<p>In our August 2010 Law Update, Al Tamimi &amp; Company reported the first  decision of a Court in the UAE to recognise and enforce a foreign arbitral award  pursuant to the New York Convention.&nbsp; Since the Fujairah Court&rsquo;s decision, the  Dubai Court of First Instance has provided yet more comfort to those engaged in  international trade and commerce by recognising and enforcing a foreign arbitral  award, despite the vociferous objections and challenge by the local  Defendant.<br /><br />This decision is pending appeal but already the Emirate of  Dubai has already become a substantially safer port in the international  arbitration world than at anytime in its trading history. <br /><br />Although there  is no system of binding precedent which guarantees any future applicant the same  result, the principles set out by the Full Bench of Dubai Court&rsquo;s Commercial  Division provide something of a sea chart (or road map) for those applicants  seeking to have recognised and enforced their foreign awards in this  jurisdiction.&nbsp; The recent ruling ratified for execution of two arbitral awards  from a sole arbitrator seated in London who determined a trade dispute under the  DIFC-LCIA Arbitration Rules in November 2009.&nbsp; The parties were respectively a  Free Zone entity and a Limited Liability Company both from Dubai.&nbsp; The Award  comprises essentially two awards, namely a substantive award on the merits of  the case followed by an award dealing with the costs of the  arbitration.<br /><br />The application by the Plaintiff to the Dubai Court to  &ldquo;ratify&rdquo; or &ldquo;confirm&rdquo; the Award and to uphold a provisional attachment order as  valid and enforceable against the Defendant was challenged on a number of  grounds.&nbsp; Thus, the Court was called upon to deal with the Defendant&rsquo;s many  arguments refuting the validity and authenticity of the arbitration agreement  and the proceedings, which had the effect of obstructing and delaying the due  recognition and the enforcement of the Award for nearly 12 months.&nbsp; <br /><br />The  Dubai Defendant contended for many of the grounds of annulment often deployed to  set aside domestic arbitral awards (as set out in Article 216 of the Civil  Procedure Code) notwithstanding its active participation in the arbitration  proceedings.<br />In rejecting the Defendant&rsquo;s submissions, the Court reasoned  that the Articles of the Civil Procedure Law prescribing &ldquo;validation&rdquo; of  domestic arbitral awards and those otherwise issued in the UAE did not apply.&nbsp;  Instead the applicable rules were those set out in the New York Convention  itself regarding the recognition and enforcement of foreign awards.<br /><br />The  parties had agreed to apply DIFC-LCIA Rules which were thereby deemed  incorporated as terms of the arbitration agreement.&nbsp; The Dubai Court held: &ldquo;The  Court&rsquo;s supervisory role when looking to recognise and enforce a foreign  arbitral award is strictly to ensure that it does not conflict with the Federal  Decree under which the UAE acceded to the New York Convention on the recognition  and enforcement of foreign arbitral awards and satisfies the applicable  procedural and substantive requirements of Articles IV and V of the Decree in  terms of being duly authenticated&rdquo;.&nbsp; <br /><br />In short, the Court stated that it  would not entertain a review of the merits of the Arbitrator&rsquo;s decision  (including her decision as to her jurisdiction in light of the arguments raised  by the Defendant during the course of the arbitration).&nbsp; Instead, the Court  required only sufficient proof of the arbitration agreement and sufficient proof  of the authenticity of the arbitration agreement and of the Award of the  arbitrator appointed in accordance with the arbitration  agreement.<br /><br />Despite all of the Defendant&rsquo;s allegations regarding the  invalidity of and indeed potential forgery of signatures on the original  contract, the alleged lack of authority of the contract&rsquo;s signatory and other  complaints which might ordinarily ground an application to set aside a domestic  award, the Court observed that the burden fell to the Defendant to make good any  allegations that the New York Convention procedures had not been observed.&nbsp; The  Defendant had made no application in London, the seat of the arbitration, to set  aside or invalidate the Award under the applicable law of the arbitration.&nbsp; The  Court ruled that it had no jurisdiction to hear the Defendant&rsquo;s complaints  predicated on grounds different from those set out in the New York Convention  and there being prima facie evidence of the authenticity of and validity of the  arbitration agreement and the Award, then there was no reason to deny its  recognition and enforcement accordingly.