A civil action was filed before the Federal Court by an international company operating in the UAE ("Party A") against a Creditor ("Party B").
Facts of the Claim
Party A submitted that it had credited Party B a sum of money comprised of US$690,981.19, £2517 and FF 60,372.85 ("the Amount"). Party A further submitted that Party B had failed to re-pay the Amount on specific dates which had been agreed earlier between them. A decision was issued in favor of the Party A from the French First Instance Court in Nantes. This decision was upheld at a later stage by the French Court of Appeal and Cassation and Party A argued that this judgment had thus become final and binding. Subsequently, following the issuance of the French judgment, Party A filed a claim against Party B in the Sharjah Court of First Instance and requested the court to:
- Execute the French judgment in order that it become enforceable in the UAE; or, alternatively
- Consider the execution request as a Statement of Claim directed against Party B;
- Order Party B to pay the Amount to Party A, plus interest.
Sharjah Court of First Instance and Court of Appeal Sharjah
Court of First Instance ruled in favor of Party A and issued an
execution order with respect to the French judgment with the effect
being that it became enforceable in the UAE. Consequently, Party B
appealed the decision to the Court of Appeal, which upheld the
decision rendered by the Court of First Instance. Party B
subsequently appealed to the UAE Federal Court.
UAE Federal Cassation Court
As to the form
Party A requested the Court to dismiss Party B's argument on the following grounds:
- Party B had acknowledged in its statement of appeal that Party A was eligible to receive payment of the Amount thus there was no interest in the appeal; and
- The Court of Appeal decision, which had upheld the ruling issued by the Court of First Instance, could not be challenged as it was rendered in accordance with the law. Furthermore, Party A argued that the interpretation and application of a foreign law is a factual issue which falls within the discretion of the lower court judges, who may rule on it without the supervision of the Federal Court.
The Federal Court dismissed Party A's first argument and
held that interest in an appeal before the Cassation Court exists
whenever an appellant is held liable through dismissal of all or
part of his claims provided that he is a party to the proceedings
and has not abandoned his action against the other side. The Court
concluded that Party A did have an interest in the appeal, despite
Party A having asked for an execution order with respect to the
Party A's second argument was also dismissed by the Court of Cassation, on the grounds that a party can appeal a judgment issued by the Court of Appeal if the requirements of Articles 173 (1) and 177 of the UAE Civil Procedure Law (CPL) are met. Article 177 specified the form the appeal is to be in whilst Article 173(1) sets out several grounds for appeal:
Article 173(1) of the CPL provides as follows:
1. Adversaries may object in cassation against judgments by the appeal courts if the value of the action is in excess of ten thousand dirhams or is of an indeterminate amount, in the following circumstances:
a. If the judgment objected to is based on a breach of the law
or incorrect application or interpretation of the law.
b. If the judgment contains a nullity or there was a nullity in the procedures affecting the judgment.
c. If the judgment objected to was issued contrary to the rules of jurisdiction.
d. If the dispute was heard contrary to another judgment issued in the same matter and with the same adversaries and that judgment is held to be legally valid.
e. If the judgment does not state grounds or if the grounds stated are insufficient or obscure
f. If the judgment pronounces on matters not requested by the adversaries or on more than they had requested.
As to the substance
Party B argued that the Court of Appeal had erred in its decision to order the execution of the French judgment. Party B submitted multiple arguments in support of this plea:
- The Court erred when it decided that the French court was exclusively competent to initially hear the matter;
- The Court misinterpreted Article 21 of the UAE Civil Transaction Code;
- The Court breached certain provisions of Convention on Judicial Assistance executed between France and the UAE.
- Party A's appeal had been deficient as to form;
- The court contradicted the international principle of reciprocity.
The Court of Cassation dismissed Party Bs' arguments and in doing so, ruled in relation to a number of important issues.
