What Impact will the New Civil Procedures Law have on the enforcement of Foreign Arbitral Awards in the UAE?
Dispute Resolution / UAE
Malak NasreddineAssociate, Dispute Resolution
Bilal SyedTrainee Solicitor,Dispute Resolution
On 2 January 2023, the UAE Federal Decree Law No 42 of 2022 promulgating the Civil Procedures Law (“New Civil Procedures Law”) came into force. The New Civil Procedures Law repealed the UAE Federal Law No 11 of 1992 on Civil Procedures and other Federal legislation that contradicts the provisions of the New Civil Procedure Code. This article will briefly discuss the effect of New Civil Procedures Law on the process of enforcing foreign arbitral awards in the UAE.
Before the enactment of the New Civil Procedures Law, the enforcement of foreign arbitral awards was governed by the Cabinet Resolution No. 57 of 2018 Concerning the Executive Regulations of Federal Law No.11 of 1992 on the Civil Procedure Law (“Cabinet Resolution”). Articles 85 and 86 of the Cabinet Resolution specified the conditions for enforcing a foreign arbitral award in the UAE.
Article 222(2) of the New Civil Procedures Law extends the time limit to issue the order of enforcement to five working days from the date of the award creditor’s submission.
On its entry into force, the New Civil Procedures Law repealed the UAE Federal Law No 11 of 1992 on Civil Procedures (“Old Civil Procedures Law”) (see Article 2 of the New Civil Procedures Law). While the New Civil Procedures Law did not expressly repeal the Cabinet Resolution, it is arguable that the Cabinet Resolution is deemed to be repealed. This is because the Cabinet Resolution was issued pursuant to (and formed part of) the Old Civil Procedures Law, which is now repealed. And the New Civil Procedures Law does not provide to the contrary. Thus, it is expected that the New Civil Procedures Law will now govern the enforcement of foreign arbitral awards before the UAE courts for enforcement proceedings on or after 2 January 2023.
As will be seen, the New Civil Procedures Law incorporates similar provisions to Articles 85 to 86 of the Cabinet Resolution. First, Article 222(1) of the New Civil Procedures Law reaffirms Article 85(1) of the Cabinet Resolution, and confirms that a foreign award may be enforced in the UAE pursuant to the same conditions for enforcement under the Law of the foreign country.
Second, Article 222(2) of the New Civil Procedures Law is also similar to Article 85(2) of the Cabinet Resolution, albeit with some minor changes. Article 222(2) confirms that, in the event that an award creditor seeks to enforce a foreign award, it must file a petition (or an ex-parte petition, as applicable) directly with the execution judge in the relevant Emirate. The procedure for filing petitions for enforcement remains the same as the former regime under the cabinet Resolution. However, Article 85(2) of the Cabinet Resolution obliged the execution judge to render an order for enforcement within three days from the date of the award creditor’s submission. Article 222(2) of the New Civil Procedures Law extends the time limit to issue the order of enforcement to five working days from the date of the award creditor’s submission.
Third, Article 222(2), read together with Article 222(3) of the New Civil Procedures Law, provides a number of conditions for the enforcement of foreign arbitral awards in the UAE, which are similar to the conditions set out in Article 85(2) of the Cabinet Resolution. Those are:
First, the UAE Courts do not have exclusive jurisdiction to try the subject matter of the dispute.
Second, the arbitral tribunal had jurisdiction to render the arbitral award in accordance with the law of the country in which it was issued and duly endorsed.
Third, the parties to the arbitration were properly summoned to attend and were duly represented.
Fourth, the foreign arbitral award acquired the force of res judicata in accordance with the laws of the foreign country it was issued in, provided that the applicant submits a certificate that the arbitral award has acquired the legal effect of res judicata or the same was stipulated in the arbitral award itself.
Fifth, the arbitral award does not violate the laws, public policy or morals of the UAE, and does not conflict with a judgment or order made by the UAE courts.
Finally, the award of the arbitrators must have been made on an issue that is arbitrable under UAE laws, and must be enforceable in the country in which it was issued.
Similar to Article 85(2) of the Cabinet Resolution, Article 222(2) confirms that the order of the execution judge is subject to appeal.
The New York Convention provides a regime for the enforcement and recognition of arbitral awards within the UAE and other contracting states, ensuring the enforcement of foreign arbitral awards in the UAE is in line with international standards.
Generally, the UAE courts are guided by the bilateral and multilateral conventions and/or treaties, to which the UAE is a signatory, for its decision on whether to recognise and enforce a foreign award. The UAE acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention") in 2006 by virtue of Federal Decree No. 43 of 2006. The New York Convention provides a regime for the enforcement and recognition of arbitral awards within the UAE and other contracting states.
In a similar fashion to Article 88 of the Cabinet Resolution, Article 225 of the New Civil Procedures Law reaffirms that Articles 222 and 223 shall apply “without prejudice to the provisions of conventions and agreements between the State and other countries regarding the execution of foreign judgments, orders and instruments”. This confirms that the application of the New Civil Procedures Law for the enforcement procedures of foreign arbitral awards in the UAE is without prejudice to the provisions of conventions, to which the UAE is a signatory. This includes the New York Convention.
Article V of the New York Convention provide a number of conditions for the recognition and enforcement of foreign arbitral awards. It is prudent for the award creditor to consider Article V before it submits its petition to the Execution Judge.
Article V(1) confirms that the court may refuse enforcement of the foreign award if the award debtor provides proof that (a) the parties to the arbitration agreement were under some incapacity or the arbitration agreement is not valid under the applicable law, (b) the award debtor was not given proper notice of the appointment of the arbitrator or the arbitration proceedings, or he was unable to present his case, (c) the award deals with a dispute that not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, (d) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties (or, in the absence of such agreement, the laws of the country), and (e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority (in the country which the award was made).
Article V(2) further confirms that the court may refuse enforcement of the foreign award if it finds that (a) the subject matter of the dispute is not capable of settlement by arbitration under UAE laws, and (b) the recognition and enforcement of the award would be contrary to the public policy of the UAE. This is in line with Article 222(2) of the New Civil Procedures Law.
The New Civil Procedures Law continues the welcome trend set by the Cabinet Resolution in ensuring the swift and efficient enforcement of foreign arbitral awards by the UAE courts.
For further information,please contact Malak Nasreddine and Bilal Syed.
Published in March 2023.
