submit to the jurisdiction of the Commercial Court.”

33. The relevant provisions of the English Foreign Judgment (Reciprocal Enforcement) Act 1933 are as follows:

“1. Power to extend Part I of the Act to foreign countries giving reciprocal treatment.

(1) If, in the case of any foreign country, Her Majesty is satisfied that, in the event of the benefits conferred by this Part of this Act being extended to, or to any particular class of, judgments given in the courts of that country or in any particular class of those courts, substantial reciprocity of treatment will be assured as regards the enforcement in that country of similar judgments given in similar courts of the United Kingdom, She may by order in Council direct—

(a) that this Part of this Act shall extend to that country;

(b) that such courts of that country as are specified in the Order shall be recognised courts of that country for the purposes of this Part of this Act; and

(c) that judgments of any such recognised court, or such judgments of any class so specified, shall, if within subsection (2) of this section, be judgments to which this Part of this Act applies.

(2) Subject to subsection (2A) of this section, a judgment of a recognised court is within this subsection if it satisfies the following conditions, namely—

(a) it is either final and conclusive as between the judgment debtor and the judgment creditor or requires the former to make an interim payment to the latter; and

(b) there is payable under it a sum of money, not being a sum payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty; and

(2A)The following judgments of a recognised court are not within subsection (2) of this section—

(a) a judgment given by that court on appeal from a court which is not a recognised court;

(b) a judgment or other instrument which is regarded for the purposes of its enforcement as a judgment of that court but which was given or made in another country;

(c) a judgment given by that court in proceedings founded on a judgment of a court in another country and having as their object the enforcement of that judgment.”

34. The relevant provisions of the Arbitration Law (DIFC Law No. 1 of 2008) (“DIFC Arbitration Law”) are as follows:

“42. Recognition and enforcement of awards

(1) An arbitral award, irrespective of the State or jurisdiction in which it was made, shall be recognised as binding within the DIFC and, upon application in writing to the DIFC Courts, shall be enforced subject to the provisions of this Article and of Articles 43 and 44. For the avoidance of doubt, where the UAE

UAE

has entered into an applicable treaty for the mutual enforcement of judgments, orders or awards the DIFC Courts shall comply with the terms of such treaty.

(2) The party relying on an award or applying for its enforcement shall supply the original award or a duly certified copy thereof and the original Arbitration Agreement referred to in Article 12 or a duly certified copy thereof. If the award or the agreement is not made in English, the DIFC Courts may request the party to supply a duly certified translation thereof.

(3) For the purposes of the recognition or enforcement of any award within the DIFC, an original award or an original Arbitration Agreement shall be duly certified if it is a copy that is certified in the manner required by the laws of the jurisdiction in the place of arbitration or elsewhere. A translation shall be duly certified if it has been certified as correct by an official or sworn translator in the place of arbitration or elsewhere.

(4) Awards issued by the DIFC Courts may be enforced within the DIFC in the manner prescribed in this Law and any rules of Court made for this purpose. Awards recognised by the DIFC Courts may be enforced outside the DIFC in accordance with the Judicial Authority Law and recognition under this Law includes ratification for the purposes of Article 7 of the Judicial Authority Law.”

The Decision Below

35. At the Court of First Instance (“CFI”), the Judge heard the suit and issued the Order after resolving the following matters that were before him:

(a) Whether the DIFC Courts had jurisdiction to enforce a foreign court judgment;

(b) Whether the Appellant’s claim to seek recognition and enforcement of the English Order constituted an abuse of the DIFC Courts’ process;

(c) Whether the Appellant’s claim could be determined in private and/or for details of parties to be anonymised in any Judgment.

Whether the DIFC Courts had jurisdiction to enforce a foreign court judgment

36. The Judge held that the DIFC Courts had jurisdiction as the claim fell under one of the jurisdictional “gateways” in Article 5 of the JAL. In particular, Article 5(A)(1)(e) of the amended JAL conferred jurisdiction to the DIFC Courts.

37. The Judge elaborated that the term “DIFC Laws” under Article 5(A)(1)(e) is defined at Article 2 of the JAL to mean “any laws issued by the Ruler in relation to DIFC”. The Judge found that Article 7(6) of the JAL, as amended by Law No. 16 of 2011 and Article 24(1) of the DIFC Courts Law, confers jurisdiction to the DIFC Courts to recognise and/or execute foreign judgments within the DIFC. Accordingly, these provisions fall within the scope of“any laws issued by the Ruler in relation to DIFC” and provide the jurisdictional “gateway” in Article 5(A)(1)(e).

38. The Judge also noted that Article 24(1) of the DIFC Courts Law confers jurisdiction on the DIFC Courts to ratify foreign orders. The preamble of Article 24(1) provides the condition that the jurisdiction of the DIFC Courts is subject to Article 7(4) of the JAL.

39. The Judge analysed the application of Article 7(4) of the JAL in the preamble of Article 24(1) of the DIFC Courts Law. He rejected the Respondents’ argument that Article 7(4) of the JAL, as amended only dealt with execution in the DIFC against assets within the DIFC and had nothing to do with foreign court orders. He found that Article 7(4), prior to the amendment of the JAL in 2011, referred to the enforcement of judgments and orders of any court outside the DIFC. However, with the amendment of the JAL, the reference to Article 7(4) in Article 24(1) of the DIFC Courts Law must now be referenced to Articles 7(4), (5) and (6) of the JAL, as amended in 2011.

40. The Judge found that any reference to enforcement of foreign court judgments within the DIFC in the JAL, the DIFC Courts Law and the RDC was not dependent on whether there was assets of the Defendant

Defendant

within the DIFC.

41. Accordingly, the Judge held that the English Order was a foreign court order of a court other than the Dubai Courts and therefore fell within the meaning of Article 7(6) of the JAL as amended in 2011 and Article 24(1) of the DIFC Courts Law. As the DIFC Courts had jurisdiction to deal with the Appellant’s claim for recognition and enforcement of a foreign court judgment, the English Order must be accepted by the DIFC Courts for recognition or execution within the DIFC in accordance with the RDC.

Whether the Appellant’s claim to seek recognition and enforcement of the English Order constituted an abuse of the DIFC Courts process

42. The Judge held that “recognised foreign judgments” or orders by the DIFC Courts could not be referred to the Dubai Courts for execution beyond the DIFC jurisdiction. He found that Article 7(2) of the JAL (as amended in 2011), only allowed judgments, decisions and orders rendered by the DIFC Courts to be referred for execution. He reasoned that, since there was no reference at all to any foreign judgment recognised by the DIFC Courts, Article 7(2) excluded “recognised foreign judgments” from the rule.

