The ADGM adopts memorandum of understanding with Ras Al Khaimah Courts on enforcement of awards

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In a further strategic move to facilitate the enforcement of Abu Dhabi Global Market (ADGM)-ratified awards across the United Arab Emirates (UAE), the ADGM courts and the Ras Al Khaimah Courts Department have entered into a memorandum of understanding for the mutual recognition of judicial instruments (Memorandum of Understanding between Ras Al Khaimah Courts Department and Abu Dhabi Global Market Courts concerning the Reciprocal Enforcement of Judgments, dated 5 May 2019, the RAK-ADGM MoU). These include judgments, orders, court-certified settlement agreements and ratified awards, issued by the ADGM and Ras Al Khaimah courts.

The RAK-ADGM MoU is adopted pursuant to:

  • Article 13(11) of Abu Dhabi Law No. (4) of 2013, which empowers the ADGM courts to enter into memoranda of understanding with external bodies to promote the recognition and enforcement of ADGM judicial instruments.
  • An earlier memorandum of understanding between the RAK and ADGM courts of 2017, which seeks to promote the cooperation between those two courts on a broader basis, including in matters of recognition and enforcement (see clause 2(5) and (6))).

The reader is reminded that the ADGM is a financial free zone established by Ruler’s Decree in Abu Dhabi in 2013, the capital of the UAE. It is serviced by a standalone, offshore legal system with an autonomous body of common law courts and substantive law, including the ADGM Arbitration Regulations 2015 which permit arbitrations to be seated in the ADGM. Ras Al Khaimah, in turn, is one of the seven emirates that form the UAE. As opposed to the ADGM, it operates on the basis of the onshore UAE civil law system.

The main, unpronounced objective of the RAK-ADGM MoU is to expand the area of free movement of judicial instruments between the onshore Emirati and the offshore ADGM courts, and to contribute to the full systemic integration between the off and onshore legal systems that together form the judicial landscape of the UAE. With this in mind, it is evident that the RAK-ADGM MoU follows in the wake of other memoranda of a similar nature (see in particular the memorandum of understanding between the Judicial Department of Abu Dhabi and ADGM courts concerning the reciprocal enforcement of judgments, dated 11 February 2018, on which I reported on this blog previously) and is as such closely modeled on the wording of those memoranda.

Given the integrational objective pursued by the RAK-ADGM MoU (and the other related memoranda of its nature), the reference to the “reciprocal enforcement” of judgments between the RAK and ADGM courts in its title (and corresponding wording in other memoranda of its nature) is somewhat misleading: the RAK-ADGM MoU essentially creates a regime of mutual recognition between the two courts and as such presumes a relationship of trust between the on and offshore UAE courts. It is on the presumption of such a relationship of inter-judicial trust that the RAK-ADGM MoU proscribes the re-examination of the merits of any qualifying judicial instruments (see clause 2, RAK-ADGM MoU: “without re-examining the substance of the dispute on which they have been issued”; and clauses 10 and 15). In a similar vein, the RAK-ADGM MoU clarifies that there is no room for the duplicate ratification of awards by both the court of origin and the court of enforcement: “A ratified or recognized arbitral award by RAK courts or ADGM Courts has the same force as a judgment of either of the Courts and therefore does not require any further ratification or recognition by the other court.” (See clause 5(a)(ii), RAK-ADGM MoU.)

For a judicial instrument issued by the RAK courts or the ADGM courts, including ratified awards, to qualify for mutual recognition and enforcement under the RAK-ADGM MoU, it must comply with the following two conditions:

  • Bear the following executory formula: “The authorities and competent bodies must proceed to execute this instrument and to carry out the requirements thereof, and they must give assistance in the execution thereof even by force if so requested.” (See clauses 7(a) and 12(a), RAK-ADGM MoU.)
  • Be accompanied by an official translation into Arabic (for RAK enforcement) or English (for ADGM enforcement) (see clauses 7(b) and 12(b), RAK-ADGM MoU).

The RAK-ADGM MoU also expressly provides for the power of each court to enlist the assistance of the respectively other court to ensure proper enforcement of each other’s judicial instruments at the execution stage (see clauses 9 and 14, RAK-ADGM MoU). In addition, each court is required to designate one court official to liaise and collaborate with his or her counterpart at the respectively other court, to ensure that there is no duplication in enforcement proceedings on- and offshore, and to assist court users in on- and offshore enforcement (see clause 16(a), RAK-ADGM MoU).

Finally, the RAK-ADGM MoU makes latent reference to the potential operation of the ADGM courts as a conduit jurisdiction for recognition and enforcement of non-ADGM judicial instruments for onward execution against a judgment or award debtor’s assets onshore. It states that:

“… [t]he requirements and procedure set out in this MoU are intended to encourage litigants to seek enforcement from the court in whose jurisdiction the subject of enforcement is situated.” (Clause 3, RAK-ADGM MoU.)

That said, readers will be aware that the operation of free zones as a conduit has caused controversy within the context of the Dubai International Financial Centre (DIFC)’s acquired role for that purpose. The ADGM courts are likely to tread carefully.

To conclude, the RAK-ADGM MoU inscribes itself in a line of memoranda of understanding between the onshore or offshore courts that seek to create a pan-UAE area of free movement of judicial instruments between the civil law mainland and the offshore common law free zones. This will result will result in a fully integrated legal system, on- and offshore, in the not so distant future. For such a system to operate with the requisite measure of reliability to ensure consumer satisfaction, reliance will have to be placed on the mutual recognition of judicial instruments, dispensing with any form of second look at the merits of the subject judicial instrument. This, in turn, presumes a relationship of trust between the issuing and supervisory courts, both on- and offshore. Time will tell whether that presumption will ultimately hold in fact. However, for now, it can be said with some confidence that the future of a fully integrated onshore/offshore UAE court system giving rise to a pan-UAE area of free movement of infra-UAE judicial instruments, including ratified awards, lies bright ahead.