Claim No: CA-007-2014

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai

IN THE COURT OF APPEAL

BEFORE DEPUTY CHIEF JUSTICE SIR JOHN CHADWICK, JUSTICE ROGER GILES AND H.E. JUSTICE ALI AL MADHANI

BETWEEN

(1) AMIT DATTANI

(2) NITIN JOBANPUTRA

(3) MASOOD UR RAHMAN

(4) SHEMHON IFTAKHAR

                                                                                                Claimants/Respondents

and

DAMAC PARK TOWERS COMPANY LIMITED

(formerly known as DAMAC REAL ESTATE ASSET MANAGEMENT COMPANY LIMITED)

                                                                                                Defendant/Appellant

Hearing:            4 March 2015

Counsel:           Rupert Reed QC with Christopher Bourke as in-house counsel for the Appellant

William McCormick QC with Bushra Ahmed of KBH Kaanuun for the Respondents

Judgment:        10 November 2015

JUDGMENT

Summary of Judgment

This summary is not part of the Judgment and should not be cited as such

 ORDER

UPON hearing Counsel for the Appellant and Counsel for the Respondents on 22 July 2014

AND UPON reading the submissions and evidence filed and recorded on the Court file 

IT IS HEREBY ORDERED THAT:

1. The Appellant’s appeals are dismissed.
2. The Appellant shall pay the Respondents’ costs of the appeal within 14 days of the date of this order, the amount of which shall be assessed, if not agreed, by the Registrar.

Issued by:

Natasha Bakirci

Assistant Registrar

Date of Issue:  10 November 2015

At: 3pm 

JUDGMENT

Deputy Chief Justice Sir John Chadwick:

1. This is an appeal from the Order made by the Chief Justice on 20 July 2014 in proceedings brought against the Appellant, Damac Park Towers Company Limited (formerly known as Damac Real Estate Asset Management Company Limited and, hereafter, “Damac”).

2. The first and second named Claimants/Respondents, Amit Dattani and Nitin Jobanputra (together “the Dattani Claimants”), were the purchasers from Damac of an apartment (“the Apartment”) known as Unit B-1046, Damac Park Towers, under a sale and purchase agreement dated 1 November 2004 (“the Apartment SPA”). On 5 October 2011 the Dattani Claimants gave notice of termination under that agreement. In proceedings commenced on 19 September 2012 by the issue of a claim form under reference CFI 034/2012 they sought a declaration that the agreement had been validly terminated, and orders for repayment of monies which they had paid to Damac on account of the purchase price and payment of interest.

3. The third and fourth named Claimants/Respondents, Masood Ur Rahman and Shemhon Iftakhar (together “the Rahman Claimants”), were the purchasers of a retail unit (“the Retail Unit”) known as Unit P4-6, Damac Park Towers, under a sale and purchase agreement dated 16 January 2006 (“the Retail Unit SPA”). On 6 October 2011 the Rahman Claimants gave notice to terminate that agreement. In proceedings commenced on 27 December 2012 by the issue of a claim form under reference CFI 046/2012 they sought a declaration that that agreement had been validly terminated, and orders for repayment of monies which they had paid to Damac on account of the purchase price and payment of interest.

4. By an order dated 6 January 2013 proceedings CFI 034/2012 and CFI 046/2012 were consolidated under reference CFI 034/2012. The consolidated proceedings came before the Chief Justice for trial on 17 to 21 November 2013. For the reasons set out in his judgment issued on 20 July 2014 the Chief Justice held that both the Apartment SPA and the Retail Unit SPA had been validly terminated and that (i) Damac should repay to the Dattani Claimants AED 1,806,400, (being the aggregate of the sums paid by them on account of the purchase price of the Apartment) and (ii) Damac should repay to the Rahman Claimants AED 1,807,700, (being the aggregate of the sums paid by them on account of the purchase price of the Retail Unit). Effect was given to that judgment by the Order made on 20 July 2014. By an Appeal Notice, issued on 7 September 2014, Damac sought permission to appeal from the Order of 20 July 2014. By an Order issued on 1 December 2014, limited permission to appeal was granted by Justice Roger Giles as a single judge of the Court of Appeal.

5. Subsequently, by an Order dated 30 December 2014 (which, on its face, is stated to have been made by consent), the Chief Justice directed that, in addition to the sums to be repaid by Damac under the Order of 20 July 2014, Damac should pay (i) to the Dattani Claimants contractual penalty interest assessed in the sum of AED 76,412.72 and statutory interest in the sum of AED 87,100.86 as of 30 December 2014 and thereafter at the daily rate of AED 77.63 until payment and (ii) to the Rahman Claimants contractual penalty interest assessed in the sum of AED 60,871.72 and statutory interest in the sum of AED 89,938.38 as of 30 December 2014 and thereafter at the daily rate of AED 09 until payment. There has been no appeal, or application for permission to appeal, from the Order of 30 December 2014.

6. Damac’s appeal from the Order made on 20 July 2014 came before this Court for oral hearing on 4 March 2015. At the conclusion of the oral hearing this Court indicated that, for reasons that would be put in writing and handed down in due course, it would dismiss the appeal from so much of the Order of 20 July 2014 as declared that the Apartment SPA had been validly terminated and ordered repayment of AED 1,806,400 to the Dattani Claimants (“the Apartment Appeal”); and that it would take time to consider its decision in relation to the appeal from so much of the Order as declared that the Retail Unit SPA had been validly terminated and ordered repayment of AED 1,807,700 to the Rahman Claimants (“the Retail Unit Appeal”).

The Apartment Appeal

7. As I have said, the Dattani Claimants were purchasers from Damac of a residential apartment in Park Towers. The price payable under the Apartment SPA was AED 1,996,000, to be paid by instalments. Clause 3.1 of the Apartment SPA was in these terms:

“3.1 The Seller sells to the Purchaser who hereby purchases the Property on the terms and conditions contained in this Agreement.”

It is pertinent to have in mind that the subject matter of the sale and purchase was the “Property”. That term and other related terms were defined in Clause 1.1 of the Apartment SPA. As so defined, the “Property” was more extensive than the “Unit”: it comprised “the Unit together with an undivided share in the Common Property apportioned to the Unit in accordance with the Participation Quota”. The “Unit” meant the Unit as described on page 1 of the Agreement: that is to say Unit B-1046. The “Common Property” meant “those parts of the Plot and the Building (excluding the parking bays attached to the specific units) not physically forming part of the Units in Park Towers and intended for benefit or use in common by all Owners in Park Towers”. The “Plot” meant “the land occupied by the Building and its associated grounds shown on the Master Plan as Plot number PB-02”. The “Building” meant “the building(s) to be constructed on the Plot as shown on Park Towers Plan”.

8. Other terms defined in Clause 1.1 of the Apartment SPA included “Completion Date” and “Anticipated Completion Date”:

“‘Completion Date’ means the date upon which the Property is completed as per the Drawing as certified by the Project Consultant, whose decision as to such date shall be final and binding upon the Parties”.

“Anticipated Completion Date’ means a date, which is 36 months after the handover of the Plot to the Seller…”

Clause 6.1 recorded that “the Anticipated Completion Date represents the date upon which it is presently expected that the Unit will be ready for occupation…”

9. Clause 6.3 of the Apartment SPA provided that the Seller should give possession and occupation of the Property on the Completion Date, “…from which date all risk in and benefit in respect of the Property shall pass to the Purchaser…” But that obligation must be read with Clause 6.4, which was in these terms:

“6.4 The Purchaser acknowledges being aware of the fact that on the Completion Date, the Common Property, other Units in the Park Towers and/or the Master Community as a whole may be incomplete and that inconvenience may be suffered as a result of the building activities which shall be in progress. The Purchaser shall have no claim against the Seller for such inconvenience, the Seller, however, shall use its best endeavours to keep such inconvenience to a minimum.”

10. Clause 7.1 of the Apartment SPA was in these terms:

“7.1 Provided the Purchaser has fulfilled his obligations in terms of this Agreement, and the Seller is the registered Owner of the clear and unencumbered title in respect of the Property at the Land Registry, the Seller shall transfer a clear and unencumbered title in respect of the Property to the Purchaser at the Land Registry as soon as is reasonably possible after the Completion Date.”

It can be seen that the Seller’s obligation to give possession and occupation of the Property (pursuant to Clause 6.3) might arise before the obligation to transfer title (pursuant to Clause 7.1).

11. As I have said, Clause 6.1 of the Apartment SPA recorded that the Anticipated Completion Date (the “ACD”) was the date upon which it was expected that the Unit would be ready for occupation. It went on to provide that:

“6.1 …The Seller reserves the right to extend the Anticipated Completion Date by a period of up to twelve (12) months, provided that the Seller shall advise the Purchaser of such extension at least three (3) months beforehand.”

Clause 6.2 recorded that the Purchaser acknowledges that the Completion Date may fall on a date before the ACD. That clause went on to provide that:

“6.2 …The Seller shall in any event give the Purchaser not less than thirty (30) days’ notice in writing of the Completion Date and the Completion Date shall only be deemed to have been determined when the Project Consultant has so certified by signing off on the Drawings.”

12. Clause 8.1 of the Apartment SPA provided that, without prejudice to the condition stipulated in Clause 6.2, the Seller undertook to take all reasonable steps necessary to procure that the Completion Date would be on, or as soon as possible after, the ACD.

13. Clause 13.1 of the Apartment SPA was in these terms:

“13.1 If the Purchaser has fulfilled all his obligations in terms of this Agreement and the Seller is unable to give possession and occupation of the Unit by the Anticipated Completion Date without prejudice to the provisions of Clause 14, the Seller shall pay a penalty at the Penalty Rate to the Purchaser on all the payments made by the Purchaser towards the Purchase Price for the period from the Anticipated Completion Date until the date when possession and occupation is offered to the Purchaser. If possession and occupation of the Unit continues to be delayed beyond 12 months after the Anticipated Completion Date, the Purchaser shall have the right on thirty (30) days written notice to the Seller to call upon the Seller to remedy the breach and then to terminate this Agreement if the Seller remains in breach after the expiry of the said period of thirty (30) days. Upon termination of this Agreement, the Seller shall refund all amounts paid by the Purchaser on account of the Purchase Price including a penalty calculated on the amounts paid at the Penalty Rate for the period after the Anticipated Completion Date until the date the refund is made to the Purchaser, which is to take place within sixty (60) days of receipt of the above mentioned written notice. The Purchaser shall have no other claims against the Seller in respect of damages, compensation or costs.”

Clause 14 contained a force majeure provision which is not material in the context of the appeal.

14. The Chief Justice found (at paragraph 102 of his judgment) that, in the events which happened and subject to the valid exercise by Damac of its right to extend pursuant to Clause 6.1 of the Apartment SPA, the ACD was 30 June 2009. There has been no appeal against that finding. He also found (at paragraph 111 of his judgment) that, in relation to the Apartment SPA, the ACD was not extended beyond that date. Although Damac sought to challenge that latter finding in a document described, confusingly, as “Appeal Notice & Skeleton Argument” submitted to the Court on 7 September 2014, permission to appeal on that ground was not granted. The position in this Court, therefore, is that 30 June 2009 was the date from which time began to run for the purposes of both (i) the payment of a penalty under the first and third sentences of Clause 13.1 of the Apartment SPA and (ii) the giving of notices under the second sentence of that clause.

15. The right to terminate the Apartment SPA under the provisions in the second sentence of Clause 13.1 arose if, but only if, (i) possession and occupation of the Unit was delayed beyond 12 months after the ACD (that is to say, in the events which happened, beyond 30 June 2010), (ii) the Purchaser had given written notice to the Seller calling for that breach to be remedied within thirty days and (iii) the Seller remained in breach after the expiry of that period of thirty days. At paragraph 18 of his judgment the Chief Justice recorded the facts that were agreed between the parties. So far as material, those facts included the following:

(1) On 14 July 2011, the first named Claimant/Respondent, Mr Dattani, instructed his lawyers, KBH Kaanuun, to issue a Notice to Remedy Breach. The Notice stated that Damac was in breach of its contractual obligations to complete the Apartment and give possession and occupation to Mr Dattani, and that Mr Dattani was exercising his rights under Clause 13.1 of the Apartment SPA, giving the Defendant 30 days’ notice to remedy the breach of the terms of the SPA.

(2) On 4 August 2011, Damac wrote to Mr Dattani “to confirm to you that your Unit has been ready for handover subject to completion by you of a number of formalities which we detail below”.

(3) On 5 October 2011, Mr Dattani instructed KBH Kaanuun to issue a Notice of Termination based upon the observations made by him and a surveyor (Mr Robert Pickering) during an inspection made on 15 September 2015. The Notice of Termination stated that, on inspection by “an independent expert surveyor”, it had been found that “the Property is not in fact complete and ready for handover”; and that:

“As such, you have failed to comply with the Notice to Cure by remedying your breach within the timeframe set out in the Sale & Purchase Agreement for the Property dated 1 November 2004. Accordingly, we are instructed to formally notify you that pursuant to Clause 13.1, the SPA is to be considered terminated with immediate effect”.

(4) On 16 November 2011, Damac wrote to KBH Kaanuun in response to the Notice of Termination, denying the allegations made in that notice and stating that:

“…The fact is that the Local Authority Building Completion Certificate has been issued on 28^th June 2011; on this basis your unsubstantiated allegations would appear to be unwarranted. We have, and will continue to comply with the terms of the Unit SPA.

Your client’s Unit was ready for handover by 4^th August 2011…”

16. The Chief Justice addressed the question whether the Dattani Claimants were entitled to terminate the Apartment SPA pursuant to Clause 13.1 of the Apartment SPA at paragraphs 117 to 142 of his judgment. At paragraph 119 he noted that Damac’s pleaded case was that the Dattani Claimants were not entitled to terminate the Apartment SPA in that (i) they had failed to fulfil their payment obligations, (ii) the Notice to Terminate Breach, issued on 14 July 2011, was premature and (iii) the Apartment was ready for possession and occupation prior to the purported termination of the Apartment SPA. At paragraph 120 he pointed out that, in the circumstances that the schedule of payments in the Apartment SPA provided that payment of the final 10% of the purchase price (which the Dattani Claimants had not paid) would be payable upon completion and delivery of possession and occupation, the first of those grounds turned on the same issue as the third: whether the Apartment was ready for possession and occupation at the time of the purported termination. As he put it, whether or not the Dattani Claimants had fulfilled their payment obligations turned on the factual question whether the apartment unit was completed. He explained, at paragraph 122, that he did not find it necessary to address the second of those grounds – whether the Notice of Termination issued on 14 July 2011 was premature – at any length; given that he had already held that, for the purposes of the Apartment SPA, the ACD was not validly extended from the original date of 30 June 2009.  The issue for decision, therefore, (as he identified at paragraphs 124 and 125) was whether Damac remained in breach in that it did not hand over possession and occupation of the Apartment within 30 days of the Notice of Termination issued on 14 July 2011; or, to put the point another way, whether the Apartment was completed for the purposes of the Apartment SPA at the time Damac purported to effect a handover of that Unit on 4 August 2011.

17. At paragraphs 126 to 129 of his judgment the Chief Justice referred to the regulatory framework applicable to the completion of the development at Damac Park Towers. He concluded that the various completion certificates that had been issued by authorities having the functions of inspection and approval were not conclusive of the factual question whether the units were fit for possession and occupation. There is no challenge to that conclusion on this appeal.

18. At paragraph 133 of his judgment, the Chief Justice recorded that it was common ground that the Apartment itself was in a sufficiently complete state at the time of the inspection: the Dattani Claimants’ submission, he said, was that the state of the common areas at that time was such that the Apartment could not be said to be ready for possession and occupation. He went on to say this:

“134. At this stage it would be useful for me first to explain the ownership of the common property in Park Towers. The definition of “Property” in Clause 1.1 of the Apartment SPA…suggests that the common property is owned in pro rata shares (in accordance with a participation quota in a separate schedule), by the owners of the individual units. However, Clause 13.1 of each SPA is only concerned with the Seller handing over possession and occupation of the respective unit itself, excluding the common property, to the Purchaser. Clause 6.4 of each SPA…also provides that the common property might be incomplete at that time and that the Purchaser shall have no claim against the Seller for any associated inconvenience.

135 The Defendant has acknowledged that, even after the issuance of these certificates, work still remained to be done in respect of Park Towers. The outstanding works that had to be done primarily pertained to the fit-out of the common areas such as lift lobbies and car parks. I understand their submissions in relation to these remaining works to be as follows: (a) the works required were of a minor nature; (b) Clause 11.4 of the Apartment SPA…envisioned that such minor remedial works would be carried out post-handover; and (c) Clause 6.4 of the Apartment SPA allows for the common property and other units in the development to be incomplete upon handover of the Apartment. The Defendant’s position is that, notwithstanding the outstanding works, the Apartment was fit for possession and occupation at the time of handover.”

19. The Chief Justice set out, at paragraph 137 of his judgment, the features in the evidence of Mr Pickering which, as he said, he had found of particular significance: (i) access into the Building was via an uncontrolled car park ramp entrance; (ii) access into the Building was not restricted, potentially compromising the security and safety of visitors to the Building; (iii) exposed electrical cables were hanging from the ceiling in the main lobby and there was no exit or fire exit signage; (iv) there were live electrical cables running under temporary carpet pieces in the elevator lobby; (v) the elevator lobby was dark and unlit; (vi) the elevators had to be operated manually by a construction worker; (vii) the overall route from the road to the Building and into the elevator was unsafe and unsecure, with an absence of signage and lighting, making it very difficult for a visitor to navigate unescorted; and (viii) a main electrical cable was hanging through the full length of the tower in the fire escape. He referred to the evidence of Mr El Chaer, a surveyor, on which Damac relied in order to counter Mr Pickering’s observations. He described Mr Chaer’s evidence as “replete with sweeping statements that are not corroborated”. He went on to say this (at paragraphs 142 and 143 of his judgment):

“142 In my judgment, the state of the common areas was such that the Apartment could not be said to be ready for possession and occupation. Although the Apartment itself was fit for occupation, the state of the common areas at the time of Mr Pickering’s inspection was such there was an insufficient level of safety for people traversing the common areas, which was necessary to access the Apartment. This is particularly so considering that the residents of the Apartment might include young children (a concern Mr Dattani articulated at trial). While the Apartment SPA envisages that there might still be ongoing works in the development, and that the common areas might be incomplete at the time of handover…safe ingress and egress is a necessary prerequisite for almost any usage of the Apartment; to that extent, the common areas and fittings must be complete enough such as to guarantee a minimum standard of safety for the residents…

143 For the above reasons, I find that the Apartment was not ready for possession and occupation as of the date of Mr Pickering’s inspection, 15 September 2011. Given the state of the Apartment Block as a whole on that date, I find that the Apartment was in fact not ready for possession and occupation when the Defendant purported to hand over possession of the Apartment on 4 August 2011. As Clause 13.1 of the Apartment SPA…allows the Purchaser to terminate the agreement if the Seller fails to deliver possession and occupation by 12 months after the ACD i.e. 30 June 2010, the Dattani Claimants were entitled to, and did, terminate the Apartment SPA by their letter of 5 October 2011 pursuant to Clause 13.1.”

144 As I have said, an Appeal Notice, seeking permission to appeal from the Order of 20 July 2014, was issued on 7 September 2014. It was accompanied by the Appeal Notice & Skeleton Argument to which I have referred. In granting permission to appeal, on limited grounds, Justice Roger Giles said this:

“An appeal notice ‘must set out the grounds of appeal relied on’ (RDC 44.34), and the grounds of appeal must set out the reasons why the decision was wrong or unjust because of serious irregularity (RDC 44.35 (1)). While there may be intersecting content, grounds of appeal and a skeleton argument are not the same thing; the former should be a formulation in as concise terms as possible of the error or injustice in the decision of the lower Court and the reasons therefor, which may then be supported by the latter. The Defendant’s appeal notice does not well identify the grounds of appeal. It and the skeleton argument are an amalgam; grounds of appeal are not formulated, and must be distilled from the narrative in the skeleton argument.”

He identified from the narrative in the skeleton argument three grounds on which Damac relied in advancing the Apartment Appeal: (i) that the Chief Justice was wrong in holding that the ACD was not extended from 20 June 2009; (ii) that he was wrong in finding that ingress and egress to the Apartment was unsafe; and (iii) that he was wrong in holding that, because of that finding, the Apartment was not ready for occupation.

21. Permission to appeal was limited to an appeal on the third of those grounds: that the Chief Justice was wrong in holding that – in the light of his finding that ingress to and egress from the Apartment was unsafe at the time of the inspection by Mr Pickering on 15 September 2011– the Apartment was not ready for occupation on 5 October 2011. In refusing permission to appeal on the other two grounds, Justice Roger Giles said this (at paragraphs 7 and 8 of the reasons set out in the schedule to his Order dated 1 December 2012:

“7. Permission to appeal is refused on ground 1 because, as the trial judge pointed out at para 123 of his judgment, if the ACD was extended from 20 June 2009 the Dattani Claimants…would still have been entitled to issue their notice. Even if the ground were upheld, it would make no difference to the result.