43. The Judge referred to Articles 7(4) and 7(5) of the JAL which allowed Dubai Courts judgments, decisions, and orders or Arbitral Awards ratified by the Dubai Courts to be brought for execution in the DIFC. He reasoned that Articles 7(4) and 7(5) similarly excluded “recognised foreign judgments” by the Dubai Courts.

44. The Judge further added that “recognised foreign judgments” were only mentioned in Article 7(6). Article 7(6) provided that judgments, decisions, orders and ratified Arbitral Awards rendered outside the DIFC by any court other than the Dubai Courts must be executed within the DIFC in accordance with the procedures prescribed in the RDC.

45. In his view, although the DIFC Courts could execute judgments, decisions and orders rendered by any recognised court other than Dubai Courts, the execution should not go beyond the jurisdiction of the DIFC Courts. The jurisdiction of the DIFC Courts did not allow the Court to refer “recognised foreign judgments” to the Dubai Court for execution andvice versa.

46. Accordingly, the Judge held that the DIFC Courts could not be a “conduit jurisdiction court” if the matter was related to a foreign court judgment.

47. The Judge drew a distinction between his finding in this case and the finding inBanyan Tree Corporate Pte Ltd v Meydan Group LLC(ARB 003/2013 and CA-005-2014) (“Banyan Tree”). InBanyan Tree, ratified Arbitration Awards were allowed to be sent for execution between the DIFC Courts and Dubai Courts according to Articles 7(3), (4) and (5). He opined that the DIFC Courts were not obliged to enforce foreign court judgments in the same way they were obliged to enforce foreign Arbitral Awards or domestic Arbitral Awards.

48. The Judge highlighted that the particular mention of “Arbitral Awards ratified by the Courts” in Article 7(2) of the JAL meant that a distinction should be drawn between what the Court issued or rendered (judgments, decisions and orders) by itself and what was rendered or issued by another court or institution and then brought for recognition and ratification. Hence, he found that a “recognised foreign judgment” could not be within the meaning of “judgments, decisions and orders rendered by the Courts” in Article 7(2) of the JAL.

49. The Judge concluded that, whilst the Court had the jurisdiction to recognise and enforce foreign judgments, the power should only be within the DIFC and could not extend outside of the DIFC. Accordingly, the Court had no power to refer “recognised foreign judgments” to the Dubai Courts for execution.

50. He dismissed the abuse of process argument, holding that it was without merit.

Whether the Appellant’s claim could be determined in private and/or for details of parties to be anonymised in any Judgment

51. The Judge applied the tests in RDC Rule 35.4(3) andArqaam Capital Ltd v DFSA(CFI 006/2010) to ascertain if the claim should be determined in private and/or whether the details of the Parties should be anonymised in any Judgment. In both tests, the Respondents were obliged to satisfy the requirement of what constituted confidential information in order for the Court to order a hearing in private.

52. The Appellants argued that the matter was not confidential because the English Order was a public document. The Judge found that the Respondents failed to satisfy both tests as they did not challenge or deny the evidence presented by the Appellants that the English Order was such a public document.

The Issues before the Court

53. The central premise of the Appellant’s argument is that the Judge erred in finding that the DIFC Courts had no power to refer a “recognised foreign judgment” to the Dubai Courts for execution.

54. The Respondents had initially sought to appeal on the following grounds.

(a) Jurisdiction: The Judge erred in law in finding that Article 24(1)(a) of the DIFC Courts Law referred to Article 7(6) of the JAL or that Article 7(6) applied to recognition and enforcement generally, as opposed to execution within the DIFC.

(b) Abuse of process: The Judge erred in law in failing to consider if there had been an abuse of process, or whether the Judge should have exercised his discretion to decline jurisdiction since there was express acknowledgement by the Appellant that it was using the DIFC Courts as a conduit jurisdiction.

(c) Costs: There was serious procedural irregularity as the Parties were not given an opportunity to make submissions on costs.

55. However, in the Respondents’ Supplementary Skeleton Argument filed on 6 December 2015, the Respondents stated that they no longer pursued their cross appeal against the Judge's decision on jurisdiction and/or abuse of process. Instead they sought to uphold the Judge's decision that the DIFC Courts could not be used as a conduit jurisdiction for the onward referral of recognised or ratified foreign judgments and maintained their costs appeal.

56. Accordingly, the main issue which this Court must decide is whether the enforcement of a foreign judgment by the DIFC Courts will result in a local judgment of the DIFC Courts which can then be executed in accordance with Article 7 of the JAL.

57. I note that the Respondents no longer pursue their cross appeal in relation to jurisdiction and abuse of process on the Judge’s decision. Nonetheless, for the sake of completeness, I will briefly address these issues previously raised by the Respondents.

58. In this judgment, I will be addressing the following issues:

(a) Issue 1: Whether the DIFC Courts have jurisdiction to enforce foreign judgments pursuant to Article 7 of the JAL and/or Article 24(1) of the DIFC Courts Law, in conjunction with Article 5(A)(1)(E) of the JAL.

(b) Issue 2: If the DIFC Courts have jurisdiction, whether the enforcement of a foreign judgment by the DIFC Courts will result in a local judgment which can then be executed in accordance with Article 7 of the JAL.

(c) Issue 3: Whether the Judge failed to consider if there was an abuse of process or whether he should have exercised his discretion to decline jurisdiction in the specific circumstances of this case.

59. As the Appellant was the successful party in the CFI, this Court has first to consider if an appeal by a party that has succeeded on the merits should be entertained.

60. Article 5(B)(1)(a) of the JAL and Article 26(1) of the DIFC Courts Law provide this Court with the jurisdiction to hear and determine appeals against decisions of the CFI.

61. The Appellant submits that this Court should consider the legal consequences of the finding of a decision in order to decide if it should entertain an appeal:Compagnie Noga D'Importation Et D'Exportation SA v Australia & New Zealand Banking Group Ltd & ors[2002] EWCA Civ 1142 ("Noga") at [28]. InNoga, Lord Justice Waller elaborated that an issue estoppel may provide a basis to allow an appeal against a finding.

