The Judicial Tribunal for the Dubai Courts and the DIFC Courts (the “Judicial Tribunal”) was established by Dubai Decree No. 19 of 2016 (the “Decree”), issued on 9 June 2016. Pursuant to the Decree, the Judicial Tribunal is authorised to rule on “conflicts of jurisdiction” and “conflicts of judgments” between the DIFC courts and the local Dubai courts.
There has been speculation that the Judicial Tribunal was intended as a response to DIFC court jurisprudence, in which the DIFC courts had confirmed their willingness to allow the DIFC to be used as a “conduit” jurisdiction for the enforcement of arbitral awards and foreign court judgments in Dubai. Whilst these DIFC court decisions were welcomed by many, they were also the subject of criticism by those who felt that the DIFC courts had started to encroach upon the jurisdiction of the local Dubai courts.
With the recent publication of the second tranche of decisions of the Judicial Tribunal, the fears of those in favour of the DIFC as a conduit jurisdiction (and the hopes of those against it) seem to have been realised. The clear trend of the Judicial Tribunal’s decisions to date is to favour the Dubai courts wherever there is any suggestion of a conflict in jurisdiction. This article discusses a number of these decisions, and outlines some of the possible implications these decisions may have for the status of the DIFC as a conduit jurisdiction for the enforcement of foreign and domestic arbitral awards and foreign judgments.
The DIFC courts’ judgments in cases such as Eagan v. Eava,1 Meydan Group v. Banyan Tree2 and Fiske v. Firuzeh3 paved the way for the DIFC to be used as a conduit jurisdiction for the enforcement of arbitral awards and foreign court judgments in “onshore” Dubai. These decisions were based on the Judicial Authority Law,4 which permits a party with an arbitral award or foreign court judgment in its favour to take that award to the DIFC courts for recognition, before then seeking execution of the resultant DIFC court judgment in the Dubai courts. The Judicial Authority Law provides specifically that the Dubai courts must enforce judgments of the DIFC courts without considering their substance, in theory avoiding the risk of the Dubai courts refusing to enforce because of a perceived issue with the underlying judgment or award.
Those in favour of the DIFC as a conduit jurisdiction highlighted the relative ease with which an arbitral award or foreign court judgment can be recognised through the DIFC courts, as compared with the local Dubai courts. Whilst the Dubai courts have certainly improved in recent years, there is still the perception that the Dubai courts are both slower and less receptive than the DIFC courts are to the enforcement of arbitral awards and foreign court judgments. Using the DIFC as a conduit jurisdiction allows the Dubai courts largely to be bypassed in favour of the quicker and more consistent DIFC courts.
Those critical of the DIFC courts’ decisions on conduit jurisdiction pointed to aspects of those cases that were seen as encroaching on the jurisdiction of the Dubai courts. In the Banyan Tree case, for example, there were no assets in the DIFC and the award in question was not a foreign arbitral award, but was issued in “onshore” Dubai. The DIFC court proceedings in that case appeared to have been brought specifically to try and avoid the Dubai courts having the opportunity to give any substantive consideration to a Dubai-seated arbitral award. This was seen by some as improper and contrary to how the relationship between the Dubai courts and the DIFC courts was intended to operate.
Key Decisions of the Judicial Tribunal on Conflicts of Jurisdiction
A total of eight decisions of the Judicial Tribunal have been published to date.5 Perhaps unsurprisingly given the constitution of the Judicial Tribunal,6 these decisions reveal a clear tendency towards the Dubai courts and a trend against the use of the DIFC as a conduit jurisdiction. Indeed, so far, the only cases in which the DIFC courts have been allowed to continue hearing a case is where there are no competing proceedings before the Dubai courts.
Daman Real Capital Partners v. Oger
In the first decision of the Judicial Tribunal to be published, Daman Real Capital Partners Company LLC v. Oger Dubai LLC,7 the DIFC courts had taken steps to enforce an arbitral award that was issued by a tribunal seated in Dubai, while annulment proceedings were pending before the local Dubai courts. The dispute was related to a project located in the DIFC and was not a true conduit jurisdiction case as there were assets in the DIFC against which enforcement was sought. The case was referred to the Judicial Tribunal, which decided that the case should be heard by the Dubai courts and the DIFC courts should “cease from entertaining” the case on the basis that "the case should be decided by one of the two courts and not by both of them."
In common with the other published decisions, there is limited reasoning provided in the Judicial Tribunal’s decision in the Daman case. It is possible that the Judicial Tribunal’s order in this case for the DIFC courts to “cease from entertaining” may only have been an order for a temporary stay of proceedings pending the outcome of the decision of the Dubai courts. This would make sense as the relevant assets in this case were located in the DIFC and only the DIFC courts have jurisdiction to enforce judgments against assets located within their jurisdiction. While logical, this interpretation seems less likely, however, given the Judicial Tribunal’s repeated use of the same formulation of words in later decisions.
