Introduction
Two recent decisions have confirmed the enforceability of interim arbitral awards in the DIFC. In this article, we consider the implications of these decisions for parties and practitioners looking to enforce awards in the DIFC.
A common concern among arbitrators and arbitration practitioners is the enforceability of interim measures. Specifically, there is often a question as to whether interim awards or procedural orders, that do not finally dispose of a dispute (such as orders for injunctions or document preservation), will be enforced by domestic courts. In recent years, there has been a trend toward the enforcement of such interim measures.
In two recent judgments, Muhallam v Muhaf (ARB 021/2022)and its appeal in Neal v Nadir [2024] DIFC CA 001/2024, the DIFC Courts have confirmed that interim awards are enforceable in the DIFC, irrespective of whether the interim award is made by a tribunal seated in the DIFC or otherwise. The DIFC Courts’ close attention to the language of the DIF Arbitration Law offers practitioners are a useful reminder to specify the form of an order when one is requested from a Tribunal.
- Background facts and the first instance decision
- The Court of Appeal weighs in
- Implications for Arbitration and Enforcement in the DIFC
Background facts and the first instance decision
In early 2023, the DIFC Courts recognised an interim measure granted by an arbitral tribunal seated in London, determining the dispute in accordance with English law and the LCIA Rules. The proceedings concerned the question of whether the DIFC Court have jurisdiction to enforce interim measures ordered by arbitral tribunals that were not seated in the DIFC.
The Defendant, Muhaf, argued that the DIFC Courts lacked this jurisdiction such that the Court of Appeal should overturn the Court of First Instance’s order enforcing an interim award issued by a London seated award. Muhaf argued that interim awards were not “arbitral awards” for the purposes of Articles 42 and 43 of the DIFC Arbitration Law, and therefore not capable of enforcement by the DIFC Courts. Muhaf further argued that the only part of the DIFC Arbitration Law that allowed for the enforcement of provisional or interim measures was Article 24(2) which allows a party to seek orders from the DIFC Courts to enforce an interim award, only where that interim award has been issued by a tribunal seated in the DIFC.
It was common ground between the Claimant and Defendant that Article 24(2) only applied where the seat of the arbitration was in the DIFC. Muhaf relied on this to argue that the DIFC Courts had no jurisdiction to enforce an interim award issued by a tribunal seated outside of the DIFC.
The Court of First Instance disagreed with this view. The Court noted that Article 24 provided that interim measures could be “awards” and that the consistent use of the language of an “award” throughout the DIFC Arbitration Law (including at Article 42 and 43, which concern recognition of foreign awards) indicated that “award” should be given a single meaning that was broad enough to encompass both interim awards and final awards that disposed of the proceedings. The Court of First Instance concluded that “[s]o long as an interim measure is an award, it may be recognised and enforced” in the DIFC, whether that award was issued by a tribunal seated in the DIFC or otherwise.
The Court of First Instance gave further commentary on the differences between enforcement under Article 24(2) of the DIFC Arbitration Law, and Articles 42 and 43. The Court considered that Article 24(2) provided a summary procedure for the enforcement of interim measures where the seat was the DIFC, such that the award does not need to be recognised before it can be enforced in the DIFC.
The Court of Appeal weighs in
The Court of First Instance’s judgment was appealed to the Court of Appeal and reported as Neal v Nadir [2024] DIFC A 001.The Court of Appeal agreed with the Court of First Instance as to the enforceability of an interim award issued by a tribunal seated outside of the DIFC.
The Court of Appeal considered that the ordinary understanding of an “award” was anything that was partial, interim, or final. Accordingly, the Court held that the consistent use of “award” to describe both interim and final awards throughout the DIFC Arbitration Law, meant that there was no reason in principle why interim awards “should not be treated as an award for the purposes of enforcement and, as a matter of public policy, ever reason why it should be”.
The Court of Appeal explained that Article 24 (which specifically related to the enforcement of awards issued by a tribunal seated in the DIFC) outlined the DIFC Court’s supervisory jurisdiction of arbitral proceedings, which only extended to arbitrations seated in the DIFC. On the other hand, the Court of Appeal explained that Articles 42 to 44 outline the DIFC Court’s enforcement and recognition jurisdiction, which the Court of Appeal considered extended to all arbitration awards. The Court of Appeal noted that, as Articles 42 to 44 did not distinguish between final and interim awards, there was no basis for importing a “finality” requirement onto any award before the DIFC Courts would enforce it.
The Court of Appeal held that if a party had an arbitral “award”, the DIFC Courts would not distinguish whether that award was final or provisional when it was sought to be enforced in the DIFC.
Implications for Arbitration and Enforcement in the DIFC
The decisions above are a welcome development in the DIFC Courts’ arbitration jurisprudence. In particular, they provide clarity to practitioners and parties that the DIFC Courts will enforce awards issued by tribunals seated both within and outside the DIFC, whether those awards are final or provisional.
However, the close focus on the specific language of the DIFC Arbitration Law, and the focus in particular on the need for an “award”, may indicate that the DIFC Courts would not enforce a tribunal’s orders or directions if they were made only by way of procedural order.
The DIFC Courts’ close focus on the actual language of the Arbitration Law is a reminder to parties to carefully consider the requirements of local arbitration laws when seeking to enforce a tribunal’s orders and ensure that they specify the form of the orders sought from the Tribunal in the initial application, to ensure that those orders are enforceable in the local jurisdiction.
Should you have any questions about enforcing foreign awards in the DIFC, please don’t hesitate to contact Nicholas Sharratt (Nicholas.Sharratt@nortonrosefulbright.com) and Alexander Field (Alexander.Field@nortonrosefulbright.com).
