India and UAE - Reciprocity for the Enforcement of Court Judgments
India Focus
India and the United Arab Emirates (the “UAE”) have shared trade relations over the past several decades which have proliferated by leaps and bounds in recent years.
Law Update: Issue 370 - From Africa to Asia: Legal Narratives of Change and Continuity
Naief YahiaPartner,Head of Litigation - Dubai
Rashid KhanSenior Associate,Dispute Resolution
Ankoosh Mehta Partner,Cyril Amarchand Mangaldas
Abhileen Chaturvedi Partner,Cyril Amarchand Mangaldas
Sarah Navodia Principal Associate,Cyril Amarchand Mangaldas
Sayyad Saqib Ali Associate,Cyril Amarchand Mangaldas
India and the United Arab Emirates (the “UAE”) have shared trade relations over the past several decades which have proliferated by leaps and bounds in recent years. Both nations have sought to strengthen these ties particularly, through the Comprehensive Economic Partnership Agreement made between the two countries in 2022.
For the calendar year ending December 2022, the UAE was India’s second largest trading partner, with exports and imports of around USD 31.33 billion and USD 52.65 billion respectively. Besides trade, the UAE was amongst the top 10 investing countries in India as at March, 2024. [1] At the same time, the UAE is also a preferred destination for Indian investment with India’s direct investments standing at USD 15.08 billion as at July, 2024. [2] The increase in trade and investments between the two nations would also mean more disputes among contracting parties from each country. With the idea that these confrontations should not in any way hinder the economic growth, the UAE and India have amended existing laws and created institutions to develop an expeditious dispute resolution process.
At a more bilateral level, pursuant to its powers under Explanation 1 of Section 44A of the Indian Code of Civil Procedure, 1908, the Indian Department of Legal Affairs (under the Ministry of Law and Justice), vide Notification G.S.R. 38(E) in the Extraordinary Gazette dated 17 January 2020 (the “Notification”), declared the UAE as a reciprocating territory giving effect to an agreement on judicial cooperation [3], which was signed by the UAE and India in 1999 (the “Treaty”) but never formally implemented in India.
As such, judgments of the following courts became directly enforceable in India:
the UAE Federal Supreme Court.
all Federal, First Instance and Appeals Courts in the Emirates of Abu Dhabi, Sharjah, Ajman, Umm Al Quwain and Fujairah.
the Abu Dhabi Judicial Department.
the Dubai Courts.
the Ras Al Khaimah Judicial Department.
the Courts of Abu Dhabi Global Markets.
the Courts of Dubai International Financial Center.
The term “Reciprocating territory” under Section 44A means any country or territory outside of India, which the central government of India may, by notification in the official gazette, declare to be a reciprocating territory for the purposes of this section. Pertinently, there are only a handful countries that have been recognized by the government of India as being a “Reciprocating Territory”. Recognition by India of the UAE as a “Reciprocating Territory” is significant and indicates a likelihood of the greater exchange of business in the future.
[1] The data on trade and investment has been taken from https://dashboard.commerce.gov.in/commercedashboard.aspx and FDI Statistics | Department for Promotion of Industry and Internal Trade | MoCI | GoI (dpiit.gov.in)[2] The data on the overseas direct investment has been taken from https://dea.gov.in/overseas-direct-investment[3] The Agreement between the Republic of Indian and the UAE on juridical and judicial cooperation in civil and commercial matters for the service of summons, judicial documents, commissions, execution of judgments and arbitral awards.
The Notification was not only a positive indicator for the partnership between India and the UAE, but also provided Indian and UAE businesses/investors greater certainty in relation to disputes based in either of the jurisdictions.
Prior to the Notification, a party wishing to enforce a UAE Court judgment in India was required to commence fresh proceedings in the Indian Courts. This meant the enforcing party would effectively have to re-argue the merits of the case casting some uncertainty on the eventual outcome. Judgment debtors with assets in India could have taken advantage of this lacuna to delay enforcement of final judgments even where it was given the opportunity to the represent itself.
Under existing legislation in the UAE "An order may be made for the enforcement in the State of judgments and orders made in a foreign country on the same conditions laid down in the law of that country for the execution of judgments and orders issued in the State" (Article 222 of UAE Federal Decree by Law No. (42) of 2022 Promulgating the Civil Procedure Code). The Notification has also affirmed the required reciprocity between the two countries for an Indian Court judgment to be enforceable in the UAE and such enforcement actions have already been successfully completed.
IndiaAt the time of writing, the enforcement avenue between India and the UAE has been utilised in the context of the enforcement of a commercial judgment of a UAE Court in India. The Indian Courts have also considered several important questions arising out of this development.
In a recent case concerning a matrimonial dispute that arose in Dubai, UAE [4], the Bombay High Court recognised the Notification and permitted the execution of a Dubai Court judgment.
