UAE – A Reciprocating Territory of INDIA
Given the extent of global cross-border trade in the present times that has inter alia proliferated the disputes between the various stakeholders thereto who often find themselves in different jurisdictions and the binding agreements between them that provide for resolution of such disputes in a jurisdiction different to theirs, enforcement of judgments issued in one jurisdiction in another has turned out to be a much complicated and costs involving task that is subjected to legal rigmarole.
It is in this context that the words “Reciprocating Territory” assumes significance. “Reciprocating Territory” in so far as India is concerned means any country outside India, which the Central Government of India may, by notification in the Official Gazette, declare to be a reciprocating territory. The need and reason to know about the reciprocating countries among others is the new era of globalization where cheating and escaping has become simple and easier.
The United Arab Emirates [“UAE”] and India are countries in constant trade, with the yearly non-oil trade between the two countries as of now hovering below USD 41billion. It is well noted that both the countries’ citizens/entities have investments directly or indirectly in each other. There has always been a huge exchange of money between the two countries which has developed a strong fiduciary relationship between them. However, some of the UAE creditors and banks have been left unsatisfied by certain unscrupulous debtors who, after having availed financial facilities from them, disappeared and kept their assets safe in India.
In the year 1999, UAE and India entered into treaty(s) inter alia for judicial cooperation and enforcement of judgments but it did not go as it was planned. The provisions of this treaty relating to enforcement of judgments was initially considered as an expensive way to recover the money lost by the creditors in UAE and thus was not much resorted to.
In January 2020, the Indian Ministry of Law & Justice notified UAE as a Reciprocating Territory for the enforcement of foreign judgments [“2020 Notification”]. Consequently, a judgment pronounced by those courts of the UAE recognised as superior courts by India could be enforced in the Indian courts without initiating a new lawsuit.
Execution of a judgment/decree issued in a foreign country [“Foreign Judgment”] in India is having a history from the times of British India. Section 44A of the Indian Civil Procedure Code, 1908 (“CPC”) deals with the Execution of decrees passed by Courts in the reciprocating territories.
This Section 44A was inserted as an amendment to the CPC in the year 1937. The main reason for such an amendment during the British India rule was very simple, India being a colony, British made sure that execution of any decree/judgment passed by the Superior Courts of Britain for money recovery can be executed in India as if the judgment was passed by the courts of India. Prior to the amendment to section 44A of the CPC, a Foreign Judgment viz. judgment/decree pronounced by a foreign court could not be executed directly in India. A Foreign Judgment was considered only as a piece of evidence and a document issued in a foreign country, and the creditor was required to initiate a fresh lawsuit before the competent court in India and obtain a judgment in his favour for the recovery of monies thereunder in India.
Later, post-independence, various other countries were notified in the Official Gazette as Reciprocating Territory by the Central Government of India. One of the recently notified Reciprocating Territory is the UAE.
A Judgment/decree passed by a court of a Reciprocating Territory may be executed in India as if it has been passed by a ‘District Court’ upon fulfilling the requirements of Section 44A (2) and 44A (3). Section 44(3) of the CPC states that a Judgment/decree passed by a court in a reciprocating territory shall not be executed if the Judgment/decree falls within any of the exceptions set out under Section 13 of the CPC which read as follows:
Where Judgment/decree issued in a reciprocating territory,
- has not been pronounced by a Court of competent jurisdiction;
- has not been given on the merits of the case;
- 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 in which such law is applicable;
- obtained are opposed to natural justice;
- has been obtained by fraud; and
- sustains a claim founded on a breach of any law in force in India.
It is to be noted that all the Judgements/decrees issued by any levels of courts of the UAE cannot be executed in India for the reason of UAE being a Reciprocating Territory. Only the Judgments/decrees pronounced by those courts of the UAE notified as ‘Superior Courts’ by the Government of India can be so executed in India. Accordingly, the Judgements/decrees pronounced by the below stated courts shall be enforced in India as if they were pronounced by an Indian Court:
- the UAE Federal Supreme Court;
- the Federal, First Instance and Appeals Courts in the Emirates of Abu Dhabi, Sharjah, Ajman, Umm Al Quwain and Fujairah;
- the Abu Dhabi Judicial Department;
- the Dubai Courts;
- the Ras Al Khaimah Judicial Department;
- the Courts of Abu Dhabi Global Markets; and
- the Courts of Dubai International Financial Centre.
Procedure for Execution of an UAE Judgment/decree in India
The Judgment/decree holder of a judgment/decree issued by Superior Courts of the UAE has to obtain the following before initiating an execution proceeding before the competent District Court in India:
- Original of the Judgment/decree translated in to English language and duly stamped;
- Copies of court notifications to the debtor (in case where the Judgement/decree was pronounced in his absence);
- A certificate from the UAE Ministry of Justice stating that the Judgment/decree is final and conclusive in nature and can be executed
Upon obtaining the above set out documents, the UAE Judgment/decree holder can execute his Judgment/decree in India by way of:
- Tracing the judgment debtor and his properties in India;
- Appointment of a local advocate and entrusting the execution petition;
- Identifying his financial credibility before initiating the execution;
- The execution petition has to executed in India within the period of limitation provided for in the relevant law [“Limitation Period”].
- When we say Limitation Period, two countries are involved and whose law of limitation will apply is questionable. It is very clear through various Indian court Judgments that the Limitation Period would be as per the law of the Reciprocating Territory and
- The Limitation Period would start running from the date the Judgment/decree has been passed in the Reciprocating Territory and the period of limitation prescribed in India would not be applicable.
- Filing an execution petition before competent court of jurisdiction where the judgment debtor resides, carries out business or where his/her/its properties are situated, for enforcement of relevant UAE judgments/decrees;
- The judgements/decrees may be enforced by attachment and sale of the property of the judgment/decree debtor; and
- If the judgment/decree debtor is pronounced insolvent, an arrest and detention of the judgment debtor in civil prison for a period not exceeding 3 months shall be pronounced by the court enforcing the execution upon an application to that effect made by the judgment/decree creditor and deposit by him/her of the prison expenses of the judgment/decree debtor for the period of detention at the rates as prescribed by the applicate law of the state in India where such court is situated.
Hence, it is very clear that the frustrated creditors or bankers of UAE who have been defrauded by an Indian domiciled debtor can obtain a decree/judgment following the simple procedures set out above and execute the same in India through the competent courts in India as if it was pronounced by the court executing it. The 2020 Notification has thus paved the way for an appropriate dispute resolution mechanism that goes a great way to help UAE domiciled creditors to recover their dues from debtors domiciled in India and at the same time foster the good bi-lateral relationship that exists between the two countries.