- The Court interpreted Articles 21 and 22 of the UAE Civil Transactions Code to mean that the summoning of parties to proceedings, and the notification of the decision rendered in relation to such proceedings is to be carried out in accordance with the laws of the state where the action is brought, the proceedings are conducted and the judgment is rendered. This Court confirmed that this is the relevant procedure to be applied as long as the application did not contradict matters of public policy of any other state where the proceedings are to be cited as evidence. Furthermore, the Court held that the effect of Articles 13, 14 and 15 of Federal Decree No. 31/92 ratifying the Convention on Judicial Assistance for the recognition and enforcement of judgments in civil and commercial matters between the UAE and France was as follows:
1. Judicial decisions rendered by the Courts of one State shall
be recognized and may be declared enforceable in the other State on
the condition that the decision is rendered by a Court which is
competent under the rules organizing the conflicts of jurisdiction
in force in the requested State, or according to the rules
contained in Article 14 of this Convention;
2. The law governing the dispute will be the law designated by legislation / rules in the requested State dealing with the conflicts of laws;
3. That the decision is enforceable as it is final and binding, which means that it is no longer subject to an ordinary appeal or application for judicial review in the State of origin (i.e. France);
4. That the parties were duly summoned, represented or declared absent, and that the decision does not include any provision which is contrary to the public policy of the requested State and there are no other proceedings between the same parties that are grounded in the same facts as those in the State of origin (that is, no other proceedings which are still pending before a court of that requested State which were was initiated prior to the subject action or which have resulted in a judgment rendered by a Court of the requested State, if the proceedings before that court were initiated prior to filing the legal case); and
5. The Court of origin shall have jurisdiction when, at the time of initiating the legal action Party A was domiciled or habitually resident in the State of origin, or if the contractual obligation (the subject of the dispute) has been or should have been performed in the State of origin with the express or tacit consent of Party A.
6. That the procedure securing the enforcement of the judicial decision shall be governed by the laws of the requested State (i.e. the UAE) but that the judicial authorities of the requested State should not consider the merits of the decision.
The Court of Cassation noted that the decision of the Court of First Instance, which was upheld by the Court of Appeal, had confirmed that although each country has its territorial sovereignty, interdependence and globalization have necessitated the recognition and enforcement of foreign decisions by States. Without such recognition, an interested party would have to bring proceedings in each country where his claim is to be asserted which action would be onerous, resulting in additional time and costs. However, most importantly, such a course of action could result in multiple conflicting decisions.
It was noted that the above obstacles had led the majority of countries to recognize foreign judgments and to declare them enforceable, either on the basis of an agreement or a convention related to the enforcement of decisions between the state here the decision originated and the state where recognition is sought, or on the basis of reciprocity notwithstanding the absence of a convention. It has been agreed that reciprocity is established not only by statutory provisions in the state whose courts issued the decision but also can be established by custom, the principles that can be gleaned from case law or from a statement issued by the chargé d'affaires of a state. In this regard, Party A had been able to file a statement issued by the French Consul in Abu Dhabi, which statement had confirmed that foreign court decisions are enforceable in the territory under Article 509 of the French Code of Civil Procedure.
In these circumstances, the foreign judgment which required an execution order had been issued by the Commercial Court of Nantes, France, and subsequently upheld by the Versailles Court of Appeals. The Versailles Court of Appeal decision was then upheld by the French Court of Cassation. It was this foreign judgment which was given an execution order after being translated by a duly accredited sworn translator and attested by the French Ministry of Foreign Affairs, the UAE Embassy in Paris and the Consular Department in the UAE in accordance with the laws and regulations of France.
The Court of Cassation held that the foreign judgments were satisfactory and valid under the terms of the Convention. It was also noted that the judgment was related to a muqawala (i.e. a supply contract) but that the contractor's obligation involved a construction project which could be classified as a commercial activity, and that further, both party A and Party B were commercial companies.
According to both the rules of international judicial jurisdiction and Article 14 (both sections) of the Convention on Judicial Assistance between the UAE and France, the originating Court has domestic, specific and international jurisdiction to hear the dispute. With regards to the law applicable to the dispute, Section B of the Convention (supported by Article 19 of the Civil Transactions Code) states that the form and substance of contractual obligations shall be governed by the law of the state in which the contracting parties are both resident (if they are resident in the same state), or the law of the state in which the contract was concluded (if the parties are resident in different states). Alternatively, if it is apparent from the circumstances of the matter that the intention of the parties was that another law is applicable, the alternate law reflecting the parties' intentions may be applied.
The Court of Cassation noted that the fact that the contract was concluded and delivery and payment occurred in France, rendered its law applicable to the dispute pursuant to Section B of the Convention.
With respect to the finality of the French decision, it is clear from the decisions of the Courts in France that as all avenues of appeal were exhausted by Party B the decision became final as a result of the decision of the French Courts of Appeal and Cassation. The UAE Court of Cassation noted that the French appeal Courts had dismissed the appeal on the basis that they were time-barred. The initial decision had been notified to the Public Prosecution in Nantes within the statutory time limit and service of the same had been duly affected on Party A. The notice of services provided to Party A contained details of the relevant time limits for appeal and the extensions to those time limits allowed under the New Code of Civil Procedure. In this regard, Article 21 of the Civil Transactions Code provides that procedural matters, including matters concerning the validity of service, shall be governed by the law of the state in which the originating decision was rendered.
Based on the points outlined above, the UAE Federal Court dismissed the appeal with costs.
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