62. The same view was expressed by Lord Justice Kay inSecretary of State for Work and Pension v Morina[2008] EWCA Civ 749 where the Appellant was permitted to appeal against certain aspects of the reasoning of the Commissioner on the merits despite having succeeded on the merits. Lord Justice Kay held that the subject matter of the proposed appeal was a fundamental legal issue rather than a finding of fact.

63. I agree with the Appellants that there is an issue of legal significance as this Court has not previously considered the issue of enforceability of foreign judgments recognised by the DIFC Courts in the Dubai Courts. Since the matter is one of public interest and importance, I consider that this Court should deal with the issue of jurisdiction.

The Grounds of Appeal

Issue 1: Whether the DIFC Courts have jurisdiction to enforce foreign judgments pursuant to Article 7 of the JAL and/or Article 24(1) of the DIFC Courts Law, in conjunction with Article 5(A)(1)(E) of the JAL.

Respondents' Arguments

64. I note that this issue has been abandoned by the Respondents. Nonetheless, I will address this issue for the sake of completeness.

65. In their cross-appeal, the Respondents argue that, in contrast to arbitration awards which are subject to an internationally agreed regime of enforcement in the form of the New York Convention, an English Commercial Court Judgment needs an independent claim to be brought before the court in order to be recognised and enforced in the DIFC.

66. Article 24(1)(a) of the DIFC Courts Law states that, pursuant to Article 7(4) of the JAL (Article 7(6) after amendment in 2011), the CFI has jurisdiction to ratify any judgment, order or award of any recognised foreign court. The Respondents submit that, by virtue of Article 24(1)(a), the DIFC Courts only have jurisdiction to ratify a judgment of a foreign court for the purposes of execution against assets in the DIFC. In the Respondents’ Written Submissions, the Respondents contend that Article 24(1)(a) refers only to (i) ratification for the purposes of a subsequent application for enforcement in the courts of Dubai, and (ii) it provides expressly that only the judgments of “recognised” foreign courts can be ratified for that purpose. Accordingly, Article 24(1)(a) confers no jurisdiction to give local judgments founded on foreign money judgments. Hence, the English Order cannot be recognised and enforced for the purposes of execution against assets outside the DIFC.

67. Article 7(6) requires that judgments rendered outside the DIFC be executed within the DIFC "in accordance with the procedure prescribed in the Rules of Court". In the Respondents’ Written Submissions, the Respondents contend that Article 7(6) refers to (i) judgments of courts of countries that are foreign to Dubai, (ii) it refers only to the execution of those foreign judgments, and (iii) it provides absolutely no more than that execution of those judgments shall take place in accordance with the RDC. The reference to the RDC is provided by Rule 45.8, which requires that an order from courts other than the DIFC Courts can only be enforced directly if an order requires payment of a sum of money and "an enactment provides that the decision may be enforced as if payable under an order of the DIFC Courts". In this regard, the Respondents argue that there is no such enactment providing for English Commercial Court judgments to be enforced as if payable under an order of the DIFC Courts. Accordingly, there is no jurisdiction to give local judgments founded upon foreign money judgments (i.e. the English Order).

68. The Respondents further submit that Article 7(2) of the JAL merely states that a judgment rendered by the DIFC Courts must be enforced against property outside the DIFC. The jurisdiction under Article 7(2), as the Respondents argue, is found in Article 5A(1)(e) of the JAL. The Respondents further add that Article 5(A)(1)(e), read with Article 19 of the DIFC Courts Law, does not confer any general jurisdiction to give judgment on foreign judgments.

Appellant's Arguments

69. The Appellant submits that Article 24(1) of the DIFC Courts Law and Article 7(6) of the JAL, in conjunction with Article 5(A)(1)(e) of the JAL, confer on the DIFC Courts the power to recognise and enforce foreign judgments, giving it jurisdiction to hear claims for the enforcement of foreign judgments.

70. In response to the Respondents' argument that Rule 45.8 requires an enactment providing for English Commercial Court judgments to be enforced as if payable under an order of the DIFC Courts, the Appellant submits that Rule 45.8 merely sets out the procedure for enforcement of a foreign judgment. It does not state the circumstances in which the judgment will be enforced. The circumstances, as the Appellant submits, are found in the English MOG.

Issue 2: Whether the enforcement of a foreign judgment by the DIFC Courts will result in a local judgment of the DIFC Courts, which can then be executed in accordance with Article 7 of the JAL.

Appellant’s Arguments

71. In its Skeleton Argument, the Appellant submits that, when the DIFC Courts enforces a foreign judgment, the product is a judgment of the DIFC Courts which can therefore be executed in accordance with Article 7 of the JAL.

72. First, the Appellant submits that the approach towards the recognition and enforcement of a foreign judgment should be guided by the English MOG. The Appellant quotes paragraphs 8 and 9 of the MOG which states the position under DIFC law:

“8.Under the English common law, where a foreign court of competent jurisdiction has determined that a certain sum is due from one person to another, a legal obligation arises on the debtor to pay that sum. The creditor may bring a claim to enforce that obligation as a debt.

9.The approach of the DIFC Courts to the enforcement of Commercial Court judgments is based on the English common law and the same approach is applied.”

73. Second, the Appellant cites the common law position articulated by Lord Bridge inOwens Bank v Bracco[1992] 2 A.C. 443 (“Owens”) at page 484 that, when common law courts recognise a foreign judgment, they recognise the existence of an enforceable legal obligation which derives from the judgment. Consequently, the Appellant contends that, in a common law court, where a claim for recognition and enforcement succeeds, the judgment creditor obtains a judgment of the DIFC Courts in his favour. The judgment sought for execution by the creditor in the Dubai Courts would be a DIFC judgment as opposed to a foreign judgment.

74. The Appellant further argues that, as the judgment obtained would be a DIFC judgment, it would fall within the scope of Article 7(2) of the JAL. The Appellant, in seeking execution of the judgment in Dubai, would be seeking the execution of a DIFC judgment, and not a foreign judgment. The Appellant reiterated this oral argument at the appellate hearing, stating that the enforcement of a foreign judgment is a new independent judgment of the local courts. In principle, the effect of a judgment at common law is that it extinguishes the original claim.