8. Permission to appeal on ground 2 is refused because an appeal on that issue does not have a real prospect of success. As to particular matters in the skeleton argument, I do not regard the exhibits to which the Defendant refers as materially supporting the evidence of Mr El Chaer, nor do I regard the evidence to which the Defendant refers as undermining the trial judge’s acceptance of and reliance on the evidence of Mr Pickering; nor do the authorities’ certificates provide conclusive evidence that the building was safe and fit for occupation. I do not think that there is a real prospect of overturning the trial judge’s factual findings.”

He went on to observe (at paragraph 10 of those reasons) that there was no other compelling reason for granting permission to appeal on these issues; and (at paragraph 11) that the ground on which he had granted permission, ground 3, was a question of construction, to be determined on the facts found by the Chief Justice.

22. At the oral hearing of the appeal before the full Court in March 2015, Counsel for the Appellant stated that there was no application to seek permission to appeal on grounds other than those for which permission was given in the Order of 1 December 2012. In those circumstances, it is that Order – and the observations made by Justice Roger Giles as a single judge of this Court in the schedule of reasons set out in that Order – that defines the scope of the Apartment Appeal. The sole issue before this Court in relation to the Apartment Appeal is whether, on the true construction of the Apartment SPA and given his finding of fact that ingress to and egress from the Apartment was unsafe at the time of the inspection by Mr Pickering on 15 September 2011, the Chief Justice was wrong to conclude that the Apartment was not ready for occupation at the time when Notice of Termination was served on 5 October 2011.

23. At the completion of the oral hearing in March 2015 this Court was satisfied that – notwithstanding the Appellant’s submissions in relation to that issue – as they appear in Notice of Appeal & Skeleton Argument and were developed at the oral hearing – the Chief Justice was entitled to conclude that, given his finding of fact that ingress to and egress from the Apartment was unsafe at the time of the inspection by Mr Pickering on 15 September 2011, the Apartment was not ready for occupation at the time when the Notice of Termination was served. The reasons which led me to reject the Appellant’s challenge to that conclusion may be stated shortly.

(1) As I have said, the obligation of the Seller under the Apartment SPA, imposed by Clause 6.3, is to give possession and occupation of the Property on the Completion Date. The date which is the “Completion Date” in that context is a defined term: it is “the date upon which the Property is completed as per the Drawing as certified by the Project Consultant”. It can only be determined “when the Project Consultant has so certified by signing off on the Drawings”: Clause 6.2. The decision of the Project Consultant “shall be final and binding upon the Parties”: Clause 1.1.

(2) “Project Consultant” is a defined term: it means “the project consultant for Park Towers as may be appointed by the Seller from time to time”. The Chief Justice made no finding that the Project Consultant had been appointed; nor that (if appointed) he had certified a Completion Date in relation to the Property which was the subject of the Apartment SPA; nor that the Seller had given to the Dattani Claimants the thirty days’ notice of the Completion Date required by Clause 6.2 of the Apartment SPA. There was no suggestion in the skeleton argument – or at the oral hearing of the appeal – that the Chief Justice had erred in failing to make such findings. The appeal was conducted on behalf of the Appellant on the basis that no Completion Date in relation to the Apartment had been certified by the Project Consultant.

(3) In those circumstances, there is no finding – and no evidence to support a finding – that there was a breach by the Seller of its obligation (under Clause 6.3 of the Apartment SPA) to give possession and occupation of the Property on the Completion Date. But Clause 13.1 of the Apartment SPA is not concerned with the failure of the Seller to give possession and occupation of the Property on the Completion Date. The first sentence of the clause is concerned with the inability of the Seller to give possession and occupation of the Unit (not the Property) by the ACD (not the Completion Date). The second sentence of the clause is concerned with (i) continued delay on the part of the Seller in giving possession and occupation of the Unit beyond the expiry of 12 months after the ACD; (ii) the right of the Purchaser then to serve a notice (described, perhaps inaptly, as a notice calling on the Seller to remedy the breach) requiring the Seller to give possession and occupation of the Unit within the period of thirty days; and (iii) the right of the Purchaser to terminate the Apartment SPA in the event that the Seller fails to comply with the requirement in that notice.

(4) In determining, as a matter of construction, what constitutes inability to give possession and occupation of the Unit by a date which is (or is determined by reference to) the ACD, it is important, as it seems to me, to have in mind that Clause 6.1 of the Apartment SPA describes the “Anticipated Completion Date” as “the date upon which it is presently expected that the Unit will be ready for occupation”: Clause 6.1 does not (as it might well have done, given the terms of Clause 8.1) describe “the Anticipated Completion Date” as “the date which is presently expected to be the Completion Date”.

(5) Given that, as I have said, Clause 13.1 is concerned with the Seller’s inability to give possession and occupation of the Unit by the ACD (or by a date determined by reference to the ACD) – and not with either the Seller’s breach of the obligation imposed by Clause 6.3 (to deliver possession and occupation of the Property on the Completion Date) or the Seller’s breach of the obligation imposed by Clause 8.1 (to take all reasonable steps necessary to procure that the Completion Date will be on, or as soon as possible after, the ACD), the description of the ACD, in Clause 6.1, points to the conclusion that – for the purposes of Clause 13.1 – the Seller will be unable to give occupation of the Unit if the circumstances are such that the Unit is not “ready for occupation”; and that, for so long as the Unit is not ready for occupation, there is “continued delay on the part of the Seller in giving…occupation of the Unit” and failure on the part of the Seller to comply with a notice requiring it to give occupation of the Unit.

(6) The Chief Justice found as a fact that ingress to and egress from the Apartment (by which, in context, he must be taken to have meant the Unit) was unsafe at the time of the inspection by Mr Pickering on 15 September 2011. Given that finding of fact (from which there is no permission to appeal), the Chief Justice was plainly entitled to hold – indeed, I would say, was bound to hold – that the Unit was not ready for occupation at the time when the notice requiring the Seller to remedy the breach was served on 14 July 2011; and was entitled to hold that the Seller had failed to comply with that notice on the date (5 October 2011) when Notice of Termination was served.

24. As I have said, the Apartment Appeal was dismissed.

The Retail Unit Appeal

25. The Rahman Claimants were purchasers from Damac of a retail unit, P4-6, in Park Towers at a price of AED 2,103,000. The provisions of Clauses 3.1, 6.3, 6.4, 7.1 of the Retail Unit SPA – and the defined terms to which I have referred in the previous section of this judgment – were the same as in those clauses of the Apartment SPA.

26. Clause 6.1 of the Retail Unit SPA was in these terms:

“6.1 It is recorded that the Anticipated Completion Date represents the date upon which it is presently expected that the Unit will be ready for occupation. The Seller reserves the right to extend the Anticipated Completion Date by a period of up to twelve (12) months.”

It can be seen that the clause in those terms differed from Clause 6.1 of the Apartment SPA; in that, unlike the latter, it did not include the proviso requiring the Seller to “advise the Purchaser of such extension at least three (3) months beforehand”.

27. Clause 13.1 of the Retail Unit SPA was in these terms:

“13.1 If the Purchaser has fulfilled all his obligations in terms of this Agreement and the Seller is unable to give possession and occupation of the Unit by the Anticipated Completion Date without prejudice to the provisions of Clause 14, the Seller shall pay a penalty at the Penalty Rate to the Purchaser on all the payments made by the Purchaser towards the Purchase Price for the period from the Anticipated Completion Date until the date when possession and occupation is offered to the Purchaser. Upon termination of this Agreement, the Seller shall refund all amounts paid by the Purchaser on account of the Purchase Price including a penalty calculated on the amounts paid at the Penalty Rate for the period after the Anticipated Completion Date until the date the refund is made to the Purchaser, which is to take place within sixty (60) days of receipt of the above mentioned written notice. The Purchaser shall have no other claims against the Seller in respect of damages, compensation or costs.”

The second sentence of Clause 13.1 of the Apartment SPA – under which the Purchaser may terminate the agreement by notice if possession and occupation of the Unit continues to be delayed beyond 12 months after the ACD – was not included in the Retail Unit SPA (either in Clause 13.1 of that agreement or at all).

28. As I have said, in the previous section of this judgment, the Chief Justice found (at paragraph 102 of his judgment) that, in the events which happened and subject to the valid exercise by Damac of its right to extend pursuant to Clause 6.1 of the SPAs, the ACD was 30 June 2009. Although, in relation to the Apartment SPA, the Chief Justice had held that there had been no valid exercise of the power to extend the ACD, the different terms of Clause 6.1 of the Retail Unit SPA led him to a different conclusion: he held (at paragraph 116 of his judgment) that, in relation to the Retail Unit SPA, the ACD was extended by the maximum of 12 months from the original date of 30 June 2009 to 30 June 2010.

29. At paragraph 20 of his judgment the Chief Justice recorded the facts that were agreed between Damac and the Rahman Claimants. So far as material, those facts included the following:

(1) In emails sent to Mr Rahman on 20 October 2010, 27 February 2011, and 24 April 2011, Damac informed him that anticipated completion of the Retail Unit was in the second quarter of 2011.

(2) On 18 August 2011, KBH Kaanuun, acting on behalf of the Rahman Claimants, sent to Damac a Notice to Remedy Breach in respect of the Retail Unit SPA. It was stated in the Notice that Damac had failed to comply with its contractual obligations: in that the Retail Unit had not been completed and that possession and occupation of the Retail Unit had not been given to Mr Rahman. The Notice required the stated breach to be remedied within 30 days. It was stated in the Notice that it was be treated, insofar as was required, as the requisite notice pursuant to Article 87 of the DIFC Contract Law.

(3) By a letter dated 21 August 2011, Damac informed Mr Rahman that the Retail Unit was “ready for handover subject to completion by you of a number of formalities which we detail below”.

(4) On 6 October 2011, KBH Kaanuun issued a Notice of Termination in respect of the Retail Unit based on observations made during the inspection on 15 September 2011: that is to say, the inspection by Mr Dattani and Mr Pickering, to which reference has been in the previous section of this judgment. The Notice was in these terms, so far as material:

“…On further enquiry, which has [included] a physical visit to the premises, an opinion from an independent expert surveyor and status insofar as the relevant supervisory department at TECOM is concerned, our client has discovered that in reality the Property is not in fact complete and ready for handover.

…

In particular, and despite requests, you have failed to provide a certified drawing from the Project Consultant evidencing Completion. In any event, and again despite requests, you have failed to provide the necessary certifications to prove that the Building as a whole and Property in particular meet all necessary approvals not least from DIFC and TECOM.

As such you have failed to comply with the Notice to Cure by remedying your breach within the requisite timeframe set out in the Sale & Purchase Agreement for the Property dated 16 January 2006. Accordingly, we are instructed to formally notify you that pursuant to Clause 13.1, the SPA is to be considered terminated with immediate effect”.

(1) On 12 October 2011, Damac wrote to KBH Kaanuun denying the allegations made in the Notice of Termination and pointing out that Clause 13.1 of the Retail Unit SPA did not confer a right of termination.

(2) On 13 October 2011, KBH Kaanuun wrote to Damac, asserting that termination of the Retail Unit SPA was effective as of 6 October 2011.

(3) On 12 December 2011, Damac wrote to Mr Rahman, informing him that the Retail Unit was ready for handover notwithstanding the Notice of Termination, and requested Mr Rahman to settle his outstanding balance.

30. At paragraphs 145 to 161 of his judgment the Chief Justice addressed the question whether the Retail Unit was completed when Damac purported to effect a handover of that unit on 21 August 2011 At paragraph 147 he observed that it was common ground that Damac’s obligation was limited to the delivery of the Retail Unit in “shell and core”: that is to say, “the interior of the unit would not be finished, meaning that a lower standard of readiness would have been required for the Retail Unit, as compared to the Apartment Unit”. That, he explained was because “…generally, units such as these would require further fit-out works specific to their intended use” and that it was common practice for such further works to be carried out by the purchaser. Further, he observed that it was also common ground that the Retail Unit itself was fit for its intended use – that is to say, for further fit-out works – when Damac purported to hand over possession to the Rahman Claimants. He went on (at paragraphs 148 and 149 of his judgment) to say this:

“148. The Rahman Claimants make the same submission the Dattani Claimants make in relation to the Apartment, viz. that safe ingress to and egress from the Retail Unit were not possible, given the state of the Development at that time. They also submit that the standard of readiness required of the Retail Unit was no less than that required of the Apartment, as Mr Rahman’s contractors would require safe ingress to and egress from to the unit.

149. The Rahman Claimants’ further submissions specific to the Retail Unit are as follows. First, access to the Retail Unit was problematic in September 2011 (the time of Mr Pickering’s inspection) as the access to the building was via basement three, and the cargo lift within the building did not serve that floor. The cargo lift was required to move equipment and construction materials for the fit-out works to the Retail Unit. Second, it was not possible to obtain insurance in respect of the required further fit-out works until the take-over certificate was available. The take-over certificate in respect of Park Towers was only issued in January 2012. Third, at that time the common areas were of such a state that access to the Retail Unit would not be possible for potential customers. This would presumably make operating the Retail Unit unprofitable, and consequently it would be difficult for Mr Rahman to find a tenant.”

31. At paragraph 157 of his judgment the Chief Justice rejected the submission that the absence of safe ingress and egress had the effect that the Retail Unit was not ready for handover in August 2011. Although he had accepted a similar submission in relation to the Apartment, he distinguished the position in relation to the Retail Unit on the grounds that “unlike the Apartment, the Retail Unit would be accessed only by contractors at that stage, as it would still need months of further fit-out work before the commencement of any retail activity” and that “the same standard of readiness was [not] required of the Retail Unit as of the Apartment…because the incompleteness of the common areas would not overly inconvenience contractors (such contractors would know their way around a construction site), nor would it pose a significant safety hazard to them”. At paragraph 160 he rejected the submission that the common areas were of such a state that access to the Retail Unit would not be possible for potential customers. He observed that the state of the common areas were only of concern to the Rahman Claimants when the Retail Unit could commence operation as a shop; and that (in any event) the commencement of operation as a shop would only have been possible after Mr Rahman fitted out the Retail Unit appropriately (a process which, he said, would take a few months, by which time the state of the common areas might have been very different). But he accepted the submissions founded upon the lack of a cargo lift and the Rahman Claimants’ inability to obtain insurance. At paragraphs 158 and 159 of his judgment he said this:

“158. However, I find the Rahman Claimants’ complaint regarding the lack of cargo lift access to be a legitimate complaint. For further works to be carried out on the Retail Unit by Mr Rahman’s contractors, a minimum degree of infrastructure would be required, as workers and materials would need to be transported to the unit itself. Without the use of the cargo lift, it would not be feasible to transport heavy and bulky construction materials to the Retail Unit. The Defendant’s response is that Mr Rahman’s testimony on the lack of cargo lift access is not credible, but Mr Rahman testified on this point in court and his testimony was not challenged.

159. I also find the Rahman Claimants’ complaint regarding insurance in respect of the further fit-out works to be a legitimate complaint. In court Mr Rahman testified that insurance in respect of the further fit-out works could only be obtained after the take-over certificate was available. The take-over certificate in respect of the whole development was only issued in January 2012. This is consistent with Mr El Chaer’s evidence that the owners of the other retail units only started taking occupation in January 2012. I find that being able to obtain insurance in respect of the further fit-out works is a legitimate requirement for fit-out works to be carried out. The Defendant’s response is that the Rahman Claimants have failed to provide any evidence as to their inability to obtain insurance, but Mr Rahman testified as to this in court and his testimony was not challenged.”

And he went on, at paragraph 161, to hold:

“161. For the reasons given at paragraphs 158 and 159 above, I find that the Retail Unit was not ready for what it was intended for, i.e. further fit-out works. Accordingly, I find that the Retail Unit was not in a sufficient state of readiness for handover to the Rahman Claimants when the Defendant purported to give possession and occupation to the Rahman Claimants on 21 August 2011.”

32. The Chief Justice then turned to the question whether the Rahman Claimants were entitled to terminate the Retail Unit SPA pursuant to Articles 86 and 87 of the DIFC Contract Law (DIFC Law No 6 of 2004). Those articles are in these terms:

“86.    Right to terminate the contract

(1) A party may terminate the contract where the failure of the other party to perform an obligation under the contract amounts to a fundamental non-performance.

(2) In determining whether a failure to perform an obligation amounts to a fundamental non-performance regard shall be had, in particular, to whether:

(3) the non-performance substantially deprives the aggrieved party of what it was entitled to expect under the contract;

(4) strict compliance with the obligation which has not been performed is of essence under the contract;(5) the non-performance is intentional or reckless;

(5) the non-performance gives the aggrieved party reason to believe that it cannot rely on the other party’s future performance. 

(6) In the case of delay the aggrieved party may also terminate the contract if the other party fails to perform before the time allowed under Article 81 has expired.

Notice of termination

(1) The right of a party to terminate the contract is exercised by notice to the other party.

(2) If performance has been offered late or otherwise does not conform to the contract the aggrieved party will lose its right to terminate the contract unless it gives notice to the other party within a reasonable time after it has or ought to have become aware of the non-conforming performance.”

33. At paragraph 170 of his judgment the Chief Justice rejected the submission, advanced on behalf of the Rahman Claimants, that Damac’s failure to give possession and occupation of the Retail Unit on 21 August 2011 in a sufficient state of readiness for handover was, of itself, a fundamental non-performance of the Retail Unit SPA for the purposes of Article 86(1) of the Contract Law. He took the view that the relevant question for determination was whether the Rahman Claimants had become entitled to terminate the agreement under Article 81 of the Contract Law.

34. Article 81 of the Contract Law is in these terms:

“81. Additional period for performance

(1) In a case of non-performance the aggrieved party may by notice to the other party allow an additional period of time for performance.

(2) During the additional period the aggrieved party may withhold performance of its own reciprocal obligations and may claim damages but may not resort to any other remedy. If it receives notice from the other party that the latter will not perform within that period, or if upon expiry of that period due performance has not been made, the aggrieved party may resort to any of the remedies that may be available under this Part 8 of this Law.

(3) Where in a case of delay in performance which is not fundamental the aggrieved party has given notice allowing an additional period of time of reasonable length, it may terminate the contract at the end of that period. If the additional period allowed is not of reasonable length it shall be extended to a reasonable length. The aggrieved party may in its notice provide that if the other party fails to perform within the period allowed by the notice the contract shall automatically terminate.

(4) Article 81(3) does not apply where the obligation which has not been performed is only a minor part of the contractual obligation of the non-performing party.”

35. The Chief Justice observed (at paragraph 172 of his judgment) that Article 81(3) allowed for termination of the contract for a delay in performance, even if the delay did not amount to fundamental non-performance, so long as an additional period of time of reasonable length for performance has been given to the non-performing party; and (at paragraph 173) that it was clear that the exception for which Article 81(4) provided did not apply in the current case, as the obligation to deliver possession and occupation of the completed Retail Unit was a major part of the Seller’s contractual obligation. In those circumstances he identified the question for determination as whether the period of 30 days – given on behalf of the Rahman Claimants in the Notice to Remedy Breach send on 18 August 2011 – was an additional period of time of reasonable length. He said that the reasonableness of the length of time given was to be judged objectively – that is to say, without reference to the aggrieved party’s position – and that what was reasonable depended on the facts and circumstances of each case. He went on (at paragraphs 174 and 175 of his judgment) to say this:

“174. I find that the period of 30 days given by the Rahman Claimants was a reasonable length of time for the purposes of Article 81(3) of the DIFC Contract Law, primarily because delivery of the Retail Unit was already more than one year overdue at the time of the Rahman Claimants’ notice, as the ACD was 30 June 2010 (taking into account a 12-month discretionary extension under Clause 6.1 of the Retail Unit SPA; see paragraph 116). Further, the Apartment SPA provides for the same notice period of 30 days, which suggests that the Defendant considered 30 days a reasonable length of notice.

175. Consequently, I find that the Rahman Claimants validly terminated the Retail Unit SPA by their Notice of Termination of 6 October 2011…”

176. At paragraphs 176 to 178 of his judgment the Chief Justice considered the consequences of a valid termination of the Retail Unit SPA. He referred to Article 81(2) of the Contract Law – which, as he said, provided that the aggrieved party might resort to any of the remedies specified in Part 8 of that Law should performance of the obligation not be carried out by the end of the additional period granted for performance – and held that that article applied in the present case. He set out the provisions of Article 90 of the Contract Law, which are in these terms:

“90.       Restitution

(1) On termination of contract pursuant to Articles 86 or 88 either party may claim restitution of whatever it has supplied, provided that such party concurrently makes restitution of whatever it has received. If restitution in kind is not possible or appropriate allowance should be made in money where appropriate.

(2) However, if performance of the contract has extended over a period of time and the contract is divisible, such restitution can only be claimed for the period after termination has taken effect.”

And he went on to say this:

“178. Article 90 allows either party to claim restitution for whatever it has supplied. The Rahman Claimants can rely on Article 90, on account of Article 81(2). The Rahman Claimants are therefore entitled to restitution of the sums they have paid to the Defendant, as this would be the most appropriate remedy for me to grant in this case.”

