A groundbreaking and long awaited Memorandum of Understanding has now been signed between the Abu Dhabi Global Market (ADGM) Courts and the Abu Dhabi Judicial Department, allowing for the direct enforcement of ADGM Courts judgments and arbitral awards into onshore Abu Dhabi

With very little fanfare, and well-away from the bright spotlight fixed by UAE legal practitioners on the Dubai International Financial Centre (DIFC) Courts, on 11 February 2018, the ADGM Courts (Abu Dhabi's equivalent of the DIFC Courts, which became operational in 2016) and the Abu Dhabi Judicial Department formalised a Memorandum of Understanding Concerning the Reciprocal Enforcement of Judgments (the MoU), allowing judgments (which includes ratified arbitral awards) to circulate between these Courts.

This is the latest of several groundbreaking new developments in the legal infrastructure within the ADGM and the ever-changing wider UAE legal landscape.

The completion of the MoU is the final piece in a much wider puzzle, that will, for the first time, allow judgments of the ADGM Courts to be recognised and enforced in onshore Abu Dhabi, and vice versa. Not only does this cross-court enforcement regime now open up a pathway between the common law and civil law courts in Abu Dhabi, but it also now appears to offer foreign litigants seeking onshore enforcement of a foreign judgment or arbitral award, whom might previously have sought to exercise the conduit jurisdiction of the DIFC Courts, with a viable alternative avenue into Abu Dhabi (and potentially into the wider UAE), via the new conduit jurisdiction of the ADGM. As readers may be aware, the conduit jurisdiction of the DIFC Courts has recently suffered a narrowing following the establishment in 2016 of the Joint Judicial Committee in Dubai.

The MoU and Onshore Enforcement via the ADGM Courts

The MoU sets out "agreed procedures for the reciprocal enforcement" (Article 2) of both Abu Dhabi Court judgments in the ADGM (Articles 6-10), and ADGM Courts judgments in Abu Dhabi (Articles 11-15).

Under the MoU, reciprocal enforcement shall occur without re-examination of the merits of the original judgment (Article 2), which will allow qualifying judgments to pass unfettered between the Courts, encouraging fundamental respect in each court for the res judicata nature of the judgments delivered by the other.

Under the MoU, arbitral awards are likewise subject to reciprocal enforcement without re-examination of the merits (Article 2) as, once such awards are ratified or recognised by a court of origin, they are included in the definition of "judgment" for the purposes of the MoU (Article 5).

The MoU states that qualifying judgments are to be enforced by applying the enforcement procedures set out in either:

a. the ADGM Court Regulations, when enforcing an Abu Dhabi judgment in the ADGM Courts (Article 10), or

b. Federal Law No. 11 of 1992, when enforcing an ADGM judgment in the Abu Dhabi Courts (Article 15).

In either case, the judgment to be enforced is first required to be affixed with an executory formula by the court which issued the judgment and translated as appropriate (Articles 7(b) and 12 (b)).

In theory at least, this appears to be a straightforward and purely mechanical process of judgment "registration" for enforcement purposes, rather than requiring any extensive exequatur or procedure to "prove" the judgment, at law.

The MoU: A Final Link in the Onshore Enforcement Chain

The MoU is the final link in the chain of legal instruments governing enforcement of judgments within and outside of the ADGM Courts.

Originally, questions of cross-court enforcement were left as only a placeholder in the creation of the ADGM Courts under Abu Dhabi Law No. (4) of 2013 (the ADGM Founding Law).

Article 13(11) of ADGM Founding Law envisaged the eventual adoption of memoranda and agreements between the ADGM Courts and other courts (including the Abu Dhabi Courts) to facilitate forms of judicial co-operation in enforcement matters, but without specifying the mechanics of such enforcement cooperation at that stage.

The provisions of the ADGM Courts, Civil Evidence, Judgments, Enforcement and Judicial Appointments Regulations 2015 as amended, (the ADGM Court Regulations) next confirmed that the ADGM Court of First Instance was invested with jurisdiction to recognise and enforce qualifying judgments and arbitral awards issued in jurisdictions outside the ADGM (see Articles 13(11)-(12) read in conjunction with Article 13(6) of the ADGM Founding Law and Article 16(2) of the ADGM Court Regulations).

In particular, Article 168(2) of the ADGM Court Regulations requires the ADGM Courts to recognise and enforce onshore Abu Dhabi Court judgments by reference to any procedure for reciprocal recognition and enforcement contained within any agreements or memoranda of understanding which may be concluded for that purpose. Article 180 conferred the same jurisdiction on the ADGM Courts to develop protocol to recognise and enforce arbitral awards. However, whilst a precursor memorandum of understanding was signed between the ADGM Courts and Abu Dhabi Judicial Department in April 2016,1 it only made brief mention of enforcement, and there has not otherwise been in the two years following the enactment of the ADGM Court Regulations any memoranda of understanding setting out extensive comprehensive enforcement protocol, until now.

Article 169 of the ADGM Court Regulations also appears to envisage future instruments with other "Emirate Members" which, if concluded, will provide a recognition and enforcement framework between the ADGM Courts and other Emirates, although as yet no such additional memorandum has been concluded.

The signature of the MoU on 11 February 2018 therefore represents the final link in a long legal chain – from placeholders in the ADGM Founding Law, to a conclusive and comprehensive procedure for litigants to request cross-court enforcement between the ADGM and the onshore court in Abu Dhabi. The MoU leaves no doubt that it is intended to be the kind of cross-court enforcement instrument envisaged by the ADGM Founding Law; Article 1 to the MoU describes the instrument as being made "pursuant to" both Article 13(11) of the ADGM Founding Law and Clause 4(4) of the 2016 MoU.

The ADGM – An Alternative Conduit Jurisdiction?

Prior to the conclusion of the MoU, the ADGM Courts were of limited use as a conduit jurisdiction for the recognition and enforcement of a foreign judgment or arbitral award into onshore Abu Dhabi.

This was despite the ADGM Court Regulations, as confirmed by Articles 170-171 and 180, envisaging the future recognition and enforcement of foreign judgments and arbitral awards in onshore Abu Dhabi (subject to their first meeting the requirements for registration in the ADGM Court) and the existence of several international Memorandums of Understanding concluded for that purpose with the Courts of the UK, Australia, Singapore and Hong Kong. Under those instruments, it had been previously agreed that the underlying merits of judgments of those courts would not be re-examined in a recognition suit before the ADGM Court.

Therefore, although there had been an international enforcement pathway for foreign civil and commercial judgments and arbitral awards to travel into the ADGM, under these instruments alone, they could not travel beyond the ADGM into onshore Abu Dhabi.

However, the MoU has now effectively now closed the loop. A foreign judgement or award may now circulate into the ADGM from abroad without review of the merits under an international MoU, and may then travel into onshore Abu Dhabi without review of the merits under the MoU. Though the legal structuring is slightly different, the result is the same conduit mechanism for foreign litigants seeking onshore enforcement as offered by the DIFC Courts.

Looking to the Future

The MoU commenced on the date of its signature (11 February 2018) and is therefore already available to parties seeking to utilise the ADGM as a conduit for the enforcement of foreign judgments and arbitral awards into onshore Abu Dhabi.

The UAE's legal landscape has decisively changed with the signature of the MoU. With potential costs advantages in the ADGM, and the ability for foreign litigants to avoid potential referral to the Joint Judicial Committee in Dubai, it is to be expected that foreign litigants will be quick to test the powers of the ADGM Court as an alternative forum to recognise and enforce foreign judgments and arbitral awards in onshore UAE.