Clever Thinking Out of Dubai

Dubai, February 2015: DIFC Courts Practice Direction No. 2 of 2015 – parties can now choose to refer their DIFC money judgments for enforcement through the DIFC-LCIA Arbitration Centre, effectively converting their judgement to an arbitral award.

Having done that, the arbitration award should be enforceable in all New York Convention countries thereby avoiding limitations of state court judgments that they are not normally enforceable outside of the home jurisdiction absent the usual and limited reciprocal enforcement mechanisms.

To some extent this mirrors the efforts by some in the mediation community, including the IBA, to find a mechanism to turn a cross border mediated settlement into an arbitral award which would then be enforceable internationally under the New York Convention.

For more, see two short Kluwer articles The Handbrake on Global Mediation and The Race towards a New York Convention for Cross-border Mediated Settlement Agreements: the Fable of the Tortoise and the Hare Revisited?

This lack of any coherent method of enforcement is widely seen as a major impediment to further globalisation of mediation, the argument being how can we expect parties involved in large international commercial disputes to embrace mediation if there is a risk that any outcome might be, to all intents and purposes, unenforceable.

DIFC’s innovative Practice Direction issued in February and subject of much discussion since late 2014, is the first of its kind globally – it offers parties the advantages of both litigation and arbitration since it allows the DIFC-LCIA Arbitration Centre to provide an additional remedy to the judgment creditor if the parties choose to submit any disputes they may have about the payment of money judgments to arbitration under the auspices of the DIFC-LCIA Arbitration Centre. In this way the judgment creditor obtains an arbitral award for their unpaid money judgment that can be enforced in the 150 plus New York Convention countries providing greater enforcement internationally.

As Michael Hwang, Chief Justice of the DIFC Courts, says

 we have developed an important tool to synthesize litigation and arbitration by giving concurrent remedies for enforcement and thereby resolve one of the great problems of international litigation

DIFC Courts Practice Direction No. 2 of 2015 – Referral of Judgment Payment Disputes to Arbitration

DIFC Courts – Chief Justice’s Explanatory Lecture on Referral of Judgment Payment Disputes to Arbitration – November 2014

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