37. As I have said an Appeal Notice, seeking permission to appeal from the order of 20 July 2014, and the “Appeal Notice & Skeleton Argument” were issued on 7 September 2014. In granting permission to appeal Justice Roger Giles identified from the narrative in the skeleton argument three grounds upon which Damac relied in support of the Retail Unit Appeal: (i) that the Chief Justice was wrong in finding that the cargo lift was not operational and that the Rahman Claimants could not obtain insurance for the fit-out works; (ii) that he was wrong in holding that, because of those findings, the Retail Unit was not ready for occupation; and (iii) that he acted in a manner that was procedurally unfair in holding that Article 81 of the Contract Law entitled the Rahman Claimants to terminate the Retail Unit SPA in the circumstances that that article had not been relied upon at the time of termination, or pleaded or relied upon at the Trial.

38. Permission to appeal in respect of the Retail Unit Appeal was limited to an appeal on the second and third of those grounds: that the Chief Justice was wrong in holding that – in the light of his findings that the cargo lift was not operational and that the Rahman Claimants could not obtain insurance for the fit-out works – the Retail Unit was not ready for occupation on 6 October 2011 (ground 5) and that that he acted in a manner that was procedurally unfair in holding that Article 81 of the Contract Law entitled the Rahman Claimants to terminate the Retail Unit SPA (ground 6). In refusing permission to appeal on the first of the three grounds (ground 4), Justice Roger Giles said this (at paragraph 9 of the reasons set out in the schedule to his Order dated 1 December 2014).

“9. Permission to appeal on ground 4 is refused because, again, an appeal on that issue does not have a real prospect of success. As to particular matters in the skeleton argument, there was evidence, albeit hearsay, that the cargo lift was not available for use, which the trial judge was entitled to regard as reliable and act upon; and the trial judge’s statement that the evidence was not challenged is not inconsistent with the Defendant’s submission that it should not be accepted, the statement meaning that there was no evidence to the contrary. There was clear evidence as to inability to obtain insurance, similarly not challenged. Again, I do not think that there is a real prospect of overturning the trial judge’s findings.”

He went on to observe (at paragraph 11) that, of the grounds on which he had granted permission, one (ground 5) was a question of construction, to be determined on the facts found by the Chief Justice and the other (ground 6) concerned questions of law and procedural fairness, to be determined on the facts found and any necessary material going to reliance on Article 81.

39. As in the case of the Apartment Appeal, given that there was no application to seek permission to appeal on grounds other than those for which permission was given in the Order of 1 December 2014, it is that Order – and the observations made by Justice Roger Giles as a single judge of this Court in the schedule of reasons set out in that Order – that defines the scope of the Retail Unit Appeal. The issues before this Court, in relation to the Retail Unit Appeal are (i) whether, on the true construction of the Retail Unit SPA and given his findings of fact that the cargo lift was not operational and that the Rahman Claimants could not obtain insurance for the fit-out works, the Chief Justice was wrong to conclude that the Retail Unit was not ready for occupation on 6 October 2011; and (ii) whether the Chief Justice reached his conclusion that Article 81 of the Contract Law entitled the Rahman Claimants to terminate the Retail Unit in a manner which was procedurally unfair.

40. In relation to the first of those issues, it was submitted on behalf of the Appellant that the Chief Justice’s conclusion (in paragraph 161 of his judgment) that the Retail Unit was not fit for what it was intended for was based on the wrong findings of fact “and therefore it is wrong”. But, as I have said, permission to appeal from the Chief Justice’s findings that the cargo lift was not operational and that the Rahman Claimants could not obtain insurance for fit-out works was refused by this Court for the reasons set out in its Order of 1 December 2014. In my view, given those findings of fact (which are not now open to challenge in this Court) the Chief Justice was plainly entitled to hold that the Retail Unit was not ready for occupation – in that it could not be occupied for the purposes (further fit-out works) for which occupation was intended – at the date (21 August 2011) when the Appellant purported to give possession and occupation of that Unit to the Rahman Claimants.

41. In relation to the second of those issues – procedural unfairness – it was pointed out on behalf of the Appellant (i) that (in contrast to Clause 13.1 of the Apartment SPA) Clause 13.1 of the Retail Unit SPA contained no provision for termination; (ii) that the Notice to Remedy Breach (or Notice to Cure) issued on 18 August 2012 contained the statement that it was intended, “…in so far as required, to act as the requisite notice pursuant to Article 87 of the DIFC Contract Law…”; and (iii) that the Notice to Terminate issued on 6 October 2011 purported to terminate the Retail Unit SPA “pursuant to Clause 13.1”.  Reference was made to the statement of the Chief Justice at paragraph 170 of his judgment that “the Defendant’s non-performance did not constitute a fundamental non-performance for the purposes of Articles 86 and 87”. In those circumstances it was said that – the Rahman Claimants having issued a notice to cure pursuant  to  Article  87 (which the Chief Justice had stated to be inappropriate) and having then purported to terminate the Retail Unit SPA pursuant  to Clause  1 of the Retail Unit SPA (which did not provide a right of termination) – there was no basis on which the Chief Justice could determine that it would have been appropriate for the Rahman Claimants to proceed under Article 81 of the DIFC Contract Law (which they did not); and no basis on which he could proceed to find that  the  Rahman  Claimants were entitled to terminate the Retail Unit SPA and that  the  termination was effective.

42. Further, it was said that the Chief Justice’s approach to the notice of termination in relation to the Retail Unit SPA was inconsistent with his approach, earlier in his judgment, to notices given in relation to the Apartment SPA. It was pointed out on behalf of the Appellant that the Chief Justice had held (at paragraph 109 of his judgment) that letters sent by Damac advising the Dattani Claimants that the ACD had been extended could not have any legal effect because they contained no express reference to Clause 6.1 of the Apartment SPA; did not use the term “Anticipated Completion Date”; and did not state that that they were to have the effect of extending the ACD. Nevertheless, it was said, “when it came to determining whether the Retail Unit  SPA had been validly terminated by the Rahman Claimants, the [Chief Justice] was quite happy to disregard his own reasoning in paragraph 109 and conclude that to terminate a contract (a much more significant step than advising that the ACD had been extended) it was sufficient to refer to and rely on Articles of the  DIFC  Contract Law which were not appropriate, purport to give notice of the termination by relying on a clause in the Retail Unit SPA which did not exist and then proceed  to determine the matter relying on an Article of DIFC Contract Law which was neither relied upon in the purported termination nor pleaded in the case”.

43. In response to those submissions it is said on behalf of the Rahman Claimants that there was no irregularity (or no serious irregularity) in the Chief Justice’s approach; and that, in any event, that approach did not lead to injustice. In particular, it is said, the Appellant had the opportunity to address what the Chief Justice identified (at paragraph 173 of his judgment) as the relevant factual issue: whether the thirty day period specified in the notice of 18 August 2011 had been reasonable in the circumstances.

44. The Rahman Claimants submit that, although Articles 81, 86 and 87 of the Contract Law may contain distinct provisions leading to the right to terminate an agreement, “more or less the same arguments need to be made and the same facts…relied on” whichever route is chosen. It is said that, in the present case, “submissions made in relation to Articles 86 and 87 were the same as those necessary for Article 81”; so that “whilst not specifically pleaded, the [court below] had before it the necessary arguments and submissions, which allowed it to make the finding that it did applying Article 81”. Further, it is said that the Appellant has failed to identify, in its appeal to this Court, what other arguments or submissions it would have made, had it been asked to address Article 81 in the court below. It is submitted that there has been no injustice: in that there could have been no further argument made by Damac which would have changed the outcome; that the submissions made on behalf of Damac in the court below were equally applicable to Article 81 as they were to Articles 86 and 87; and that, even if Damac had made submissions and arguments directed specifically to Article 81, the finding of the court below would have been the same. In particular, it is said, the Chief Justice having identified that the question which he had to consider was the one posed by Article 81(3) – “whether the period of 30 days which the Rahman Claimants gave [Damac] to remedy its breach was an additional period of time of reasonable length” – the only question which Damac would have needed to address (had reliance on Article 81 been pleaded) was whether the thirty day notice period was a reasonable length of time for the purposes of Article 81(3). But, in the events which happened, Damac did address that question: it made submissions upon it at paragraphs 199 to 204 of its Closing Submission, dated 19 December 2013, contending that the thirty day notice period was unreasonable. In the circumstances that Damac was able to advance (and did in fact advance) submissions directed to the relevant question (notwithstanding that reliance on Article 81 was not pleaded), it is not now able to say that the failure to plead reliance on Article 81 has led to injustice in this case.

45. It was pointed out on behalf of the Rahman Claimants that Article 86(3) of the Contract Law provides that:

“86(3) In the case of delay the aggrieved party may also terminate the contract if the other party fails to perform before the time allowed under Article 81 has expired.”

It was submitted that Article 86(3) itself provides a context in which a court must consider the application of Article 81. An aggrieved party who pleads reliance on Article 86 is entitled to rely on Article 81(3) – notwithstanding that it has not pleaded reliance on that article – provided that it has pleaded (and can establish) facts which bring the case within Article 81(3): that is to say, provided it has pleaded and proved that notice allowing an additional period of time of reasonable length has been given, the aggrieved party may terminate the contract at the end of that period.

46. In my view the Appellant fails on the second of the two issues which it has been permitted to advance in this Court in support of the Retail Unit Appeal. It has failed to establish procedural unfairness. I am led to that conclusion for the following reasons:

(1) As the Chief Justice recorded (at paragraphs 30 and 32 of his judgment) the issue whether the Rahman Claimants were entitled to terminate the Retail Unit SPA in reliance on Articles 86 and 87 of the Contract Law was before him at trial.

(2) Article 87 does not, of itself, confer any right to terminate: rather, it provides, in sub-article (1), how a right to terminate (where it has arisen) is to be exercised and, in sub-article (2), for circumstances in which a right to terminate (where it has arisen) may be lost.

(3) A right to terminate arises under Article 86: in particular, it arises under sub-article (1) – where the failure of the other party to perform an obligation under the contract amounts to a fundamental non-performance – and under sub-article 86(3) – where there has been a failure by the other party to perform before the time allowed by Article 81 has expired. There is, I think, no doubt that Article 86(3) confers a right to terminate in cases where the delay in performance does not, of itself, constitute fundamental non-performance (provided, of course, that notice under Article 81, allowing additional time of reasonable length has been given by the aggrieved party): that follows from the inclusion of the word “also” in Article 86(3).

(4) The right to terminate which arises under Article 86(3) is, as it seems to me, indistinguishable (at least in the circumstances of the present case) from the right to terminate which arises under Article 81(3). Under each of those provisions the right to terminate arises in cases where the delay in performance does not, of itself, constitute fundamental non-performance; and, under each of those provisions, the right to terminate arises if, but only if, notice allowing an additional period of time has been given under Article 81(1) and the additional time allowed is of a reasonable length or is extended to a reasonable length.

(5) In those circumstances, a party who has given notice of intention to terminate the contract at the end of an additional time for performance can rely on either Article 86(3) or on Article 81(3) of the Contract Law. In either case it will need to establish (i) that the additional time allowed (or the time which has, in fact, elapsed) was of reasonable length and (ii) that the right to terminate was, itself, exercised by notice (as required by Article 87(1)) unless the notice of intention to terminate had specified that, if the other party failed to perform within the period allowed by that notice, the contract should automatically terminate (as provided by the third sentence of Article 81(3).

(6) Further, in a case where a party who has given notice of intention to terminate the contract at the end of an additional time for performance does rely on that notice of intention (and any subsequent notice of termination given on or after the expiry of that additional period) in proceedings seeking a declaration that the contract has been validly terminated under the provisions of the Contract Law, the other party must be taken to know that the issues in those proceedings will be the same whether the right to terminate is said to have arisen under Article 86(3) of that Law or under Article 81(3) of that Law; and that those issues will include the issue whether the additional time for performance was of reasonable length.

(7) In the present case – as appears from paragraphs 199 to 204 of its Closing Submissions – Damac plainly did appreciate that it needed to address the issue whether the additional time for performance was of reasonable length. Damac was not misled by the contention (advanced on behalf of the Rahman Claimants at trial) that the case was founded on fundamental non-performance.

(8) In those circumstances there was no procedural unfairness in the Chief Justice founding his decision that the contract had been validly terminated on Article 81 of the Contract Law rather than on Article 86. The Rahman Claimants are correct to submit that the course of the trial and the outcome would not have been different if reliance on Article 81(3) of the Contract Law had been pleaded.

Conclusions

47. As I have said, this Court has already dismissed the Apartment Appeal. I would dismiss the Retail Unit Appeal also.

48. My provisional view is that there is no reason to depart from the usual practice that the unsuccessful appellant should pay the costs incurred by the successful respondents. Subject to further consideration in the light of such representations as to costs as the parties may wish to put before the Court – such representations to be made in writing and filed with the Court within fourteen days of the delivery of judgments – I would order that Damac pay to the Dattani Claimants their costs of the Apartment Appeal and to the Rahman Claimants their costs of the Retail Unit Appeal; such costs to be assessed (if not agreed) on the standard basis.

H.E. Justice Ali Al Madhani

49. I agree with the judgment of the Deputy Chief Justice and have nothing to add. 

Justice Roger Giles

50. I have had the advantage of reading the reasons of the Deputy Chief Justice in draft. Gratefully drawing on and assuming familiarity with them, I am able briefly to explain my agreement with dismissal of both appeals.

The Apartment Appeal

51. The question is whether Damac was in a position to give possession and occupation of the Apartment when, although the Apartment itself was in a sufficiently complete state, access to it through the common areas was unsafe.

52. In answering the question, it must be remembered that Damac was selling to the Dattani Claimants not the Unit but the Property, that is, the Unit plus an undivided share in the Common Property; and so the subject of the sale was the Unit as reached through the common areas provided by Damac as part of the sale. On an ordinary understanding of language, the answer to the question is no.  Damac correctly accepted that possession and occupation could not be given if no access was possible.  Equally, possession and occupation entails not just ability to access the Unit through the common areas provided as part of the sale, but ability safely to do so.

53. There was a toehold for departing from this understanding in Clause 6.4 of the Apartment SPA, in that the Common Property might be incomplete on the Completion Date and any claim for inconvenience from building activities in progress was excluded; so, it could be said, that the common areas were incomplete was consistent with ability to give possession and occupation of the Unit. Damac invoked this clause, submitting that the Apartment SPA “plainly envisaged significant disruption of access and egress by the Common Property”.

54. In my opinion, Clause 6.4 does not assist Damac. Inconvenience is less than lack of safety, and of a different character, and the clause does not support that the common areas could be so incomplete that access could not safely be had consistently with ability to give possession and occupation.

55. Damac otherwise sought to submit that the facts found by the Chief Justice did not support the conclusion that access to the Apartment through the common areas was unsafe. As the Deputy Chief Justice has recorded, the permission to appeal did not extend to challenging the finding that ingress to and egress from the Apartment was unsafe.  The submissions morphed into suggesting that there were degrees of lack of safety and on the facts found there was only a low degree, in effect, no more than inconvenience, so that Clause 6.4 came into play.

56. I do not accept this supplement to Damac’s invocation of the clause. Unsafe is unsafe, more than a matter of inconvenience, and in any event the impediments to safe access as found were significant for residents of the Apartment and their visitors.

The Retail Unit Appeal

57. One question, similar to that in the Apartment Appeal, is whether Damac was in a position to give possession and occupation of the Retail Unit when, notwithstanding that the Retail Unit itself was in a sufficiently complete state (for further fit-out works), cargo lift access was not available and insurance could not be obtained.

58. Damac relied on Clause 6.4 of the Retail Unit SPA, submitting that it was envisaged that the common property might be incomplete with consequences for use of the Retail Unit; and further, that the Retail Unit SPA did not address the particular use for fit-out works and, when there could be safe access for contractors, it was wrong to imply the further requirements particular to the Rahman Claimants of cargo lift availability and ability to insure.

59. However, the sale of the Retails Unit for retail purposes entailed fit-out works, and so that the common property part of the subject of the sale, and the development as a whole, would be such that fit-out works could proceed. On the Chief Justice’s findings, they could not, and those findings (that it was not feasible to transport heavy and bulky materials to the Retail Unit and insurance for the fit-out works could not be obtained) are not able to be challenged.  These are more than matters of inconvenience which might give some operation to Clause 6.4.  Damac submitted that there was access otherwise than by the cargo lift and that insurance was a matter of choice for the purchaser of the Retail Unit, but taking heavy and bulky materials to the site and insurance in respect of the works are ordinary incidents of fitting out.  In my opinion, on the findings made the answer to the question is again no.

60. The other question is whether there was procedural unfairness in the Chief Justice taking Article 81 of the Contract Law as the basis for the entitlement to terminate the Retail Unit SPA.

61. The Rahman Claimants terminated in purported reliance on a contractual right in Clause 13.1 of the Retail Unit SPA, although the clause gave no such right. But the Chief Justice recorded that termination in reliance on Articles 86 and 87 of the Contract Law was before him.  Article 87 is concerned with how a right to terminate is exercised or may be lost, and is not the source of a right to terminate; but Article 86 expresses a right to terminate in the case of fundamental non-performance (Article 86 (1)) or where there has been failure to perform in the time allowed under Article 81 (Article 86 (3)).  The latter takes up the right to terminate in Article 81 (3), where there has been non-fundamental delay in performance and notice giving a reasonable time for performance.  Thus reliance on Article 86 could include that a contract was terminated for non-fundamental delay in performance after notice giving a reasonable time for performance.

62. At trial the Rahman Claimants did not clearly take this course. They submitted that time had been made of the essence by the giving of notice, and that failure to give possession and occupation of the Retail Unit was fundamental non-performance entitling them to terminate.  In response, Damac submitted that the Rahman Claimants had failed to give reasonable notice making time of the essence, so that there had not been “fundamental breach”.  While referring generally to Articles 86 and 87, the Rahman Claimants did not expressly submit that they had terminated for failure to perform in the time allowed under Article 81.

63. The Chief Justice observed that the provision in Article 81 for termination after reasonable notice “serves the same function as the common law doctrine of notice making time of the essence”; hence he “address[ed] the Rahman Claimants’ submission under Article 81”. With respect, it would have been better if the operation of Article 81 had been flagged for the parties’ consideration.  But Damac accepted that procedural unfairness was “only relevant if a different result would have been achieved”.  As an extension of this, any denial of procedural fairness leads nowhere if Damac would not have lead different or additional evidence and the appeal court can consider whether Article 81 was given a correct application.

64. Damac did not suggest that its evidence would have differed had there been express reliance on Article 81. Nor did it challenge the Chief Justice’s decision that Article 81 was satisfied, that is, that the exclusion in Article 81 (4) did not apply and the additional period of time allowed by notice prior to termination had been reasonable.  Rather, it is submitted that termination in reliance on Article 81 could not be upheld because the notice of termination had been said to be “pursuant to Clause 13.1”.  This was ill-founded because Clause 13.1 did not give a right of termination, and, it was said, as a purported exercise of one right it could not be construed or regarded as a termination in the exercise of the different right expressed in Article 81.

65. Whatever the merit of this submission, and I should not be taken to favour it, the difficulty is that it is unrelated to any want of procedural fairness in the Chief Justice taking up Article 81 as the basis for the entitlement to terminate the Retail Unit SPA. The same submission was available in relation the Rahman Claimants’ undoubted reliance on Article 86 (1) as a basis for termination.  It was not made.  In my opinion, it should be concluded that the same result would have been achieved if Article 81 had clearly been in the ring from the beginning.  At trial Damac addressed whether the time allowed for performance was reasonable, as an issue arising in relation to making time of the essence, and it did not seek to reopen that matter on appeal.  The denial of procedural fairness of which it complains does not provide a fortuitous opportunity to raise a new argument which could have been made at trial.

Conclusions

66. I agree with the dismissal of both appeals, and with what the Deputy Chief Justice has said in relation to costs.

Issued by:

Natasha Bakirci

Deputy Registrar

Date of Issue: 10 November 2015

At: 3pm

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Claim No: CFI 013/2015

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

ABU DHABI ISLAMIC BANK PJSC

                                                                                          Claimant

and

BARCLAYS BANK PLC

Defendant

   ORDER OF JUDICIAL OFFICER NASSIR AL NASSER

UPON reviewing the Claimant’s Application Notice CFI 013/2015-2 dated 9 November 2015 seeking an extension of time to serve the claim form on the Defendant (“the Application”)

AND UPON reviewing the Claimant’s witness statement;

IT IS HEREBY ORDERED THAT:

1. The Claimant’s Application is granted.
2. The Claimant shall serve the Claim Form on the Defendant by no later than Monday, 11 January 2016.
3. There be no order as to costs.