75. The Appellant submits that it is possible for a common law court to enforce a judgment recognising a judgment of another court. The Appellant cites English, Scottish, Hong Kong and Singapore authorities to support its contention: Foreign Judgments (Reciprocal Enforcement) Act 1993, section 1(2A)(c);Clarke v Fennoscandia Ltd[2004] SC 197 (“Clarke”);Morgan Stanley & Co International Ltd v Pilot Lead Investments Ltd[2006] HKCFI 497 (“Morgan Stanley”);Poh Soon Kiat v Desert Palace Inc (trading as Caesars Palace)[2009] SGCA 60 (8 December 2009) (“Poh Soon Kiat”).

76. The Appellant highlights section 1(2A)(c) of the English Foreign Judgments (Reciprocal Enforcement) Act 1993 which expressly excludes judgments founded on foreign judgments. Section 1(2A)(c) states as follows:

“1. Power to extend Part I of Act to foreign countries giving reciprocal treatment.

(2A)The following judgments of a recognised court are not within subsection (2) of this section—

(c) a judgment given by that court in proceedings founded on a judgment of a court in another country and having as their object the enforcement of that judgment.

77. The Scottish case ofClarkeexplains that the Foreign Judgments (Reciprocal Enforcement) Act 1993 does not apply to judgments founded on a judgment of a court in another country. According to the Appellant, an absence of section 1(2A)(c) would permit the enforcement of a foreign judgment based on a judgment.

Respondents’ Arguments

78. The Respondents’ main contention is that a “recognised foreign judgment” does not constitute a judgment rendered by the DIFC Courts within the scope of Article 7(2) of the JAL.

79. First, the Respondents submit that the Judge was correct in holding that “recognised foreign judgments” or ratified arbitral awards do not fall within the scope of“judgments, decisions and orders rendered by the Courts”under Article 7(2) of the JAL. The Respondents further elaborated that there would not have been a need to mention“Arbitral Awards ratified by the Courts” in Article 7(2) if the provision had meant to include “recognised foreign judgments” or ratified arbitral awards under the meaning of“judgments, decisions and orders rendered by the Courts”.

80. Second, the Respondents further submit that there is no enactment providing for English Commercial Court judgments to be enforced as if payable under an order of the DIFC Courts. Instead, original proceedings must be brought in the Court where such judgment is inclined to be enforced by obtaining a local judgment which must be independently enforced: seeAdrian Briggs, Recognition of Foreign Judgments: A Matter of Obligations,Law Quarterly Review (2013) 87, p2.

81. In the Respondents’ Supplementary Skeleton Argument, the Respondent argues that there is a difference between DIFC Courts-rendered judgments and DIFC Courts-ratified arbitral awards which can be enforced outside the DIFC (as provided by Article 7(2) of the JAL), as opposed to judgments and awards ratified and rendered outside of the DIFC which have to be executed within the DIFC in accordance with the RDC (as provided by Article 7(6) of the JAL).

82. The Respondents further submit that there is no enactment providing for English Commercial Court decisions to be enforced as if payable under an order of the DIFC Courts other than within the DIFC which is provided by Article 7(6). They contrast this with Article 42(4) of the DIFC Arbitration Law which states:

“Awards issued by the DIFC Courts may be enforced within the DIFC in the manner prescribed in this Law and any rules of Court made for this purpose. Awards recognised by the DIFC Courts may be enforced outside the DIFC in accordance with the Judicial Authority Law and recognition under this Law includes ratification for the purposes of Article 7 of the Judicial Authority Law.”

83. Third, in response to the Appellant’s argument that the recognition and enforcement of a foreign judgment should be guided by the MOG, the Respondents submit that the MOG is not binding on the courts.

84. Fourth, the Respondents reject the Appellant’s reliance on the common law position stated inOwens,which recognises the existence of an enforceable legal obligation derived from a recognised foreign judgment. The Respondents submit that the case only confirms that where “the whole field is effectively governed by statute”, common law does not assist. Additionally, the Respondents cite the same case in the European Court of Justice (“ECJ”) (Owens Bank Ltd v Bracco & Another(Court of Justice of the European Communities Case C-129/92)) where the ECJ held that decisions dealing with enforcement of foreign judgments in one state do not bind courts of another state in which the foreign judgment is to be enforced. The Respondents also distinguished the case ofPoh Soon Kiatraised by the Appellant in its Skeleton Argument, asserting that judgment in the case referred to domestic judgments and not foreign judgments.

85. Fifth, the Respondents submit that by enforcing the English Order in Dubai via the DIFC Courts, the Appellant is effectively usurping the sovereignty of the UAE as a State. The UAE chose not to include the mutual recognition of judgments when it signed a Treaty between the United Kingdom of Great Britain and Northern Ireland and the UAE on Judicial Assistance in Civil and Commercial Matters in Civil and Commercial Matters on 7 December 2006. Enforcing the English Order conflicts with the treaties to which the UAE is a party and is contrary to Federal law. The use of the DIFC as a conduit jurisdiction results in an “excessively expansive interpretation” that the UAE did not intend.

Issue 3: Whether the Judge failed to consider if there was an abuse of process or whether he should have exercised his jurisdiction to decline jurisdiction in the specific circumstances of this case.

Respondents' Arguments

86. I note that this issue has been abandoned by the Respondents. Nonetheless, I will address this issue for the sake of completeness.

87. The Respondents submit that there was "uncontested evidence" that the Respondent did not have any assets in the DIFC or any intention of bringing any assets into the DIFC. The Respondents further assert that there was an "express acknowledgement" by the Appellant that the DIFC was being used as a "conduit jurisdiction" and not for any purposes relating to the DIFC. In this connection, the Respondents contend that the Judge should have declined jurisdiction in the exercise of his discretion based on the circumstances.

88. Alternatively, the Judge's findings that there was no abuse of process was an error in law. The Respondents submit that the Appellant’s claim constituted an abuse of process as they could not show a “real prospect of a legitimate benefit” for enforcing the judgment in the DIFC:Demirel v Tasaruff[2007] EWCA Civ 799;Linsen International Ltd v Humpuss Sea Transport Pte Ltd[2011] EWCA Civ. The Respondents argue that they have no assets in the DIFC, no intention of bringing the assets within the DIFC and the Appellants were aware of this fact.

