February 4, 2020

Joint Judicial Committee takes a stand against blocking or delaying tactics?

The Joint Judicial Committee (the JJC) was established to deal with conflicts of jurisdiction between the Dubai Courts and the DIFC Courts, pursuant to Dubai Decree No 19 of 2016. The JJC is probably most notable for restricting and curbing the use of the DIFC Courts as a conduit to enforce foreign (and domestic) arbitration awards and judgments against parties who are outside the DIFC. Furthermore, the JJC which tended to favour the onshore Courts, has regularly been used a guerrilla tactic by recalcitrant respondents to cause delay and block parties bringing their claims in the DIFC Courts. In this article we look at some recent decisions from the JJC.

The recent decisions mark a real shift in that in all five decisions, the applications to the JJC have been dismissed and in all cases, the JJC ruled that claims should be permitted to continue in the DIFC Courts. The first judgment in particular is striking because it appears to re-open the possibility of the DIFC Courts being used as a conduit jurisdiction, while at the same time, criticising the applicant for its behaviour and calling out the application to the JJC as "abuse". The cases show that the applications to the JJC are being used as delaying tactic, but the JJC tribunal is increasingly less tolerant of it being used in this way. For the first time, it appears that the JJC is penalising such applicants by ordering them to pay the respective respondent's costs (rather than just a nominal amount of AED 2000), although the form of wording used in the decisions does not appear to be consistent. As costs are not awarded in this way in the onshore Dubai courts, it will be interesting to see how such costs orders will be enforced.

The decisions can be accessed at the following link.

Summaries of the decisions are as follows:

Cassation No. 5/2019 (Judicial Tribunal) – Appellant: Essar Projects Limited v Respondent: McConnell Dowell South East Asia Pte Limited

Summary

McConnell (M) sought to enforce a Singaporean judgment against Essar (E) (following its failure to perform its obligations under a guarantee) in the DIFC courts. E is not domiciled in the DIFC and does not appear to have a connection to the DIFC.  In response, E raised a jurisdiction challenge in the DIFC Courts and then filed a claim before the Dubai Court to set aside the Singapore judgment and challenge the validity of the guarantee. E then filed an application with the JJC for a declaration that the Dubai court (rather than the DIFC court), should have general jurisdiction over the dispute.

Outcome

The JJC dismissed E's application; concluding that "the case that the proceedings in the DIFC Court should be left to take their course is overwhelming". The JJC was also critical of E's conduct in the history of the proceedings. It stated that that E had "dragged the claim out" by initially challenging the validity of service. Furthermore, the JJC noted that E was "cynically and discreditably attempting to escape its undoubted obligations under the Singapore judgment and is thereby abusing the process of the [JJC]". The JJC further concluded that there was no conflict of jurisdiction between the Dubai courts and the DIFC courts (as the DIFC court had not yet ruled on Essar's challenge to the DIFC court's jurisdiction to enforce the Singapore judgment). The JJC noted, that the appellant’s claim in the Dubai Court is a long way from being heard, whereas the proceedings in the DIFC Court are well progressed and will conclude speedily given the fact the DIFC and Singapore courts are both common law jurisdictions, and that there are limited grounds for challenging a foreign money judgment issued by a court of competent jurisdiction under the MOU entered into by the two respective courts. E were ordered to pay M's costs.

Cassation No. 6/2019 (Judicial Tribunal) – Appellant: Arloid Real Estate Development v Respondent: Hazrat Ali

Summary

Arloid Real Estate (ARE) made an application to the JJC that only the Dubai Courts were competent to hear its dispute with Hazrat Ali (HA), notwithstanding an MOU between the parties in which they expressly submitted to the jurisdiction of the DIFC Courts. HA filed its original claim in the DIFC Courts. ARE based its position on the following: (i) the Dubai Courts had general jurisdiction; (ii) the project that the underlying dispute related to was based within the jurisdiction of the Dubai Courts; and (iii) the Civil Procedure Code sets out that jurisdiction in real estate cases is seized by the court in which such real estate is located. HA disputed this on the basis of the express jurisdiction clause in the MOU.

Outcome

On the basis of the MOU – in which ARE expressly agreed to the jurisdiction of the DIFC Courts – the JJC dismissed the application; concluding that the DIFC Courts were competent to hear the case and the Dubai Courts had no jurisdiction to do so. ARE were ordered to pay "the fees and expenses" of the application.