Issued by:

Nassir Al Nasser

Judicial Officer

Date of issue: 11 November 2015

At: 2pm

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Claim No: CFI-027-2014

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai

IN THE COURT OF FIRST INSTANCE

BEFORE JUSTICE SIR RICHARD FIELD

BETWEEN

LEGATUM LIMITED

Claimant

and

ARIF SALIM

Defendant  

Hearing:            15, 16 & 17 September 2015

Counsel:           Duncan McCall QC (instructed by Al Tamimi & Company) for the Claimant

Dr Reyadh Kabban of Al Kabban & Associates for the Defendant

Judgment:        11 November 2015

JUDGMENT OF JUSTICE SIR RICHARD FIELD

Summary of Judgment

This summary is not part of the Judgment and should not be cited as such

INTRODUCTION

1. On 21 June 2014, the IT system of the Claimant (“Legatum”) was sabotaged.

2. This is the trial of a claim by Legatum that it was the Defendant (“Mr Salim”), a former senior member of its IT team, who was responsible for this attack on the Legatum IT system by deliberately interfering with and interrupting its proper functioning.

3. The burden of proof is of course on Legatum and the standard of proof is the civil standard, namely the balance of probabilities. Lord Nicholls said in In re H (Minors)(Sexual Abuse: Standard of Proof)[1996] AC 563, 586D-H:

“The balance of probability standard means that a court is satisfied an event occurred if the court considers that, on the evidence, the occurrence of the event was more likely than not. When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. Fraud is usually less likely than negligence. Deliberate physical injury is usually less likely than accidental physical injury…Built into the preponderance of probability standard is a generous degree of flexibility in respect of the seriousness of the allegation.”

“Although the result is much the same, this does not mean that where a serious allegation is in issue the standard of proof required is higher. It means only that the inherent probability or improbability of an event is itself a matter to be taken into account when weighing the probabilities and deciding whether, on balance, the event occurred. The more improbable the event, the stronger must be the evidence that it did occur before, on the balance of probability, its occurrence will be established.”

4. The House of Lords has subsequently emphasised that Lord Nicholls was not saying that in civil cases involving serious allegations a “heightened” civil standard of proof is required, see In re B (Children) (FC) [2008] UKHL 35. This no doubt is true, but common sense tells one that in practice where serious allegations are made in civil proceedings, strong and convincing evidence will usually be required for such allegations to be proved on the balance of probabilities and this is the approach I propose to adopt in this case.

5. The case against Mr Salim is based on circumstantial evidence. It is well known that whilst circumstantial evidence can be strong evidence, careful consideration must be given as to whether the evidence reveals any other circumstances which weaken or destroy the case against the accused and care should be taken to reach conclusions based only on reliable evidence and not on mere speculation. 

THE FACTUAL WITNESSES

6. The witnesses of fact called by Legatum were: Mr Conor O’Flynn, a Senior IT Analyst employed by Legatum, Mr Paul Sheriff, Legatum’s CFO and Mr Mark Stoleson, Legatum’s CEO. When I use the word “fact” I do not include any opinion that Mr Salim was responsible for the sabotage or any conclusionary reasoning supporting an allegation that Mr Salim was the culprit.

7. Dr Al Kabban, who appeared for Mr Salim, made a number of criticisms of the evidence given by these witnesses. For instance, he observed that some amendments were made to some of the witness statements before the witnesses gave sworn evidence and in the case of Mr O’Flynn that he (Mr O’Flynn) had changed in his second witness statement what he had said in his first statement about how data was copied onto a virtual server. In my judgment, none of Dr Al Kabban’s criticisms undermine the reliability of the sworn factual evidence given by Legatum’s witnesses from the witness box. In my judgment, the factual evidence given by all of these witnesses was truthful and reliable. Mr Stoleson had a tendency to argue Legatum’s case from the witness box but abstained from doing so after a comment from myself. Notwithstanding these lapses into advocacy, I have no hesitation in accepting Mr Stoleson’s factual evidence.

8. Mr Salim was the sole factual witness called by his side. He gave evidence by video link from Australia and had a tendency to speak very fast. Unfortunately, many of his answers in cross-examination were not picked up in the recording of his evidence. Both sides have provided such notes as they were able to produce of his answers which I found very helpful. In the circumstances, I propose to give my considered assessment of the reliability of Mr Salim’s evidence after I have considered Legatum’s case based principally on undisputed facts and Mr Salim’s response thereto. Suffice it to say at this stage that I did not find Mr Salim to be a reliable witness on a number of important matters and I am therefore prepared to accept only those parts of his evidence that are corroborated by the oral testimony given on behalf of Legatum or by other reliable evidence. 

THE FACTUAL BACKGROUND: PART I – MR SALIM’S KNOWLEDGE OF THE IT SYSTEM; THE IT TEAM; MR SALIM’S RESIGNATION

9. Legatum was created by its Chairman, Mr Christopher Chandler, a wealthy investor. It is a private investment firm based in the DIFC, Dubai which invests proprietary capital in listed entities around the world. In carrying on its business it is highly dependent on its IT system. Data security is therefore extremely important to it.

10. Mr Salim was employed as a member of Legatum’s IT team from 16 September 2004 until 31 May 2014 when his resignation from the company became effective. His actual leaving date was 29 May 2014. On 16 March 2008 he signed a new contract of employment dated 12 February 2008 which described his role at that time as “Server Architect”.

11. By early 2014, when Mr Stoleson asked each member of the IT team to describe his role in the company, Mr Salim’s role had expanded considerably over the previous 9 years 10 months. In a memorandum he produced in response to Mr Stoleson’s request, Mr Salim described himself as “IT Vice President” and stated that his role was

“… to take complete responsibility of datacentre systems, servers, applications and DR [Disaster Recovery] functionalities for Legatum and private offices across the globe. This includes research, planning, designing, implementing and maintaining all Legatum systems and server projects (such as Tradar, SUN and Data archive etc). The role also helps Head of IT with yearly budgeting, decision making, and IT strategy planning”.

12. Amongst the specific responsibilities Mr Salim went on to list in this memorandum were responsibilities for all server hardware and data storage systems, backup support, and all disaster recovery systems.

13. It is clear that over the 10 years he was with Legatum Mr Salim acquired a detailed knowledge of all aspects of Legatum’s IT system. During that period owing to his seniority he was involved in every single IT project, whether in a planning capacity or in implementing or running projects. Also, all members of the IT team covered for each other where necessary and thus Mr Salim would have had a good understanding of that part of the system that was the direct individual responsibility of each of his colleagues.

14. Mr Salim served notice of his resignation by an email to Mr Stoleson dated 17 April 2014. This followed the departure in early 2014 of the head of the Legatum IT team, Mr Benvir Padda. A shared services survey conducted in December 2013 had shown that the IT team had been underperforming. Mr Padda had been more a policy and strategy man than a hands-on man with a close knowledge of the system.

15. After Mr Padda left the company, the IT team consisted of Mr Salim, Mr O’Flynn and Mr Srdjan Radivojeric (Technical Support Analyst). Later, on 11 June 2014, Ms Krisztina Nagy joined the team as a Technical Support Analyst.

16. Mr O’Flynn was responsible for all network components and internet connectivity across all the Legatum sites and Mr Radivojeric was responsible for managing and maintaining all desk top and helpdesk level support including all of the IT user end facilities.

17. Mr O’Flynn testified that:

(i) Mr Salim felt insulted when asked by Mr Stoleson in March 2014 to put into writing his role and responsibilities; in Mr Salim’s view, senior management ought to have known what the role of each member of the IT team was.

(ii) Mr Salim also resented the fact that after Mr Padda’s departure he had to seek authorisation from certain senior managers for purchases for the IT system, whereas Mr Padda had been given prior authority to make purchases up to a certain value.

(iii) Mr Salim was upset when he learned that Legatum were intending to replace Mr Padda by appointing someone from outside the company rather than himself.

(iv) Mr Salim felt that his services would be dispensed with in the near future.

18. Mr Salim denied in cross-examination that he bore any resentment towards Legatum or that he thought that he would be let go if he did not resign. I reject Mr Salim’s denials and accept the evidence of Mr O’Flynn.

19. Mr Salim’s last day in the office was 29 May 2014.

THE FACTUAL BACKGROUND: PART II – LEGATUM’S IT SYSTEM

20. Legatum’s IT system consisted of: (i) the computers (work stations) located in Legatum’s DIFC office for use by Legatum personnel; (ii) equipment located in a data centre in the DIFC office premises; (iii) further equipment sited at other small locations around the world.

21. The equipment in the DIFC data centre comprised a number of network components, primary and secondary domain controllers and all of the primary data servers and storage for the system. In total, there were approximately 55 servers. It was possible to gain access to the system from any of the work stations, as well as remotely over the internet via a secure and encrypted connection. Access to the system required the use of appropriate credentials and thus only people with the requisite knowledge thereof could do so.

22. Within the System, there were thousands of possible “IP addresses” (also known as “IP numbers”) though only a small number were used at any one time. An IP address is a unique number assigned to a device (e.g. a computer) which is part of the network. Legatum’s IP addresses/numbers were organised in ranges of 254 addresses per range. Servers were held on one range, PCs on another range, phones on another, and so on. Given the large number of IP addresses/numbers, there was no need to reassign an IP address to another device once the device to which that IP address has been assigned was no longer in use.

23. The IP addresses/numbers were dynamically assigned using a Dynamic Host Configuration Protocol (DHCP), which allowed IP addresses to change after a period of inactivity of 14 days. However, given the infrequent changes of machines and the fact that PCs were rarely shut down for longer than 14 days the DHCP, IP addresses/numbers at Legatum usually stayed assigned to individual PCs as the preferred IP addresses.

24. Access to the servers was administered and controlled by three Microsoft domain controllers in Dubai and three other domain controllers in different locations. The servers ran a variety of applications, including e-mail, file and print sharing, SQL databases and various business applications which accessed either databases or files. These applications included all of Legatum’s financial applications (SUN Financials and 4Series), two document management systems (CODEX and eDocs), Legatum’s intranet system, including Sharepoint, and Legatum’s external websites. Most critical data was replicated to the disaster recovery site in Thailand and data was backed up to physical tapes incrementally each night as a safeguard. Usually, there would be one up-to-date copy of all of the company’s data on tape each week. These backup tapes were kept in a small room adjacent to the data centre itself.

25. If the domain controllers were immobilized, access to the system would be rendered impossible.

26. The network storage SAN had connectivity with two physical servers, each of which ran six mounted “virtual” servers. A “virtual” server is not a physical piece of hardware but is instead comprised of a set of electronic specifications and configuration files which run on a “host” server or computer. If a virtual server is “mounted”, it can be seen on the system. If it is “unmounted” it is invisible on the system.

27. The Legatum IT system used Active Directory (AD) which is a centralised and standardised system that: (i) automates network management of user data and security and distributes resources; and (ii) enables interoperation with other directories. Active Directory worked with the Primary Domain Controller (PDC) to authenticate and authorise all users and computers in the Windows domain network – assigning and enforcing security policies for all computers and installing or updating software. Thus, when a user logged into a computer that was part of the Windows domain, Active Directory checked the submitted password and determined whether the user was a system administrator using an administrator account or a normal user using a user account.

28. An administrator account is an account that can be used to change security settings, install software and hardware and access all files on the computer. It can also be used to make changes to other user accounts.

29. A user account is a collection of information that tells Windows which files and folders can be accessed, what changes can be made to the computer and the user’s personal preferences.

30. The Primary Domain Controller and Backup Domain Controller (BDC) are functions that can be assigned to a server in a network of computers that use the Windows NT operating system. Windows NT uses the idea of a domain to manage access to a set of network resources (applications, printers, and so forth) for a group of users. The user needs only to log into the domain to gain access to the resources, which may be located on a number of different servers in the network. The Primary Domain Controller manages the master user database for the domain. One or more other servers are designated as backup domain controllers.

31. Mr Salim’s workstation at the DIFC office had the designation (DBX-ANS-1) within the Legatum IT system.

32. Before he left Legatum on 29 May 2014, Mr Salim made available to Mr O’Flynn handover notes about Legatum’s IT system. These notes took the form of over 1,000 pages of Excel spreadsheets, Word documents and screenshots. The handover was done, as Mr Salim well knew, to enable the IT team to run the IT system in Mr Salim’s absence, Mr Salim knowing far more about the IT system than the remaining members of the IT team. Included in the notes was a list of IP numbers for servers, workstations and printers and a list of passwords for numerous accounts.

33. After Mr Salim’s departure, his passwords on his own personal account (“arifs”) and the Active Directory system user accounts identified in the handover file were changed.

THE FACTUAL BACKGROUND: PART III – THE LEGATUM IT SYSTEM CRASHES

34. The first signs that Legatum’s IT system had been sabotaged emerged on Saturday 21 June 2014 when Mr Sheriff was unable to access his emails whilst in Scotland on business. This led to Mr O’Flynn going to Legatum’s DIFC office to investigate the problem where he found that no access could be obtained to the Primary Domain Controller, the Active Directory or the servers.

35. At about 11.00 am that morning Mr O’Flynn telephoned Mr Salim to ask for his help. Mr Salim gave Mr O’Flynn some details of what to check in order to try and get the system back up and running, including old recovery passwords for the PDC and local administration accounts that were set on the machines. However, none of these worked. It was at this point that Mr O’Flynn first called Mr Salim to verify the passwords on the handover sheet and to check if there were other passwords that could be tried to gain access to the domain controller.

36. Mr O’Flynn asked for Mr Salim’s help several times that day and at one point asked whether he might be willing to come into the office, as he understood the system better than anyone else. Mr Salim enquired several times whether Mr O’Flynn had been asked by anyone in management to request his help. He wanted any involvement to be cleared with senior management first, in particular with Mr Stoleson. He also asked if Mr Stoleson had been in touch with Mr O’Flynn and whether he had mentioned anything about asking him (Mr Salim) to come in. He raised the same enquiry in respect of the Chairman, Mr Chandler.

37. Mr Salim eventually arrived at the Legatum office at approximately 6 pm on the Saturday evening. Having first asked if it was all right for him to do so, he sat at his old computer and logged into his old account to see if he could restore some of the servers from there. Since the domain controllers were down, along with the AD, his old account could not be re-activated and the password reset to allow him to log back in with his former Windows account. He therefore had to set up a profile on the PC, so that he could log in and get access to the network and systems. Mr O’Flynn believes that Mr Salim created another “Arif” account with which to log in and get access to the servers using remote desktop connections.

38. Mr Salim said he wanted a contract to cover his work in assisting the recovery of the IT system and asked for an assurance from Mr Stoleson that he would not be held responsible for any actions that he may take to retrieve our IT system. Mr Robert Vickers, Legatum’s Senior Vice President (Legal), prepared a draft contract for Mr Salim to sign. However, two days later, Mr Salim refused to sign the contract and gave a number of vague reasons as to why he would not agree to the terms outlined in the draft contract, including that his brother, whose sponsorship he was then under, did not approve of him entering into a consultancy contract. Mr Salim also said that he had plans to fly to Australia with his family on holiday that week. However, when Mr Sheriff asked him whether he had booked his tickets, he said he had not.

39. On Sunday 22 June 2014, it was agreed that an individual called Chris from ITSec would try to restore the domain controllers using software that needed to be on either a USB key or a DVD and inserted into the server located in the data centre. Mr Salim proceeded to make an issue over the fact that a DVD was being used in preference to a USB notwithstanding that if the machine could read the files on the media storage, it mattered not if the files were stored on a CD/DVD or on a USB key. Mr Salim also became quite agitated in the data centre when Chris, the ITSec man, attempted to work on the domain controllers. At this point Mr O’Flynn received a call from Amir Kolahzadeh from ITSec who said that Mr Salim was interfering with Chris’s work and making it difficult for him to do his job. Later, when Mr O’Flynn spoke to Mr Salim about this, he said that Chris did not know what he was doing. However, one of the domain controllers was restored.

40. Messrs Sheriff, Radivojeric, O’Flynn and Salim then had a meeting to come up with a plan of action. Mr Salim said he was confident that he could restore the system if only he was left alone to do it. He said that he could not help if others were making changes or trying different things. Mr O’Flynn thought he clearly seemed unhappy that other professionals had been asked to assist with the response to the crash of the system.

41. McAfee Foundstone Professional Services (“McAfee”) was engaged by Legatum on the Sunday to help recover Legatum’s lost data. Mr Paul Wright, who is Legatum’s expert witness, was the first IT McAfee professional to arrive at the office at around 7pm on that evening. After explaining how McAfee worked and what they would be doing, Mr Wright started asking basic questions to gain an understanding of what had occurred and what the Legatum people knew. A number of his questions were directed to Mr Salim but Mr Salim did not answer all the questions and was quite vague in his responses to others. This was surprising to Mr O’Flynn because some of the questions were pretty basic and involved matters he would have expected Mr Salim to know about.

42. The following day (23 June 2014) the IT team met with Mr Sheriff and discussed a plan that envisaged Mr Salim leading the recovery effort. Mr Salim told Mr O’Flynn that he would like to run the entire recovery project, clean up whatever had happened, come up with a revised infrastructure and network, write new policies and procedures for the system globally and separate the Neritum domain that served Mr Chandler personally from the Legatum domain. Mr Salim said that he could only do this if and when all external professionals had been removed. He said his concern was that too many people were making attempts to recover the system and it was difficult to track what was being done.

43. At one point, Mr Salim suggested that he could try a few things to recover the virtual host machines and said he was confident of doing so. Mr O’Flynn was keen for him to get started but Mr Salim then hesitated to get started and when he realised that Mr O’Flynn and several others were not leaving his desk, he said that he needed time to think about the situation to see what needed to be done and to read a few notes or emails. Whilst Mr O’Flynn and Mr Radivojeric were standing at his desk, Mr Salim appeared to be playing around with his computer mouse and not doing very much at all. However, Mr O’Flynn eventually left Mr Salim’s desk and a short time later Mr Salim recovered some of the virtual host servers. In light of this behaviour of Mr Salim, Mr O’Flynn reset the passwords again on those parts of the system that he knew were now up and running.

LEGATUM’S EXPERT WITNESS, MR PAUL WRIGHT

44. As stated above, the expert witness called by Legatum was Mr Paul Wright. Mr Wright has an MSc (with Distinction) in Professional Computing from Staffordshire University. From 1987 to 2009 he was a Detective Sergeant with the City of London Police working in the area of computer crime during which period from mid November 2001 he was a member of the National Hi-Tech Crime Unit. Since February 2009 he has held high-level civilian positions as a consultant investigator into computer incidents and as an advisor on computer security. He joined McAfee in June 2014 as EMEA Technical Director for Cybercrime Consulting.

45. In the course of investigating the crash of the Legatum IT system, Mr Wright captured a number of forensic images from computers and servers located in the Legatum IT network and conducted a forensic analysis on the workstations of the past and current members of the Legatum IT team, save for that used by Ms Krisztina Nagy who had only joined the team very recently.

46. Mr Wright also investigated Legatum’s Windows Event logs for 2014 which are a repository of digital information about particular computers showing every activity on the System. However, he found that the VPN logs relating to the secure and encrypted connection – Remote Access Connection, Dynamic Host Configuration Protocol (“DHCP”), Domain Name Server, and Core Switches and Cisco network devices – had been immobilised and rendered unavailable.

47. In the course of his investigation, Mr Wright identified login activity between March and June 2014 linked to the IP numbers 172.25.25.16, 172.20.0.240 and 172.25.26.29 and the accounts “clsadmin”, “dxbbackup” and “spsadmin”. The IP number 172.25.26.29 was the IP number assigned to Mr Salim’s workstation.

48. On 17 July 2014, Legatum staff discovered that a new virtual unmounted device existed on the Legatum IT system and learned later it had been named “Ptolemy 1”. A screen shot of Ptolemy 1 shows the IP number for that device as 172.25.25.35 and also that the credential “arifs” made 9 attempts to logon to Ptolemy 1 on 31 March 2014. It was also discovered that the files for a user profile for the account “clsadmin” had been created on Ptolemy 1 at 15:57 hours on 6 May 2014.

49. Further investigation revealed that the data that had been deleted from the IT system during the sabotage carried out on 21 June 2014 had previously been copied from an existing server called “Ptolemy” onto the virtual, unmounted Ptolemy 1, where it remained.

50. Using the information found on the Windows Event logs and the forensic analysis of images taken from the computers he examined, Mr Wright produced what he called the “Attack Timeline of Events”, the final version of which was set out in his Second Report. The events identified in this list (“the Attack Timeline”) and their dates and times were not disputed at the trial by Mr Dinesh Bareja, Mr Salim’s expert witness. This, however, did not deter Dr Al Kabban from contending in his closing submission that since Legatum’s IT system has been rebuilt, there is no alternative to relying on the information made available by the Claimant to the Court, “[h]owever the validity and the truthfulness of this information is doubted.” Mr Bareja having accepted the accuracy of the Attack Timeline and the trial having progressed on this basis, this judgment will also proceed on that basis.

51. It was Mr Wright’s opinion that the sabotage inflicted on the Legatum IT system was not carried out by an external third party but by someone with intimate inside knowledge of the system. Mr Salim trailed the possibility that an external consultant who had worked on the system was responsible by mistake or design for the incident on 21 June 2014, but the main thrust of his defence, as we shall see, was that a fellow member of the IT team had caused the incident by mistake.