Conduit jurisdiction cases
The second decision to be published by the Judicial Tribunal, Dubai Waterfront LLC v. Chenshan Liu,8 nbsp;dealt with a similar situation to the Daman case, whereby one party sought enforcement in the DIFC courts of an arbitral award rendered in Dubai, while annulment proceedings were pending before the Dubai courts.
The key difference with the Daman case, however, was that Dubai Waterfront LLC was an onshore Dubai company with no link to the DIFC and no assets located in the DIFC. This presented the Judicial Tribunal with a true conduit jurisdiction case. Nevertheless, the Judicial Tribunal adopted almost precisely the same reasoning as in the Daman case, finding that the local Dubai courts were the competent forum and the DIFC courts should “cease from entertaining” the matter on the basis that “the case should be decided by one of the two courts and not by both of them”.
The Judicial Tribunal further considered the issue of conduit jurisdiction in its more recent decision of Ramadan Mousa Mishmish v. Sweet Homes Real Estate LLC.9 That case involved a Dubai International Arbitration Centre (DIAC) award that had been issued by an arbitral tribunal apparently seated in Dubai. The award creditor applied to the DIFC courts for recognition of the award (although it was alleged that there were no assets in the DIFC and no other connection with the DIFC), and the award debtor started proceedings before the Dubai courts seeking annulment of the award. Like the Dubai Waterfront case, the Judicial Tribunal in the Ramadan Mishmish case ordered the DIFC courts to “cease from entertaining” the case. This was on the basis that the Dubai courts “have the general jurisdiction” and so the Dubai court “is the competent court to entertain the case”.
Foreign arbitral awards
Whilst the first tranche of Judicial Tribunal decisions were unhelpful to proponents of using the DIFC as a conduit jurisdiction, they at least left this strategy open as a possibility in the context of foreign-seated arbitral awards. Even this, however, may now have been closed-off by the recently published decision in Gulf Navigation Holding P.S.C v. Jinhai Heavy Industry Co. Limited (Formerly Zhoushan Junhaiwan Shipyard Co., Ltd.).10 That case concerned an application to the DIFC courts to recognise a London-seated arbitral award, in response to which the award debtor filed an application to the Dubai Centre for the Amicable Settlement of Disputes. Whilst this Centre does form part of the Dubai courts, it effectively involves a form of pre-dispute court-administered mediation rather than formal judicial proceedings. Nonetheless, the Judicial Committee found that the Dubai courts were competent to hear the case, and that the DIFC courts should “cease to entertain” the recognition action. As with the Ramadan Mishmish case discussed above, this conclusion was apparently based on the finding that the Dubai courts had “general jurisdiction” and so were competent in this case.
Cases involving no conflict of jurisdiction
The Judicial Tribunal has indicated that it will not prevent the DIFC courts from being used as a conduit jurisdiction in circumstances where no parallel proceedings have been commenced before the local Dubai courts involving the same parties and relating to the same subject matter.
In Marine Logistics Solutions LLC & others v. Wadi Woraya LLC & others,11 Marine Logistics sought recognition and enforcement through the DIFC courts of a London-seated arbitral award under the New York Convention, even though Wadi Woraya was located in onshore Dubai and had no assets in the DIFC. Wadi Woraya applied to the Judicial Tribunal to determine whether the DIFC courts or the local Dubai courts had jurisdiction to hear the enforcement proceedings. The Judicial Tribunal dismissed the application and held that the DIFC courts had jurisdiction, on the basis that there were no parallel proceedings pending before the Dubai courts. As such, there was no conflict of jurisdiction between the two courts and nothing for the Judicial Tribunal to determine.
The Judicial Tribunal reached the same conclusion, apparently for the same reason, in Gulf Navigation Holding PJSC v. DNB Bank ASA12 and in Emirates Trading Agency LLC v. Bocimar International N.V.13 The Gulf Navigation case involved an application to the DIFC courts to recognise an English commercial court judgment; the Emirates Trading case involved two English commercial court judgments and two London-seated arbitral awards, recognition of which was sought before the DIFC courts. As there were no competing proceedings before the Dubai courts in both cases, the Judicial Tribunal found that there was no conflict of jurisdiction and so allowed the cases to proceed before the DIFC courts.
Since the Judicial Tribunal has been established and its decisions have been made public, there has been a strong reaction from legal practitioners in Dubai. Many commentators have declared that this signals the end of the DIFC as a conduit jurisdiction. Whilst this conclusion may be somewhat premature, it certainly appears that the use of the DIFC as a conduit jurisdiction is unlikely to be a reliable means of enforcement for both domestic and foreign arbitral awards.
It appears, however, that the Judicial Tribunal will not prevent the DIFC courts from being used as a conduit jurisdiction in circumstances where no parallel proceedings have been commenced before the local Dubai courts. This leaves open the possibility that a judgment debtor may attempt to use this position to its advantage by issuing annulment proceedings in the local Dubai courts (even when they do not in theory have jurisdiction) in order to try to prevent the enforcement of domestic or foreign arbitral awards via the DIFC courts.