Cassation No. 7/2019 (Judicial Tribunal) – Appellant: Anand Narain Kapoor v Respondent: Barclays Bank PLC

Summary

This dispute related to monies that Barclays Bank PLC (Barclays) claimed were owed to it by Anand Narain Kapoor (ANK). After over 12 months of defending proceedings made against it by Barclays in the DIFC Courts, ANK raised a jurisdictional challenge to the competence of the DIFC Courts to hear the dispute. ANK argued that the DIFC Court could not determine liability until such determination had been made by the Dubai Courts and that the DIFC Courts were not able to determine issues of quantum. Barclays challenged this on the basis that: (i) the DIFC Courts were well equipped to hear the dispute; (ii) the parties had expressly agreed in writing (pursuant to the Guarantee Agreement) that any dispute would be heard by the DIFC Courts; and (iii) ANK had participated in legal proceedings for over a year with no previous objection to the jurisdiction of the DIFC Courts and had therefore submitted to the jurisdiction of this Court.

Outcome

The JJC dismissed ANK's cassation; concluding that the DIFC Courts had exclusive jurisdiction to hear the dispute (as agreed between the parties under the Guarantee Agreement). This agreement was consistent with Article 31(5) of the UAE Procedure Code, which permitted the parties to lawfully consent to the jurisdiction of a specific Court (which they ultimately did). As such, there was "no shadow of doubt" in terms of the DIFC Courts' jurisdiction in this case. The JJC also held that ANK had willingly submitted to the jurisdiction of the DIFC Courts by actively participating in the proceedings and that it was in the "wrong" by now attempting a "turn around/change [of] direction" by raising a jurisdictional challenge.

Cassation No. 8 / 2019 (Judicial Tribunal) – Appellant: AF Construction Company LLC (Formerly: Al Futtaim Carillion - Abu Dhabi LLC) v Respondent: Power Transmission Gulf

Summary

AF Construction Company LLC (AF) filed an application to the JJC requesting the determination of a case in the Dubai Courts which related to a dispute with Power Transmission Gulf (PTG). The contract betwee AF and PTG (the Contract) included an arbitration clause which stated that any dispute between the parties would be resolved according to the ADCCAC rules. The parties then agreed to amend their arbitration clause to stipulate DIFC-LCIA as the applicable rules. The parties had both engaged in arbitration under the DIFC-LCIA rules and PTG was now enforcing the arbitration award that had been issued in its favour in the DIFC courts. AF argued that the arbitral proceedings took place in the GA Oasis Beach Tower in Dubai Marina, an area outside the spatial jurisdiction of the DIFC (and therefore the DIFC-LCIA Centre) and enforcement was subject to the jurisdiction of the Dubai Courts. AF argued the DIFC Courts were not competent to deal with any dispute and Dubai Courts should have the exclusive jurisdiction to enforce any arbitral award and PTG's award is therefore invalid. In its defence, PTG highlighted the parties' agreement to amend the arbitration clause from the ADCCAC to the DIFC-LCIA Arbitration Centre. PTG stated that it had obtained its arbitral award on this basis and therefore the DIFC Courts had the authority to ratify and execute it.

Outcome

The JJC held that the amendment to the Contract proved that AF agreed to refer disputes to arbitration in accordance with the DIFC-LCIA rules. The arbitration procedures of the DIFC-LCIA Centre applied, and – pursuant to Article 16, Paragraph 2 of these rules – the arbitral tribunal had the power to hold its meetings and hearings at any geographical location at its discretion and arbitration award issued at the the GA Oasis Beach Tower was still considered as if it was issued within the arbitration center. The JJC further noted that, although the DIFC courts and the DIFC-LCIA Centre are separate entities, the DIFC-LCIA Centre is an established institution in the DIFC, and therefore the DIFC Court (not the Dubai Court) was responsible for ratifying and enforcing the arbitration award. The application was dismissed and AF were ordered to pay costs (but only of AED 2000).

Cassation No. 9 / 2019 (Judicial Tribunal) – Appellants: 1- Rouge LLC. 2- Claude Barrett v Respondent: Bessin Spilay Corporation

Summary

The appellants, Rouge LLC and Claude Barrett (A), filed an application before the JJC seeking an order for the jurisdiction of the Dubai Courts to hear a dispute between them and Bessin Spilay Corporation (BSC) (which related to a claim under a promissory note in the amount of USD 1.5 million), and to prevent the DIFC Court from hearing this claim on the basis that the promissory note to which the claim related originated in the United Arab Emirates. A also argued that the origin of the promissory note meant that it was subject to the law of commercial transactions in the country, being UAE law. In response, BSC stated that the promissory note contained an express provision which granted jurisdiction to the English Courts or the DIFC Courts in the event of a dispute between the parties.

Outcome

The JJC dismissed A's case and held that the DIFC Courts had jurisdiction due to the express wording within the promissory note. The applicants were ordered to pay "expenses."

Although the JJC is still active, and the procedures is still rather unclear, these cases are a marker that the JJC will not permit applications where it is evident they are purely being used as a blocking or delaying tactic. In our view, none of these cases display a real conflict of jurisdiction between the DIFC Courts and the Dubai Courts, and they underpin the importance of considering carefully whether an application to the JJC should be made. There well may be delay caused but there is the risk that the application will not succeed and that there may also be adverse cost consequences.