On 11 February 2018 ADJD and ADGM entered a Memorandum of Understanding (the Memorandum) to formalise the procedures for the reciprocal enforcement of judgments. By entering the Memorandum the courts hope to encourage litigants to seek enforcement from the jurisdiction in which their matter is based.
The Memorandum
In order for judgments of ADJD to be enforced by ADGM (and vice versa) the following criteria will need to be met:
- a formula set out in the Memorandum, stating that the authorities must execute and assist in enforcing the judgment must be affixed to the judgment order;
- ADJD judgments must be translated into English and ADGM judgments into Arabic;
- an application must be submitted by the judgment creditor to the ADGM/ADJD courts;
- if a judgment issued by ADJD/ADGM requires action to be taken by the ADJD/ADGM courts, a letter indicating the action to be taken must be sent to the relevant court along with details of what is to be enforced; and
- when carrying out the enforcement procedures, the enforcement judge of ADJD shall apply the enforcement procedures without re-examining the merits of the judgment of the ADJD/ADGM courts. This is an important requirement of the Memorandum and one that should provide clarity for parties going forward.
The ADGM and ADJD courts have mutual obligations to ensure that the Memorandum is effectively enforced. This includes appointing assigned officers to liaise with one another, providing information on referrals, applications and publications and taking all measures to ensure the Memorandum is successfully implemented.
The court in which the case is heard will retain all fees they receive under the Memorandum.
What does this mean in practice?
The United Arab Emirates has 'financial free zones' which are subject to their own comprehensive set of laws and regulations. They also have their own courts and can in the case of ADGM apply English law. These 'financial free zones' are typically referred to as being offshore. The ADGM is one such free zone.
In contrast, the term onshore is used to refer to mainland UAE which is governed by federal law and the laws of the respective Emirate. For the purpose of this analysis, reference to onshore refers to ADJD which is subject to the laws of the Emirate of Abu Dhabi and the federal laws of the UAE. The Memorandum should provide parties with clarity and confidence that the judgments they receive from ADJD/ADGM will be recognised offshore and onshore.
By virtue of the ADGM Courts, Civil Evidence, Judgments, Enforcements and Judicial Appointments Regulations 2015 (the Regulations) parties are permitted to request in writing to have the ADGM Court of First Instance determine their claim or dispute.
This raises the question of whether non-ADGM parties who 'opt-in' to use the ADGM courts can potentially 'opt-out' of the ADJD courts. The Memorandum does not address this directly, however it does state the neither court shall query the judgment of the other. This would suggest that those parties who have opted in to the ADGM will have the ADGM judgment enforced by the ADJD. As the Memorandum is practically implemented we would expect the interaction between it and the Regulations to be confirmed.
On balance, the Memorandum is a significant development which offers Abu Dhabi investors greater certainty for the enforcement of awards and will have a positive impact on Abu Dhabi's investment environment.
