Cutting Back on Fraud: The Enforcement of UAE Judgments in India
On the 17th January 2020, the Ministry of Law and Justice in India declared the UAE as a “Reciprocating Territory” for the purposes of enforcing civil decrees or UAE court judgments related to money and other civil matters, under the Indian Civil Procedure Code of 1908. This is a highly progressive step in the administration of justice across the two countries, and a recognition of the accountability, reliability and fairness of the UAE system in enforcing foreign judgments. The important factor denoted in this development is that the government of India will now allow the enforcement of UAE court judgments in the district courts of India. This extends to enforcing judgments against properties, assets, and the imprisonment of debtors located in India whom are subject to legal action in the UAE. The tide changing implications to the administration of justice, and particularly the prevention of international fraud, are viewed and explained below.
Under international law, the legal concept of “comity” stipulates that most courts will enforce foreign judgments if they are not incongruent with local laws, domestic policy, or principles of equity in general. However, this concept can lead to a vague interpretation by courts, and a myriad number of questions can present themselves at the trial level of enforcement if there is no clear direction for the interpretation of this principle under domestic law. For example, the ability of a party to raise a defence against the judgment in court after the issues have already been litigated in the foreign judgment; the effect on public policy decisions and how they are to be analysed under this doctrine; and, since this is a legal “principle” what would the basis for enforcement be if there is no formal written policy in place to mandate enforcement by the government?
The lack of any clear direction on foreign judgments can create a “fraud gap,” where fraudsters can target jurisdictions without enforcement mechanisms in place for foreign judgments. For example, such individuals may enter into transactions with local businesses, and engage in various types of misrepresented business deals. Once the fraud is complete, and money is extracted through dubious means, the fraudster can then retreat to their home country, relying on the absence of an enforcement mechanism therein for any court proceedings brought in the jurisdiction where the fraud was conducted. When the victims attempt to recover funds, the legal expenses, length of time, and the lack of clarity on how courts in the two jurisdictions can cooperate to administer justice, could halt the recovery process before it has even begun.
The declaration by the Indian government, with respect to the UAE, naming the country as a “reciprocating territory,” is an explicit endorsement of the principle of comity in effect between the two countries. It means that the Indian government has now officially declared that under its civil procedure code, judgments rendered in the UAE are enforceable in India, due to the fact that the UAE also enforces Indian court judgments within its borders. In the example given above, any fraudulent Indian company who now seeks to retreat to India after completing illegal activities or breaching agreements in the UAE, will now be unable to evade their misdeeds in India. Any court action beginning in the UAE, can now officially be completed in India, with the district courts under the instruction to enforce UAE judgments in full, without hearing a defence against such judgments in the Indian courts.
The only conditions under which a district court may not accept a judgment rendered in the UAE arise under the following conditions:
(a) where the decree has not been pronounced by a Court of competent jurisdiction;
(b) where the decree has not been given on the merits of the case;
(c) where the decree appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognize the law of [India] in cases which such law is applicable;
(d) where the proceedings in which the decree was obtained are opposed to natural justice;
(e) where it has been obtained by means of fraud;
(f) where it sustains a claim founded on a breach of any law in force in India.
As can be seen above, these conditions of refusal are generally based on issues related to conflicts between UAE and Indian/international laws or principles of justice. Otherwise, a district court cannot re-examine issues in India, which have already been resolved through the judgment of a UAE court. These exceptions will also require proof, that such decrees conflict with Indian law, or that there was some fraud or extreme error in pronouncing the judgment.
To begin the process of enforcement, a plaintiff in India must file an execution application in the relevant district court, along with a certified copy of the UAE court judgment. In addition, it is important for the advocate hired to have a clear understanding of both the Indian legal system and the laws of the UAE, to be prepared for any objections to enforcement. Finally, to successfully manage cross border claims, a firm with an international network will be required, to provide a full suite of services in your recovery.