52. In Mr Wright’s judgment, the fact that data was copied onto a hidden virtual server, Ptolemy 1, before being deleted on the other servers indicates that the attack was carried out by an insider who wanted the option to recover the data from Ptolemy 1 at a later stage. Also, there was no evidence of any external reconnaissance before the attack, only internal reconnaissance both before and after the attack. Further: (i) there was no evidence of the use of Trojans (programs designed to breach the security of a computer system while ostensibly performing some innocuous function) or a rootkit (a set of software tools that enable an unauthorised user to gain control of a computer system without being detected); (ii) no ransom demand was received and no mention was made on the internet of the attack or that Legatum data was being disseminated; and (iii) there was no evidence that anyone outside had carried out a reconnaissance of the physical Legatum environment.

53. Mr Wright’s opinion that the damage done to the Legatum IT system was not carried out by an external third party but by someone with intimate inside knowledge of the system was not seriously challenged on behalf of Mr Salim.

54. On 2 July 2015, Legatum made voluntary disclosure of a hard disc containing Event Logs and Forensic Images of various hard discs. Included in that disclosure was this screenshot taken from a text Notepad file:

55. The highlighted middle section of the screen shot appeared to show that Mr Radivojeric (srdjan) had logged on to the Legatum IT system using the “clsadmin” account on 21 June 2014 at 4:35:17 hours. In a supplementary Third Report produced on the second day of the trial, Mr Salim’s expert witness, Mr Dinesh Bareja, expressed the view on the basis of this screenshot that Mr Radivojeric had accessed the invisible virtual server Ptolemy 1 on 21 June 2014 after Mr Salim had left Legatum. If this conclusion were soundly based it would have seriously undermined Legatum’s case that the existence of Ptolemy 1 was not known to Legatum until it was discovered on 17 July 2014.

56. Mr Wright answered Mr Bareja’s third report in a further (third) report which he confirmed on oath in the witness box. His evidence was that the screenshot was taken from a text Notepad file and was not an event log as had been assumed by Mr Bareja; rather, it was a draft working document in text format he had created in the course of his investigation. It had been included in Legatum’s voluntary disclosure in error and had not found its way into his finished work product. He further testified that he had once again checked the original event logs and was able to confirm there was no log of any type showing that the user “LEGATUM\Srdnanr” had accessed Ptolemy 1 at any time on 21 June 2014. Mr Wright’s evidence as to what the text Notepad file was, how it had been included in the voluntary disclosure made on 2 July 2014 by mistake, and his confirmation that having rechecked the original event logs there is no log of any type showing that the user “LEGATUM\Srdnanr” had accessed Ptolemy 1 at any time on 21 June 2014, was not challenged on behalf of Mr Salim. Further, Mr Bareja expressly accepted when cross-examined that he was not suggesting that Mr Wright had deliberately doctored any material.

57. In his written closing submissions, however, Dr Al Kabban, asserts that the screen shot shows that Mr Radivojeric accessed Ptolemy on 21 June 2014 and concludes, “As such, the Claimant’s contention that they were not aware of the existence of Ptolemy 1 and they did not have knowledge about the password to the clsadmin account is false.” And Dr Al Kabban does not stop there. He goes on:

“The Claimant expert’s justification and reasoning that the log is an amalgamation of entries is absurd as one cannot see any common factor or link between the three log entries in the screenshot. As confirmed by the Claimant’s Counsel that logs cannot be altered, it is the Defendant’s position that indeed logs cannot be altered but they can be copied onto a note pad document as seen in the screenshot thereby concluding that the entries are genuine log entries taken from the Claimant’s data base which confirms the Defendant’s position that selective information has been made available to the Defendant and the Honourable Court” [paragraph 47].

“Even, if one were to believe that the inclusion of this log in the hard drive was a part of the rough work file belonging to the Claimant’s expert, the authenticity of this log cannot be ignored or denied. A detailed review of that particular log indicates that the Claimant’s expert obtained this piece of information from the Claimant’s data base and accidently forgot to erase it before sending over the hard drives to the Defendant. This revelation clearly indicates that the Claimant’s expert has been selective in the information he has made available to the Defendant and the Honourable Court. The Claimant’s expert has deliberately provided the Honourable Court with information that supports the case filed by the Claimant’s management against the Defendant while concealing information that clearly shows that the Defendant was not responsible for the alleged System Incident …” [paragraph 51]. 

“With regards to the Defendant’s last expert report submitted on 16/09/2015, the Defendant’s expert discovered a new log entry in one of the hard drives handed over by the Claimant to the Defendant. The hard drive contained a log entry which shows that one of the Claimant’s employee, Mr. Srdjan, accessed Ptolemy 1, a few hours before the System Incident was allegedly launched. The Claimant’s expert has made a futile attempt of dismissing the Defendant’s new finding as a part of his work file which does not hold any relevance in this case. The Defendant’s expert refuses to believe the same as the Defendant’s expert was given the hard disks in sealed plastic containers that declared the “Chain of Custody”. However, the Claimant Expert’s statement that the new piece of information in the form of a log entry is a part of his rough work states that the hard disks provided to the Defendant were contaminated with the Claimant expert’s personal files. The hard disks made available to the Defendant were supposed to be images of Ptolemy 1 and other systems and this statement raises a doubt about the veracity of all the event logs and data that has been supposedly analysed and reported to the Honourable Court throughout the course of these legal proceedings” [paragraph 74].

58. None of these criticisms and serious allegations was put to Mr Wright in cross-examination or asserted in evidence by Mr Bareja and it is most regrettable that they are now advanced by Dr Al Kabban.

59. In my judgment, Mr Wright was a transparently honest witness and I accept his evidence about how the Notepad text came to be included in the material disclosed on 2 July 2015. Accordingly, I reject the contention that the screen shot shows that Mr Radijoveric accessed Ptolemy 1 on 21 June 2014.

60. Indeed, I found Mr Wright to be an impressive expert witness. The mistake over the Notepad text apart, the investigation he carried out was technically extremely proficient and he presented his findings clearly and objectively.

61. In his first two reports he concludes that his factual findings coupled with information provided by Mr O’Flynn and Mr Radivojeric establish conclusively that it was Mr Salim who sabotaged Legatum’s IT system. Whether or not Mr Wright was entitled to state this opinion on the ultimate question to be decided in this trial, I place no reliance on it since it is for the court, not the expert witnesses, to decide whether the case against Mr Salim has been established to the necessary standard of proof.

THE KEY EVENTS IN THE ATTACK TIMELINE VIEWED IN THE LIGHT OF OTHER EVIDENCE

Change of Encryption Key and Backup System Passphrase.

62. On 7 April 2014 the encryption key and passphrase for Legatum’s backup system were changed using IP address 172.25.25.213. The back-up system was Mr Salim’s responsibility. It was Mr O’Flynn’s evidence that neither he nor Mr Radivojeric (the only other members of the IT team on 7 April 2014) carried out this operation.

63. No mention was made in Mr Salim’s handover notes that the backup tapes were encrypted or that the encryption key and passphase had been changed on 7 April 2014.

64. Mr Salim denied that it was he who had changed the encryption key and passphrase. He testified that he was unaware that there was an encryption key and passphrase because when using the back-up tapes system, these were never required. It was also his case that during the attempts to recover lost data after 21 June 2014, an external consultant, a Mr Valerio, had mistakenly overwritten the database related to the tape backup software and it was only after this there was any prompting for the encryption key and passphrase.

Deletion of 300,000 files from Mr Salim’s hard drives

65. Mr Wright examined the hard drive found in Mr Salim’s Legatum computer and another hard drive hidden within Mr Salim’s work station.

66. On three occasions on 27 and 28 May 2014 approximately 300,000 files were wiped from Mr Salim’s two hard drives using “CCleaner” software.

67. Prior to the trial, Mr Salim claimed that he only deleted personal information, but artefacts discovered on his Legatum computer show that he kept company data on his computer including “audit information”, “minutes and resolutions” of meetings and a large number of other Legatum documents. In cross-examination, Mr Salim first denied deleting company data from his hard drives but when shown the evidence that he had deleted a large amount of company data, he maintained that this must have happened without him being aware of it.

Ptolemy 1

68. The operating system for Ptolemy 1 (the invisible virtual server discovered on 17 July 2014) was installed on Ptolemy 1 on 31 March 2014 and the “clsadmin” account was created on it on 6 May 2014. This was admitted by Mr Salim. Ptolemy 1 itself was therefore created some time prior to 31 March 2014.

69. Between 4 and 13 June 2014 (after Mr Salim’s departure from Legatum on 29 May 2014) there were interactions between the “clasdmin” account, Ptolemy 1 and IP address 172.20.0.240. This latter address came from the Legatum’s disaster recovery range of IP addresses and I accept the evidence of Mr O’Flynn that it was an inactive address.

70. At 10.30 pm on 17 June 2014, “clsadmin” was used to trigger a run on a “Robocopy” file on Ptolemy 1 using a program called “Task Scheduler”. This task was completed the following day. Task Scheduler is used to arrange for a task to run at future point in time. The Robocopy software was used to copy Legatum’s data to Ptolemy 1.

71. Further copying of data to Ptolemy 1 triggered by “clsadmin” occurred on 18, 19, 20 June 2014, on each occasion at 10.30 pm, the same time of day that the copying began on 17 June 2014.

72. The “clsadmin” account was also used to connect to Ptolemy 1 on 21 June 2014 at 04:31 am.

73. The data copied to Ptolemy 1 was not deleted during the sabotage carried out on 21 June 2014. It consisted of all of the Legatum data that was deleted from elsewhere on the Legatum IT system on 21 June 2014, save for a few emails. This data on Ptolemy was not discovered until after the existence of Ptolemy 1 emerged on 21 June 2014.

74. Forensic traces of “Robocopy” executable, namely the file or program that causes a computer to execute a task, were found on Mr Salim’s workstation during the McAfee investigation. The use of Robocopy to copy material onto Ptolemy 1 prior to his departure was admitted by Mr Salim when interviewed by Mr Wright on 7 August 2014 (“the interview”). No such traces were found on the workstations of any of the other members of the IT team.

75. It is not disputed that Mr Salim did not disclose the existence of Ptolemy 1 (which was invisible on the IT system) in the handover notes provided to Mr O’Flynn. He also did not disclose the existence of Ptolemy 1 when he was being asked to help in the recovery of Legatum’s lost data over the phone and at Legatum’s office, although he must have known that at least some of the lost data had been copied from Ptolemy to Ptolemy 1, since he carried out the copying operations that were undertaken before his departure from Legatum.

76. At the interview, Mr Salim said that he did not disclose the existence of Ptolemy 1 in his handover notes because the migration of data from Ptolemy to Ptolemy 1 was not yet complete; he was still testing how this migration should be done. And when Mr Wright put it to Mr Salim that since the copying was incomplete, Ptolemy 1 should have been included in the handover notes, Mr Salim said, “Yeah, it should have been.”

77. In his first witness statement made almost a year after the interview, Mr Salim stated that:

“Ptolemy 1 was purely a test server which was built in April- May 2014 when the data migration project was underway in the Claimant’s office. Ptolemy 1 server was created for a project under the instructions of the management whereby they instructed me to migrate data from one of the old servers (Ptolemy) to the newly built virtual environment servers called Host1 and Host2. The purpose of Ptolemy 1 server was to test the various methods that can be used to transfer data from the old server i.e. Ptolemy. Once the testing was done and the method(s) to be used for data transfer was selected through the testing done on to Ptolemy1, it was meant to be deleted and replaced with a fresh and newly built live server. The old Ptolemy was to be decommissioned after the selected data transfer method was used and data was transferred on the newly built live server. Emitec Consultants were also involved in this project. This project was not completed when I had resigned from my position and left the company…” (paragraph 33).

“All the members of the IT team and the external consultants were aware that the company data on Ptolemy1 server was being copied using test scripts to see and test how the data would be migrated from the existing old servers to the newly created servers … The test scripts were automated and schedule to run for a number of days to ensure that they are working properly before they could be used for real data migration”. (paragraph 35).

“The Claimant has also accused me of failing to mention the details of Ptolemy1 in my handover notes, however in my opinion it was not necessary to mention this information as  Ptolemy1 was an ongoing project, it was in the testing phase and everybody in the IT team including the external consultants were aware of its existence. Nevertheless, its exclusion from the handover notes was not deliberate and was a mere lapse. The fact that Ptolemy1 was not mentioned in the handover notes is irrelevant, particularly when everybody in the IT team including the management were aware of the existence and purpose of creation of Ptolemy1”. (Paragraph 40).

78. The external consultants referred to by Mr Salim were Emitec who between 18 and 24 March 2014 did work on the virtual environment of the Legatum IT system.

79. Mr Sheriff’s evidence was that until Ptolemy 1 was discovered on 17 July 2014, no-one at Legatum knew of the existence of Ptolemy 1, let alone that data had been copied thereon from another server. The evidence of Mr O’Flynn (who had received Mr Radivojeric’s confirmation that he had not known of Ptolemy 1) was to the same effect. Mr Sheriff also testified that the several consultants who in the past had done different work on the Legatum IT system had each completed a questionnaire sent to them by Legatum that asked for details of any work carried out, when, the servers accessed, the account names seen, who provided the access credentials, any use or receipt of the credentials for the “clsadmin” account and any connection to the IP numbers 172.25.25.16; 172.25.26.29; nd 172.20.0.240. In answering the questionnaire sent to it, Emitec reported that between 18 and 24 March 2014 they had installed 2 HP DL585 G7 Servers and installed and enabled Windows 2012 R2, Hyper-V services and SCVVMM 2012 R2 using a service account the credentials for which were provided by Mr Salim. The “clsadmin” account had been used to configure Windows 2012 R2 Hyper-V cluster and SCVMM but the password was inserted by Mr Salim whenever required.

80. All of the respondent consultants approached by Legatum reported that they had not connected to any of the specified three IP numbers.

81. Mr Wright’s forensic examination of the workstations of the other members of the IT team showed that none of those devices had been used to access Ptolemy 1.

82. Included in Mr Salim’s handover notes was a section headed “Legatum device server roles” under which, inter alia, four test servers were identified and three “Interaction” servers. When asked in cross-examination why he identified these servers but not Ptolemy 1 he replied that these servers were old physical servers that had been turned into test servers whereas Ptolemy 1 was a new virtual server.

83. When asked during the interview why he did not tell the Legatum IT and McAfee recovery teams about Ptolemy 1 and the data that was on it, Mr Salim said the project was on-going, he was testing it and he had not copied everything.

84. In cross-examination he said that he did not tell the recovery teams about Ptolemy 1 because only a small amount of data had been transferred and it may have been overwritten.

85. Whilst management may have approved the expenditure on the work done by Emitec in March 2014, I accept the evidence of Mr Sheriff and Mr O’Flynn that neither the Legatum IT team (other than Mr Salim) nor Legatum’s management knew anything of Ptolemy 1 until it was discovered on 17 July 2014; and that accordingly they knew nothing about any copying onto a new virtual server of Legatum data until this too was discovered after 17 July 2014. If they had had this knowledge, Ptolemy 1 and the data it contained would certainly have been revealed in the early days of the recovery attempts. Also, Mr Salim’s evidence involves the suggestion that many individuals within Legatum have conspired falsely to allege that Ptolemy 1 was unknown until 17 July 2014, which I regard as a fantastic and wholly unrealistic proposition.

86. I also find that Emitec did not know Legatum data was being copied on to one of the new virtual servers and did not know the password for “clsadmin”.

87. I further find that Mr Salim deliberately omitted to disclose the existence of Ptolemy 1 both in his handover notes and when he returned to Legatum’s offices on 21 June 2014 and thereafter. On his own evidence the test copying of data from the old Ptolemy to Ptolemy 1 was on-going and therefore incomplete when he left the company. He therefore had as much reason to disclose the existence and purpose Ptolemy 1 in his handover notes as he did to disclose the four test servers and three Interaction servers he did disclose under the heading “Legatum device server roles”.

88. As to his failure to tell the recovery teams about Ptolemy 1, I find his different explanations for this to be wholly unconvincing and contrived. Mr Salim well knew that the recovery teams were working on the basis that the whole of Legatum’s data had been deleted from the IT system. In these circumstances, even if only part of the data on old Ptolemy had been transferred to Ptolemy 1 by the time Mr Salim had left on 29 May 2014, it is incredible that he did not disclose or mention to the teams the existence of Ptolemy 1 and his copying thereon of Legatum data, especially since it is clear from Mr Wright’s Appendix K, which is a sample of many Ptolemy 1 artefacts found on Mr Salim’s work station, that a considerable quantity of corporate data had been copied over pre 29 May 2014, including information relating to Middle East benefit packages, Legatum salary review and settlements, asset register reconciliation, sovereign finance and Indian banks.

Use of the “clsadmin”, “spsadmin” and “dxbbackup” accounts to access the Legatum IT system

“clsadmin”

89. Prior to his departure from Legatum on 29 May 2014, Mr Salim frequently used the “clsadmin” account from his workstation to access the IT system. On 27 May 2014 “clsadmin” accessed the Legatum IT systems’ domain controllers and the Disaster Recovery server, all from Mr Salim’s workstation. In particular at 4:45 pm the “clsadmin” account was used to make multiple connections within a few seconds of each other to six disaster recovery servers.

90. On 28 May 2014, the “clsadmin” account was used from Mr Salim’s work station to access the Zeus backup server at 08:38 am and 12:07 pm, the Zeta2 at 08:40 am and the Beta domain controller at 12:07 pm, 4:10 pm and 4:23 pm.

91. On 29 May 2014, the “clsadmin” account was used from Mr Salim’s workstation to access the Zeus backup server at 08:10 am and the Beta domain controller at 2:53 pm and 3:03 pm.

92. After 29 May 2014, the “clsadmin” account was used to access the IT system (Ptolemy 1 in particular, see paragraphs 68 – 72 above) from IP number 172.20.0.24 and from 20 June 2014 this account was also used on occasion from IP number 172.25.25.35 and on other occasions from IP number 172.25.25.16.

93. On 21 June 2014 (the day of the sabotage) “clsadmin” logged on to Legatum’s financial system’s data base from IP number 172.25.25.16 and was used from the same IP number to delete that database at 05:27 am.

94. At 06:07 am on 21 June 2014 Legatum’s SOGNO domain controller was shut down by the “clsadmin” account.

95. At 06:15 am on 21 June 2014 Legatum’s Beta domain controller was shut down using the “clsadmin” account from IP number 172.25.25.16.

96. Mr Wright’s forensic examination of the workstations of Mr O’Flynn, Mr Radivojevic and Mr Padda revealed that none of these devices ever used the “clsadmin” account.

97. I accept Mr O’Flynn’s evidence that whilst Mr Salim was employed by Legatum he (Mr Salim) must have been the only member of the IT team to use the “clsadmin” account and that neither he (Mr O’Flynn) nor Mr Radivojevic knew the password to the “clsadmin” account.

98. I find that Mr Salim did not disclose the “clsadmin” account in his handover notes, as alleged by Legatum. In cross-examination he suggested for the first time that he may have disclosed the account in some part of the notes other than the materials that had been included in the trial bundle. Until this point, he had impliedly accepted that “clsadmin” had not been disclosed and his case was that he may have missed a few details as he prepared the notes from memory based on what his replacement might need to know to start work with the servers.

99. The entire handover notes had been available to Mr Salim throughout the proceedings. Legatum had found no mention in the notes of “clsadmin”. In these circumstances it was for Mr Salim to examine the notes to make good his late-in-the-day suggestion that he did indeed disclose the account. However, he failed to produce any evidence from the notes to make good his assertion and on the evidence before me I have no hesitation in finding that he did not reveal the existence of “clsadmin” in his handover notes. 

“spsadmin”

100. On 3 May 2014 at 11:07 am the “spsadmin” account was used to access the Legatum IT system (Seti04) from Mr Salim’s workstation (IP number 172.25.26.29). I find on the basis of Mr O’Flynn’s evidence in paragraph 18 of his first witness statement that this use by Mr Salim of the “spsadmin” account before he left Legatum can have had nothing to do with his normal duties.

101. On 4 June 2014 the “spsadmin” account accessed Zeus from IP number 172.20.0.24.

102. On 9 June 2014 the ‘spsadmin” account was created on Ptolemy 1 (8:57 pm) and accessed Zeus from IP number 172.20.0.24 (9:40 pm).

103. On 13 June 2014 the “spsadmin” account from IP number 172.20.0.24 accessed: (a) Zeus at 8:09 pm; and (b) Seti04 at 8:38 pm.

104. On 21 June 2014 the “spsadmin” account from IP number 172.20.0.24: (a) accessed Zeus at 06:03 am; and (b) shut down the Alpha domain controller at 06:27 am.

105. The forensic examination of the workstations of the other members of the IT team conducted by Mr Wright showed that those devices had not accessed the “spsadmin” account.

106. I find that the existence of the “spsadmin” account was unknown by the Legatum IT team. It was not referred to in Mr Salim’s handover notes.

“dxbbacup”

107. On 9 June 2014 at 9.37 pm; and on 10 June 2014 at 7:31 pm; and on 13 June 2014 at 02:03 am, the “dxbbackup” account accessed Zeus from IP number 172.20.0.24.

