ADDLESHAW GODDARD DOING BUSINESS IN THE GCC: A ROADMAP TO RESOLVING DISPUTES IN DUBAI

Transcription

1 ADDLESHAW GODDARD DOING BUSINESS IN THE GCC: A ROADMAP TO RESOLVING DISPUTES IN DUBAI

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3 CONTENTS 1 INTRODUCTION TO THE REGION COURT SYSTEM: A MULTI-FACETED JURISDICTION A GATEWAY TO INTERNATIONAL ENFORCEMENT RECENT DEVELOPMENTS YOUR CONTACTS...8 1

4 1 INTRODUCTION TO THE REGION With its ideal geographic location between the Asian, African and European markets, Dubai continues to fulfil its aim of establishing itself as the principal hub for international trade in the region. Alongside its growing reputation as an economic hub, it is also fast becoming the go to legal jurisdiction for parties seeking common law certainty in a civil law landscape. Together with its innovative introduction of more than 20 free zones, Dubai now has world class establishments for the promotion of investment and free trade not just for those in the region, but from across the globe. With the volume of trade, finance, people and deals flowing through the region, there follows the inevitable need for support at the transactional and dispute end from legal experts familiar with the region, its intricacies, cultural nuances and the kind of on the ground knowledge that gives clients a strategic advantage. Members of Addleshaw Goddard s Dubai commercial litigation team have acted on some of the most important cases in the DIFC Courts over recent years, and have been involved in making much of the new law in the jurisdiction particularly in relation to enforcement. We also act on a regular basis as advisors to international clients on bringing cases before the local courts, and work closely with carefully selected local advocates to obtain the most commercial outcome for clients, navigating the dual legal systems in the UAE achieving the best possible result. While the issue of where to bring a claim for recognition and enforcement of a foreign judgment or award is one of logistical and procedural complexity best analysed by legal experts familiar with the region, it is clear that transparency and enforcement options in the UAE and the wider GCC (under the various conventions between its member states) are steadily increasing. As such, whether before the Courts of the DIFC or onshore Dubai, or indeed, the wider GCC, the courts of the region should be carefully considered and assessed as part of any client s international litigation and/or enforcement strategy. This roadmap provides a high level overview of the legal system in the UAE, one that is both innovative and reliable but can be equally complex and frustrating to those unaware of its idiosyncrasies and customs, and how it can best be negotiated to help clients achieve their international objectives. 2

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6 2 COURT SYSTEM: A MULTI-FACETED JURISDICTION Dubai is one of the few jurisdictions in the world which offers parties both a civil and common law jurisdiction with a civil law Arabic language system operated onshore and an English language common law Court operating in the Dubai International Financial Centre (the DIFC), a federal financial free zone established in Choosing the best forum for a governing law and jurisdiction clause, the resolution of any dispute which touches the region or a place to enforce an arbitration award or judgment can save clients considerable time and costs. Where that forum is the GCC, Addleshaw Goddard (Middle East) LLP s has the extensive experience in the region to get the best result before its various courts and navigate the practical application of international and local laws which, alongside our internationally recognised service quality, means we can assist in achieving the best possible result. Practical considerations when using the DIFC Courts include: Proceedings are conducted in English and the Courts adopt a precedent based approach which will be more familiar to those from common law jurisdictions; The DIFC Courts will recognise and apply the parties choice of governing law; Legal costs are recoverable (at the Court s discretion); Common law remedies not usually available in the region (such as anti-suit injunctions, freezing orders and worldwide disclosure orders) are available; and Arbitration Awards will be recognised and enforced in accordance with the New York Convention. The DIFC Courts Not only is the DIFC a financial hub for the region, providing a platform for business and financial institutions to interact with other global entities, it also has its own English speaking common law court system and independent regulator (the Dubai Financial Services Authority). Diagram 1: The DIFC Courts structure COURT OF APPEAL The DIFC Courts offer a ground-breaking service in the region, allowing international parties access to justice in the familiar setting of a common law English language court. The total value of claims and counterclaims before the DIFC Court in 2016 was USD 1.59 billion with cases heard by judges from around the globe including the UAE, UK, Malaysia, Singapore and Australia. COURT OF FIRST INSTANCE 4

