International Quarterly — Issue 18

DNB Bank v Eyadah: jurisdiction of the DIFC courts

DNB Bank ASA v (1) Gulf Eyadah Corporation (2) Gulf Navigation Holdings PJSJ CA 007/2015, 25 February 2016

DNB Bank ASA was seeking recognition and enforcement of an English High Court order in the United Arab Emirates by bringing an action in the Dubai International Financial Centre (DIFC) Court. The English court order required Gulf Eyadah Corporation and Gulf Navigation Holdings PJSJ to pay DNB Bank ASA US$8.7 million together with costs in relation to finance documents and a guarantee. The issue in this case was whether the DIFC Court had jurisdiction to enforce a foreign award.

At first instance, the DIFC Court held that the English order was a “foreign” court order which fell within Article 7(6) of the Judicial Authority Law (JAL). The relevant part of the JAL in relation to this case comprises Dubai law no.12 of 2004 (amended by Dubai law no.16 of 2011 and also Article 24(1) of the DIFC Court law no.10 of 2004). The judge considered that the English order constituted a “foreign” court order within the meaning of Article 7(6) of the JAL. In particular, that the English order came under Article 5(A)(1)(e) of the JAL and so the jurisdictional “gateway” was satisfied. Basically, the English court order was a foreign court order that fell within the JAL, and so could be recognised by the DIFC Court. As a result it could be referred to the Dubai Court for execution.

The Court of Appeal did not agree with this reasoning, but still enforced the English order, albeit under a different JAL provision. The Appeal Court concluded that Articles 7(4) to 7(6) did not apply to the English order. However, the DIFC Court still had jurisdiction to consider the claim under Article 7(2) of the JAL, which provides for the execution of judgments, decisions and orders given by the DIFC Court was relevant. In conclusion, it was held that Article 7(2) of the JAL applied, and this provided for the execution of judgments, orders and decisions which were given by the DIFC Court. As this was a foreign judgment, it could be enforced by the DIFC Court. On enforcement, it became an independent local judgment.

Reliance was placed upon the Memorandum of Guidance that had been entered into by the Commercial Courts of England and Wales and the DIFC Court. This Memorandum provided reciprocity mechanisms for the execution of judgment for assets in other jurisdictions. The JAL therefore provided a gateway for the recognition of foreign awards.

The Court of Appeal also considered that the presence of assets in the DIFC was not a condition to the enforcement of foreign court judgments. It did not matter that the defendant did not have any assets within the direct jurisdiction of the DIFC. This is interesting and helpful because the DIFC Court could be used as a “conduit” to enforce a foreign judgment in a subsequent jurisdiction. An English court order for payment of money can be taken to the DIFC Court for recognition and enforcement. The DIFC Court can recognise and enforce the order, and then the claimant can use the DIFC judgment to enforce the order in the local Dubai courts.

Finally, the respondent was unable to demonstrate that the enforcement of an English order was manifestly unfair or breached the administration of justice. This point was not pursued on appeal, but the Court of Appeal commented that this process of enforcement would not be unfair or breach the administration of justice in any event.