United Arab Emirates: DIFC Courts Sign A Memorandum Of Guidance For The Reciprocal Enforcement Of Money Judgments And A Memorandum Relating To References Of Questions Of Law With Singapore

The UAE and Singapore have, in recent years, enjoyed a strong relationship. Bilateral trade between Singapore and the UAE has jumped from S$4.4 billion in 2001, reaching S$11.6 billion in 2009 and is expected to have increased further since. More than 300 Singaporean companies are currently said to be working in the UAE, operating in the fields of infrastructure, real estate, communications, transportation, water treatment and IT ‒ to name a few. Similarly, investment by UAE companies in Singapore has also grown significantly in recent years in areas such as oil and gas storage, refinery, and exploration. In the area of law, the UAE, particularly the DIFC, has looked to Singapore as inspiration in bringing about a climate of trust and confidence in the judiciary. As an example of this, the DIFC Courts in 2005 appointed eminent Singaporean lawyer and arbitrator Mr Michael Hwang SC as its Deputy Chief Justice, who was in 2010 elevated to the position of Chief Justice.

Further evidence of Dubai's commitment to developing and strengthening its ties with Singapore can be found in the memorandum of guidance ("MOG") entered into by the Dubai International Financial Centre Courts ("DIFC Courts") and the Supreme Court of Singapore, on 19 January 2015. The Supreme Court of Singapore is made up of the High Court and the Appeals Court and, as of January 2015, the Singapore International Commercial Court (the "SICC").

There is currently no formal treaty between the UAE and Singapore for the reciprocal enforcement of court judgments; nor is the UAE a member of the Commonwealth of Nations whose judgments would have been enforceable in Singapore under the Reciprocal Enforcement of Commonwealth Judgments Act, and vice versa. The MOG now provides detailed guidance as to both the criteria and procedure for the recognition and enforcement of money judgments of the Singapore Courts in the DIFC Courts, and vice versa. In short, it is a guide for each Court, setting out how cross-border enforcement is to be conducted in the future. But the MOG is not binding on the DIFC Courts or the Supreme Court of Singapore.

In signing up to the MOG, the DIFC Courts and Supreme Court of Singapore have undertaken to apply a common law approach to the reciprocal enforcement of foreign judgments. This approach requires that:

(a) the court which rendered the judgment must have had jurisdiction to determine the dispute;

(b) the parties to the original court proceedings and the enforcement proceedings must be the same (or derive their title from the original parties);

(c) the judgment must be final and conclusive (even though it may be subject to appeal); and

(d) the judgment must be a money judgment (judgments ordering fines, taxes or penalties are not).

When these criteria are satisfied, neither Court will re-examine the merits of any judgment which is sought to be registered and enforced in the other jurisdiction. We note that there remain a very limited number of grounds for challenging recognition (for example, suspicion of fraud, issues of public policy and the judgment being contrary to the principles of natural justice). It should also be noted that the terms recorded in the MOG between the DIFC Courts and Singapore do not apply to the enforcement of money judgments in the local UAE courts.

The signing of this MOG is noteworthy as this is the first such memorandum entered into by the DIFC Courts and a South East Asian state. The DIFC Courts have also entered into MOGs with the Commercial Courts of England and Wales, the New South Wales Supreme Court, the Federal Court of Australia and most recently the Kenyan High Court. These MOGs demonstrate Dubai's commitment to providing another layer of certainty for investors in these jurisdictions doing business in Dubai as they provide significant reassurance and guidance about the procedures for enforcing money judgments in the respective jurisdictions.

The signing of this MOG is particularly relevant for Singapore in light of the launch of the SICC, which was introduced as a new platform for the resolution of the international commercial disputes in the Asia Pacific region. One of the main concerns in relation to the SICC's effectiveness has been the enforceability of its judgments internationally. This was the subject of our previous e-bulletin which may be accessed here.

Notwithstanding the MOG's non-binding status, it is a significant step  taken by the Supreme Court of Singapore in an attempt to improve  the  enforceability  of  its  judgments  in  other  jurisdictions. It  will  be  interesting  to  see whether  other  reciprocal enforcement agreements between Courts emerge in the coming years if it proves to be an effective, and certainly more expedient, means of increasing enforcement prospects. Certainly the UAE has been a leader in adopting this approach, in contrast to the traditional outreach to other states, with a view to negotiating and entering into bilateral treaties.

Signing of the Memorandum of Understanding on References of Questions of Law (the "MOU")

The DIFC Courts and Supreme Court of Singapore have additionally entered into a document setting out a procedure for dealing with issues of foreign law. Under that procedure, instead of having to engage expert witnesses to opine on foreign law in the usual adversarial manner, the MOU allows the Courts to direct the parties to take steps to have any contested issue of foreign law determined by the other Court.

The Supreme Court of Singapore has previously entered into a similar agreement with the Supreme Court of New South Wales ("Singapore-NSW MOU"). This is in line with the procedure adopted by certain common law courts in referring questions of foreign law into each other's courts – for example, as per the Westacre Investments v Yugoimport case. In that case, a question arose in relation to an English law point and the Supreme Court of Singapore proceeded to direct the judgment creditor to apply to an English court for an authoritative statement of the relevant English law.

Inspired by this, the New South Wales Supreme Court Act was amended to empower its Supreme Court to order, subject to certain conditions, that proceedings be commenced in a foreign court to answer questions as to the principles of foreign law. In addition to Singapore, the New South Wales Supreme Court has also entered into a similar memorandum of understanding with the state of New York.

Under the MOU, the requested Court would undertake to answer the question of law as expeditiously as its procedures would allow. By way of a parallel, the current Singapore Rules of Court, (Order 101), allow the Singapore High Court or the Court of Appeal to order that a question of NSW law be referred to the NSW Court. It is likely that Order 101 will now be extended to include referrals arising from the MOU.

Whilst we view the issuing of the MOU as a positive and potentially cost-effective method dealing with issues of foreign law, it remains to be seen how such references will be dealt with in practice. Would such responses bind the requesting Court? Can they be appealed? In particular, the MOU provides (in addition to the formal application route) for "less formal forms of communication and consultation" between the Courts regarding questions of law. It is not clear what this entails, and how would the result of such forms of communication be deployed in practice.

Furthermore, it remains to be seen whether parties to the dispute will have much influence over the decision to refer queries to the other Court. The idea of a referral to a different Court, if made without party explicit consent, is certainly a novel one. Moreover, how the process of referrals sits with the concept of exclusive jurisdiction (as would be stipulated in the parties' underlying contracts) is one that the Courts may also need to consider.

What does all this mean for business? For businesses investing in South East Asia, the MOG and the MOU mean that the DIFC Courts are now a serious option for the resolution and eventual enforcement of disputes. From the Singapore perspective, with the introduction of the SICC, boasting a variety of international judges hoping to bring international expertise to the domestic court system of Singapore, it will be interesting to see what place the referral system under the MOU will have.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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