Fichte & Co has recently obtained a judgment from the Federal Court of First Instance of Fujairah (UAE), recognising two London arbitration awards given in absentia of the Respondents. This is believed to be the first judgement of its kind in the UAE recognizing foreign arbitration awards with reference to the 1958 New York Convention related to the Recognition and Enforcement of Foreign Arbitral Awards (the “NY Convention”), and is of significant importance for now creditors will be able to enforce their recognised claims in the UAE.

So far the UAE Courts were known to retain their jurisdiction, thus meaning they were contending the merits and not only the form of a foreign award, despite the ratification of the NY Convention. This was done under the formal pretext of the foreign awards being inconsistent with the procedural rules as stated by the domestic law, or under the “catch all” exception of non compliance with “public policy” or “morals”. It was therefore a common notion among lawyers that these obstacles could not be overcome, thereby leaving the foreign award holders in the dark, not able to enforce their rights against opponents in the UAE.

The judgment under review, significantly departing from usual practice, upholds in its motivation the same reasoning adopted by Fichte & Co litigation team in their submissions and inspiring the NY Convention. Aim is to simplify the recognition and enforcement of foreign arbitration awards between signatory States, allowing recognition and enforcement as if the awards have been issued domestically in each signatory State. It is also to be noted that the foreign awards in question were issued in absentia, a fact previously considered by the Court as depriving the defendant from his right to defend the claim, and thus a further strong reason adopted by the UAE Courts to reclaim their jurisdiction over the merits of the question.

Legal advice will have to be changed following this judgment, as the recognition and enforcement of foreign arbitration awards seems now possible in the UAE, not only in theory but also in practice. Previously, any company whose right had been upheld by a foreign Arbitration Tribunal was advised that its chances to enforce the same in the UAE were minimal notwithstanding UAE ratification of the NY Convention because of the Courts’ attitude, while now the Fujairah Court has showed to have “no objection” to execution of the same. This judgment is not only good for all parties that hold already a foreign award in their hand but also for all companies concerned about outstandings in a contractual relationship that opted for foreign arbitration: where lawyers have previously predicted pursuing arbitration proceedings would not be convenient because of the un-enforceability of the final award,  it is now time to revisit this advice.

In good substance the Fujairah Court has not only answered the claimants’ request for the recognition of these awards, but moreover the calls of an entire business community for a reasonable approach to the NY Convention serving as a further incentive for investments in the UAE, helping to reassure potential investors that they can enforce their rights against their debtors domiciled in the UAE. Yes they can!

Interested readers willing to obtain a copy of the judgment pronounced by the First Instance Federal Court of Fujairah or for any further clarifications or enquiries on said judgment and its proceedings, please contact Fichte & Co litigation team: Chehade El-Kahi (chehade.elkahi@fichtelegal.com)