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DIFC Courts and Nishith Desai Associates Guidance Note

DIFC Courts and Nishith Desai Associates Guidance Note

September 17, 2018

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DIFC Courts Chief Justice, Michael Hwang SC

September 14, 2018

 

  1. Good evening your excellences, distinguished guests, ladies and gentlemen. It is a great pleasure to speak to you today on behalf of the DIFC Courts, which tonight is represented by myself as the Chief Justice, and I am accompanied by my Deputy Registrar, Ms Nour Kirk. Please allow me to give you a brief account of who we are and provide some context as to the importance of this Guidance Note we are signing here tonight.
  1. As commerce becomes ever more global and countries ever more connected, it is imperative that judicial systems keep pace and remain able to support and protect businesses. And it was this basic requirement that led to the creation of the DIFC Courts in 2004.
  1. The DIFC Courts are Dubai’s English language, commercial common law judicial system, and form a key part of the legal system of the United Arab Emirates. They were established with the specific objective to enable the international community in Dubai to have greater confidence in the Emirate’s legal framework, and further strengthen the trade relations with Dubai. And, a decade later, I believe the Courts have been extremely successful in achieving this objective.
  1. The DIFC Courts serve the international business community by maintaining a world-class judicial system which enjoys the confidence of the commercial sector. The Courts are capable of resolving all commercial disputes, ranging from sophisticated, international financial transactions to simple domestic contractual and employment disputes
  1. Probably the biggest misconception about the DIFC Courts is that we only deal with cases and claims arising out of the DIFC. While we have jurisdiction over matters occurring in the DIFC, or where one of the parties is incorporated or registered in the DIFC, we also deal with any cases and claims in which all parties to the dispute agree in writing to use the DIFC Courts. This is because in 2011, a decree of His Highness Sheikh Mohammed opened the DIFC Courts’ jurisdiction to businesses from all across the GCC region and beyond. Regardless of whether your agreement with another party has any connection to the DIFC or not, you can opt into the jurisdiction of the DIFC Courts by providing for it in writing in a contract.
  1. I should also emphasise that the DIFC Courts are designed to complement the Dubai Courts. When it comes to resolving business disputes, it’s all about providing choice. Businesses like to have a choice, whether it’s litigation vs arbitration, common vs civil law, or English language vs Arabic. 
  1. Please allow me to say a few words on the Dispute Resolution Authority (DRA), which administers justice and legal excellence within the DIFC. Established in 2014, it is the third body of the DIFC, alongside the DIFC Authority and the Dubai Financial Services Authority (DFSA).
  1. The DRA is the gateway to a suite of dispute resolution services available to businesses, lawyers and individuals. It currently incorporates the DIFC Courts; DIFC Wills Service Centre (WSC), the first common law, English language wills service for non-Muslims in the Middle East; the DIFC Academy of Law (AoL), an independent entity that provides quality education and support to the UAE legal community; and the DIFC Arbitration Institute (DAI), which operates the DIFC-LCIA Arbitration Centre, the Arab world’s leading international arbitration and mediation centre.
  1. The provision of an environment which business both domestically and internationally can trust, one in which contracts can be enforced and disputes resolved fairly and swiftly, one of certainty and predictability are all vital, but are worth little to the business community if decisions can’t be enforced.
  1. This Guidance Note with one of the leading law firms in India will build on the efforts of Dubai and the UAE to improve business certainty and trade security with its leading foreign trade partners. As the third largest foreign trade partner to India, the UAE is well-positioned to offer expertise and provide practical guidance to parties seeking enforcement of civil and commercial judgments in India and the DIFC.
  1. With 26,000 Indian firms and over 40,000 UAE-based firms owned by non-resident Indians (NRIs) in the UAE, along with bilateral trade standing at $53 billion last year, the relationship between the two nations is more economically interconnected than ever before.
  1. Of Dubai’s 2.6 million population, over half are from India – this translates to 28% of the overall UAE population – and quite clearly the single largest expatriate population living, working and operating business and trade across the Emirates.
  1. More specifically to Dubai, recent figures place the number of Indian companies registered with Dubai Chamber as over 37,000 and noted that Dubai’s non-oil trade with India amounted to $26 billion in 2016.
  1. Increased foreign trade has resulted in a steep rise in the number of commercial disputes and cross-border transactions, leading to a greater need for contract and judgment enforcement. As a result, amendments to India’s 2015 ‘Commercial Courts Act’ were introduced this year to allow state governments to establish commercial courts at the district level. This agreement builds on these efforts to create more efficient and high-quality dispute resolution mechanisms, an essential element to boosting trade between the two nations.
  1. This Guidance Note comes at a time when UAE-India relations are at an all-time high, following Prime Minister Narendra Damodardas Modi’s visit to the UAE in February 2018. Bilateral trade between the UAE and India is forecast to grow to $100 billion by 2020. In 2018, Dubai FDI reported that India has consistently been the among the top five bilateral trade partners of Dubai and a major source of FDI into Dubai, ranking as the second largest investment group into our Emirate over the last three years.