Appellant's Arguments

89. The Appellant submits that there is nothing wrong in seeking enforcement of a foreign judgment in the DIFC Courts and then using the reciprocal enforcement mechanisms to execute against assets outside the DIFC. The Appellant cited examples of foreign arbitral awards which were enforced in the DIFC Courts and then executed against assets outside the DIFC using reciprocal enforcement mechanisms:A v B[ARB-002-2014] (22 Jan 2015);Banyan Tree v Meydan(ARB-003-2013) (2 April 2015);X1 X2 v Y(ARB-001-2014) (13 July 2015);X1 X2 v Y1 Y2(29 July 2015).

90. In response to the Respondents’ arguments that they do not have any assets and have no intention of bringing any assets into the DIFC, the Appellant submits that those are simply the Respondents’ assertions. The Appellant submits that assets may enter the DIFC following an order for enforcement, and the order would enable DNB to use the Court’s execution mechanism to locate the Respondents’ assets.

91. The Appellant further argues that, even if there were no assets in the DIFC, the Appellant could obtain a third party debt order against a bank licensed or registered within the DIFC, but in respect of money held by a branch outside the DIFC: Corinth v Barclays Bank plc[CA-002-2011] (22 Jan 2012).

92. The Appellant contends that a real prospect of a legitimate benefit and the presence of assets within the DIFC are not necessary for a party seeking enforcement in the DIFC. The Appellant does not concede that the Respondents have no assets within the DIFC as this is a mere assertion. In any event, it is legitimate to register a foreign judgment in the DIFC to capture any future assets that might make a foray into the DIFC. In any event, the Appellant submits that there is a legitimate benefit in the present matter.

Discussion

Discussion on Issue 1

93. The jurisdiction of the DIFC Courts is found in Article 5 of the JAL (as amended in 2011). In particular, Article 5(A)(1)(e) of the JAL is relevant in the present matter. Article 5(A)(1)(e) provides that the CFI 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.” Article 2 provides that DIFC Laws refer to any laws issued by the Ruler in relation to DIFC.

94. Article 7 of the JAL provides for the execution of judgments, decisions, orders and arbitral awards within and outside of the DIFC.

95. In particular, Article 7(2) provides for the execution of judgments, decisions and orders rendered by the DIFC Courts and the Arbitral Awards ratified by the DIFC Courts outside of the DIFC. Accordingly, Article 7(2) is a DIFC Law which falls within the jurisdictional “gateways” under Article 5(A)(1)(e).

96. In relation to the recognition and enforcement of foreign judgments, the Judge in the CFI analysed Article 24(1)(a) of the DIFC Courts Law which provides that pursuant to Article 7(4) of the JAL, the CFI has jurisdiction to ratify any judgment, order or award of any recognised foreign court. I agree with the Judge that the reference to Article 7(4) of the JAL was a reference to the original JAL. Given the amendments made in 2011, reference should instead be made to Articles 7(4), (5) and (6) of the JAL, as amended by Dubai Law No. 16 of 2011. In the original JAL, Article 7(4) referred to the enforcement within the DIFC of judgments, awards and orders of any courts outside the DIFC. In the amended JAL, Articles 7(4) to 7(6) provide for the enforcement within the DIFC of judgments, decisions and orders and ratified Arbitral Awards rendered by Dubai Courts or any court other than the Dubai Courts.

97. The Respondents have referred to Article 7(6) of the JAL in relation to the English Order. Article 7(6) requires that judgments rendered outside the DIFC be executed within the DIFC "in accordance with the procedure prescribed in the Rules of Court". The reference to the RDC is provided by Rule 45.8 which requires that the order from courts other than the DIFC Courts can only be enforced directly if an order requires payment of a sum of money and "an enactment provides that the decision may be enforced as if payable under an order of the DIFC Courts". Clearly, Articles 7(4) to 7(6) of the JAL and Article 24(1)(a) of the DIFC Courts Law are enactments which provide for foreign court decisions to be enforced within the DIFC. Accordingly, I find that the requirements in Rule 45.8 are satisfied. By virtue of Article 24(1)(a) of the DIFC Courts Law read with Articles 7(4) to 7(6) of the JAL, the DIFC Courts has jurisdiction to hear claims for the recognition and enforcement of foreign judgments.

98. Nonetheless, Articles 7(4) to 7(6) of the JAL do not apply in this matter. I will explain in detail in paragraphs [99] to [124].

Discussion on Issue 2

99. While the English MOG expressly states that “this memorandum has no binding legal effect. It does not constitute a treaty or legislation, is not binding on the judges of either party and does not supersede any existing laws, judicial decisions or court rules…”, I agree with the Appellant’s argument that the English MOG (given that it was signed by the then Head of the English Commercial Court in its official capacity) serves as a starting point to guide the Court in the recognition and enforcement of a foreign judgment. Paragraph 18 of the MOG provides the four basic common law requirements.

“18. The Commercial Court must have had jurisdiction, according to the DIFC rules on the conflict of laws, to determine the dispute. The DIFC Courts will generally consider the Commercial Court to have had the required jurisdiction only where the person against whom the judgment was given:

a. was, at the time the proceedings were commenced, present in the jurisdiction; or

b. was the claimant, or counterclaimant, in the proceedings; or

c. submitted to the jurisdiction of the Commercial Court; or

d. agreed, before commencement, in respect of the subject matter of the proceedings, to submit to the jurisdiction of the Commercial Court.”

100. A foreign judgment is not enforceable as such, but common law courts will allow a claim for the judgment sum to be filed and recognised and/or enforced if the basic four common law requirements in paragraph 18 of the English MOG for recognition and enforcement are met. It should be emphasised that the English MOG only applies to money judgments as provided in paragraph 1:

101. In the present matter, it is clear that the English Order fulfils at least one of the requirements in paragraph 18 to allow enforcement of English Commercial Court judgments in the DIFC Courts.

(a) The Respondents had submitted to the jurisdiction of the English Commercial Court when they acknowledged service of the Appellant’s Claim Form on 7 August 2014. On 11 February 2015, Tarek Shrayh, a lawyer from Al Tamimi & Company who represents the Appellants, filed a witness statement to say that the Respondents “intended to defend the Appellant’s claims in the English proceedings and expressly chose not to dispute the jurisdiction of the English Courts.” The Respondents have not disputed this fact.

(b) In the Loan Agreement, the Finance Documents and the Guarantee documents, the Parties had expressly agreed to submit disputes to the jurisdiction of the English Courts. The governing law clauses in the said documents also expressly provided that they would be governed by English Law. The Respondents have not disputed this fact.

