We are pleased to share yet another success in enforcing a foreign arbitral award in the local UAE Courts for our client and successfully defending an appeal in the process. At the outset, this particular matter centred around a petition for a court order recognising and affixing an enforcement seal to a Singaporean arbitral award in the UAE. The petition involved the application of the civil procedure code (Federal Decree Law No. 42 of 2022), which came into force on 2 January 2023 (the “New Civil Procedure Code”).
Since the implementation of the New Civil Procedure Code, Articles 222 - 225 set out a procedure for the enforcement of foreign awards. Leveraging this more streamlined procedure, which no longer requires a preliminary application for ratification, our team successfully applied to the execution Court. Within a matter of days, we obtained an order recognising the foreign award in the UAE and directing its immediate enforcement. This was on the basis of the applicable provisions of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) (the “New York Convention”) to which the United Arab Emirates is a signatory.
However, the matter did not end there. The opposing party filed an appeal against the enforcement of the award, leading the Court to suspend the enforcement proceedings pending the appeal’s resolution. The appeal hinged on the assertion that the Singaporean award is in conflict with UAE public policy, as per Article V(2) of the New York Convention, which stipulates that enforcement of an award may be refused if it is found that its enforcement would be contrary to local public policy.
In the Singaporean arbitration proceedings, the dispute had revolved around whether the opposing side had been entitled to deduct certain local taxes under the laws of their domicile. The tribunal, interpreting a contractual provision, had ruled in favour of our client, determining that the other side was not entitled to these deductions.
In the appeal, the opposing side attempted to draw parallels with a number of UAE court precedents, which have ruled that arbitration tribunals cannot decide on tax issues as they pertain to public policy and are therefore non-arbitrable. However, we argued that these precedents are pertinent only to arbitrations governed by UAE Federal Arbitration Law and seated in the UAE, distinguishing our case, which fell outside this jurisdiction.
More substantially, our position was that the tribunal's decision had not constituted a ruling on a tax matter per se, but was an exercise of its powers in interpreting contractual terms regarding whether the prices should include or exclude local taxes. Ultimately, the Court concurred with our second argument and dismissed the appeal, upholding the original enforcement order. This decision not only reaffirms the enforceability of foreign arbitral awards in accordance with the new streamlined procedure under UAE law, but also highlights the clear distinction between interpreting contractual terms regarding tax inclusions and addressing tax matters tied to public policy.
Currently, our litigation team is ardently engaged in enforcing the award against the assets of the debtor. As always, we are devoted to bringing this case to a close in a manner that affirms the value and weight of the award granted to our client.
Our litigation and arbitration team routinely handles the enforcement of arbitration awards and judgments, as well as commencing and defending appeals. If you have any questions about enforcing arbitral awards and local rulings, or navigating the appeals process across various sectors, please don’t hesitate to contact our experienced legal team.
Evelina Gurtskaya
Associate
NHB LEGAL