Enforcement of UAE court judgments in India – A positive step23 January 2020

Background

To facilitate mutual assistance in civil and commercial matters, India and the UAE entered into the “Agreement on Juridical and Judicial Cooperation in Civil and Commercial Matters for the Service of Summons, Judicial Documents, Commissions, Execution of Judgements and Arbitral Awards” on 25 October 1999 (the “Treaty”).

Although the Treaty was ratified in 2000, and the UAE gave effect to the Treaty by publishing it in its Federal Gazette in the same year, India had not completed domestic formalities[1] in relation to certain provisions of the Treaty until now.

As a result, successful parties in UAE court proceedings were unable to benefit from the Treaty and often found it difficult to enforce judgments in India.

The Notification

India issued a notification on 17 January 2020 (the “Notification”) declaring the UAE as a “reciprocating territory” and notifying the following UAE courts as “superior courts” (collectively, the “Relevant Courts”) for the purposes of section 44A of the Indian Code of Civil Procedure (the “CPC”):

1. Federal Court

• Federal Supreme Court; and
• Federal, First Instance and Appeals Courts in the Emirates of Abu Dhabi, Sharjah, Ajman, Umm Al Quwain and Fujairah.

2. Local Courts

• Abu Dhabi Judicial Department;
• Dubai Courts;
• Ras Al Khaimah Judicial Department;
• Courts of Abu Dhabi Global Markets; and
• Courts of Dubai International Financial Centre.

Implications

Before the Notification, the enforcement of a judgment issued by a Relevant Court entailed fresh proceedings being brought before the relevant Indian court. Such proceedings could, among other things, re-examine the case on merit. At times, this deterred aggrieved parties from seeking legal recourse or enforcing favorable court outcomes against parties and assets based in India.

After the Notification, a successful party in proceedings brought before a Relevant Court can directly approach the competent court in India to seek execution of a judgment relating to the payment of a sum of money without the Indian court re-trying or re-examining the case.

This Notification will plug the gap in enforcement of commercial and civil disputes relating to payment of money, such as loan defaults, where delinquent Indian expatriates would no longer be secure in India providing a haven if proceedings in the Relevant Courts of the UAE go against them.

Backed by strong political and people to people interaction, UAE-India trade has grown to USD 60 billion and is poised for further growth. This development provides UAE parties with a level of security that is likely to increase confidence in Indian counterparts and consequently support this growth.

Overall, this should be considered a positive and long-awaited development. However, it is worth noting that some questions remain. Primarily, will Indian parties wishing to avoid adverse enforcement still be able to misuse the customary safeguards[2] available in respect of enforcement of foreign court judgments and take unfair advantage of the elongated timelines in India’s overburdened civil and commercial courts?

Given the sheer volume of business dealings between parties based in the UAE and in India, it won’t be long before the path to enforcement provided by the Treaty and the Notification will be put to the test.