In Invest Bank PSC v Ahmad Mohammed El-Husseini and ors [2022] EWHC 3008 (Comm), the English High Court held that there was no real risk of substantial obstacles to enforcement or an additional burden in terms of costs or delay in enforcing English Court judgments in the United Arab Emirates (the “UAE”).
Background
An application for security for costs arose out of fraud proceedings before the English High Court, in which the Claimant, a Sharjah based bank, sought judgment debts of circa £20 million against the First Defendant arising from proceedings in Abu Dhabi.
The Defendants argued that security for costs should be granted pursuant to CPR Rule 25.13, primarily on the basis that there was a real risk of non-enforcement in the UAE of any award of costs either via enforcement through the offshore DIFC Courts or through the onshore UAE Courts. The Claimant disagreed and submitted that there were no obstacles to enforcement under either route.
Decision
CPR Rule 25.13 relevantly provides:
“(1) The court may make an order for security for costs under rule 25.12 if –
(a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order; and
(b)
(i) one or more of the conditions in paragraph (2) applies, or
(ii) an enactment permits the court to require security for costs.
(2) The conditions are –
(a) the claimant is –
(i) resident out of the jurisdiction; but
(ii) not resident in a State bound by the 2005 Hague Convention, as defined in section 1(3) of the Civil Jurisdiction and Judgments Act 1982“.
The question before the Court was whether there was a real risk that the Defendants would not be in a position to enforce an order for costs in the UAE.
The Court considered enforcement of English judgments for costs under the offshore DIFC Court and the onshore UAE Court regimes separately:
- Offshore DIFC enforcement: The Court acknowledged that both parties agreed that an English judgment for costs could be enforced in the DIFC, and then that DIFC judgment could be enforced in the UAE. The Court rejected the Defendants’ argument that the Claimant could obstruct DIFC enforcement by commencing parallel proceedings in the onshore courts on the basis that there was no credible basis for submitting that the Claimant would do so.
- Onshore UAE enforcement: The Defendants argued that there were real risks that the onshore UAE Courts would: (i) find there was no reciprocity between the English Courts and the UAE Courts; (ii) refuse enforcement on the basis that they had exclusive jurisdiction over the subject matter of the dispute; and (iii) find that enforcement of a costs order would be contrary to UAE public policy. The Court rejected all three arguments, finding that:
- 1. Reciprocity: there was clear reciprocity as a result of the letter dated 13 September 2022 from the UAE Ministry of Justice to the Dubai Courts (which we covered in an earlier bulletin). The letter acknowledged that a judgment rendered by the Dubai Courts had been enforced by the English Courts in Lenkor Energy Trading DMCC v Puri [2020] EWHC 1432 (QB), and confirmed that the Ministry considers a principle of reciprocity between the English and UAE (or at least Dubai) Courts to have been established;
- 2. Jurisdiction: there was no credible basis for the Defendants to argue that the UAE Courts would have any jurisdiction for the claims brought by the Claimant in the English Courts (being an enforcement action concerning real property and personal assets in England, and a claim under the English Insolvency Act), let alone exclusive jurisdiction; and
- 3. Public policy: while the UAE Courts may only permit awards of lawyers’ fees in very modest amounts and not in the sums reflecting actual sums expended, this did not amount to a prohibition on recovery of actual lawyers’ fees and there was no evidence that such an award would be contrary to public policy. The Court noted that DIFC Courts award legal costs and the UAE Courts have enforced foreign arbitral awards which contain awards of legal costs, notwithstanding that enforcement under the New York Convention permits a public policy exception.
As such, the Court held that there was no reason to consider that the UAE Courts would not enforce an English costs order, whether via the offshore DIFC route of the onshore UAE route, nor was there a real risk of substantial obstacles of enforcement in the UAE.
Comment
The decision confirms that, from the English Court perspective, there should be no real risk that its judgments should not be enforced in the UAE, whether via the offshore DIFC Courts or the onshore UAE Courts. The decision adds to a growing number of examples of reciprocity between the English and UAE Courts and ought to provide comfort to litigants in both jurisdictions.
For further information, please contact:
Stuart Paterson, Partner, Herbert Smith Freehills
stuart.paterson@hsf.com