102. Lord Bridge inOwensstated (at page 484) the common law position that a claim for enforcement is based on a legal obligation on the judgment debtor to comply with the judgment by a court of competent jurisdiction:

“A foreign judgment given by a court of competent jurisdiction over the defendant is treated by the common law as imposing a legal obligation on the judgment debtor which will be enforced in an action on the judgment by an English court in which the defendant will not be permitted to reopen issues of either fact or law which have been decided against him by the foreign court.”

103. In my view, this is founded on the concept of international comity which connotes courtesy or the need for reciprocity between foreign courts (Dicey, Morris & Collins,The Conflict of Laws, Sweet & Maxwell, 15^thed, page 5). In recognising foreign judgments, courts are expected to respect the reasoning of the foreign courts, without going into the merits of the decision. Lord Bridge’s judgment clearly establishes the principle that the enforced judgment becomes an independent judgment in which the defendant will not be allowed to reopen issues of fact or law which were decided against him.

104. Using Lord Bridge’s line of reasoning, a foreign judgment, when granted recognition in the DIFC Courts, therefore becomes a local judgment of the DIFC Courts and should therefore be treated as such by the Dubai Courts (amongst others).

105. The Respondents have referred to the opinion of the Advocate General of the Court of Justice of the European Communities (“ECJ”) inOwens Bank Ltd v Bracco and Anor(Case C-129/92). The Advocate General opined that decisions dealing with enforcement of foreign judgments in one state do not bind courts of another state in which the foreign judgment is sought to be enforced. However, it should be noted that the Advocate General was referring to the enforcement of judgments under the Brussels Convention which does not apply in the present matter. Furthermore, this was an opinion of the Advocate General and was not a judgment by the ECJ.

106. Accordingly, when seeking execution, the judgment creditor will be seeking enforcement of the DIFC Courts’ judgment, not the English judgment.

107. Case law shows that, when the DIFC Courts recognise and enforce a foreign judgment, the product is itself a judgment of the DIFC Courts which can therefore be executed under Article 7 of the JAL.

108. InClarke, Lord Kingarth at paragraph 31 statedobiter dictathat the ‘laundering’ of foreign judgments was permitted until the introduction of section 2A in the Foreign Judgments (Reciprocal Enforcement) Act 1933.

109. InMorgan Stanley, Deputy High Court Judge Poon followed Lord Kingarth’s dicta in Clarke. The Judgment Creditor had registered a default judgment obtained in the High Court of England (“the English Judgment”). The English Judgment was then registered in Singapore under the Reciprocal Enforcement of Commonwealth Judgments Act as a judgment of the High Court of the Republic of Singapore (“the Singapore Order”). As the Judgment Creditor was unable to recover the judgment sum in Singapore, it sought enforcement in Hong Kong after discovering that the Judgment Debtor had assets there. The Hong Kong Court of First Instance did not enforce the Singapore Order as there was insufficient proof that the Singapore Order was final and conclusive, a pre-requisite for enforcement under the Hong Kong Judgments (Facilities for Enforcement) Ordinance (“FJREO”), Cap. 9. However, the Court continued to evaluate the Singapore Order in the event it had met all the pre-requisites for enforcement. The Court re-affirmed the dicta inClarke, stating that it would have found that the Singapore Order was registrable if it had met all the pre-requisite for enforcement.

110. The Court also discussed the purpose of the FJREO. The Registrar had opined that it was not the purpose of the FJREO to provide for the registration of ‘secondhand judgments’. The Court disagreed with the Registrar’s findings and explained at paragraph 24:

“In my view, FJREO does not draw any distinction between: (a) a monetary judgment made by a superior court of a designated country and (b) a judgment made by that superior court in proceedings founded on judgment of a court in another country and having as their objective the enforcement of that judgment. Once the prerequisites for registration are fully met, both judgment (a) and (b) made by that superior court may be registered …”

111. InPoh Soon Kiat, the Singapore Court of Appeal took the view that a foreign money judgment could be sued upon in a common law action. Chan Sek Keong CJ discussed the law on the enforceability of foreign judgments in Singapore at [13]:

“The law on the enforceability of foreign judgments in Singapore is not in doubt, and is summarised in, inter alia, Dicey, Morris and Collins on the Conflict of Laws (Sir Lawrence Collins gen ed) (Sweet & Maxwell, 14^thEd,2006) (“Dicey, Morris and Collins”) at vol 1, para 14-020 as follows:

For a claim to be brought to enforce a foreign judgment, the judgment must be for a definite sum of money, which expression includes a final order for costs, e.g. in a divorce suit. It must order X, the defendant in the [enforcement] action, to pay to A, the claimant, a definite and actually ascertained sum of money; but if a mere arithmetical calculation is required for the ascertainment of the sum it will be treated as being ascertained; if, however, the judgment orders him to do anything else, e.g. specifically perform a contract, it will not support an action, though it may beres judicata. The judgment must further be for a sum other than a sum payable in respect of taxes or the like, or in respect of a fine or other penalty.”

112. InPoh Soon Kiat, the judgment sought to be enforced was not a foreign money judgment. Chan Sek Keong CJ found that it was instead a judgment setting aside the fraudulent transfer by the Appellant of his interest in a property. Consequently, he held that the judgment could not be enforced.

113. The Judge in the CFI found that “recognised foreign judgments” cannot be referred to the Dubai Courts for execution beyond the DIFC jurisdiction. He held that Article 7(2) of the JAL referred to judgments, decisions and orders rendered by the DIFC Courts and Arbitral Awards ratified by the DIFC Courts. However, he found that there was no reference at all to any foreign judgment recognised by the DIFC Courts. Accordingly, he found that Article 7(2) excluded “recognised foreign judgments”. He further held that “recognised foreign judgments” were only mentioned in Article 7(6).

114. The phrase “recognised foreign judgments” is not found in the JAL and there is no definition of this term. Justice Sir John Chadwick inBocimar International N.V. v Emirates Trading Agency LLC(CFI 008/2015) (“Bocimar”) also made reference to the use of this term in the judgment by the Judge. He expressed the view that when His Excellency used the term “recognised foreign judgment”, he was referring to judgments rendered outside the DIFC and did not refer to judgments rendered by the DIFC Courts. He adopted the observations of Justice Sir Richard Field who gave leave for this appeal. In particular, he adopted paragraphs 21 and 22 of the schedule of Justice Sir Richard Field’s order of 9 September 2015.

