Arbitration may be defined as a process of dispute resolution between the parties in dispute through Arbitral Tribunal. The parties appoint an arbitrator who helps them to resolve their dispute. Arbitration is an alternative to litigation as a method of dispute resolution. The law relating to arbitration in India is based on the English Arbitration Law. Foreign legal material is easily available due to communication and technological development. Foreign judgments are recognized based on bilateral or multilateral treaties or conventions or other International Instruments.
Arbitration is a legal process that takes place outside the Courts; however it is final and legally binding. Arbitration is a flexible method of dispute resolution, which can give a quick, inexpensive, confidential, fair and final solution to a dispute. The procedure of arbitration includes the determination of the dispute by one or more independent third parties called as the arbitrators. They are appointed by or on behalf of the parties in dispute.
Arbitration Award and Foreign Judgments
An arbitration award may be defined as the decision of the arbitrator. It can be a monetary award where a party is directed to pay to another party or a non-monetary award. An arbitration award can be made for payment of a sum of money, declaration upon any matter to be determined in the arbitration proceedings, injunctive relief, and specific performance of a contract and for rectification, setting aside or cancellation of a deed or other document.
The foreign judgment is enforced based on the principle that where a foreign court of competent jurisdiction has adjudicated upon a claim then there exists a legal obligation to satisfy that claim where the said judgment needed to be enforced.
However, acquiring an arbitral award or foreign judgment is not an end of a legal battle. Its execution is subsequent step and it can be colossal particularly in its implementation or execution of any order that is in another country as opposing to where the judgment or the award was issued. In UAE execution of an arbitral award or foreign judgment is very challenging when the other party (obliged to pay) is shying away from his obligations under the award. It is inevitable to formulate strategies by the one in whose favour the judgment is passed for successful execution of a foreign judgment with the help of lawyers in UAE.
New York Convention and UAE
UAE is a signatory to New York Convention on Recognition and Implementation of Foreign Arbitral Awards that permits automatic acknowledgment of foreign awards from countries that are signatory to this Convention. On signing of the treaty, the signatory country has altered their procedure for enforcement of foreign arbitral awards, even if such awards fails to comply with the requirements of UAE Civil Code, yet it fulfills the requirements of New York Convention.
Issuance of New Rules
The UAE Government has issued new rules and regulations under a Cabinet Decision for implementing foreign judgments and arbitral awards. The provisions of new rules and the application for enforcement shall be submitted before the Judge and he shall be obliged within three days to rule upon the submitted application, however, such application can still be appealed.
Enforcement of order
The execution judge must be satisfied in order to issue an enforcement order on the foreign judgment on the following aspects:
- The UAE Courts do not have any exclusive jurisdiction to try the matter;
- The foreign court or arbitration institute shall be issued as per the rules and regulations of that country and it is duly attested from relevant ministries;
- The foreign judgment obtained was not an ex-parte judgment and both the parties need to be duly summoned and the judgment was issued in their presence;
- The award is binding on the parties according to the laws of the country;
- The award issued in the country should not be against the public order of UAE.
The new basic prerequisites are the foregoing requirements that are established by the UAE Courts for the enforcement or acknowledgment of foreign judgments. Construction contracts have the same requirements when come up for the execution before the UAE Courts.
These are complexed and intricate as compared to other contracts; the foreign judgments issued under such contracts will be enforced either through the New York Convention or through the requirements of new Cabinet Decision for enforcement of foreign awards or judgments. As we have discussed above that passing of an arbitral award is not sufficient and it’s execution is equally important. Hence, it is advisable to take expert advice and help when it comes to execution of an arbitral award or foreign judgment.