The DIFC Court of Appeal (“Appeal Court”) confirmed in a recent judgement in Neal v Nadir [2024] DIFC A 001 (“Judgement”) that the DIFC Courts have jurisdiction to enforce interim measures where the seat of the arbitration is not the Dubai International Financial Centre (DIFC), when those interim measures take the form of an award.
Factual Background
The case concerned a provisional award rendered by an arbitral tribunal seated in London, where the relevant arbitration agreement provided for disputes to be referred to arbitration under the now defunct DIFC-LCIA Rules. As previously reported, in September 2021, the joint venture between the DIFC and the London Court of International Arbitration (DIFC-LCIA) was abolished, and all respective assets, liabilities, rights, and obligations of these institutions were transferred to the newly established Dubai International Arbitration Centre (DIAC) by way of the Decree No. 34. The arbitral tribunal in this case proceeded under the DIAC Arbitration Rules on this basis.
The issue of the jurisdiction of the arbitral tribunal and the effect of the Decree No. 34 were not discussed, as apparently the arbitral tribunal would issue its award on jurisdiction in the near future. The matter that was subject of the Judgement though was whether under DIFC Law No. 1 of 2008 as amended by DIFC Law No. 1 of 2013 (“DIFC Arbitration Law”) an award on interim measures can be enforced when the seat of arbitration lies outside the DIFC.
As previously reported, this was confirmed in Muhallam v Muhaf [ARB 021/2022] last year in the DIFC Court of First Instance.
The Rationale and Conclusions of the Appeal Court
The crucial point of discussion was the correspondence between:
- Article 24 of the DIFC Arbitration Law, which provides for the right of a party in whose favour an interim measure has been granted to request from the DIFC Court an order enforcing the Arbitral Tribunal’s order. Article 24 only applies when the seat of arbitration is in the DIFC (Article 7(1) of the DIFC Arbitration Law); and
- Articles 42 and 43 of the DIFC Arbitration Law, which provide for the recognition and enforcement of “awards” and apply when the seat is outside of the DIFC (Article 7(2) of the DIFC Arbitration Law).
The Appellant argued that Article 24 of the DIFC Arbitration Law is the only way of enforcing interim measures, and since it does not apply when the seat is outside of the DIFC, the Court may not enforce an award on interim measures when the seat is in London.
The Appeal Court disagreed based on the interpretation of the word “award” in Articles 42 and 43 of the DIFC Arbitration Law. It concluded that there is nothing in Articles 42 and 43 of the DIFC Arbitration Law that distinguishes between final and partial awards, on the one hand, and interim and provisional awards, on the other. It further noted that Article 24 of the DIFC Arbitration Law itself “refers to interim measures in an award prior to the award which finally determines the dispute.”
The Appeal Court further reasoned that it is not the finality of the award that is crucial, but its binding nature, and interim and provisional awards are binding as “parties to an arbitration agreement who have agreed to be bound by decisions of the arbitral tribunal are obliged to comply and there is no good reason why they should not be compelled to do so.”
On this basis, the Appeal Court concluded that there was no good reason for not enforcing an award, whether it be an award for interim measures or otherwise, subject to the possible challenges under Article 44 of the DIFC Arbitration Law.
Court’s Powers under Article 24(2)
The Appeal Court also made an important observation obiter dictum in respect of Article 24(2) of the DIFC Arbitration Law. Specifically, the Appeal Court in effect disagreed with the Court of First Instance, when the latter concluded that, under Article 24(2) of the DIFC Arbitration Law, the court would give force to the Tribunal’s decision without considering whether enforcement was appropriate. The Appeal Court noted that, even under this provision, the Court “would have a discretion, to be exercised judicially, whether or not to enforce such an order which was not in the form of an award.” The Appeal Court did not provide guidance, though, on what grounds enforcement could be refused.
Effect of the Judgement
The Judgement is a welcome endorsement of the earlier development, which is in line with both international trends and UAE’s commitment to act as a pro-arbitration jurisdiction, as it confirms the existence of an additional option for the parties to arbitrations seated outside of the DIFC to enforce tribunals’ awards on interim measures. This opportunity is additional to the possibility to request interim measures directly from DIFC Courts under Article 15 of the DIFC Arbitration Law.
