Enforcement of UAE judgments in England & Wales: recognition of reciprocity

By Shahed Ahmed, Associate, Fenwick Elliott

A recent English judgment enforcing a UAE judgment may have paved the way for clarity on the enforcement of UAE judgments in England and Wales. 

In 2020, the English High Court in Lenkor Energy Trading DMCC (‘Lenkor’) v Irfan Iqbal Puri (‘Mr Puri’) (‘Lenkor case’) decided to enforce a Dubai First Instance Court judgment that was issued back in 2017.

Mr Puri was the sole shareholder and managing director of a Dubai-based entity, IP Commodities DMCC (‘IPC’). Pursuant to a Tripartite Agreement for the sale and purchase of gasoil between Lenkor, IPC and a third-party buyer, Mr Puri signed two cheques as security on behalf of IPC. A dispute arose in respect of the transaction and Lenkor was successful in arbitration proceedings against IPC. As IPC had failed to satisfy the arbitral award, Lenkor encashed the cheques. The cheques bounced resulting in Lenkor launching criminal and civil Dubai court proceedings against Mr Puri. The Dubai courts (including the Dubai Court of Appeal and Court of Cassation) ultimately found in favour of Lenkor and ordered Mr Puri to pay circa AED123m.

In 2019, Lenkor made an application to the English courts for recognition, at common law, of the Dubai First Instance court judgment. Mr Puri resisted the application on the basis that such recognition would be contrary to public policy on the following grounds:

1. Illegality: the underlying transaction was illegal, which tainted the cheques and the claim to recognise the judgment;
2. Piercing the corporate veil: the Dubai court judgment ran counter to well-recognised principles of English law, i.e., Mr Puri was being made personally liable for the debts of IPC; and
3. Interest: the rate of 9% was exorbitant.

The English High Court rejected Mr Puri’s arguments: 

1. Illegality: the Dubai judgment is only impeachable on the ground that its recognition would be contrary to public policy, which was not the case here. The Dubai judgment did not in any event have to confront the illegality issue as it was based on the legal consequences of signed cheques that subsequently bounced. Even if it was permissible to look at the underlying transaction, illegality would not have been decisive of the case;
2. Piercing the corporate veil: whilst English law would not have imposed personal liability on Mr Puri; this is because it does not have a statutory provision equivalent to the Dubai Commercial Transactions Law. This does not follow that English public policy would be offended by recognising the judgment; and
3. Interest: the amount of 9% closely reflected the equivalent rates in England so to characterise it as a penalty was unrealistic.

Ultimately, summary judgment was ordered in favour of Lenkor, and the High Court’s decision was subsequently upheld by the English Court of Appeal1. 

Following the above, on 13 September 2022, the UAE Ministry of Justice (‘MoJ’) issued a circular to the Director General of the Dubai Courts and, by specific reference to the Lenkor case, requested the Dubai courts to take steps to confirm the principle of reciprocity (in other words, to enforce English judgments). 

Taken from an unofficial translation, the circular states, amongst other things:

“Further, Article (85) of the Implementing Regulations of the Civil Procedure Code amended in 2020 states that judgments and orders rendered in a foreign country may be enforced in the State under the same conditions prescribed by the law of the said country. Legislation does not require that a treaty on legal assistance be in place for enforcement of foreign judgments, and these judgments may be enforced in the State on the Principle of Reciprocity.

We find that this principle is met given that English courts have enforced a judgment rendered by Dubai Courts under a final judgment handed down by the High Court of Justice in UK in Lenkor Energy Trading DMCC V. Puri (2020) EWHC 75 (WB) (Lenkor), which is a judicial precedent and a binding principle for all English courts according to their judicial system.” 

Conclusion

This represents a significant step for companies operating in both the UK and UAE. It is likely to give judgment creditors more confidence to seek enforcement of English court judgments in the UAE and vice versa. This is particularly given the MoJ has proactively requested the Dubai courts to confirm the principle of reciprocity. The circular is, however, only addressed to the Dubai courts, so whether the Abu Dhabi courts will adopt a reciprocal approach is yet to be seen.

Additionally, if reciprocity is consistently recognised between the UK and UAE, it may also encourage – or in some cases, force – parties to settle any disputes between them. This is because the parties may well be more concerned that their overseas assets would be susceptible to enforcement, which may not have been the case previously.

There is perhaps one further note of caution. The MoJ circular is non-binding, and the UAE courts maintain the discretion to consider, amongst other things (e.g., jurisdiction, public policy), whether the Lenkor case does, in fact, demonstrate reciprocity from the English courts. This can be subjective, and because there is no concept of judicial precedent in the UAE, it is likely to result in inconsistent approaches taken by UAE courts (as we have seen, on occasion, with the recognition of foreign arbitral awards). As such, one should consider carefully when seeking enforcement of an English judgment in the UAE. Subject to any limitation considerations, it may be wise to first wait and see if the UAE courts adopt a consistent approach of reciprocity. 

Finally, reciprocity alone will not suffice for UAE courts to enforce English judgments. The conditions stipulated under Article 85 of Cabinet Resolution No. (75) of 2021 concerning the UAE Civil Procedure Law must also be verified before any order of enforcement is granted by the UAE courts. In other words, parties seeking to enforce an English judgment in the UAE should factor in all elements of enforcement, and not just reciprocity. 

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• 1. (2020) EWHC 75 (WB) & [2021] EWCA Civ 770