DIFC Courts Affirm Enforceability of Foreign Interim Arbitral Awards
In Neal v. Nadir [2024] DIFC A 001, the Dubai International Finance Centre ("DIFC") Court of Appeal held that provisional arbitration awards issued by tribunals seated outside the DIFC are enforceable within the DIFC. The decision recognized the enforceability of interim relief because of the binding nature of the award at issue.
The Decision
The central issue in Neal v. Nadir was whether a foreign-seated "Provisional Award on Interim Relief" imposing a freezing order and an ancillary disclosure order could be enforced in the DIFC. The respondent opposed the enforcement of the award on the basis that the court's power to enforce interim measures under Article 24 of the DIFC Arbitration Law No. 1 of 2008 (as amended) applies only to DIFC-seated arbitrations and does not extend to the enforcement of interim relief by foreign-seated tribunals. At issue was also the enforceability of an interim, as opposed to a final, award.
While recognizing the debate on whether interim relief is enforceable under the New York Convention, the court considered that in modern arbitration practice, "few would regard it as desirable that awards of this kind should not be enforceable." The court rejected the argument that the enforceability of an award in the DIFC turned on a criterion of "finality." In the court's view, it is "the binding nature of the award which is critical." The court also stated that "[o]nce it is accepted that a provisional or interim award is indeed an award" under the DIFC Arbitration Law, it found no compelling reason why parties should not be obliged to comply with interim awards to which they have agreed to be bound.
Important Points
The decision provides important jurisprudence in the DIFC Courts regarding the enforceability of provisional awards providing interim relief. Because the question of enforceability of interim awards involves analysis under the New York Convention and the laws of the state in which enforcement is sought, enforcement of interim awards currently varies widely from jurisdiction to jurisdiction. In deciding this case, the DIFC Courts have set a modern standard around the binding nature of such awards in deciding whether the interim relief should be enforced. It will be interesting to see whether other courts around the world will follow the DIFC Court's reasoning and continue the trend toward enforceability of interim relief awarded in foreign-seated arbitrations.
