NALANI v NETTY [2025] DIFC ARB 027 — The High Cost of Procedural Obstruction in Enforcement Proceedings (15 May 2025)

Did the Partial Award in Nalani v Netty constitute an enforceable instrument under Article 42 of the DIFC Arbitration Law despite incorporating a London-seated tribunal’s Peremptory Order?

The dispute centers on the Claimant’s attempt to enforce a Partial Award rendered by an LCIA tribunal seated in London. The Defendant challenged the enforcement, arguing that the relief granted was essentially a "Peremptory Order" under Section 41(5) of the English Arbitration Act rather than a substantive arbitral award. The Defendant contended that such procedural orders fall outside the scope of the DIFC Arbitration Law’s recognition regime.

The Court rejected this characterization, emphasizing that the form of the document is secondary to its dispositive effect. By incorporating the Peremptory Order into the operative text of the Partial Award, the tribunal effectively elevated the procedural measure to a binding arbitral determination. As noted in the Court’s reasoning:

I accept that the Partial Award issued on 20 September 2023 falls within the definition of an "award" under Article 42 of the DIFC Arbitration Law.

The Court’s decision confirms that parties cannot evade enforcement by labeling an award as "procedural" if the tribunal has clearly intended for the relief to be final and binding. Further analysis of this procedural strategy is available at: Nalani v Netty [2025] DIFC ARB 027: The High Cost of Procedural Obstruction in Enforcement Proceedings.

Which judge presided over the Nalani v Netty enforcement proceedings in the DIFC Arbitration Division?

The matter was heard and determined by H.E. Justice Shamlan Al Sawalehi, sitting in the Arbitration Division of the DIFC Court of First Instance. The final order with reasons was issued on 15 May 2025, following a hearing held on 30 April 2025.

What were the specific legal arguments advanced by Nalani and Netty regarding the validity of the Enforcement Order?

The Claimant, Nalani, argued that the Enforcement Order dated 24 December 2024 was a final and binding judgment of the DIFC Court, which triggered the procedural timeline for cost assessments under RDC 40.10. Conversely, the Defendant, Netty, sought to strike out the claim and set aside the Notice of Commencement (NoC) of assessment.

The Defendant’s position was that the enforcement proceedings were effectively "ongoing" due to its pending jurisdictional challenges. They argued that because the validity of the Enforcement Order was being contested, the timeline for cost assessment had not yet commenced.

It contends that the recognition and enforcement proceedings for the Partial Award remain ongoing due to the Defendant’s pending Jurisdictional Challenge and Strike Out Application, which directly contest the Court’s jurisdiction and the validity of the Enforcement Order.

Did the DIFC Court have jurisdiction to enforce a London-seated award that incorporated a Peremptory Order under the English Arbitration Act?

The core doctrinal issue was whether the DIFC Court’s jurisdiction under Article 5(A)(1)(e) of the Judicial Authority Law (JAL) extends to awards that derive their substantive content from foreign-seated procedural orders. The Defendant argued that the DIFC Court lacked jurisdiction because the underlying relief was not an "Arbitral Award" within the meaning of the DIFC Arbitration Law, but rather an English procedural order. The Court had to determine if the incorporation of such an order into a Partial Award satisfied the jurisdictional requirements for recognition under the JAL.

How did H.E. Justice Shamlan Al Sawalehi apply the test for jurisdictional validity in Nalani v Netty?

Justice Al Sawalehi applied a robust interpretation of the JAL, focusing on the nature of the document presented for enforcement rather than the origin of the procedural measures contained within it. The Court held that once a tribunal issues a document as an "Award," the DIFC Court’s role is to facilitate its enforcement, provided it meets the criteria of Article 42.

I find that jurisdiction is firmly established under Article 5(A)(1)(e) of the Judicial Authority Law (the “JAL”), which confers jurisdiction upon the DIFC Courts to recognise and enforce arbitral awards. To note, I recognise that the law on jurisdiction has been updated, however, considering the dates of these proceedings the JAL remains the relevant authority.

The Court further reasoned that the Enforcement Order itself was a conclusive act of the Court. Once issued, it stands as a judgment unless successfully stayed or set aside, neither of which occurred in this instance.

Which specific DIFC statutes and RDC rules governed the Court’s decision on the timeliness of the cost assessment?

The Court relied heavily on the DIFC Arbitration Law and the Rules of the DIFC Courts (RDC). Specifically, the Court cited:
* DIFC Law No. 1 of 2008 (DIFC Arbitration Law): Articles 42 and 43, which define the scope of enforceable awards and the procedure for recognition.
* Judicial Authority Law: Article 5(A)(1)(e), which establishes the Court’s jurisdiction over the recognition and enforcement of arbitral awards.
* RDC 40.10: Which mandates that a notice of commencement of assessment of costs must be filed within three months of the date of the judgment or order.
* RDC 43.61 to 43.75: Which govern the procedural framework for the enforcement of foreign-seated arbitral awards.

How did the Court utilize precedents like Neal v Nadir and Deutsche Bank AG v Sebastian Holdings Inc?

The Court utilized Neal v Nadir [2024] DIFC CA 001 to support the principle that interim relief or procedural orders, when incorporated into an award, become enforceable. This precedent was crucial in dismissing the Defendant’s argument that the Peremptory Order was distinct from the Partial Award. Additionally, the Court referenced the principles of finality in Deutsche Bank AG v Sebastian Holdings Inc [2024] EWCA Civ 245 to underscore that an enforcement order is a final judgment, thereby triggering the strict timelines for cost assessments under RDC 40.10.

What was the final disposition of the Jurisdictional Challenge and the NoC Set Aside Application?

H.E. Justice Shamlan Al Sawalehi dismissed both the Defendant’s Jurisdictional Challenge & Strike Out Application and the NoC Set Aside Application in their entirety. The Court ordered the Defendant to pay the Claimant’s costs for both applications. The Claimant was further directed to submit a Statement of Costs within three days of the order, limited to three pages.

I am satisfied that the Partial Award constitutes an enforceable arbitral award under DIFC law, and that the Enforcement Order dated 24 December 2024 was properly issued.

What are the wider implications of Nalani v Netty for practitioners handling enforcement of foreign awards in the DIFC?

This decision serves as a warning against using procedural challenges to delay the enforcement of arbitral awards. It clarifies that the DIFC Court will not entertain attempts to "unbundle" an award by challenging the procedural components that a tribunal has incorporated into its final or partial award. Practitioners must anticipate that once an Enforcement Order is granted, it is treated as a final judgment, and the clock for procedural steps—such as cost assessments—begins to run immediately, regardless of subsequent, meritless challenges.

Where can I read the full judgment in Nalani v Netty [2025] DIFC ARB 027?

The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/arbitration/arb-0272024-nalani-v-netty-1. The text is also archived at: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/arbitration/DIFC_ARB-027-2024_20250515.txt.

Cases referred to in this judgment:

Legislation referenced:

• DIFC Law No. 1 of 2008 (DIFC Arbitration Law), Articles 42 and 43
• Judicial Authority Law, Article 5(A)(1)(e)
• RDC 4.16(1), 9.27, 40.1, 40.10, 43.61 to 43.75, 43.70