  1. As India and Dubai’s business communities becomes ever more global, and as they become ever more part of the Global fabric of trade, the interconnectivity of courts becomes ever more important to the families in Dubai (the UAE) as well as in India whose livelihoods and futures depend on the economic prosperity of the two countries and the businesses operating in them. It is for these reasons that we hope to build closer connections with the Indian law firms and courts so as to protect the ever-increasing trade flows between the countries.
  1. Moving more specifically to this Guidance Note, principles of treaties, conventions and comity may be well known to lawyers, but the business people operating ever more globally want to see that the courts, which are there to protect them, are also operating internationally and are in communication.
  1. The Note helps to underpin the UAE’s business links with India and builds on the formal relationships the DIFC Courts have in place with many of the UAE’s main trading partners, including the United Kingdom, United States, Australia, Singapore and Malaysia, to name just a few.
  1. Moreover, through a series of memoranda with leading international jurisdictions the DIFC Courts have now established one of the world’s strongest enforcement regimes. Our money judgments can be enforced internationally through treaties such as the GCC Convention and Riyadh Convention, conventions with China, and France, and reciprocal arrangements with many common and civil law courts overseas.
  1. In exceptional cases, where we are unable to engage with the courts of a particular country with a view to signing a similar MOG, we have sought the assistance of a well-known local law firm to collaborate with us to publish a Guidance Note as to the position about recognition and enforcement of foreign judgments in the country concerned in comparison with the position in the DIFC Courts, and that Guidance Note will then be posted on our website for the information of the international business community. This has happened with China, and is happening again in India, for the simple reason that we have not been able to identify and engage with the proper authority to sanction the relevant Indian courts to sign an MOG with a foreign territory, especially when we are only a free trade zone within the UAE, although one with considerable judicial independence. So we concluded that it was better to collaborate with the private sector to get the relevant information and knowledge into the public domain for the benefit of the international business community so that the position of Indian judgments in the DIFC Courts and vice versa are clearly stated and understood.
  1. In a sense this Guidance Note should have been simpler than it actually is. We have entered into Memoranda of Guidance with:-
  • The Commercial Court of England & Wales
  • The United States District Court for the Southern District of New York
  • The Supreme Court of Singapore
  • The New South Wales Supreme Court
  • The Federal Court of Australia
  • The High Court of Kenya
  • The Federal Court of Malaysia
  • The High Court of Zambia
  • The High Court of Hong Kong
  • The Supreme Court of the Republic of Kazakhstan
  • The National Court Administration of the Supreme Court of Korea
  1. All the common law countries have rules on recognition and enforcement of foreign judgments which are broadly the same as in the DIFC. Accordingly, when the rules of any sister common law country are set out and compared side by side with the applicable rules in DIFC Courts, the principles will appear to be largely similar, if not identical in most aspects.
  1. However, the problem with India is the fact there already exists a treaty between India and the UAE made in 1999, which deals with the mutual recognition and recognition of each other’s money judgments, and which pre-dates the founding of the DIFC in 2004. Accordingly, at the time when the India-UAE treaty was entered, the UAE was a wholly civil law country where the rules for recognition and enforcement of foreign judgments would be based on civil law principles as set out in the UAE Civil Procedure Code.
  1. Most of the people in this room will not know the drafting history of how the terms of the treaty were negotiated, but the end result is that the rules for enforcing an Indian Judgment in the UAE (which would now include the DIFC Courts) are more like civil law principles for recognition and enforcement of Judgments than on common law principles.
  1. Mr Moazzam Khan, who is the main author of the section in this Guidance Note dealing with the legal position in India, will be explaining this in greater detail when he makes his presentation. However, speaking from the viewpoint of the DIFC Courts, it would seem that a party with an Indian Judgment in its favour seeking to enforce it in the DIFC Courts would have a more complicated route to take if it were to invoke the treaty provisions rather than the common law principles which the DIFC Courts and other common law courts are used to.
  1. However, having conducted serious research into this matter at the DIFC Courts end, we believe that it would be open to the holder of an Indian Judgment when applying for recognition and enforcement of that Judgment in the DIFC Courts to rely on the common law rules for enforcement, notwithstanding the availability of the treaty provisions. I will leave it to Moazzam to explain the position to you when he makes his presentation.
  1. What are our plans for the future? Part of it is in building stronger connections with the judiciary of one the UAE’s top trading partners, a country whose citizens represent over 50% of Dubai’s population, and a country which has ever closer economic and cultural ties with Dubai. That is India.
  1. We realise that by working together to analyse future developments and opportunities and by sharing best practices we will be best able to support our respective business communities and the economic success of our respective states. This has been our experience of working with legal entities and institutions elsewhere in the world, such that a collaborative and symbiotic relationship outlined today is not only for the good of the courts but, more importantly, for the good of the communities we serve.
  1. Thank you for your time this morning. I now welcome Mr. Moazzam Khan, Head – Global Litigation Practice, Nishith Desai Associates, to say a few words.

Thank you.

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