The Enforcement of Onshore ICC Awards in ADGM: A recent ADGM Judgment
Abu Dhabi / Dispute Resolution
John GaffneySenior Counsel,Dispute Resolution
Malak NasreddineAssociate,Dispute Resolution
In A8 v B8 [2023] ADGMCFI 0015, the ADGM Court of First Instance considered an application for recognition and enforcement of an ICC arbitral award dated 24 January 2023 (the “Award”) pursuant to section 60(1)(c) of the ADGM Arbitration Regulations 2015, as amended in December 2020 (“Arbitration Regulations”) in circumstances where the Respondent contested the jurisdiction of the Court to try the claim.
The parties entered into a construction contract on 20 November 2015 (the “Agreement”), pursuant to which the Claimant appointed the Respondent to design and construct a building in Abu Dhabi. The Agreement contained an agreement to arbitrate under the ICC Rules seated in Abu Dhabi. The governing law of the Agreement was UAE law. A dispute arose between the parties, and the Claimant commenced ICC arbitration proceedings against the Respondent. The arbitral tribunal rendered the Award in favour of the Claimant.
The Respondent filed an application with the onshore Abu Dhabi Court of Appeal (“ADCA”) to set aside the Award. In turn, the Claimant filed an application with ADCA to ratify and recognise the Award. ADCA dismissed both applications on the basis that exclusive jurisdiction resided with the ADGM Courts because the ICC representative office is based in the ADGM.
The parties both appealed the decisions of ADCA, respectively. The Abu Dhabi Court of Cassation (“ADCC”) dismissed both appeals and affirmed that the location of the ICC office in the ADGM conferred jurisdiction over the Award on the ADGM Courts. The Respondent filed a ‘Reversal Application’ before ADCC to reverse its judgment and to stay enforcement of the Award. ADCC dismissed the Reversal Application on the basis that the ADGM Courts have exclusive jurisdiction to determine any challenge to the Award.
Accordingly, the Claimant sought the recognition and enforcement of the Award before the Court pursuant to section 60(1)(c) of the Arbitration Regulations. The Respondent sought a declaration pursuant to Rule 38 of the Court Rules that the Court did not have jurisdiction and asserted that the Claimant’s application amounted to an abuse of process.
The Court dismissed the Respondent’s assertion that the Claimant’s application was an abuse of process.
The Court granted the Claimant’s application for the recognition of the Award. The Court referred to Justice Sir Andrew Smith’s observation in A4 v B4 [2019] ADGMCFI 0007 [12], noting that the language of section 61(1) of the Arbitration Regulations is in mandatory terms, and the Court is required to recognise and enforce an award unless one of the grounds for refusal of recognition and enforcement under section 62(1) of the Arbitration Regulations is satisfied. The Court noted that none of the usual grounds under section 62 of the Arbitrations Regulations were invoked in the instant case.
The Court granted the Claimant’s application for the enforcement of the Award and dismissed the Respondent’s jurisdictional objection. The Court additionally confirmed that the presence or otherwise of assets of the Respondent in the ADGM was an “arid debate” because this was not a pre-condition to the grant of an enforcement order, referring to a decision of the DIFC Courts in Meydan Group LLC v Banyan Tree Corporate Pte Ltd, CA-005-2014. In Meydan, the DIFC Court of Appeal rejected the argument that there was a requirement for the presence of assets within the DIFC as a prerequisite to recognition and enforcement of an award in the DIFC. The Court agreed with this approach and noted that there is no established international jurisprudence requiring the existence of assets as a necessary prerequisite to an enforcement application of an award, albeit in practice parties with an award in their favour inevitably seek enforcement in the jurisdiction in which the majority of the award debtor’s assets are perceived to exist.
However, the Court declined to direct the ADGM Registry to affix the “executory formula” to its order, such as to facilitate the enforcement of the order in other UAE Courts. While the Court had sympathy with the Claimant’s position, it held it was not in a position to grant the request to affix the executory formula.
The Court noted the mandatory wording of Article 13(14) of the Founding Law, which in the view of the Court “does not permit factual circumvention of the law therein laid down, it being unequivocally stated that the enabling Article 13(13) “shall not apply to a judgment or order rendered by the Global Market’s Courts in respect of the recognition or enforcement of…(b) any arbitral award rendered by a tribunal where the seat is outside the Global Market”. Thus, the effect of Article 13(14) of the Founding Law was to preclude use of the ADGM Courts as a ‘conduit jurisdiction’ for the enforcement of foreign judgments and arbitral awards.
The Court explained that this fundamental principle was reflected in a specific amendment to Practice Direction 10.15 concerning enforcement of the Court’s orders and judgments outside the jurisdiction, which states that the ADGM Registry “shall not affix an executory formula, for the purpose of recognition and enforcement in any other jurisdiction, to an order or judgment rendered by the Court in respect of the recognition or enforcement of: (b) any arbitral award rendered by a tribunal where the seat is outside the jurisdiction.”
Accordingly, the Court declined to direct the ADGM Registry to affix the “executory formula” to its order. However, the Court confirmed that it remained open to the Claimant to utilize the Court’s order as the basis for a renewed enforcement (or similar) application elsewhere.
The Abu Dhabi Courts have now confirmed that the location of the ICC office in the ADGM confers exclusive jurisdiction on the ADGM Courts to determine a challenge to an ICC award issued in Abu Dhabi, and the Court’s judgment is notable for a number of reasons. First, the Court has held that the language of section 61(1) of the Arbitration Regulations is drafted in mandatory terms, meaning that the Court is required to recognise and enforce an award unless one of the grounds for refusal of recognition and enforcement under section 62(1) of the Arbitration Regulations is satisfied.
Second, the Court has clarified that the presence or otherwise of a party’s assets in the ADGM is not a pre-condition to the grant of an order recognising and enforcing an Award within the ADGM.
Third, the Court has determined that the effect of Article 13(14) of the Founding Law in precluding the use of the Court as a ‘conduit jurisdiction’ for the enforcement of foreign judgments and arbitral awards, is such that the ADGM Courts may not be used to enforce a non-ADGM arbitral award outside ADGM. The Court confirmed that it does not have the latitude to qualify the terminology of the Founding Law, nor to construe the wording of Article 13(4) otherwise.
For further information,please contact John Gaffney and Malak Nasreddine.
Published in September 2023
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