In an era of increasing global commercial activity, arbitration has become the preferred method of resolving international disputes. The Maldives, having acceded to the New York Convention in 2019, has taken steps to align its domestic legislation with international norms through the Arbitration Act of the Maldives. Enacted to facilitate a consistent legal framework for arbitration, the Act mirrors the UNCITRAL Model Law in many aspects, particularly in Chapter 10, which governs the recognition and enforcement of foreign arbitral awards.
While the Act is progressive in design, the real-world application of its provisions has proven complex. The Hilton vs. Sun case—a multi-year legal battle over the enforcement of a foreign arbitral award—has revealed the practical challenges of enforcing such awards in the Maldives, despite legislative alignment with international standards.
The Legal Framework for Enforcement
Under Article 72 of the Arbitration Act, foreign arbitral awards made in accordance with the Act must be recognized and enforced in the Maldives. Article 73(a) further clarifies that such enforcement must be requested through the “relevant court,” which would then issue an order for enforcement. In theory, this provides a clear pathway for parties seeking to enforce arbitral awards. However, the Hilton case demonstrates how ambiguities in jurisdictional interpretation can disrupt this process.
Hilton’s Enforcement Battle: A Timeline
- December 2015: Hilton submitted its first request to the Civil Court of the Maldives to enforce a foreign arbitral award against Sun. The request was denied nearly a year later on the grounds that the Civil Court’s Property and Monetary Large Claims Division lacked jurisdiction.
- 2016: Hilton submitted a second request, this time to the Enforcement Division of the Civil Court. Again, enforcement was denied, with the court asserting that jurisdiction rested with the High Court.
- High Court Ruling: On appeal, the High Court of the Maldives reversed the decision, declaring that the Civil Court is the competent authority to enforce foreign arbitral awards under Article 73(a).
- 2017: A third request was filed, but enforcement was once again denied. This time, the decision was based on a Maldivian civil court judgment from a case brought by Sun, which relitigated issues already addressed in arbitration. The court ruled the management agreement between the parties void, ordering Hilton to pay damages. Hilton appealed this judgment.
- 2021: The High Court overturned the Civil Court’s ruling, and the Supreme Court upheld the High Court’s decision in August 2021, validating Hilton’s position.
- 2020–2021: Hilton made a fourth enforcement request, leading to the Civil Court issuing injunctions freezing Sun’s bank accounts. These were upheld by the High Court, which reaffirmed the Civil Court’s jurisdiction. Objections raised by Sun were dismissed by all levels of the judiciary.
- December 2021: The Civil Court ordered Sun to pay the outstanding amount within one month, nearly six years after Hilton’s initial request for enforcement.
Lessons from the Hilton vs. Sun Case
The Hilton enforcement saga exposed inconsistencies in judicial interpretation, delays, and procedural inefficiencies that risk undermining the Maldives’ ambitions to be seen as a foreign investment–friendly jurisdiction. Despite clear statutory guidance under the Arbitration Act and international obligations under the New York Convention, the practical enforcement of foreign arbitral awards has proven to be a complex and prolonged process.
This case highlights the urgent need for:
- Judicial training on arbitration law and international standards,
- Clarification of jurisdictional roles among the Civil, High, and Supreme Courts,
- Efficient case management practices to reduce delays in enforcement proceedings.
A Step Forward, But Room to Grow
The Maldives’ adoption of a modern arbitration framework reflects its commitment to facilitating international commerce and upholding the rule of law in business disputes. However, as seen in the Hilton case, legislative alignment is only one piece of the puzzle. Effective implementation, judicial clarity, and procedural efficiency are equally vital to building investor confidence and ensuring that the Maldives remains a credible destination for international dispute resolution.
As the country continues to integrate into the global economy, addressing these challenges will be key to ensuring that foreign arbitral awards are recognized and enforced not only in principle—but in practice.