Dubai International Finance Centre Courts enforce a US judgment for the first time

The DIFC Courts have, for the first time, enforced a US judgment.

In the recent case, Barclays Bank PLC & others vs. Essar Global Fund Limited, the Claimants, a consortium of foreign lenders, had obtained judgment against the Defendant in the courts of New York, and sought to enforce this judgment in the UAE against the Defendant’s UAE assets.

The Defendant challenged the enforcement attempt on several grounds, including that:

1. the DIFC Courts did not have jurisdiction to enforce foreign judgments since such matters are matters of ‘foreign affairs’ reserved for the Federal Government under the UAE Constitution (the constitutionality argument);

2. the New York judgment was not final and conclusive on the merits as it could be vacated on motion under the rules of New York (the finality argument); and

3. the New York judgment was not capable of enforcement under common law principles as it was a consent judgment rather than a judgment resulting from adversarial proceedings (the adversarial judgment argument).

The DIFC Court dismissed each of these arguments and denied the Defendant’s application for stay of execution. The DIFC Court granted the Claimants’ application to enforce the New York judgment.

On the constitutional argument, the DIFC Court found that there was no conflict between Article 120 of the UAE Constitution and the law conferring jurisdiction on the DIFC Courts to enforce foreign judgments. The court considered that ‘foreign affairs’ as referred to in the Federal Constitution connoted the conduct of foreign policy between states; whereas recognition of foreign judgment involved application of a rule of private commercial law.

On the adversarial judgment argument, the court found that the fact that the New York judgment was a judgment by confession, rather than the result of a substantive contest on the merits, did not make it any less enforceable as a foreign judgment.

On the finality argument, the court found that the NY judgment was final and conclusive under common law principles as it was ‘res judicata’ to the Defendant’s liability for the admitted debt, just like an appeal. The court also held that pendency of a motion to vacate did not render the judgment other than final and conclusive.

This is a positive development to promote and improve the already blossoming economic partnership between the UAE and the US as businesses will have comfort that judgments granted in the US can be enforced in the UAE.