In 2021, the Kerala High Court [5] considered whether the Notification has retrospective effect when determining an application to enforce a UAE judgment which predated the Notification. The Court held that the Notification was declaratory in nature and so, based on settled principles of law, it should have retrospective effect unless there was anything expressed in the Notification to the contrary. This was reinforced by the same Court’s decision in a later case. [6]
[4] Pearl Chesson vs. Sean Paul Lawrence 2020 SCC OnLine Bom 5471 [5] Kadheeja Kalladi Puthanpurayil v. Mohammed Nazir Abdul Aziz 2021 KLT 3 792[6] The Green Branches Trading Co. (LLC) v. Shabana Trading 2022 SCC OnLine Ker 6186
UAEIn the UAE, Indian Court judgments have also been successfully enforced by virtue of the Notification, which demonstrates the UAE Courts’ positive treatment of the agreement and reciprocity between the two jurisdictions. In enforcing Indian Court judgments, the UAE Courts would seek to ensure the judgment in question does not fall foul of the requirements of the Treaty. Under Article XX, the judgment shall not be recognised or executed any of the following apply:
the judgment is not conclusive and executable;
the judgment has not been issued by a Court of competent jurisdiction;
the judgment has not been issued on the merits of the case;
it appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognise the law of the enforcing party in cases in which such law is applicable;
if the proceedings in which the judgment was obtained are opposed to natural justice;
the judgment has been obtained by fraud;
the judgment sustains a claim founded on a breach of any law in force, or is contrary to the constitutional rules or the principles of public order in the UAE;
the judgment contravenes the rules concerning the legal representation or persons suffering from lack of capacity in the UAE;
the judgment was issued without the defaulting party having been duly summoned in accordance with the rules applicable in the UAE and having not participated in the proceedings;
the dispute in which the judgment was issued by the Indian Courts is the subject of a case pending before the UAE Courts (between the same parties and involving the same cause of action) which was raised earlier than the case before the Indian Courts provided the Indian Court was competent to hear and decide upon it.
It is notable that whilst the applicable procedures for the recognition or execution would be subject to the laws of the UAE (Article XI), the UAE Courts would consider the requirements of the Treaty when deciding whether to enforce an Indian Court judgment.
IndiaThe enforcement of foreign arbitral awards in India is governed by Part II of the Arbitration and Conciliation Act 1996.
Also, as a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (the “New York Convention”), India has declared the following reservations for recognizing and enforcing foreign arbitral awards in India under the New York Convention:
the subject arbitral award must have been issued in another New York Convention signatory state;
the underlying dispute must have arisen out of a legal relationship, whether contractual or otherwise, which is considered a commercial relationship under Indian law;
the territory in which the arbitral award was issued must be a “reciprocating territory”. [7]
[7] Article I (III) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958.
Whilst India and the UAE are both signatories to the New York Convention, in order for a UAE seated arbitral award to be directly enforced in India, a notification under Section 44 (b) [8] of the Indian Arbitration and Conciliation Act, 1996 must be published in India’s official gazette. This has not yet occurred and therefore UAE seated arbitral awards (including DIFC and ADGM seated awards) are not yet directly enforceable in India. For the avoidance of doubt, the Notification does not change this position.
UAEIn the UAE, an arbitral award arising out of Indian seated arbitration proceedings would be enforceable under either the New York Convention (since both countries are signatory states) or the Treaty, depending on which the UAE court considers more relevant. Given the specific focus on the enforcement of arbitral awards, it is more likely that the provisions of the New York Convention would be applied [9]. The requirements set out in the Treaty (at Article XXV) do not go beyond those set out at Article V of the New York Convention.
[8] Section 44 of the Arbitration and Conciliation Act, 1996: In this Chapter, unless the context otherwise requires, “foreign award” means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th day of October, 1960—a) in pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies, andb) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the Official Gazette, declare to be territories to which the said Convention applies.
[9] In Cassation Appeal No. 1337/2023 (Commercial), the Dubai Court of Cassation upheld the decision to enforce an arbitral award rendered in India, in accordance with the provisions of the New York Convention.
For completeness, Article XXV of the Treaty requires that:
the award of arbitrators is based on a written agreement of the parties to the dispute to submit to arbitrators for determination of any specific or future dispute arising out of legal relations;
the award is made on matters arbitrable according to the law of the UAE unless it is contrary to UAE public policy;
the party requesting the enforcement of the award produces a copy of the award accompanied by a certificate of the competent judicial authority in India to the effect that the award is executable; and the party requesting the enforcement provides a certified copy of the arbitration agreement.
The Notification has opened an avenue for enforcement of UAE Court judgments in India. Parties with final civil/commercial judgments from the UAE Courts can directly file an execution application in the Indian Courts without having to file a fresh suit first. The primary benefit of the Notification is a significant saving of time and costs for UAE Court judgment creditors. The same should be true for Indian judgment creditors wishing to enforce Indian Court judgments in the UAE. The UAE Courts would have regard for the enforcement requirements set out in Article XX of the Treaty and, in the case of an Indian seated arbitration award, the UAE Courts would more likely apply the requirements of the New York Convention, given that both countries are signatory states and because the New York Convention has a narrower focus on the enforcement of arbitral awards. In any event, the requirements of the Treaty do not go beyond those set out in the New York Convention.
The declaration of UAE as a reciprocating territory shall also facilitate recovery proceedings undertaken by banks and financial institutions in UAE against defaulting debtors that are located or have assets in India. It could also potentially open up avenues under the Insolvency and Bankruptcy Code 2016 for enforcement of a UAE court judgment in India.
The Notification, in addition to the commercial disputes, is also of relevance to family law matters where UAE Court judgments could be enforced against an Indian national and/or resident. Parties can now enforce UAE Court judgments in India as if they were judgments handed down by the Indian family Courts themselves provided this does not give rise to any contravention of public policy in either jurisdiction. This significantly reduces the risk of lengthy, duplicated and expensive proceedings.
This article was written in collaboration with Cyril Amarchand Mangaldas. For further information,please contact Naief Yahia and Rashid Khan.
Published in September 2024