108. On 21 June 2014 at 05:45 am “dxbbackup” from IP number 172.20.0.24 was used to shut down Zeus (Symantec Backup Exec system).

109. The forensic examination of the workstations of the other members of the IT team conducted by Mr Wright showed that those devices had not accessed the “dxbbackup” account.

110. I find that the existence of the “dxbbackup” account was unknown by the Legatum IT team and was not referred to in Mr Salim’s handover notes.

The use of IP numbers 172.20.0.24 and 172.25.25.16

111. On 27 May 2014, Mr Salim’s workstation (DBX-ANS-1) attempted to connect to IP 172.25.25.16 between 6:54 pm and 7:02 pm.

112. On 29 May 2014, Mr Salim’s workstation (DBX-ANS-1) again attempted to contact to IP 172.25.25.16 between 08:24 am and 08:25 am.

113. As recorded above, IP numbers 172.20.0.24 and 172.25.25.16 were used in conjunction with accounts “clsadmin”, “spsadmin” and “dxbbackup” after 29 May 2014 to gain access to the Legatum IT system and on 21 June 2014 to sabotage it.

114. I accept the undisputed evidence of Mr O’Flynn that: (i) the IP number 172.25.25.16 had last been assigned to a very old server (one of the company’s first), which had been decommissioned and switched off in July 2013; and (ii) the device to which IP number 172.20.0.240 was allocated was part of the disaster recovery system in Thailand and was an inactive address.

115. I find on the evidence that the existence of IP numbers 172.20.0.24 and 172.25.25.16 was unknown to the Legatum IT team. It is not disputed that they were not mentioned in Mr Salim’s handover notes.

Attempt to contact IP number 172.20.0.240 on 21 June 2014

116. Mr Wright’s forensic examination of Mr Salim’s workstation revealed that it had not been used after 29 May 2014 until it was employed in an attempt to access IP number 172.20.0.240 at 7:17 pm on 21 June 2014, at which time Mr Salim was at Legatum’s office apparently to assist in the recovery of the lost data.

117. Mr Salim did not deny that he was at Legatum’s office at 7:17 pm on 21 June 2014 and that his workstation was made available to him but he denied in cross-examination that it was he who used his workstation in an attempt to connect to IP number 172.20.0.240.

The usability of the “clsadmin”, “spsadmin” and “dxbbackup” user accounts to achieve remote access to the Legatum IT system

118. It was the evidence of Mr Wright and Mr O’Flynn that the Legatum virtual private network (“VPN”) uses “split tunnelling” which allows a remote VPN user to access the internet at the same time as the user is accessing resources on the VPN. In this way, a user can connect to file servers, database servers and other servers on Legatum’s network through the VPN connection by allocating a Legatum internal IP number to the accessing device. At the same time, the user can access the system through an alternative IP number allocated to the user’s machine.

119. In cross-examination in answer to a question how Mr Salim could have had remote access to the Legatum IT system after 29 May 2014, Mr Wright explained that “the Active Directory gives permission to people with certain accounts to come in to Legatum from outside. We know from witnesses and from the interview of Mr Arif Salim that “spsdmin” could do so. Looking at the … the user of the Active Directory, we can see that “spsadmin” is in a container folder named “location global”. Therefore other accounts in that will also have access from the outside. “Clsadmin” is in the same container”.

120. This evidence of Mr Wright was not challenged or disputed.

121. It was Mr Salim’s case until a fairly late stage in his cross-examination that the user accounts “clsadmin”, “spsadmin” and “dxbbackup” could not be used to gain remote access to the Legatum system because they were Legatum internal IP addresses and accordingly could not be directly utilised or connected to from outside the company premises.

122. To begin with Mr Salim stoutly adhered to this contention but it was then put to him that if this were true, whoever carried out the attack on 21 June 2014 using “clsadmin” would have had to be present in Legatum’s office pretty much all night on 21 June 2014. At this point Mr Salim stated that “clsadmin” could be used remotely if the user had first connected to system using a user account with VPN access enabled on it. He also confirmed that he was not suggesting that whoever perpetrated the incident must have been in the office all night on 21 June 2014.

123. In light of: (i) the evidence of Mr Wright and Mr O’Flynn referred to above in paragraphs 118-120 above; and (ii) Mr Salim’s admission that “clsadmin” could be used remotely if used in the right way, I have no hesitation in finding that the user accounts “clsadmin”, “spsadmin” and “dxbbackup” could indeed be used remotely to access Legatum’s IT system as Legatum has contended at all material times. 

THE INTERVIEW

124. As mentioned above, Mr Salim was interviewed by Mr Wright on 7 August 2014. The interview was recorded and a transcript was in evidence at the trial. Mr Salim attended the interview voluntarily.

125. In the course of the interview, Mr Wright reviewed the many factors which he maintained linked Mr Salim to the attack on the Legatum IT system and accused Mr Salim of having perpetrated the attack, to which Mr Salim responded with neither a protest of his innocence, nor an admission that he was the culprit but instead insisted he was telling Mr Wright what he knew and reiterated the help that he claimed to have given to recover the lost data.

MR SALIM’S CASE

126. Mr Salim’s case is fully set out in his two witness statements. In these statements he denies that he was responsible for the sabotage of Legatum’s IT system, maintaining that he did not access the system on any occasion in the period after his departure from Legatum on 29 May 2014 down to his return to the office in the evening of 21 June 2014.

127. In summary form, in addition to the contentions and evidence of Mr Salim already referred to above, his contentions are as follows:

(a) He had a very limited knowledge of the networking aspect of Legatum’s servers and other networking equipment.

(b) His account passwords had been re-set on his departure so that he was completely removed from and could not access the Legatum IT system after his departure on 29 May 2014.

(c) The system could have been attacked by a Legatum insider or by an external consultant who had acquired knowledge of the “clsadmin”, “spsadmin” and “dxbbackup” user accounts and the passwords thereof.

(d) Since the VPN logs were deleted, Legatum cannot prove who had attacked the IT system.

(e) External consultants had been given full privileges and access to the IT system over time and therefore had access to the internal systems from their offices via VPN.

(f) As for Legatum’s allegation that Mr Salim used the IP number 172.25.25.16 before 29 May 2014, in preparation for the handover, he must have gone through all the servers and tried to connect to all (old and new) of them.

(g) In the period March – May 2014 Emitec was assisting Legatum in installing and upgrading the old backup system and were given access to the “dxbbackup” account.

(h) External consultants used the “clsadmin” account to log onto the system and Mr Salim’s use of the account was within his job profile.

(i) Messrs Graham and Collin, members of the Corporate Communications team, knew of and used the “spsadmin” account.

(j) Mr Salim was not the only one who knew the system’s passwords; the IT team knew them and some were stored on the RDC manager. Accordingly, Mr Salim was not required to remember all the passwords.

(k) The handover notes were sufficiently detailed and thorough. Mr Salim believed that the notes would be scrutinised by Legatum who would raise any omissions from the notes.

(l) There was nothing strange or unusual about Mr Salim’s behaviour when he returned to the Legatum office to help recover the lost data.

(m) The Legatum IT system was not secure and was vulnerable to attack.

(n) Mr Salim denied the alleged motive he had for the attack, namely that it was a response to his having been passed over as Mr Padda’s replacement that would allow him to show himself as a saviour of the company.

THE EXPERT EVIDENCE OF MR DINESH BAREJA

128. The expert witness called by Mr Salim was Mr Dinesh Bareja who has worked for many years as an information security consultant and investigator into digital information security incidents. Amongst the positions he has filled are: (i) Chief Surveillance Advisor, Jharkhand Police – Cyber Defence Research Centre (Special Branch), Ranchi, Jharkhand (India); Principal Consultant, CSI Consulting Inc., Toronto (Canada); Principal Consultant, Secure Matrix Pvt Ltd, Mumbai (India).

129. Mr Bareja is based in Dubai. He left it to his team in India to examine the event logs relied on by Mr Wright that had been disclosed by Legatum in the proceedings. The examination was not carried out until after the service of his First Report.

130. I have dealt with Mr Bareja’s Third Report above. His first two reports effectively reiterated Mr Salim’s Defence and proceeded on the basis that what Mr Salim said there was true. The First Report responded to a preliminary statement of findings produced by Mr Wright on 28 August 2014 as part of his investigation. Mr Wright’s report as an expert witness was not served until after Mr Bareja’s First Report had been served. The principal conclusions Mr Bareja reached at the end of his First Report were: (i) the breakdown of the Legatum IT system was a systemic risk waiting to happen; (ii) the absence of the VPN logs (the DHCP, DNS and Core Switches and Cisco networks logs) meant that Legatum had no proof to establish its claim against Mr Salim; (iii) the failure of various of the Legatum team members to practise security hygiene and their common use of credentials had led to a situation where anyone could use any other person’s machine or username-password; and (iv) the incident on 21 June 2014 appeared to be the result of a big error committed by some team member.

131. Mr Bareja’s Second Report responded to Mr Wright’s First Expert Report along the lines of his (Mr Bareja’s) First Report. In particular, he maintained that Mr Salim could not have gained access to the Legatum IT system after he had left the company on 21 June 2014 and all users at Legatum’s office had free access across the networks.

132. It was Mr Bareja’s opinion that: (i) during a handover there is mutual responsibility on both parties to enable a complete transition; (ii) in view of the overwriting by Mr Valerio of the backup data during the recovery period, it is incorrect to attribute any sort of malicious intent to Mr Salim in not sharing encryption keys which were never in his possession and basing this demand on a system error message that can be traced to a mistake by an external consultant.

133. In cross-examination, Mr Bareja conceded that in reaching the conclusion expressed at the end of his First Report that Legatum’s loss of data was the result of a big error he had not considered the evidence provided by the event logs studied by Mr Wright that had previously been made available through disclosure. And this was despite that fact that in his preliminary statement of findings, Mr Wright had stated that Windows Event Logs for 2014 had identified suspicious logging activity between March and June 2014 linked to IP numbers 172.25.25.16 and 172.20.0.240 and “clsadmin”, “dxbbacup” “spsadmin” and the IP number for Mr Salim’s computer 172.25.26.29.

134. Indeed, Mr Bareja conceded that not a single one of his conclusions was based on forensic evidence. Instead he had built an image in his mind of what had transpired at Legatum with the IT team and the system growing organically.

135. Mr Bareja also frankly and very properly conceded that where he made factual statements about the Legatum IT system and its operation, for instance the statement that clsadmin account could not be used remotely, he was relying on what he had been told by Mr Salim.

136. Mr Bareja also agreed that Mr Wright’s attack timeline was accurate and went on to state that Mr Salim had had “God rights” when employed by Legatum in that he had domain administrator rights by which he could change the privilege settings – the things a user is allowed to do on the system – in any way he wanted on any account.

137. In addition, Mr Bareja accepted that once a user gained remote access to the Legatum network, he could use internal IP addresses to access the different parts of the system.

CONCLUSIONS

Factual culpability

138. In my judgment, notwithstanding the absence of evidence as to which particular computer was used to carry out the attack, the evidence and findings set out above in paragraphs 45 – 137, constitute strong and convincing proof that satisfies the civil standard of the balance of probabilities that it was Mr Salim who sabotaged Legatum’s IT system.

139. I accept Mr Wright’s opinion that the 21 June 2014 attack was not perpetrated by an outsider (or outsiders) but by an insider.

140. The user account “clsadmin” was used on 21 June 2014 to: (i) delete Fin2 (Legatum’s financial systems database) [05:27 am]; shut down the SOGNO domain controller [06:07 am]; (iii) shut down the Beta domain controller [06:15 am].

141. On 27 May 2014, two days before he parted company with Legatum, Mr Salim used “clsadmin” to access the Legatum IT systems’ domain controllers and the Disaster Recovery server; in particular at 4:45 pm the “clsadmin” account was used to make multiple connections within a few seconds of each other to six disaster recovery servers. As Mr Wright observed in his First Report these mirrored the sabotage method and were unnecessary for the fulfilment of Mr Salim’s daily duties.

142. And, as recorded above in paragraphs 90 – 91: (A) on 28 May 2014 the “clsadmin” account was used from Mr Salim’s work station to access the Zeus backup server, the Zeta2 and the Beta domain controller; and (B) on 29 May 2014, the “clsadmin” account was used from Mr Salim’s workstation to access the Zeus backup server and the Beta domain controller. There can be no doubt in my view that it was Mr Salim himself who used the “clsadmin” account on these occasions on 27, 28 and 29 May 2014. This is because only Mr Salim knew the password for the “clsadmin” account and the occasions all took place during office hours, so that if another member of the IT team all of whom worked from the same table, had dared to use Mr Salim’s computer, he would have been quickly spotted doing so.

143. Mr Salim also created the “clsadmin” account on Ptolemy 1 on 6 May 2014 and, as recorded in paragraphs 68 – 72 above, that account was used on a number of occasions to access Ptolemy 1 between 4 and 21 June 2014. In particular, “clsadmin” was used to run a Robocopy file on Ptolemy 1 using the Task Controller program, after which data was copied onto Ptolemy 1 on 18, 19 and 20 June 2014.

144. No-one within Legatum knew of the “clsadmin” account. The workstations of Mr O’Flynn and Mr Radivojeric had never used this account. Emitec knew of the existence of the “clsadmin” account but they did not know the password. Mr Salim did not disclose the account in his handover notes. This in my judgment was a deliberate act. He knew that following his departure from Legatum the passwords on his own company account (Legatum\arifs) and the main administrator account (Legatum\administrator) would be changed and so he suppressed the existence of the “clsadmin” account (whose password of course he knew) so that he could use the account after his departure to sabotage Legatum’s IT system.

145. On 21 June 2014: the “dxbbackup” account shut down Zeus (Legatum’s Symantec Backup Exec system); and the “spsadmin” account was used to access Zeus at 06:03 am and to shut down the Alpha domain controller. Previously, on 3 May 2014, “spsadmin” was used by Mr Salim to access the Legatum IT system (Seti04). This latter use had nothing to do with his normal duties.

146. As recorded above in paragraphs 101 – 103 above, the “spsadmin” account was used: (i) on 4 June 2014 to access Zeus; (ii) on 9 June to access Ptolemy 1; and (iii) on 13 June 2014 to access Zeus and Seti04.

147. No-one in Legatum knew of the “spsadmin” and “dxbbackup” accounts. They had never been used on the workstations of Mr O’Flynn and Mr Radivojeric. They were not disclosed in Mr Salim’s handover notes. It is fanciful to suggest that a third party outsider would have known of these accounts and their passwords and that the accounts continued to be available for undetected use after Mr Salim’s departure.

148. As recorded in paragraphs 92 – 95; 100 – 104; 107 – 108 above, the IP numbers 172.20.0.24 and 172.25.25.16 were used in conjunction with the accounts “clsadmin”, “spsadmin” and “dxbbackup” after 29 May 2014 to gain access to the Legatum IT system and on 21 June 2014 to sabotage it.

149. As I have already found (see paragraphs 118 – 123 above) those accounts could be used to access remotely the Legatum IT system.

150. Mr Salim attempted to connect to IP address 172.25.25.16 on 27 May 2014 and on 29 May 2014, his last day at Legatum. As Mr Salim well knew from his extensive knowledge of the Legatum IT system: (i) the IP number 172.25.25.16 was inactive having last been assigned to a very old server switched off in July 2013; and (ii) the IP number 172.20.0.240 was also an inactive address having been originally allocated to part of the disaster recovery system in Thailand.

151. No-one within or without Legatum other than Mr Salim was in a position to know of the availability of the IP numbers 172.20.0.24 and 172.25.25.16 out of the thousands of IP numbers within the Legatum IT system. Nor was anyone other than Mr Salim in a position to know that these IP numbers could be used without a conflict occurring with other IP numbers, which can happen when two computers on a local area network have been assigned the same IP number.

152. On 21 June 2014 at 7:17 pm when Mr Salim was back in the Legatum office ostensibly helping to reactivate the Legatum IT system and recover the deleted data, his Legatum workstation was used in an attempt to access IP number 20.0.240. I have no doubt that it was Mr Salim who made this attempt. I am also in no doubt that it was no coincidence that he tried to access IP number 172.20.0.240, this being the IP number from which: (A) the “spsadmin” account was used to access: (i) Zeus on 4 June 2014; (ii) Ptolemy 1 on 9 June 2014; (iii) Zeus and Seti04 on 13 June 2014; (iv) Zeus and Alpha domain controller on 21 June 2014: (B) the “clsadmin” account was used to access: (i) Ptolemy1 three times on 9 June 2014; (ii) Ptolemy 1 on 17 June 2014; (iii) Ptolemy 1 on 21 June 2014: (C) the “dxbbackup” account was used to access: (i) Zeus on 9 July 2014; (ii) Zeus on 10 June 2014; and (iii) Zeus on 13 June 2014; (iv) Zeus (Symantec Backup Exec System) on 21 June 2014.

153. As recorded in paragraph 62 above, on 7 April 2014 the encryption key and passphrase for Legatum’s backup system was changed. I accept the evidence of Mr O’Flynn that neither he nor Mr Radivojeric, the other two members of the IT team, made these changes.

154. The backup system was Mr Salim’s responsibility. He alone had the necessary knowledge to make these changes. On the evidence before me I have no doubt that it was he who made the changes and that he deliberately failed to disclose them in his handover notes. His defence that he did not know the encryption key or the passphrase and his reliance on the overwriting on the system during the recovery operation do not hold water, for they ignore the facts that: (i) the encryption key and passphrase were indeed changed on 7 April 2014; (ii) the backup system was his responsibility; (iii) there is no tenable basis for believing that anyone else, whether within or outside Legatum, made the changes.

155. Almost all of the Legatum data that was deleted on 21 June 2014 had been copied onto Ptolemy 1, and remained on that invisible server after the attack. Mr Salim admits that it was he who created Ptolemy 1 and that before his departure from Legatum he had migrated data from the old servers (Ptolemy) to this new virtual server and that this process was on going at the time of his departure. In accessing Ptolemy 1 prior to his departure, Mr Salim used the “clsadmin” account. As recorded in paragraphs 69 – 73; 102 above, Ptolemy 1 was accessed after 29 May 2014 numerous times using the “clsadmin” and “spsadmin” accounts, neither of which was disclosed by Mr Salim in his handover notes. During this period, Robocopy was used to copy further data onto Plotemy 1. Forensic traces of the use of Robcopy prior to 29 May 2014 were found on Mr Salim’s workstation. No such traces were found on the workstations of Mr O’Flynn and Mr Radivojeric. Although what had been copied onto Ptolemy 1 by the time Mr Salim left Legatum was not the whole of Legatum’s data, a significant amount of the data had been migrated to Ptolemy 1, including Middle East benefit packages, Legatum salary review and settlements, asset register reconciliation, sovereign finance and Indian banks.

156. Ptolemy 1 was unknown to anyone within or without Legatum. Mr Salim listed in his handover notes four other test servers and three “Interaction” servers but he deliberately, as I have found, failed to disclose in those notes Ptolemy 1’s existence. Mr Salim also deliberately made no mention of Ptolemy 1 to the recovery teams after he returned to Legatum’s office ostensibly to help in recovering the deleted data.

157. Mr Salim’s secret creation of Ptolemy 1, his secret copying onto Ptolemy 1 of almost all of the data deleted in the attack and his failure to disclose Ptolemy’s existence in his handover notes and when he returned to Legatum’s office after the attack, is very powerful evidence against him.

158. The attack on the Legatum IT system targeted Legatum’s most vital data both at the Dubai office and at the recovery site in Thailand. This plainly shows, as Mr Wright opined, that the perpetrator had an intimate knowledge of the system. Mr Salim had such knowledge. On the evidence before the court there is no reasonable doubt but that he was the perpetrator.

159. Reliance was placed by Mr Bareja on what he said were serious shortcomings in the Legatum IT system’s security in support of his view that the 21 June 2014 incident was a big accident. Although the security of the system could have been improved, it is clear from the evidence of Mr O’Flynn that it was not nearly as bad as asserted by Mr Bareja. But in any event, even if there were a serious lack of security, Mr Bareja’s point goes nowhere because the evidence I have rehearsed at length in this judgment is consistent only with the attack having been carried out by an insider.

160. The establishment of Mr Salim’s role in the attack on Legatum’s IT system does not depend on the proof of a motive for the attack and I make my finding that it was Mr Salim who sabotaged Legatum’s system independently of any consideration of motive. That said, it is inconceivable that he did not have a motive for the attack and as to that I tend to the view that he carried out the attack in order to punish Legatum for not appointing him to replace Mr Padda, whilst at the same time giving himself the opportunity of appearing to be Legatum’s saviour when, having been called in to help as he correctly predicted he would be, he “discovered” Ptolemy 1.

Mr Salim’s evidence

161. It follows from the above conclusions that Mr Salim’s denials in his evidence that he was the perpetrator were knowingly and dishonestly false. He also knowingly gave false evidence when he at first denied that he had copied corporate data from his second hard drive (see paragraph 67 above). Hence my conclusion expressed in paragraph 8 above that Mr Salim was an unreliable witness whose evidence I was not going to accept unless it was corroborated by the oral testimony of the Legatum witnesses or by other reliable evidence.

