Mondaq:UAE Notified As A Reciprocating Territory Under Section 44A Of Civil Procedure Code

29 March 2020:  INTRODUCTION : The purview of this article is the impact of addition of United Arab Emirates to the notification dated 17th January 2020 G.S.R 38 (E) issued by Ministry of Law and Justice. This notification allows filing of an execution proceeding under the Civil Procedure Code 1908 of a decree passed by UAE Courts in India.

When a certified copy of a decree of any Superior Court of UAE has been filed in a District Court in India, the Decree may be executed as if it had been passed by the District Court in India. As opposed to filing of a fresh suit prior to the notification coming into force. The amendment ensures cooperation between the laws of two sovereign states. UAE becomes the 11th country to be notified as reciprocating territory.

It all started with India entering into a bilateral Agreement with UAE in October 1999 on Juridical and Judicial Cooperation in Civil and Commercial Matters for the Service of Summons, Judicial Documents, Commission, Execution of Judgements and Arbitral Awards (the “1999 Agreement”) which would enhance the cooperation between the states which is inevitably necessary for various Indian businesses that are based in UAE.

The notification provides for the following Courts in UAE to be Superior Courts:

(1) Federal Court-

(a) Federal Supreme Court;

(b) Federal, First Instance and Appeals Courts in the Emirates of Abu Dhabi, Sharjah, Ajman, Umm Al Quwain and Fujairah;

(2) Local Courts-

(a) Abu Dhabi Judicial Department;

(b) Dubai Courts;

(c) Ras Al Khaimah Judicial Department;

(d) Courts of Abu Dhabi Global Markets;

(e) Courts of Dubai International Financial Center.

WHAT HAPPENS WHEN A DECREE IS PASSED BY A COURT IN A NON RECIPROCATING STATE
A decree passed by a State which is a non- reciprocating territory shall not be executed directly by the Indian Courts. In such cases a fresh suit has to be filed on the basis of the judgement, which shall be considered as the cause of action for the said suit. In the said suit wherein the judgement of a non- reciprocating territory is construed as the cause of action, the decree passed by a non- reciprocating territory shall be treated as another piece of evidence.

REQUIREMENTS OF CIVIL PROCEDURE CODE 1908:Irrespective of the decree being reciprocating or non- reciprocating, the decree must comply with the requirements set out in Section 13 of the Civil Procedure Code.

Section 13 reads as under: A foreign judgment shall be conclusive as to any matter thereby directly adjudicated upon between the same parties or between parties under whom they or any of them claim litigating under the same title except—

(a) where it has not been pronounced by a Court of competent jurisdication;

(b) where it has not been given on the merits of the case;

(c) where it appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognise the law of 2 [India] in cases in which such law is applicable;

(d) where the proceedings in which the judgment was obtained are opposed to natural justice;

(e) where it has been obtained by fraud; (f) where it sustains a claim founded on a breach of any law in force in 2 [India].

Under the Civil Procedure Code, 1908 direct enforceability of a foreign decree requires compliance of Section 13, 14(1) and 44A of the Code.

Section 14(1) reads as under: The Court shall presume upon the production of any document purporting to be a certified copy of a foreign judgment, that such judgment was pronounced by a Court of competent jurisdiction, unless the contrary appears on the record; but such presumption may be displaced by proving want of jurisdiction.

Section 44A reads as under:

(1) Where a certified copy of a decree of any of the superior Courts of 3 *** any reciprocating territory has been filed in a District Court, the decree may be executed in 4 [India] as if it had been passed by the District Court.

(2) Together with the certified copy of the decree shall be filed a certificate from such superior Court stating the extent, if any, to which the decree has been satisfied or adjusted and such certificate shall, for the purposes of proceedings under this section, be conclusive proof of the extent of such satisfaction or adjustment.

(3) The provisions of section 47 shall as from the filing of the certified copy of the decree apply to the proceedings of a District Court executing a decree under this section, and the District Court shall refuse execution of any such decree, if it is shown to the satisfaction of the Court that the decree falls within any of the exceptions specified in clauses (a) to (f) of section 13.

Under the provisions of Section 44A of the Civil Procedure Code, a decree passed by the superior court of a reciprocating territory can be enforced, only after the same is notified by the Central Government.

Pursuant to Explanations under Section 44-A of the Civil Procedure Code, 1908 a “reciprocating state” means any country or territory outside India which the Central Government may, by notification in the Official Gazette declare to be a reciprocating territory for the purposes of this section ; and “superior courts” with any reference to any such territory, means such Courts as may be specified in the said notification.

IMPACT
(a) UAE decrees are now distinguished from non-reciprocating decrees (which require starting afresh by filing a suit in India). In the case of Marine Geotechnic LLC v/s Coastal Marine Construction and Engineering Ltd.([2014]183CompCas438(Bom), the Bombay High Court held that there are two types of decrees i.e. reciprocating and non-reciprocating decrees. Decrees from territories which the Central Government has notified as ‘reciprocating’ under Section 44A of CPC are decrees from reciprocating territory all other decrees are decrees from non-reciprocating territories.

(b) There will be an increase in the number of UAE court cases seeking recovery of funds from Indians.

(c) Considerable reduction in time for executing the decrees passed.

(d) The decree holder shall only be burdened to satisfy the courts in India about the test under Section 13 of the Civil Procedure Code.

(e) Recovery of the amount due in a faster way.

(f) The limitation period under the Limitation Act would be extended upto 12 years as opposed to the limitation of 3 years for filing a fresh suit.

(g) Transgression of the comprehensive procedure laid down under the Civil Procedure Code, 1908 of filing a fresh suit.

NCLAT CLOSES DOORS FOR FOREIGN DECREES:
Reportedly as on date the UAE banks have to recover Rs. 50,000 crores from Indians who have defaulted in repaying the banks. One of the options available for recovery of debt is under Insolvency and Bankruptcy Code, 2016 but recently in Usha Holdings LLC. Vs Francorp Advisors Pvt Ltd (Company Appeal (AT) (Insolvency) No. 44 of 2018) the National Company Appellate Tribunal held that NCLT shall not be the proper authority in deciding whether the foreign decree is valid or not.

While deciding on the issue the NCLAT referred to its judgement in Binani Industries Limited vs Bank of Baroda & Anr. (Company Appeal (AT) (Insolvency) No. 82 of 2018) wherein it clearly articulated the objective of IBC i.e. maximising the value of the corporate debtor and not recovery of debt.

CONCLUSION
The said notification was a desired impetus which was required since last 20 years to actually enforce the bilateral agreement between the countries that took place in 1999. Furthermore, this would be a welcoming change for the legal industry in the country as this notification would bring with it a wave of foreign litigation based on the decrees by the Superior Courts in UAE. This is a change that would flourish, strengthen the ties and bring in strategic investments between the two countries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

As reported on Mondaq



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