United Arab Emirates: Enforcing English Family Finance Orders In UAE

Last Updated: 8 June 2017
Article by Byron James and Alexandra Tribe

The efficacy of a court order or judgment is only as good as the ability to enforce it. In family finance cases, proportionality often dictates that assets held in jurisdictions with barriers to recognition or enforcement of an English order present an unjustifiable hurdle. In cases where there are sufficient assets to offset internationally owned assets against those held domestically, this offers a simple solution; but what of those cases where fairness, the underpinning concept inherent in family finance cases, can only be met through the distribution of those assets held abroad? In such circumstances, one may need a foreign court to recognise and enforce the English order. In an increasingly globalised, international world, the reciprocal enforcement of orders is becoming a commercial necessity for jurisdictions keen to interact effectively with the rest of the world.

There are few countries seeking to interact with the rest of the world more than the UAE. It has provided a home and work for a large number of English expats who have been travelling out there for a significant number of years. Where there are English families and individuals relocating to a particular place, inherent in that will be the consequence of relationship breakdown and the specific issues which such international cases present. There is a growing trend, perhaps reflecting the more long term, settled plans of expatriates in the UAE, of purchasing property there and using the country as a base for their self-run businesses. Consequently there is a lot of individuals' and families' money finding its way to the UAE. The ability to rely upon the local jurisdiction to recognise and enforce English orders would provide fairer and more cost efficient routes for expatriates in family breakdown. 

It was with this in mind that there was a degree of interest in the decision of DNB Bank ASA v Gulf Eyadah [CA-007-2015] (25 February 2016) which appeared to confirm that parties would be able to have a foreign order recognised in the DIFC court and then use this recognition to obtain enforcement in the Dubai court. The case involved a banking dispute, where an English order was made in the Chancery Division and the DNB bank wanted to enforce that order in the Dubai court. The decision at first instance held that there was jurisdiction in the DIFC court for the application to enforce to be made but that it would not be possible to take the next step in the process of seeking enforcement through to the Dubai court.

The first instance judge stated what many had understood the position to be for some time: that foreign arbitral awards were recognised (under the New York Arbitration Convention on the Recognition of Foreign Arbitral Awards) but foreign judgments were not. It is for this reason that expatriates have long been encouraged to reach agreements between themselves regarding outcomes on separation as the best route through which they are able to avoid being subjected to domestic Sharia based laws; the gender-based determinism of asset distribution and parental roles is something that most expatriates are keen to avoid.

The successful applicant bank brought the appeal on the ground that the barrier to enforcement from DIFC to Dubai court would undermine their ability to enforce the English order effectively, and ultimately undermine the order obtained in the DIFC court. The appellant bank argued that halting the progress from DIFC court to the Dubai court on the ground that the order obtained was a recognised foreign judgment was wrong because once the English order had been ratified in the DIFC court then it would progress thereafter as an order of that court rather than as a foreign one. This argument succeeded and the Appellate Court upheld the appeal on this basis – creating what some have termed 'a conduit jurisdiction'.  

There was thereafter a clear route to overcome the inability to enforce foreign judgments in the Dubai court, by filtering them first through the DIFC court and enforcing that order in the Dubai court removing the foreign judgment label. There is no "forum non conveniens" test applicable between courts based within the UAE and therefore one can choose to apply freely in the first instance to the more commercial and globally minded DIFC court. This decision had the potential to be very significant and, whilst applicable in a banking case, clearly had a wider reach: if an English court made an award for someone in a family finance case to pay a lump sum, and that person only had assets in the UAE, there was now a route available to have that judgment debt enforced against that debtor. It had the potential to open the door to enforcement against a wide array of non-disclosing and non-compliant spouses seeking to avoid the strictures of an English order.

However these 'open doors' caused concern; consequentially, on 9th June 2016, the Ruler of Dubai established the "Judicial Tribunal for the Dubai Courts and DIFC Courts".  The specific purpose of this Tribunal is stated as being to resolve any conflict of jurisdiction that might arise between the DIFC courts and the Dubai courts. The dynamic between the two courts is complex and interesting, and the motivation behind the establishment of this Tribunal is not yet clear. It could be a method of restricting the DIFC court from its attempts to be more progressive or try and bring parity and consistency between the two courts in a positive, rather than restrictive, way. The Tribunal appears to have been established very quickly and its purpose will become clear only through its action. If the purposive aspect is to limit and even entirely block the 'conduit jurisdiction' created by the DNB bank case that would undoubtedly be a backward step for the UAE legal system.

There is therefore a continued uncertainty as to the extent to which English orders will be capable of enforcement in Dubai/UAE through the conduit jurisdiction and the advice to clients must be to adopt a wait and see approach, to see how the Tribunal itself will respond to future such attempts to achieve enforcement and recognition. It remains however that some clients face little choice where agreements both as to substance and to arbitrate remain unforthcoming. These two mechanisms, binding agreements and arbitration, continue to provide the safest means of achieving certainty in family finance cases with a UAE element. They remain the clearest, unimpeded route to recognition and enforcement within the UAE courts.

There is an interesting parallel path being pursued between the courts and privately achieved outcomes playing out in the English family legal system. Through arbitration, for example, one is able to control venue, timeframes and level of judge: all extremely attractive to clients, especially to those abroad who would welcome a hearing taking place in their part of the world rather than having to undergo significant upheaval and travel. Arbitration now extends to children cases too, providing a complete service available to separating families. Whilst the English court system suffers continual court closures, court buildings which offer little comfort or service (and often barely even a room) and overstretched, overworked judges, it is clear to those within the profession that of the two litigation paths, between court led and privately arranged, the latter appears to be where we are heading in the future.

The difficultly at present is that one requires agreement from both sides to arbitrate, as it is a contractually based process. Enforcement usually involves a lack of agreement and cooperation from the other side. For the majority of cases, on separation, the collaborative methods being promoted throughout the family law world work extremely well for expatriates living in the UAE. However, for those who have to push back against a difficult party seeking to hide and run away from an English order, a door was opened by conduit jurisdiction; it remains to be seen the extent to which it may have been closed again by the Tribunal.

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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