Legal culpability

162. Article 41 of DIFC Law No. 5 of 2005 (the “Law of Obligations”) states:

“(a) A defendant is liable to another person if he wrongfully interferes with property in which the other person has an interest such that the other person suffers loss.

(a) A defendant interferes with property if:

…

(b) he deals with or (in respect of property as to which he owes a duty of care) neglects the property so that it is destroyed or damaged.

…

(c) A defendant’s interference is wrongful if it occurs without the permission, express or implied, of the person with an interest in it.

163. By sabotaging Legatum’s IT system in the manner I have described, Mr Salim wrongfully interfered with Legatum’s property under Article 41. Dr Al Kabban submitted that, assuming Mr Salim had carried out the 21 June 2014 attack, his actions were not covered by Article 41 because he had not used or acquired Legatum’s information to cause damage. I reject this submission. In my view the sabotage inflicted on Legatum’s IT system by Mr Salim could not be a plainer instance of someone interfering with the property of another so as to cause that other person to suffer loss.

164. Pursuant to Articles 23, 24, and 25 of the Law of Damages and Remedies (DIFC Law No 7 of 2005), Legatum has a right to damages to compensate it for its losses resulting from Mr Salim’s breach of Article 41 of the Law of Obligations. The measure of those damages is that sum of money which would put it in the same position as it would have been in if it had not sustained the wrong committed by Mr Salim.

Loss and damage

165. Legatum claims loss and damage in the sum of USD 690,533, calculated as follows:

166. Details of the first four heads of loss were given in evidence by Mr Sheriff. “Network Rebuild” is a reference to the emergency servers that Legatum purchased following the 21 June 2014 incident. In my judgment, there is no basis for requiring Legatum to give credit for the value of these emergency servers: the cost involved does no more than to put Legatum back in the position as near as may be to that obtained before the attack.

167. “Network Rebuild Contractors’ Fees” refers to consultancy costs incurred to engage the appropriate contractors with relevant expertise to build the emergency servers in an expedient manner.

168. “Indirect costs” refer to the value of estimated Legatum employee time incurred in dealing with the attack or its effects, which could have been spent elsewhere. The value of this time was calculated by reference to the relevant employee’s salary and the proportion of the relevant employee’s contractual time engaged.

169. Mr Sheriff believed that the personnel identified in the table below had spent the corresponding proportion of their contractual time in dealing with the attack or its effects. He testified that these costs cover the period immediately after the attack and do not cover the indirect costs Legatum has suffered due to the extensive management time involved in preparing its legal case.

170. Mr Sheriff accepted that the indirect costs claimed are based on an estimate of the cost of wasted Legatum employee time in dealing with the incidents and its effects. He told the court that a conservative estimate had been used. In almost all cases where a claim is made for staff time spent in the aftermath of a wrongful act, the amount of time so spent will be based on an estimate rather than on specific time-keeping records. So long as the court is satisfied that the estimate is reasonable, as I am in this case, the estimate can found a recovery for staff time if the first two of the following three propositions propounded in the English Court of Appeal’s decision in Aerospace Publishing Ltd & Anr (“Aerospace”) v Thames Water Utilities Ltd [2007] Bus L.R. 726, the Court of Appeal are satisfied:

(a) The claimant must adduce such evidence that it could reasonably adduce to show the extent of the diversion of staff;

(b) The claimant must also establish that the diversion of staff caused significant disruption to its business;

(c) If the first two elements can be established, the court may infer that, had the staff not been diverted from their usual activities, they would have directly or indirectly generated revenue for the claimant in an amount at least equal to the cost of employing them during that time.

171. In my judgment, Legatum have satisfied the first two requirements promulgated in Aerospace Publishing Ltd & Anr (“Aerospace”) v Thames Water Utilities Ltd. It has produced such evidence as it could reasonably produce of the diversion of staff and has established that the diversion of staff caused significant disruption to its business. Accordingly, it is open to me to find, and I do find, that had the staff not been diverted from their usual activities, they would have directly or indirectly generated revenue for Legatum in an amount at least equal to the cost of employing them during that time.

172. The damages I award Legatum are therefore the total it claims, namely USD 690,533.

173. Following delivery of this judgment, the parties are invited to serve written submissions as to costs and interest in accordance with the following timetable: (1) Claimant’s first round of submissions to be served within 7 days of the hand down date; (2) Defendant’s reply submissions 7 days thereafter; (3) Claimant’s responsive submissions 7 days thereafter.

Issued by:

Natasha Bakirci

Assistant Registrar

Date: 11 November 2015

At: 10am

The post CFI 027/2014 Legatum Limited v Arif Salim appeared first on DIFC Courts.

Claim No: CFI 014/2010

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF APPEAL

BETWEEN

TAALEEM PJSC

                                                                              Claimant

and

(1) NATIONAL BONDS CORPORATION PJSC

First Defendant

(2)DEYAAR DEVELOPMENT PJSC

Second Defendant

   ORDER OF CHIEF JUSTICE MICHAEL HWANG SC

UPON reviewing the Second Defendant’s Application Notice CFI-014-2010/27 dated 9 August 2015 and supporting documents seeking reconsideration at an oral hearing of the Order of Chief Justice Michael Hwang SC dated 3 August 2015 denying permission to appeal against the Second Judgment of Justice Sir David Steel dated 23 March 2015

AND UPON reading the Second Defendant’s Brief Written Statement in support of its oral application for permission to appeal

AND UPON reading the relevant material in the case file

AND UPON hearing Counsel for the Claimant, Counsel for the First Defendant and Counsel for the Second Defendant on 7 September 2015

IT IS HEREBY ORDERED THAT:

1. The Second Defendant shall be granted leave to appeal to the Court of Appeal on the following bases:

(a) First, the argument that the trial judge made no factual finding which supported his legal conclusion that the Second Defendant’s obligation to repay the Claimant arose because of a novation (the “First Ground”) has a real prospect of success.

(b) Second, the argument that the trial judge’s treatment of the Second Defendant’s arguments in respect of the additional Murabaha profit charges was inconsistent has a real prospect of success (the “Fourth Ground”). 

SCHEDULE OF REASONS

1. The Second Defendant applied for reconsideration at an oral hearing of my Order dated 3 August 2015 refusing permission to appeal the Second Judgment of Justice Sir David Steel dated 23 March 2015 (the “Second Judgment”).

2. There was a hearing on 7 September 2015 at which the Second Defendant was represented by Mr Roger Kennell.

3. I have reconsidered my previous order and now decide to grant the Second Defendant leave to appeal the Second Judgment, for the reasons given below.

THE SECOND DEFENDANT’S FIRST GROUND OF APPEAL

The Second Defendant submits that at the merits hearing before Justice Sir David Steel, the Agreed List of Issues contained the following issues:

(a) Issue 1: (A) whether Deyaar entered into a legally binding agreement under which Deyaar assumed or agreed to acquire Taaleem’s rights and obligations in respect of Sky Gardens (“Issue 1A”) including Taaleem’s obligation to repay NBC in respect of the financing it had provided to Taaleem to purchase the interest in Sky Gardens (“Issue 1B”)?

(b) Issue 5: whether there was a novation or an assignment to Deyaar of Taaleem’s obligation to repay NBC, and in either case whether NBC could sue Deyaar (“Issue 5”).

(c) Issue 6: whether Deyaar and NBC otherwise reached a binding legal agreement in relation to Sky Gardens or its financing, and if so what agreement (“Issue 6”).

5. The Second Defendant then submits that the trial judge made no findings on Issue 5 and did not address or discuss the novation or assignment or their requirements. Crucially, the trial judge did not consider the relevant provisions of the DIFC Contract Law to determine whether they were satisfied, and hence, whether there was a novation or assignment. Further, in the Second Judgment, the trial judge stated for the avoidance of doubt that he “so find[s]” that “Deyaar, NBC and Taaleem reached agreement for the transfer of all Taaleem’s rights and obligations in respect of Sky Gardens, including the obligation to repay NBC and that was achieved by a novation of the existing finance structure. Such was the clearest mutual intention of the parties” (paragraph 13, Second Judgment).

6. In respect of novation, Articles 101 and 102 of the DIFC Contract Law require the acceptance by the obligee of a substituted contract with a third party in satisfaction of the obligor’s existing obligations.

7. While it is possible inferentially to read the First and Second Judgments of Justice Sir David Steel to such that Issue 1A and 1B were answered in the affirmative, I agree that neither judgment has set out the factual basis (whether documentary or otherwise) for the finding of either a novation or an assignment.

8. While the neglect of an express reference to Articles 101 and 102 of the DIFC Contract Law is not, of itself, determinative of my decision to grant the Second Defendant leave to appeal, it is a strong factor in favour of my grant of leave that neither of Justice Sir David Steel’s two judgments showed – expressly or inferentially – that he had considered Articles 101 and 102 and the necessary elements in so far as his judgments did not consider the necessary elements as provided by law and the factual bases for showing that those elements arose in this case. This is equally true in respect of an assignment.

9. The findings referred to by Justice Sir David Steel at paragraph 9 of the Second Judgment are relied upon by him for the proposition that “inferentially [a valid transfer of Taaleem’s obligations to Deyaar] is only consistent with Deyaar being liable to repay NBC since otherwise there would be no commercial value to Taaleem in concluding the transfer of Sky Gardens to Deyaar”. I agree that his conclusions on the Second Defendant’s liability to repay the Claimant (which at paragraph 13 of his Second Judgment are stated to arise out of a novation) are the type of conclusions made on the basis of a mix of fact and law. They are not, of themselves, factual findings. Indeed, there are no factual findings made in respect of the issue of novation or assignment (and whether the necessary elements of a novation or assignment were satisfied on the facts) in either of Justice Sir David Steel’s judgments.

10. The lack of a factual finding by the trial judge raises the possibility that, on a review of the factual record, there may be a lack of factual evidence necessary to make the finding that a novation or assignment took place, and correlatively, that the Second Defendant has a real prospect of success on appeal. Accordingly, I agree that the Second Defendant’s First Ground should have a hearing before the Court of Appeal. 

THE SECOND DEFENDANT’S FOURTH GROUND OF APPEAL

11. The core of the Second Defendant’s Fourth Ground is whether Justice Sir David Steel was entitled to accept a new argument advanced by the First Defendant that there was a series of separate and direct contracts between the First and Second Defendants under which the Second Defendant agreed to pay an additional interest at 5.5% per annum.

12. The Second Defendant’s complaint is that the existence of these contracts were not pleaded by the First Defendant, nor were they asserted in the latter’s Opening or Closing Submissions, and only canvassed in the hearing (on 23 and 24 November 2014) leading to the Second Judgment. Conversely, the Second Defendant was precluded from raising its defences that Articles 101 and 102 of the Contract Law were not satisfied, or that the additional Murabaha profit charges were inconsistent with Sharia Law, on the basis that it should not have raised these “unpleaded and unargued” matters at the hearing which lead to the Second Judgment. The Second Defendant submits that this is inconsistent treatment.

13. I agree that there was an inconsistency in the treatment of the Second Defendant’s arguments and those advanced by the First Defendant.

14. I also note that Justice Sir David Steel had accepted that, as a matter of construction, it was not a term of the Murabaha Agreement that a recurring profit element of 5.5% was payable (at [31] of the Second Judgment). Further, Justice Sir David Steel had not found that, in the “concluded agreement for transfer of Taaleem’s interest in Sky Gardens to Deyaar on 4 December 2008”, there was any such term imposing on the Second Defendant any liability for a recurring profit element of 5.5%. These factors, in addition to the inconsistent treatment of the Parties’ arguments, support the Second Defendant’s application.

15. I am accordingly of the opinion that the grounds of appeal advanced before me have a real prospect of success. Further, the fundamental principle that justice should also be seen to be done, and that adequate reasons are provided, warrants the grant to the Second Defendant for leave to appeal so that the question of how its liability arose.

Issued by:

Amna Al Owais

Deputy Registrar

Date of issue: 18 November 2015

At: 10am

The post CFI 014/2010 Taaleem Pjsc v (1) National Bonds Corporation Pjsc (2) Deyaar Development Pjsc appeared first on DIFC Courts.

Claim No: CFI 025/2015

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

IN THE MATTER OF DUBAI HOLDING INSURANCE SERVICES PCC LIMITED

AND IN THE MATTER OF THE DIFC INSOLVENCY LAW NO. 3 OF 2009

ORDER OF H.E. JUSTICE OMAR AL MUHAIRI DATED 19 NOVEMBER 2015

UPON the petition of MAS CLEARSIGHT LIMITED (“the Petitioner”) presented to the Court on 21 October 2015 (“the Petition”);

AND UPON reading the Petition and the evidence recorded on the Court file;

AND UPON there being no notice of objection received;

IT IS HEREBY ORDERED THAT:

1. MAS CLEARSIGHT LIMITED, registered in the DIFC under Registration Number 0875, and Commercial License Number CL0875, and with its Registered Office at Unit A, Level 5, Gate Building East Wing, DIFC, P.O. Box 506811, Dubai, UAE be wound up under the Insolvency Law DIFC Law No. 3 of 2009.
2. Pursuant to Article 58(1) of the Insolvency Law, Mr Shahab Haider of Sajjad Haider Chartered Accountants LLP is hereby appointed as Liquidator of MAS CLEARSIGHT LIMITED.
3. Permission be granted for the Liquidators to apply to the Court for the fixing of their remuneration.
4. The costs of the winding-up petition and of the application for the appointment of the provisional liquidators together be paid as an expense of the liquidation.

Issued by:

Nassir Al Nasser

Judicial Officer

Date: 19 November 2015

At: 4pm

The post CFI 025/2015 MAS Clearsight Limited v Not Applicable appeared first on DIFC Courts.

Claim No: CA-004-2015

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai

IN THE COURT OF APPEAL

BEFORE CHIEF JUSTICE MICHAEL HWANG, JUSTICE SIR RICHARD FIELD AND H.E. JUSTICE OMAR AL MUHAIRI

BETWEEN

INVESTMENT GROUP PRIVATE LIMITED

                                                                                                Appellant/Defendant

and

STANDARD CHARTERED BANK

                                                                                                Respondent/Claimant

Hearing:            6 May 2015

Counsel:               Michael Joyce Patchett of Outer Temple Chambers assisted by Ali Al Aidarous of Al Aidarous International Legal practice for the Appellant/Defendant

James Abbott of Clifford Chance LLP for the Respondent/Claimant

Submissions:    18 June, 19 August, 7 October and 22 October 2015

Judgment:        18 November 2015

JUDGMENT

Summary of Judgment

This summary is not part of the Judgment and should not be cited as such

ORDER

UPON hearing counsel for the Appellant and counsel for the Respondent on 6 May 2015

AND UPON reading the submissions and evidence filed and recorded on the Court file;

IT IS HEREBY ORDERED THAT:

1. The Appellant’s appeal is dismissed.
2. The Appellant shall pay the Respondent’s costs within 14 days of the date of this order, the amount of which shall be assessed, if not agreed, by the Registrar.

Issued by:

Mark Beer

Registrar

Date of Issue: 18 November 2015

At: 4pm

JUDGMENT

CHIEF JUSTICE MICHAEL HWANG SC

1. This judgment is the judgment of the court. Each member of the court has contributed to it.
2. This is an appeal from an order of Justice Sir David Steel dated 15 January 2015 (the “Order”) dismissing the Appellant’s application for an order that the DIFC Courts have no jurisdiction or, alternatively, that the DIFC Courts should decline to exercise its jurisdiction on the ground of forum non conveniens (“FNC”).
3. The Appellant, Investment Group Private Limited (“IGPL”), is a company incorporated in the Emirate of Sharjah, and conducts its business in and from its premises in Sharjah.
4. The Respondent, Standard Chartered Bank (“SCB”), is a company incorporated in the United Kingdom. It operates in the DIFC as a licensed entity and through a branch in the DIFC.

I.     PROCEDURAL HISTORY & BACKGROUND FACTS

5. The dispute between the parties arose out of two loans advanced by SCB to IGPL in 2009 and 2010 respectively.
6. The parties’ transactions encompassed the following agreements entered into between them:
   • a loan agreement entered into on 3 June 2009 in respect of the loan advanced by SCB to IGPL in 2009 (the “2009 Agreement”);
   • A share pledge agreement entered into on 3 June 2009 under which IGPL pledged shares listed on the Dubai Financial Market as security for the loan advanced under the 2009 Agreement (the “Share Pledge Agreement”); and
   • a loan agreement entered into on 10 May 2010 in respect of the loan advanced by SCB to IGPL in 2010 (the “2010 Agreement”).

(the 2009 Agreement, the 2010 Agreement, and the Share Pledge Agreement collectively are hereafter referred to as “the Agreements”)

7. The 2009 Agreement comprised:
   • an Offer Letter – Multi Currency Term Loan Facility, dated 3 June 2009, incorporating the General Terms (for Multi-Currency/Multiple Borrowers Term Loan Facility, reference 100004395 (the “Loan Facility General Terms”); and
   • a Banking Arrangements Letter dated 3 June 2009 (the “Banking Arrangements Letter”) which incorporated SCB’s General Terms and Conditions Covering Banking Arrangements, SCB/UAE/GC/1 (the “SCB General Terms and Conditions”)
8. The material terms of the 2009 Agreement are as follows.
   • Clause 26 of the Loan Facility General Terms provides that the 2009 Agreement was to be governed by the “laws of United Arab Emirates”.
   • Clause 27 of the Loan Facility General Terms provides that:

“(a)       Subject to sub-clause (b) below, unless a Finance Document provides otherwise, each Borrower submits to the exclusive jurisdiction of the courts of United Arab Emirates to settle any dispute arising out of or in connection with any Finance Document (including a dispute regarding the existence, validity or termination of any Finance Document (a “Dispute”).

(b)        Notwithstanding sub-clause (a) above, the Bank shall not be prevented from taking proceedings relating to a Dispute in the courts of any other jurisdiction where any asset of an Obligor may be located. To the extent allowed by law, the Bank may take concurrent proceedings in any number of jurisdictions.

• Schedule 1 to the Loan Facility General Terms defines a “Finance Document” as “this Facility Agreement, any Security Document, any documents identified as such in the Offer Letter and any other document designated as such by the Bank and the Principal Borrower from time to time”.
• Clause 11 of the SCB General Terms and Conditions provides that:

“The Bank and the Borrower agree to submitting to the jurisdiction of the courts of the U.A.E. [T]he Bank may, at its option, elect to commence proceedings in the courts of other jurisdictions and the Borrower hereby agrees, in such case, to submit to the jurisdiction of such courts.”

9. Clause 23 of the Share Pledge Agreement provides: “[t]his Pledge and all non-contractual obligations arising in any way out of or in connection with this Pledge are governed by the laws of the Emirate of [Dubai/Abu Dhabi] and the applicable federal laws of the U.A.E. and the Pledgor irrevocably submits to the non-exclusive jurisdiction of the Dubai Courts.”
10. The material terms of the 2010 Agreement are as follows:
    • Clause 36.1 of the 2010 Agreement provides that the agreement is governed by “the laws of England”.
    • Clause 36.2 of the 2010 Agreement provides:

“(a)       The Parties agree that the courts of England shall have jurisdiction to settle any disputes or proceedings which may arise in connection with any Finance Document (in this clause referred to as “Proceedings”)…This Clause 36.2(a)…shall not limit the right of any Finance Party to bring Proceedings against the Borrower in connection with any Finance Document in any other court of competent jurisdiction or concurrently in more that [sic] one jurisdiction”

11. SCB commenced an action in the Dubai International Financial Centre (“DIFC”) Courts on 6 August 2014 against IGPL for sums owed as a result of IGPL’s alleged defaults under the Agreements and to enforce the Share Pledge Agreement.
12. IGPL filed an application on 21 September 2014 seeking a declaration from the DIFC Courts that it lacked competent jurisdiction to hear the dispute and, alternatively, that the DIFC Courts should decline jurisdiction in favour of the Sharjah Courts on the ground of FNC (the “Jurisdiction Application”).
13. On 12 January 2015, IGPL commenced an action against SCB in the Sharjah Civil Courts in Case No. 1243/2015 (the “Sharjah Action”), seeking judgment against SCB for damages arising from SCB’s alleged breaches of the Agreements.
14. On 15 January 2015, Justice Sir David Steel dismissed IGPL’s Application and ordered it to pay SCB’s costs of the Jurisdiction Application.
15. On 31 May 2015, a hearing for the Sharjah Action was held before the Sharjah Federal Court of First Instance (the “Sharjah CFI”). That day, the Sharjah CFI issued a judgment holding that it had no jurisdiction to hear the Sharjah Action because SCB was headquartered in Dubai and the relevant agreements were to be performed in Dubai (the “Sharjah Action Judgment”).
16. IGPL then filed an appeal against the Sharjah Action Judgment. On 15 September 2015, the Sharjah Court of Appeal issued a decision upholding the Sharjah Action Judgment (the “Sharjah Appeal Judgment”). On 7 October 2015, IGPL filed an appeal against the Sharjah Appeal Judgment, to be determined by the USC.