“21. It follows that recognised foreign awards are referred to in Article 7(2) because they would otherwise not be enforceable; and enforced foreign awards (that is awards in respect of which a DIFC Courts judgment has been entered) are not so referred to, for once foreign awards have been enforced by entry of a judgment in their terms, they become judgments of the DIFC Courts and so are already enforceable under Article 7(2). Similarly, there is no reference in Article 7(2) to foreign judgments because once they are recognised and enforced by action on the judgment, the Court issues a DIFC Courts judgment, which is itself enforceable under Article 7(2).

22. In my judgment, these submissions are seriously arguable and have a real prospect of success for the purposes of RDC 44.8. Accordingly, I grant the Claimant permission to appeal the finding of the learned judge in paragraph 52 of his judgment and the associated findings and reasoning in paragraphs 44 to 52.”

115. InBocimar, the Claimant sought the entry of judgment debts arising from two orders made in the High Court of England and Wales, Commercial Court, in 2014 (“the 2014 English Orders”). On 26 January 2016, the DIFC Courts of First Instance made an order by consent in relation to the judgment debts. Justice Sir John Chadwick held that “from and after 26 January 2016”, the Defendant had been a judgment debtor under an order of the DIFC Courts. His Honour further clarified that the Claimant would be seeking to enforce the judgment of the DIFC Courts instead of the 2014 English Orders. Accordingly, Article 7(2) of the JAL should apply.

116. I agree with the views of Justice Sir John Chadwick inBocimar. As the phrase “recognised foreign judgment” is not found in the JAL, I will not adopt the use of this phrase to avoid confusion. In the present matter, it is clear that the judgment sought to be enforced is a foreign money judgment, which is enforceable by this Court. Once it is enforced, it becomes an independent local judgment of this Court.

117. Accordingly, I respectfully disagree with the Judge’s analysis of Article 7(2) of the JAL. A foreign judgment which is enforced by this Court would become a local judgment and therefore falls within the scope of“judgments, decisions and orders rendered by the Courts”under Article 7(2) of the JAL.

118. The Respondents emphasise the distinction between DIFC Courts-rendered judgments and DIFC Courts-ratified arbitral awards. The Respondents submit that Article 7(6) of the JAL is the only article which deals with foreign judgments while ratified arbitral awards are mentioned in both Articles 7(2) and 7(6).

119. The Respondents further contend in their Supplementary Skeleton Argument that there is no enactment providing for English Commercial Court decisions to be enforced as if payable under an order of the DIFC Courts. In contrast, there is an enactment under Article 42(4) of DIFC Arbitration Law which provides as follows:

120. In my view, the Respondents are incorrect in drawing such a distinction between a recognised arbitral award and a foreign judgment simply based on the wording of both provisions in the JAL. The distinction, however, is that the recognition of a foreign award does not of itself give rise to a judgment in terms of the award. In this regard, a recognised award may not be enforced because enforcement has not been asked for or the Court has, in its discretion, refused enforcement.

121. There is a clear distinction between the enforcement of a recognised arbitral award and the enforcement of a judgment confirming a recognised arbitral award. Rule 43.75 (2) of the RDC clearly illustrates this distinction. It provides that once the Court has made an Order enforcing an arbitral award, the Court may enter judgment in the terms of the award.

122. Gary Born inInternational Commercial Arbitration(Wolters Kluwer, 2^nded, 2014) notes the difference between the enforcement of judgments confirming foreign arbitral awards and that of a recognised arbitral award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“the New York Convention”). The New York Convention only covers the enforcement of foreign arbitral award but not the enforcement of foreign judgments confirming foreign arbitral awards. He notes at page 3730:

“…it is well-settled that a foreign court judgment confirming an award may be recognized and enforced under national law regarding foreign judgments regardless of the award-creditor’s ability to enforce the award under local law. In one court’s words:

“The [New York Convention] in no way purports to prevent states from enforcing foreign money judgments, whether those judgments are rendered in the enforcement of an arbitration award or otherwise. …[S]ince the [New York Convention] itself and its enforcing legislation [FAA] go only to the enforcement of a foreign arbitral award and not to the enforcement of foreign judgments confirming foreign arbitral awards, New York state law is not preempted to the extent that it permits, regulates and establishes a procedure for the enforcement of the foreign money judgment.” (emphasis added)

123. There are also situations where enforcement of a recognised arbitral award is not sought by the parties. Instead, parties only seek to recognise an arbitral award. The provisions in the DIFC Arbitration Law parallel that of the New York Convention. Emmanuel Gaillard and Domenico Di Pietro (eds) inEnforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice(Cameron May, 2008) (at page 603) provide some useful guidance on such situations:

“In certain arbitral proceedings where declaratory awards are sought, either party or both parties apply for recognition of the award. In other cases recognition of an award may be sought to preclude a re-litigation of the dispute or to, ‘acknowledg[e] a status quo as ruled in an award rendered by an arbitral tribunal.’ In these cases enforcement is not sought (since there is nothing to enforce). The recognition of such declaratory awards may be sought before the relevant courts at the seat of arbitration. The losing party may equally seek recognition (but not enforcement) of the award.”

124. Accordingly, recognition of foreign awards need to be mentioned in Articles 7(2) and 7(6) of the JAL, otherwise they would not be enforceable. Enforced foreign awards where the Court has entered judgment in the terms of the award become judgments of the DIFC Courts and as such are already enforceable under Article 7(2) of JAL.

Discussion on Issue 3

Whether the presence of assets is a condition to the enforcement of foreign court judgments

125. I agree with the Judge that the enforcement of foreign court judgments within the DIFC in the JAL, the DIFC Courts Law and the RDC will be allowed whether or not there are assets within the DIFC. The presence of assets in the jurisdiction is not a pre-condition stated in Article 24(1) of the DIFC Courts Law, Article 7(6) of the JAL and Article 42 of the DIFC Arbitration Law. There is nothing in the JAL, the DIFC Courts Law and the RDC that prevents the entering of a judgment if there is evidence which proves that there are no assets in this jurisdiction.

126. The entry of a judgment and the process of levying execution (where presence of assets are concerned) are separate. The Federal Court of Australia inTraxys Europe SA v Balaji Coke Industry Pvt Ltd (No 2)[2012] FCA 276 explained this concept in paragraphs 82 and 83.

