I solved it - it was an authentication issue. Executing the following line on Server resolved the issue:
$ xauth add ${client_ip}:0 . ${hex_key}
xauth: creating new authority file /homes/${username}/.Xauthority
where ${client_ip}
is the client with X server running, ${hex_key}
is the 32-character hex string. Afterwards upon assinging the $DISPLAY
env variable I can now connect successfully.