India: Bridging The Gaps - India Finds A Softer Route For Enforcing Foreign Decrees/Judgments Emanating From The UAE

Introduction

On 17 January 2020, India paved way for the execution of decrees and judgments passed by certain UAE courts in India. This was done by a notification¹ (UAE Notification) declaring UAE as a reciprocating territory and recognizing certain courts in that country from which decrees and judgments will be enforceable in India. The notification is issued under Section 44A of the Code of Civil Procedure, 1908 (CPC) which deals with the execution of foreign decrees/judgments in India. This provision is an independent right conferred on a foreign decree holder for enforcement of a decree/order in India². The UAE Notification will further improve the ease of doing business in India by instilling confidence in the minds of the UAE investors and businessmen about India's judicial framework.

Briefly, Section 44A of the CPC provides that foreign decrees/judgments passed by "superior courts" in "reciprocating territories" can be executed in India as if they had been passed by a district court in India. Reciprocating territory has been defined as any country outside India which the Indian government by notification in the official gazette declares to be a reciprocating territory for the purposes of Section 44A of the CPC. Superior courts of reciprocating territories are those courts which have been specified in the above notification³. A foreign decree/judgment which is conclusive and does not fall under any of the limited exceptions under the Indian law⁴ can be enforced by filing execution proceedings in India. In such proceeding, the foreign decree holder will have to file a certified copy of the decree along with a certificate from the superior court stating the extent, if any, to which the decree has been satisfied or adjusted. There is a rebuttable presumption under Indian law that the foreign court which passed the order was a court of competent jurisdiction⁵. Where the foreign decree/judgment is in relation to a commercial dispute and for an amount of INR 300,000 or above, the execution proceedings will be filed before the Commercial Courts constituted under The Commercial Courts Act, 2015.

Courts recognized under the UAE Notification

The UAE Notification has recognized decrees and judgments from the following courts in UAE as executable in India⁶:

1. Federal Courts

• Federal Supreme Court
• Federal, First Instance and Appeal Courts in the Emirates of Abu Dhabi, Sharjah, Ajman, Umm Al Quwain and Fujairah

2. Local Courts

• Abu Dhabi Judicial Department
• Dubai Courts
• Ras Al Khaimah Judicial Department
• Courts of Abu Dhabi Global Markets
• Courts of Dubai International Financial Centre

Bridging the gaps

The UAE Notification formalizes the need to facilitate the widest measure of legal assistance for juridical and judicial cooperation in civil and commercial matters which was contemplated way back in an agreement entered into between India and UAE on 25 October 1999 (UAE Agreement)⁷. The instruments of ratification for the UAE Agreement were exchanged in Abu Dhabi on 29 May 2000 and the text of the agreement was published for information of general public on 23 November 2000⁸. While the UAE Agreement provides that it shall come into force on the date of exchange of instruments of ratification between India and the UAE, the laudable objectives of the UAE Agreement could not be achieved up until the UAE Notification was recently published by the Indian Government in the official gazette.

In the absence of UAE Notification, decrees/judgments passed by courts in UAE could not be executed in India as courts refused to equate the UAE Agreement with a notification under Section 44A of the CPC⁹. The process which was followed prior to the UAE notification for enforcement of a foreign decree from UAE was to file a fresh suit before a competent court in India on the basis of the foreign judgment which was treated as evidence. This was a more tedious and time-consuming process.

Indian courts had taken judicial notice of the delay in publishing the UAE Notification by the Government of India. In January 2019, the Bombay High Court¹⁰ noted that the delay in publishing the UAE Notification was on account of the lack of information regarding the designation/level of courts functioning in the UAE which was to be collected by the Ministry of External Affairs (MEA) of India. Taking note of the delay, the court impressed upon the MEA to take a decision and directed its order to be placed before the concerned ministers of the Indian government and its senior most law officers. An explanation for the delay in the UAE Notification and notifications recognizing other countries as reciprocating territories under Section 44A of the CPC is the emerging and dynamic arbitration framework in India which has lately been the focal point of India's attention. Nonetheless, the UAE Notification paves way for the publication of similar notifications recognizing other foreign nations as reciprocating territories under Section 44A of the CPC.

The UAE Notification has breathed in fresh air in Article XV of the UAE Agreement which provides that India and UAE shall in accordance with its laws, recognize and execute decrees passed by each other's courts in civil, commercial and personal matters etc. It is in furtherance of the historic visits of the Prime Minister of India to UAE on 16-17 August 2015 followed by the India visit of Crown Prince of Abu Dhabi and Deputy Supreme Commander of UAE Armed Forces on 10-12 February 2016 for strengthening the India-UAE bilateral relations. The UAE Notification was long awaited and bridges the gap towards realizing the true intent of the UAE Agreement i.e. to strengthen the bonds of friendship between Indian and UAE and promoting fruitful cooperation in the judicial and legal spheres. Apart from augmenting the list of reciprocating territories from which foreign decrees/judgments can be enforced in India, the UAE Notification will act as a safeguard for creditors in UAE who can now enforce judgments obtained in UAE against defaulters having assets in India.

Footnotes