<br /><br />The Court expressly excluded  from application section 4 (Articles 235, 236 and following) of the Civil  Procedure Law regarding enforcement of foreign judgements and foreign  arbitration awards generally.&nbsp; <br /><br />These rules pre-date the UAE becoming  party to the New York Convention and tend to require the applicant to  re-litigate substantive issues of jurisdiction in any event and to bear the  burden of establishing that no impediment exists to preclude enforcement under  UAE law.&nbsp; These cumbersome protectionist procedures are precisely what the New  York Convention was designed to overcome.<br /><br />Contrary to some early  published UNCITRAL treaty status reports, the UAE did not make any reservations  under Article I (3) to the effect that:&nbsp; &ldquo;This State will apply the Convention  only to recognise and enforce awards made in the territory of another  contracting State.&rdquo;&nbsp;&nbsp;<br /><br />This is a fairly common reservation by early  signatories (for example, by both the UK and USA) but curiously, there was some  confusion about whether or not UAE had so reserved.&nbsp; The United Nations has  since confirmed not and recently amended and updated its treaty status report to  correct the error.&nbsp; <br />&nbsp;<br />On this basis, the provisions of the UAE Law on  Civil Procedure regarding recognition of foreign arbitral awards arguably have  been rendered obsolete.&nbsp; Thus, even arbitral awards of non-Convention States (of  which admittedly there are few in the world) will fall to be recognised and  enforced in the UAE under the New York Convention [and/or under any other multi-  or bi-lateral treaty, if more advantageous].<br /><br />Fate of Future Awards -  Choppy Waters Predicted<br />The grounds to challenge and resist recognition and  enforcement of a foreign award under Article V of the New York Convention are  substantially narrower than local procedures and the burden falls to a  respondent to establish them.<br /><br />Nevertheless, a Court may still refuse to  enforce a foreign arbitral award if an opposing party proves:</p>
<ul>
<li>The parties to the arbitration agreement were, under the law applicable to  them, under some incapacity, or the said agreement is invalid under its  governing law as chosen by the parties or under the law of the country where the  award was made; or</li>
<li>The party against whom the award is invoked was not given proper notice of  the appointment of the arbitrator or of the arbitration proceedings or was  otherwise unable to present his case; or</li>
<li>The award deals with a difference not contemplated by or not falling within  the terms of the submission to arbitration, or it contains decisions on matters  beyond the scope of the submission to arbitration, provided that, if the  decisions on matters submitted to arbitration can be separated from those not so  submitted, that part of the award which contains decisions on matters submitted  to arbitration may be recognised and enforced; or</li>
<li>The composition of the arbitral authority or the arbitral procedure was not  in accordance with the agreement of the parties, or, failing such agreement, was  not in accordance with the law of the country where the arbitration took place;  or</li>
<li>The award has not yet become binding on the parties, or has been set aside  or suspended by a competent authority of the country in which, or under the law  of which, that award was made.</li>
</ul>
<p>Also, a Court in the UAE may refuse to enforce the award if it decides  that:</p>
<ul>
<li>The subject matter of the award is not capable of resolution by arbitration  under UAE law (i.e. is non-arbitrable), or</li>
<li>If the recognition or enforcement of the award would be contrary to public  policy.</li>
</ul>
<p>Given the UAE&rsquo;s unreserved accession to the New York Convention, all foreign  arbitral awards should fall to be recognised and enforced in the UAE under the  Convention procedures henceforth. But it remains to be seen just how expeditious  and pro-enforcement the Courts of the UAE will be in practice when applying the  law of the New York Convention if subject to a relevant challenge pursuant to  Article V by a recalcitrant respondent.&nbsp; <br /><br />It may also be anticipated that  such respondents will invite the Court to interpret the public policy exception  expansively, so as to operate as a shield if public morals or Sharia are  offended or even to protect what some foreigners might regard as purely local  commercial interests.</p>