In brief:

  • India is the UAE’s third largest foreign trading partner and there is a significant number of trading relationships between Indian registered and owned companies based in the UAE and other companies in the UAE.
  • There is new guidance on the mutual recognition and enforcement of civil and commercial judgments in the DIFC Courts and the courts of India.
  • Indian judgments can be enforced in the DIFC Courts but UAE judgments cannot currently be enforced in India.

On 14 September 2018, the DIFC Courts and Nishith Desai Associates signed a Guidance Note on the mutual recognition and enforcement of civil and commercial judgments in the DIFC Courts and the courts of India (“Guidance Note”). Although the Guidance Note is welcome, there is scope for greater legal collaboration between the Republic of India (“India”) and the United Arab Emirates (“UAE”).

The commercial relationship between India and the UAE is significant. India is UAE’s third largest foreign trading partner. Approximately twenty six thousand (26,000) Indian companies and forty thousand (40,000) UAE-based firms owned by non-resident Indian nationals operate in the UAE. In 2017, it is estimated that bilateral trade was USD 53 billion.

That means that there is a significant number of trading relationships between Indian registered companies, Indian owned companies based in the UAE and everyone else who does business in the UAE. During the course of any business relationship, it is common for disputes to arise between the parties. Of fundamental importance to any country seeking to entice businesses and ensure a healthy economy is a legal system that facilitates the efficient and fair resolution of such disputes. At present there is no actual recognition and mutual enforcement of UAE judgments in India.

On 25 October 1999, India and the UAE entered into the Agreement on Juridical and Judicial Cooperation in Civil and Commercial Matters for the Service of Summons, Judicial Documents, Commissions, Execution of Judgements and Arbitral Awards (“Agreement”). According to the Guidance Note, India has only given effect to the Agreement in relation to the service of summonses and other processes. No notification has been given in respect of the recognition or enforcement of civil judgments, as is required under Section 44A of the Indian Code of Civil Procedure.

Section 44A states:

“‘Reciprocating territory’ means any country or territory outside India which the Central Government may, by notification in the Official Gazette, declare to be a reciprocating territory for the purposes of this section, and ‘Superior Courts’, with reference to any such territory, means such courts as may be specified in the said notification.

Therefore, the UAE is not a reciprocating territory for the execution of UAE judgments in India. This means that even if a UAE judgment is obtained by a claimant and the assets of the judgment creditor are located in India, a fresh law suit will need to be filed in India based on the UAE judgment or the original cause of action, or both. Conversely, if the UAE was a reciprocating territory, all that would need to be done to enforce a UAE judgment in India is the commencement of execution proceedings – a far simpler and less costly exercise.

The DIFC Courts in the UAE has gone to great lengths to facilitate the enforcement of Indian judgments. Indian judgments can be enforced in the DIFC Courts provided that they are final and conclusive and that it does not relate to payment of taxes, fines or penalties and assuming there is no successful challenge to the judgment.

It would be of enormous benefit to the business community in both India and the UAE if India was to give effect to the principle of mutual recognition and enforcement of judgments. This would provide much greater certainty to those doing business in both countries.