7 Dubai onshore Courts (the Dubai Courts) The UAE legal system is a civil law regime. Shari ah law is a main source of Dubai legislation and is embodied into the laws governing civil and commercial relationships. Where matters are not specifically codified into statute, the Dubai Courts will refer to Shari ah law and custom for guidance. Unless specified otherwise in an agreement between the parties, the default forum for disputes relating to contracts concluded or performed in onshore Dubai is the Dubai Court. There is no judge made law, or binding precedent as in common law jurisdictions, and whilst there may be a consistent line of jurisprudence in relation to a dispute, the role of the Dubai Courts is to apply the law on a case by case basis by assessing the facts of a case against the black letter law. Key elements of onshore Dubai procedure are: Proceedings are conducted in Arabic by way of written memoranda rather than advocacy; Only a limited class of advocates (including UAE nationals but not international consultants) can appear before the Dubai Courts; There is no binding precedent, judges retain a broad discretion when applying the law to the facts of a case and parties have an automatic right to appeal; Where a matter is considered one of public order or policy, the Dubai Courts may reject a foreign law agreed by the parties and apply UAE law; Only nominal legal costs are recoverable; Parties cannot appoint their own expert witnesses (if an expert witness is required, they will be appointed by the Court from a list of Court registered experts); and There is no concept of without prejudice in relation to any attempts by the parties to settle a dispute amicably, meaning that these can be referred to before the Court with the invitation to draw inferences as to a parties faith in the strength of its case. Diagram 2: The Dubai Courts structure COURT OF FIRST INSTANCE COURT OF APPEAL COURT OF CASSATION 5

8 3 A GATEWAY TO INTERNATIONAL ENFORCEMENT Onshore enforcement of arbitration awards Dubai has no specific arbitration law and so domestic awards must be ratified by the Dubai Courts prior to enforcement. Once ratified, the award must then be enforced by the Court, which may be refused if the Civil Code 1 was not adhered to, it contravenes UAE public policy or a procedural irregularity is found to exist. Despite being a signatory to the New York Convention, this ratification process has also been applied to foreign arbitration awards. The grounds upon which the Dubai Courts may refuse to ratify or enforce an award can be broad, meaning that it can take several years for an award creditor to effect enforcement if a debtor resists enforcement all the way to the Court of Cassation. Enforcement in the DIFC The uncertainty around whether a New York Convention award would be enforced in the Dubai Courts (and in other GCC jurisdictions) was unattractive to foreign investors and counterparties. By Article 7 of the Judicial Authority Law 2 (which established the jurisdiction of the DIFC Courts), the DIFC and Dubai Courts are obliged to enforce judgments and arbitration awards ratified by the other court. In principle, therefore, this reciprocal arrangement permits a party to obtain an order for ratification and enforcement of a foreign arbitration award in the DIFC Courts and then seek execution in the Dubai Courts. In a key development, Justice Sir John Chadwick confirmed in Egan v Eava 3 that the DIFC Courts have jurisdiction to enforce a foreign award, whether or not the defendant had any assets in the DIFC and whether or not there was any other connection with the DIFC. In a further significant development, in DNB Bank v Gulf Eyadah 4, the DIFC Courts found that they could also legitimately be used as a conduit for the enforcement of foreign judgments and not just arbitration awards. This is potentially significant as there are very limited circumstances in which an onshore Dubai Court will recognise or enforce a foreign judgment. Where the conduit arrangement is followed, this could lead to the interesting situation whereby a foreign judgment is executed in the onshore Dubai Courts which those Courts would not necessarily have enforced directly. The introduction of the DIFC Courts have improved the enforceability of awards in the region by adopting an arbitration friendly approach and using the statutory provisions in place between it and the onshore Dubai Courts to facilitate enforcement in the onshore Courts. 1 Law No 5 of 1985 concerning the issuance of the civil transactions law in the UAE 2 Law No. 12 of [ARB ] 4 [CA ] 6

