Service of DIFC Court Documents Becomes Easier in the Arab World | K&L Gates LLP

The 1983 Riyadh Arab Agreement for Judicial Cooperation (Riyadh Convention) aims to facilitate judicial cooperation between signatory countries. It is an important tool for the enforcement of arbitral awards in the Arab world, especially in countries like Libya, Sudan, Somalia and Yemen, which are not signatories to the 1958 Convention for the Recognition and enforcement of foreign arbitral awards (commonly known as the New York Convention).

However, until recently, parties seeking service by the DIFC tribunal on a resident of another Riyadh Convention signatory state faced significant obstacles resulting from a finding by the DIFC tribunal in Pearl Petroleum Company Limited & Others v Regional Government of Iraqi Kurdistan1 this service was to be effected in accordance with Article 6 of the Riyadh Convention.

Article 6 of the Riyadh Convention provides that service of “legal and non-legal acts and documents” relating to the proceedings shall be effected by the court of the district in which the person or entity resides, rather than by diplomatic.

The effect of the DIFC Court decision in Pearl petroleum – that the notification procedure of Article 6 is both compulsory and exclusive – was that, if the court seised refused or failed to make the notification, it was not permissible to adopt another means of notification and the party requesting notification was without recourse.

A recent decision by the DIFC tribunal appears to have resolved this issue. The DIFC Court of Appeal in Lahela vs. Lameez2 considered an appeal against the trial court’s decision to dismiss the defendant’s request to set aside an ex parte DIFC court order allowing the plaintiff to serve a DIFC court order recognizing and enforcing an arbitration award from the DIFC headquarters (the execution order) by other means (the Alternative Service Order). The alternate service order was requested by the plaintiff after the local court in Erbil, Republic of Iraq refused to serve the enforcement order on the defendant, a company registered in Erbil, as required. Article 6 of the Riyadh Convention. The defendant argued that Pearl petroleum had correctly concluded that the Riyadh Convention is part of DIFC law, that Article 6 of the Riyadh Convention provides for the mandatory and exclusive mechanism of service and that the DIFC Court does not have the power to order service alternative.

The DIFC Court of Appeal held that Article 3 (2) of Federal Law No. 8 of 2004 on Free Financial Zones – which provides that free financial zones are subject to all federal laws, to the exception of federal civil and commercial laws – expressly excludes the provisions of Article 6 of the Riyadh Convention from application within the DIFC. In reaching this conclusion, the Court determined that Article 6 is a provision relating to civil procedure and that it is therefore properly characterized as “civil and commercial law” for the purposes of the exemption provided for in the Article 3 (2).

The DIFC Court of Appeal further ruled that “there are no conditions of the [Riyadh] Convention according to which service under its provisions must be the exclusive means by which service can be validly effected ”and any interpretation to this effect would be“ contrary to its obvious objects and purpose ”. The DIFC Court of Appeal therefore concluded that, under its correct interpretation, the Riyadh Convention is not the only means by which service can validly be effected; however, the facilities provided by the Riyadh Convention are available to the Court should it choose to use them.

Consequently, the decision in Lahela confirms that the DIFC tribunal is not bound to apply the provisions of Article 6 of the Riyadh Convention and that it may order other means of service (or, if its own rules allow, completely waive to the meaning).

In light of this ruling, the process of serving a DIFC tribunal order recognizing and enforcing an arbitration award from the DIFC headquarters on a foreign defendant residing in another Riyadh Convention state should now be easier.

Given the broad scope of the Riyadh Convention, the decision of the DIFC Court of Appeal is a positive step and reaffirms the DIFC as a favorable arbitration court.

1 [2017] DIFC ARB 003

2 [2020] DIFC CA 007

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