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Indian Debtors and UAE Court Judgments: New Processes and New Prospects of Recovery in India

  • Market Insight 23 January 2020 23 January 2020
  • Middle East

  • Global Recoveries

On 17 January 2020, the Central Government of India declared the UAE to be a reciprocating territory for the purposes of the Code of Civil Procedure, providing new rights (and options) to UAE creditors seeking the enforcement of UAE Court Judgments against individual and corporate debtors located in India.

Indian Debtors and UAE Court Judgments: New Processes and New Prospects of Recovery in India

Following CSL Chambers' recent article setting out the details of the notification and its practical impact from an Indian law perspective and in light of Clyde & Co's association with CSL which allows us to provide a seamless, full-service offering to clients seeking to enforce UAE Court judgments against debtors located in India, we set out below a quick summary of responses to the questions you are likely to be asking yourself given this development.

If you are seeking to obtain, or to enforce, a UAE Court judgment against an Indian debtor; or have previously elected not to pursue a UAE Court judgment given the difficulties and risks involved in the process, the landscape has now changed and whilst this new procedure is in its infancy, the pursuit of judgment debts via the Indian Courts has, in our view, become more attractive and, more importantly, more likely to succeed.   

A UAE creditor's perspective: your questions answered

Wasn’t there an existing treaty on reciprocal enforcement in place between the UAE and India?

Yes. Some 20 years ago, the UAE and India entered a treaty for judicial co-operation and the mutual recognition and enforcement of judgments (the Treaty). The Treaty, entitled 'Agreement on Juridical and Judicial Cooperation in Civil and Commercial Matters for the Service of Summons, Judicial Documents, Commissions, Execution of Judgements and Arbitral Awards', was signed on 25 October 1999.

Article 15(1) of the Treaty provides for the mutual and reciprocal recognition and enforcement of court judgments:
Each of the Contracting Parties shall, in accordance with its laws, recognise and/or execute decrees[1] passed by the Courts of the other Contracting Party in civil, commercial and personal matters and by criminal courts in civil matters.

What changed on 17 January 2020?

Although the Treaty was signed and ratified by both governments in 1999 and enacted into UAE domestic law in 2000, it was not until 17 January 2020 that India declared the UAE a "reciprocating territory" pursuant to its domestic laws and procedures (the Notification). This meant that the Treaty was never before given effect in India. The Notification gives it full legal effect with the result it can now be relied on in India.

What does this change mean for UAE creditors?

Whilst the application of the Notification is yet to be tested, in theory, the enforcement of UAE Court judgments in India will be easier and quicker (in relative terms).

Historically, a creditor who successfully obtained a UAE Court judgment that it wished to enforce against the debtor in India needed to commence a new substantive claim against that debtor before the Indian Courts based on the UAE judgment (which had only evidentiary / persuasive value); the claim would in effect need to be proved again in India. This procedure was duplicative, expensive and took a number of years, which understandably dissuaded many creditors from bringing claims in the first place if India was the place where enforcement would be needed.

Whilst the new process still requires the creditor to commence a case for enforcement in the Indian Courts – enforcement is not 'automatic' as the creditor must satisfy the Court the enforcement criteria are met – importantly, the claim will no longer be re-examined on the merits by the Indian Courts in considering the judgment for enforcement

The limited grounds for non-recognition of a UAE Court judgment for enforcement in India include (without limitation), where the judgment: (i) was issued by a Court without competent jurisdiction; (ii) is not final and conclusive (i.e. subject to further appeal); (iii) was obtained by fraud; (iv) is contrary to the principles of public order in India; and / or (v) was passed in absentia and the defendant was not duly summoned in the proceedings.

Subject to satisfying certain criteria set out in the Treaty, a UAE Court judgment which the Indian Courts agree to enforce, will be treated by the Indian Courts as if it had been passed by a domestic court in India, i.e. the creditor will directly bring a case for enforcement of the judgment and will not have to file a wholly new case to prove its claim/rights.

If the debtor fails to make payment voluntarily, it is possible to pursue the enforcement process via the Indian Courts, which will take steps against the debtor to recover amounts awarded on behalf of the creditor. 

In addition, and notably, there are potential insolvency consequences for the Indian debtor that may be availed by the creditor under the Indian Insolvency and Bankruptcy Code 2016 (the Bankruptcy Code) and a creditor may, where any judgment amount is not satisfied, initiate insolvency proceedings against a defaulting corporate debtor; and there is recent authority to suggest that an unsatisfied foreign court judgment may be treated as a debt for the purposes of the Bankruptcy Code.

Are there any time limits I need to be aware of?

The limitation period for executing a UAE judgment in India is 12 years from the date when it became enforceable.

Note however that under the Bankruptcy Code, a creditor has only 3 years from the 'date of default' to commence insolvency proceedings against a corporate debtor. It is presently unclear whether the date of default refers to the date of the UAE Court judgment or the date on which the judgment is ordered for enforcement in India.

If you require further advice on the options available to you and details about how Clyde & Co together with CSL can assist, please contact Keith Hutchison or John Lewis


[1] Defined as "any decision rendered in judicial proceedings by a competent court of the Contracting States."


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