9 4 RECENT DEVELOPMENTS The Joint Judicial Committee Up until 2016, the DIFC Courts ruled on their own jurisdictional boundaries, pushing those limits in accordance with DIFC statute and judge-made law and the Judicial Authority Law. However, in June 2016, a decree was issued by the Ruler of Dubai establishing a judicial tribunal to adjudicate on conflicts of jurisdiction between the two systems (the Joint Judicial Committee). We continue to monitor the judgments being issued by the Joint Judicial Committee carefully in order to ensure that clients receive the most up to date strategic advice regarding to the relationship between the two jurisdictions, and which is the most appropriate in which to commence a claim whether a standalone claim or for recognition and enforcement. The Current Position ADGM The Newcomer In addition to the DIFC Courts, the Abu Dhabi Global Market in Abu Dhabi was established in 2013 with the aim of becoming a broad-based international financial centre for local, regional and international institutions. Like the DIFC, the ADGM has its own law-making powers and Court system. However, unlike the DIFC, English common law is directly applicable in the ADGM with a wide-range of English statues on civil matters also applicable. Whilst the ADGM Courts remain in their infancy, it appears that many of the caveats and intricacies of the relationship between the on-shore and free zone courts have been ironed out by way of statute meaning that where (arguably) there has been some erosion of the certainty in the Courts of Dubai, the ADGM might avoid similar issues. Regardless of the establishment of the Joint Judicial Committee, the DIFC Courts now have a settled jurisprudence that requires them to recognise and enforce domestic and foreign arbitral awards as well as foreign judgments even in circumstances where the award or judgment debtor has no assets in the DIFC. We have acted on cases where this has included assets in the wider Middle East (and across the globe) and in Africa. As very few of its judgments are published, it is less clear how the onshore courts are treating such judgments but commentary suggests some DIFC judgments are proceeding through the execution courts and others are being held up. Regardless of the execution court s approach, the DIFC Courts have a number of effective enforcement means against judgment debtors whether or not they have assets in the DIFC including an ability to issue worldwide disclosure orders. As such, effective options are available to award and judgment creditors in the DIFC that have previously been absent from jurisdictions in the GCC. 7

10 5 YOUR CONTACTS PAUL HUGHES Legal Director t: e: p.hughes@aglaw.com CHARLOTTE BHANIA Associate t: e: c.bhania@aglaw.com Paul specialises in joint venture and shareholder disputes as well as general contractual disputes and commercial fraud. He is regularly instructed on DIFC enforcement actions and has recently acted on two leading DIFC Court cases creating new law in the process. Paul s practice is split between international arbitration and the DIFC Courts which he combines with in-depth knowledge of local UAE law. He has also acted on a number of regulatory investigations and inquiries (both public and private). Paul s experience includes: Brookfield Multiplex v DIFC Investments and another (CFI ) Instructed by Brookfield Multiplex to bring anti-suit proceedings against the DIFC Authority. Brookfield argued that commencing a summary expert procedure in the local Dubai courts represented the commencement of proceedings in breach of the arbitration agreement. In doing so, successfully secured protective undertakings from the Defendant to discourage further pursuit of onshore court proceedings; Pearl Petroleum & Others v Kurdistan Regional Government of Iraq (ARB ) Instructed by the KRG to challenge an order issued by the DIFC Court for recognition and enforcement of two partial arbitration awards (issued in London under LCIA Rules). We were instructed to apply to set aside those orders and succeeded in challenging the lawfulness of service; Instructed by UK law firm to bring confidential enforcement proceedings in the DIFC arising out of a high value arbitration award; and Instructed by several UK and European retailers to advise on the legality of franchise and commercial agency agreements and optimal forum for pursuing disputes. Advising on strategic approach given multijurisdictional nature of disputes. Charlotte is an Associate at Addleshaw Goddard (Middle East) LLP. She is experienced in advising international clients on a broad range of domestic and cross-border litigation and alternative dispute resolution matters from pre-action to enforcement. Charlotte s experience includes: Brookfield Multiplex v DIFC Investments and another (CFI ); Pearl Petroleum & Others v Kurdistan Regional Government of Iraq (ARB ); Acting for a number of international financial institutions in Europe and the Middle East in relation to multiagency inquiries, including conducting internal investigations into alleged violations of US sanctions and reporting to the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury and the US Department of Justice; Acting for a defendant in a claim under s.90 of the English Financial Services and Markets Act 2000; Advising a Part 20 defendant airline in an antitrust damages claim before the English High Court arising from the European Commission s Decision in relation to the air cargo cartel; Successfully defending the joint liquidators of a company in litigation brought against them by multiple claimants following the disposal of assets by, amongst others, running a technical defence available to insolvency practitioners under section 234 of the Insolvency Act 1986; and Assisting on a US$1 billion breach of warranty claim before the LCIA. 8

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