“82. There is nothing in the IAA that, as a matter of law, prevents an Australian court from directing the entry of judgment or the making of an order in the terms of the relevant award if there is evidence which proves that, at the time such a judgment is entered or such an order is made, there may be or, even, definitely are, no assets within Australia against which execution might be levied.

83. The ordinary entitlement of a successful party in litigation to a judgment is a fundamental entitlement and is not dependent upon that party proving to the satisfaction of the court that there are likely to be assets available to the judgment creditor at any particular time against which execution might be levied. The litigious process which culminates in the entry of judgment or the making of an order and the process of levying execution in order to obtain satisfaction in respect of that judgment or order are quite separate processes.”

127. InMeydan Group LLC v Banyan Tree Corporate Pte Ltd[CA-005-2014] (3 November 2014), this Court held that there was no requirement for the presence of the Respondents or the assets within the DIFC as a pre-requisite to recognition of a domestic arbitration award made within the Emirate of Dubai but outside the DIFC. Whilst the absence of assets may be a point for consideration by the Court in granting execution of an award, it is not a bar to enforcement. This principle was set out by this Court in paragraphs 33 and 43:

“33. The absence of assets in the jurisdiction may be relevant consideration to the exercise of discretion to grant execution. But even then a judgment creditor is entitled to levy execution against assets which come into the jurisdiction after the judgment is entered or which did not even exist at that time. Furthermore an enforcement order alone may be of value in the tracing of assets by, for example, oral examination:Fonu v. Demirelsupra at para 42. In any event, it is clear that there is no barrier to enforcement given the absence of assets within the jurisdiction. This appears to be accepted and in any event is fully explained inTraxys Europe SA v. Balaji Coke Industry (No 2)FCA 276.

…

43. It is right to say that there is no evidence that Meydan has assets within the DIFC (or otherwise within the jurisdiction of the DIFC Courts). But there is no basis for asserting that the application for enforcement within the DIFC has no independent purpose. I do not understand it to be accepted that no such assets exist or alternatively that no such assets (whether they currently exist or not) may come within the jurisdiction following an order for enforcement. In any event an order for enforcement would enable Banyan to engage the court’s machinery (in the form of say a freezing order or an oral examination) for obtaining details of any assets that are or become available.”

128. In my opinion, this principle similarly applies to the enforcement of a foreign judgment. The nature and whereabouts of the assets should only be dealt with after the local DIFC Courts judgment on the foreign judgment is obtained:Tassruff Mevdauti Sigorta Fonu v Demirel and another[2007] EWCA Civ 799.

129. From the perspective of the DIFC Courts, it is not wrong to use the DIFC Courts as a conduit jurisdiction to enforce a foreign judgment and then use reciprocal mechanisms to execute against assets in another jurisdiction. The DIFC Courts are not concerned with what happens in the Dubai Courts in which the Claimant seeks to enforce its judgment as it does not have the jurisdiction to dictate what they should do. However, the holder of a DIFC Courts judgment recognising a foreign judgment will seek enforcement of the DIFC Courts judgment at its own risk. Furthermore, the Respondents did not argue that the Dubai Courts would not enforce the judgment.

Whether there has been an abuse of process

130. An abuse of process has been explained by Lord Bingham in Attorney General

Attorney General

v Barker[2000] 1 FLR 789 as “using that process for a purpose or in a way significantly different from its ordinary and proper use.”

131. InHunter v Chief Constable of the West Midlands Police[1982] AC 529, Lord Diplock explained that the circumstances in which an abuse of process occurs are very varied and is not limited to fixed categories. A finding of an abuse of process depends on whether it would be manifestly unfair to a party or would bring the administration of justice into disrepute.

132. The Respondents have not demonstrated that the enforcement of the English Order would be manifestly unfair to them. The recognition and enforcement of the English Order would certainly not bring the administration of justice into disrepute. The Appellant has not brought any vexatious proceedings on this matter by concurrently pursuing several enforcements of the same order in different jurisdictions. In fact, there is benefit attainable by the Appellant once it obtains a local judgment upon recognition and enforcement of the English Order. This is not a situation where the “game is not worth the candle” or that the judicial and court resources are not used appropriately and proportionately:Jameel v Dow Jones and Co[2005] EWCA Civ 75. The Appellants are legitimately seeking a recourse by coming to the DIFC Courts for recognition and enforcement of the English Order. Hence, I do not agree with the Respondents that the use of the DIFC Courts as a conduit jurisdiction would amount to an abuse of process.

133. Accordingly, I find that there is no abuse of process in the Claimant’s application to recognise and enforce the English Order.

Conclusion and Costs

134. For the reasons set out above, I allow the Appellant’s appeal.

135. The Respondents submitted at the Appellate Hearing that their costs appeal was based on the success of this appeal. As the Respondents have been unsuccessful in this appeal, their costs appeal is accordingly dismissed, and the Respondents remain liable to pay the costs awarded by the Judge below.

H.E. Justice Omar Al Muhairi:

136. I have no comments to add and agree with the above Judgment of the Chief Justice.

Justice Sir David Steel:

137. My judgment on this appeal can be expressed very shortly.

138. The essential issue on this appeal is the nature of a judgment issued by the DIFC Courts on recognition and enforcement of a foreign judgment. It is not a “recognised foreign judgment”. Indeed that is not a term reflected in the legislation. It is in fact a domestic judgment and accordingly falls within the scope of Article 7(2) of the Judicial Authority Law. The comparison that the judge sought to draw with a ratified foreign award was based on a misconception since recognition of a foreign award does not of itself give rise to a judgment on the terms of the award. For that purpose the applicant must seek enforcement of the foreign award by obtaining a judgment: RDC 43.75. But since that is a discretionary remedy, it follows that there may be situations in which the foreign award has been recognised but there is no judgment in its terms.

Issued by:

Natasha Bakirci

Assistant Registrar

Date of Issue: 25 February 2016

At: 4pm

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You are here: BAILII >> Databases >> The Dubai International Financial Centre >> DNB Bank ASA v (1) Gulf Eyadah Corporation (2) Gulf Navigation Holdings Pjsc [2015] DIFC CA 007 (25 February 2016) URL: http://www.bailii.org/ae/cases/DIFC/2016/ca_007.html Cite as: [2015] DIFC CA 007, [2015] DIFC CA 7

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DNB Bank ASA v (1) Gulf Eyadah Corporation (2) Gulf Navigation Holdings Pjsc [2015] DIFC CA 007