THE PARTIES’ ARGUMENTS IN THE COURT OF FIRST INSTANCE

A. IGPL’s arguments in the CFI

17. In the Jurisdiction Application, IGPL sought (1) an order that the DIFC Courts lacked competent jurisdiction to hear the dispute and (2) an order that the DIFC Courts should decline jurisdiction to hear the dispute on the ground of FNC. However, IGPL had made concessions which resulted in the abandonment of the first relief shortly before the CFI hearing (the “Concessions”). It pursued only the second relief to the end.
18. IGPL’s Concessions were expressed in the following terms in its Skeleton Argument for 27^th November 2014:

“IGPL accepts that the DIFC Court have jurisdiction to hear these claims, pursuant to Article 5A(1)(a) of Dubai Law 16 of 2011, as SCB has a branch registered in the DIFC. The issue is whether the Court should decline jurisdiction, based on the doctrine of FNC.”

19. There are two dimensions to the Concessions. The first dimension to the Concessions is that IGPL conceded that the DIFC Courts had competent jurisdiction to determine SCB’s claims pursuant to Article 5A(1)(a) of the Judicial Authority Law (the “Jurisdiction Concession”). The second dimension to the Concessions is that IGPL had conceded that the parties did not agree to opt-out of the DIFC Courts’ jurisdiction under the Agreements or the Share Pledge Agreement (the “Choice of Court Concession”).
20. IGPL’s submissions on the application of the FNC doctrine before the CFI were two-fold.
21. First, IGPL argued that the FNC doctrine was applicable as between the DIFC Courts and the Courts of Sharjah, and between courts of the United Arab Emirates (“UAE”) generally.
22. Second, IGPL argued that, applying the FNC doctrine, the DIFC Courts should decline jurisdiction on the ground of FNC because the Sharjah Courts was the clearly more appropriate forum to resolve this dispute.
23. In support of its argument that the FNC doctrine was applicable in the present case, IGPL relied on this Court’s decisions in Corinth Pipework v Barclays Bank CA002/2011 (“Corinth”) and Al Khorafi v Bank Sarasin CA003/2011 (“Al Khorafi”), where the Court acknowledged that it could exercise its discretion to stay proceedings, and could invoke the FNC doctrine in an appropriate case. IGPL recognized that the decision in Allianz v Al Ain Ahlia CFI012/2012 (“Allianz”) qualified the scope of application of the FNC doctrine, where the Court held that the doctrine has no application to competing claims to jurisdiction by courts within the UAE. IGPL therefore argued that Allianz was wrongly decided.
24. IGPL’s argument was that the Court in Allianz had erroneously assumed that the UAE’s Federal Civil Procedure Code (the “CPC”) was applicable to the DIFC and limited the DIFC Courts’ jurisdiction. IGPL contended before the CFI that this assumption was erroneous because the CPC did not apply to the DIFC Courts, which applied their own procedural rules to determine whether they had competent jurisdiction.
25. In the alternative, IGPL contended that, if the CPC were applicable, then the relevant provision (Article 31(3) of the CPC), when applied, would confer competent jurisdiction on the Courts of Sharjah (and not the DIFC Courts) because Sharjah was IGPL’s place of business and the Agreements were mainly performed in Sharjah.
26. IGPL further argued that application of the FNC doctrine would also point to the Courts of Sharjah as the distinctly more appropriate forum for resolving the present dispute for the following reasons. It denies that the parties had any agreement to confer jurisdiction on the DIFC Courts under either of the Agreements.
27. IGPL also denied that any of the connecting factors relied on by SCB pointed towards the DIFC as the distinctly more appropriate forum.

B. SCB’s arguments in the CFI

28. SCB argued that the jurisdiction of the DIFC Courts was delineated by Article 5 of Dubai Law No. 12 of 2004 as amended by Dubai Law No. 16 of 2011 (the “Judicial Authority Law”). In its submission, Article 5A(1)(a) of the Judicial Authority Law conferred jurisdiction on the DIFC Courts in relation to any claim or action involving, as a party, an entity licensed to carry on business or conduct activity within the DIFC (“Licensed DIFC Establishment”).
29. Relying on the wide interpretation adopted by this Court in Corinth of “Licensed DIFC Establishment” as including the full legal entity, whether registered in the DIFC or elsewhere in the UAE, SCB argued that it was a Licensed DIFC Establishment within the meaning of Article 5(A)(1)(a) of the Judicial Authority Law. Accordingly, SCB submitted that the DIFC Courts had jurisdiction over its claims.
30. Further, SCB contended that the parties had not, in the Agreements and Share Pledge Agreement, agreed to opt-out of the DIFC Courts’ jurisdiction, because the phrases “Courts of Dubai” and “Courts of the UAE”, as adopted in the Agreements’ and the Share Pledge Agreement’s choice of court provisions, included the DIFC Courts. In this regard, SCB relied on this Court’s decision in National Bonds v Taaleem CA 001/2011 (“Taaleem”). SCB also pointed out that it had an option under the 2010 Agreement to commence proceedings against IGPL in any court of competent jurisdiction, and this agreement should be given effect.
31. Finally, SCB challenged IGPL’s application to stay SCB’s action on the ground of FNC, by arguing that the FNC doctrine had no application between courts of the UAE. In this regard, SCB relied on the DIFC Courts’ decisions in Allianz, Barclays Bank PLC v (1) Afras Limited and (2) Radhakrishnan Nanda Kumar CFI 008/2013, and Meydan Group LLC v Banyan Tree Corporate Pte Ltd CA005/2014 (“Meydan”).

C. The decision of the CFI

32. Justice Sir David Steel dismissed the Jurisdiction Application. At the outset he expressed the view that IGPL had correctly made the Jurisdiction Concession and Choice of Court Concession. He went on to hold that the Jurisdiction Concession was correct, and explained that, so long as SCB fell within one of the categories set out at Article 5(A) of the Judicial Authority Law, the DIFC Courts would have exclusive jurisdiction to hear the dispute. Since SCB was a licensed entity within the DIFC, it would qualify as a “Licensed DIFC Establishment” within the meaning of Article 5(A)(1)(a) of the Judicial Authority Law, thereby conferring jurisdiction on the DIFC Courts to hear the dispute.
33. Justice Sir David Steel also held that the Choice of Court Concession was correctly made, and found that the parties did not opt-out of the DIFC Courts’ jurisdiction under Article 5(A)(2) of the Judicial Authority Law. The choice of court provisions in the Agreements and Share Pledge Agreement, which might have the effect of opting out of the DIFC Courts’ jurisdiction, included the DIFC Courts as a chosen court to which the parties had submitted their dispute.
34. In respect of the 2009 Agreement and the Share Pledge Agreement, which provided that IGPL submitted to “the exclusive jurisdiction of the courts of the United Arab Emirates”, Justice Sir David Steel held that the phrase “courts of the United Arab Emirates” would necessarily include the DIFC Courts, and he reasoned as follows at [4] of his judgment:

“The DIFC Court is one of the courts of Dubai: see National Bonds Corp. v. Taaleem CA-001-2011. By extension it is a court of the UAE. Indeed within Dubai, it has exclusive jurisdiction. Accordingly, absent an agreement to accord exclusive jurisdiction to another court, there is no basis for excluding the DIFC Court as a court of the UAE. It is thus a court of competent jurisdiction in respect of claims under the 2009 Agreement.”

35. In relation to the 2010 Agreement, Justice Sir David Steel relied on Clause 36.2, which permits SCB to “bring Proceedings against [IGPL]… in any other court of competent jurisdiction or concurrently in more than one jurisdiction.” Having found that the DIFC Courts had competent jurisdiction, he held that the scope of Clause 36.2 extended to include the DIFC Courts, and that IGPL had therefore agreed to submit to the DIFC Courts’ jurisdiction since SCB commenced an action in the DIFC.
36. In addressing IGPL’s primary argument that the DIFC Court should decline jurisdiction on the ground of FNC, Justice Sir David Steel’s analysis took the following course.
    • First, he held that, on a proper understanding of the House of Lords’ decision in Spiliada Maritime Corp v. Cansulex Ltd [1987] AC 460, the FNC doctrine does not apply to resolve competing claims to jurisdiction by courts of the same state, such as where the competing claims to jurisdiction are made by courts within the UAE. Justice Sir David Steel endorsed the decision in Allianz where H.E. Justice Ali Al Madhani expressed a similar view.
    • Second, Justice Sir David Steel held that it was not appropriate for a court within the UAE to apply the FNC doctrine, because the other courts of the UAE do not recognize or apply that doctrine. Several reasons further supported this view:

• The UAE Courts, in line with its civil law roots, would not regard jurisdiction and its exercise as a discretionary matter.
• If the DIFC Courts applied the FNC doctrine and relinquished jurisdiction in favour of another UAE Court, the other UAE courts (including the distinctly more appropriate couirt) might not recognize that as a proper exercise of jurisdiction.

• Finally, Justice Steel held that the circumstances surrounding the dispute did not point to the Sharjah Courts as a distinctly more appropriate forum than the DIFC Courts to hear the dispute, even if the FNC doctrine were applicable.
  • He found that the DIFC Courts were the only Courts which satisfactorily fell within the scope of all three jurisdiction clauses contained in the Agreements. This was an important factor pointing towards the DIFC Courts as the distinctly more appropriate forum, as it would allow the parties to resolve all disputes arising out of their relationship in a single forum.
  • The 2010 Agreement was governed by English law, which the DIFC Courts were better placed to apply than the Sharjah Courts.
  • As the Agreements were prepared in English, the DIFC Courts would be a more efficient adjudicative forum than the Sharjah Courts, which would require translations for all agreements and related documents authored in English.
  • No real difference in physical convenience would be felt between Dubai and Sharjah, since they were adjacent Emirates.

II.         THE PARTIES’ ARGUMENTS ON APPEAL

37. IGPL bases its appeal on several grounds.
    • As a preliminary point, IGPL seeks to withdraw both the Jurisdiction Concession and the Choice of Court Concession. The withdrawal is pursued on the basis that Justice Sir David Steel had erred in law by relying on these concessions in finding that the DIFC Courts had competent jurisdiction, because competent jurisdiction cannot be conferred by concession.
    • IGPL’s principal argument is that the DIFC Courts do not have competent jurisdiction to hear the present dispute. It argues that Corinth was wrongly decided by this Court by adopting a wide interpretation of Article 5A of the Judicial Authority Law. That interpretation is incorrect because it would invest in the DIFC Courts an exorbitant jurisdiction, is inconsistent with the UAE’s constitutional and federal laws (which IGPL contends apply to the DIFC), and does not give effect to the special legal status held by an entity’s branch under UAE law.
    • IGPL further argues that the parties had, in any event, opted-out of the DIFC Courts’ jurisdiction. On a proper construction of the choice of court provisions in the Agreements, the parties have agreed to confer jurisdiction on the UAE’s Federal Judicial Authority (to the exclusion of all other Emirate Courts) or the Dubai Courts (excluding the DIFC Courts).
    • IGPL also contends that the DIFC Courts should decline to exercise jurisdiction because a jurisdictional conflict has now emerged between it and the Courts of Sharjah, and that jurisdictional conflict should be referred to the UAE’s Union Supreme Court (“USC”) for resolution as required by Article 121 of the UAE’s constitution.
    • Alternatively, even if the DIFC Courts have competent jurisdiction to hear the present dispute, this Court should stay these proceedings on the ground of FNC. IGPL argues that the FNC doctrine is applicable to competing claims to jurisdiction by courts within the same state, and that the relevant connecting factors establish that the Courts of Sharjah are distinctly the more appropriate forum to resolve this dispute.
38. In response, SCB makes the following arguments.
    • IGPL should not be permitted to withdraw the Jurisdiction Concession or the Choice of Court Concession. Their withdrawal would prejudice SCB, since SCB had relied on these concessions when formulating its arguments before Justice Sir David Steel and since the concessions had shaped the entire “legal landscape” of the parties’ dispute in the Jurisdiction Application.

• The DIFC Courts do have competent jurisdiction to determine SCB’s claims in these proceedings. To this end, SCB argues that Corinth was correctly decided and, applying the interpretation of Article 5A(1)(a) of the Judicial Authority Law adopted by this Court in that decision, the DIFC Courts have competent jurisdiction to hear the present dispute because SCB was a “Licensed DIFC Establishment” within the meaning of that provision. The CPC does not apply to circumscribe the scope of the DIFC Courts’ jurisdiction as established under the Judicial Authority Law. The DIFC Courts are exempt from the CPC by virtue of Article 3(2) of the UAE’s Federal Law No. 8 of 2004 (“Federal Law 8”).
• SCB’s alternative argument is that, even applying the relevant provisions of the CPC, the Courts of Dubai (including the DIFC Courts) would also have competent jurisdiction to hear the present dispute. Contrary to IGPL’s contention, the applicable provisions are Articles 31 and 33 of the CPC, which would confer jurisdiction on the DIFC Courts on any of the following bases:
  • the Agreements were to be performed in Dubai
  • the losses allegedly suffered by SCB materialized in Dubai; or
  • the choice of court provisions in the Agreements amounted to an agreement between the parties to confer jurisdiction on the DIFC Courts to hear the present dispute.
• SCB further submits that there is no jurisdictional conflict between the DIFC Courts and the Sharjah Courts which needs to be referred to the USC for resolution. The Sharjah Courts’ jurisdiction has not been engaged, insofar that they have never made a positive ruling that they have jurisdiction over the present dispute. To the contrary, the Sharjah Action Judgment shows that the Sharjah CFI has held that it has no jurisdiction to hear the dispute and that it is the Courts of Dubai which have jurisdiction to hear it.
• In response to IGPL’s application to stay these proceedings on the ground of FNC, SCB contends that the FNC doctrine should not apply in cases such as these proceedings when the alternative forum is another court within the UAE. To this end, SCB relies on this Court’s holding in Allianz.
• In the alternative, SCB argues that the application of the FNC doctrine would point to the DIFC Courts as the distinctly more appropriate forum to determine this dispute, relative to the Sharjah Courts.

III.        ISSUES BEFORE THIS COURT

39. The issues which this Court must decide are as follows.
40. First, whether IGPL should be permitted to withdraw the Choice of Court Concession and the Jurisdiction Concession.
41. Second, whether the DIFC Courts have competent jurisdiction to hear SCB’s claims against IGPL under the Agreements.
42. Third, whether the DIFC Courts may apply the FNC doctrine and, if so, whether these proceedings should be stayed on the ground that the Sharjah Courts are the distinctly more appropriate forum.

IV.        ISSUE 1: IGPL’S APPLICATION TO WITHDRAW THE CONCESSIONS

A. The approach towards an application to withdraw a concession

43. The approach an appellate court should take when a party applies to be permitted to withdraw a concession has been considered in a number of cases in the English courts. In Ex parte Firth, In re Cowburn(1882) 19 Ch D 419 at p. 429, the Court of Appeal said:

“…the rule is that, if a point is not taken before the tribunal which hears the evidence, and evidence could have been adduced which by any possibility would prevent the point from succeeding, it cannot be taken afterwards. You are bound to take the point in the first instance, so as to enable the other party to give evidence.”

44. In Pittalis v Grant [1989] 1 QB 605, when considering whether the appellant should be allowed to withdraw a concession on the meaning of a provision in the Rent Acts, Nourse LJ observed at p. 611:

“Even if the point is a pure point of law, the appellate court retains a discretion to exclude it. But where we can be confident, first, that the other party has had opportunity enough to meet it, secondly, that he has not acted to his detriment on the faith of the earlier omission to raise it and, thirdly, that he can be adequately protected in costs, our usual practice is to allow a pure point of law not raised below to be taken in this court. Otherwise, in the name of doing justice to the other party, we might, through visiting the sins of the adviser on the client, do an injustice to the party who seeks to raise it.”

45. In Jones v MBNA [2000] EWCA Civ 514 (“Jones v MBNA”), the appellant sought leave to withdraw a concession made below that the implied term of mutual trust and confidence in an employment contract could only be breached by an employer if he had acted in bad faith. The Court of Appeal refused permission for this new case to be advanced on appeal. Peter Gibson LJ said at [38]:

“It is not in dispute that to withdraw a concession or take a point not argued in the lower court requires the leave of this court. In general the court expects each party to advance his whole case at the trial. In the interests of fairness to the other party this court should be slow to allow new points, which were available to be taken at the trial but were not taken, to be advanced for the first time in this court. That consideration is the weightier if further evidence might have been adduced at the trial, had the point been taken then, or if the decision on the point requires an evaluation of all the evidence and could be affected by the impression which the trial judge receives from seeing and hearing the witnesses. Indeed it is hard to see how, if those circumstances obtained, this court, having regard to the overriding objective of dealing with cases justly, could allow that new point to be taken.”

46. May LJ said at [52]:

“Civil trials are conducted on the basis that the court decides the factual and legal issues which the parties bring before the court. Normally each party should bring before the court the whole relevant case that he wishes to advance. He may choose to confine his claim or defence to some only of the theoretical ways in which the case might be put. If he does so, the court will decide the issues which are raised and normally will not decide issues which are not raised. Normally a party cannot raise in subsequent proceedings claims or issues which could and should have been raised in the first proceedings. Equally, a party cannot, in my judgment, normally seek to appeal a trial judge’s decision on the basis that a claim, which could have been brought before the trial judge, but was not, would have succeeded if it had been so brought. The justice of this as a general principle is, in my view, obvious. It is not merely a matter of efficiency, expediency and cost, but of substantial justice. Parties to litigation are entitled to know where they stand. The parties are entitled, and the court requires, to know what the issues are. Upon this depends a variety of decisions, including, by the parties, what evidence to call, how much effort and money it is appropriate to invest in the case, and generally how to conduct the case; and, by the court, what case management and administrative decisions and directions to make and give, and the substantive decisions in the case itself. Litigation should be resolved once and for all, and it is not, generally speaking, just if a party who successfully contested a case advanced on one basis should be expected to face on appeal, not a challenge to the original decision, but a new case advanced on a different basis. There may be exceptional cases in which the court would not apply the general principle which I have expressed. But in my view this is not such a case.”

47. In New Zealand Meat Board & Anor v Paramount Export Ltd & Anor (New Zealand) [2004] UKPC 45, the majority of the Privy Council permitted the appellant to advance a contract interpretation point that had not been advanced at trial or in the New Zealand Court of Appeal, the appellant having conceded that, if a provision in the contract in question (clause 8.3.2) had not been amended, that provision would have been breached. In fact, the provision had not been amended, and the majority was of the view that on its true construction, the appellant was not liable to the respondents. In giving the majority judgment of the Board, Lord Hoffmann said at [45] – [48]:

“45. In these circumstances the question is whether the Meat Board should be allowed to withdraw the concession. Mr Cooke [Counsel for the Respondents] says that this would be unjust. The case was fought on the assumption that if the Council had made a request for quota allocation in breach of Clause 8.3.2, the Meat Board would be liable for complying with it. If it had been known that this was in issue, the plaintiffs could have adduced evidence of surrounding circumstances to show that the agreement should be construed as having this meaning.

46. Their Lordships consider that the plaintiffs cannot complain of being misled about the evidence they would need to adduce at the trial. On the pleadings, the whole question of contractual liability and the construction of the agreement was in issue. It would have been open to the Meat Board, without any amendment of the pleadings, to put before Heron J the argument upon which it now relies. In any case, the surrounding circumstances were exhaustively explored at the trial and their Lordships are unable to imagine what facts could be unearthed which would lead to the conclusion that the Meat Board was assuming a contractual liability for the way it exercised its statutory power to allocate quota. Mr Cooke did not suggest any…
47. It therefore appears to their Lordships that despite the fact that the true construction of the contract was not argued before the judge, the plaintiffs could not have complained of prejudice if the point had been taken before the Court of Appeal. It was a question of law on which no further evidence could have been called. The position is the same before their Lordships’ Board. It is no doubt very disappointing for the plaintiffs, having succeeded in the courts below, to lose on a new point in the final court. On the other hand, it would be a miscarriage of justice if the Meat Board were required to pay some $7m out of public funds when it had no legal liability to do so, merely on account of the way its advisers had conducted the litigation. Mr Cooke referred their Lordships to a recent observation of Lord Bingham of Cornhill in Grobbelaar v News Group Newspapers Ltd[2002] 1WLR 3024, 3034, para 21:

“Only rarely and with extreme caution will the House permit counsel to withdraw from a concession which has formed the basis of argument and judgment in the Court of Appeal.”

48. That is a sound policy and in deciding to allow the concession to be withdrawn, their Lordships hope they have displayed the same caution as the House did in Grobbelaar’s case. If there were any possibility that the outcome could have been affected if the point had been taken earlier, that would of course have been an entirely different matter. But their Lordships consider that in this case the plaintiffs can be adequately compensated by a suitable order for costs.”
49. In Crane T/A Indigital Satellite Services v Sky-In-Home Ltd [2008] EWCA 978 the question was whether the appellant should be permitted to advance an interpretation of the Commercial Agents (Council Directive) Regulation which had not been run at trial. The Court of Appeal refused to grant the permission sought. Arden LJ said that a new point would not be allowed to be taken if there was a risk of prejudice to the other party, which would be the case if, had the new case been raised at trial, the other party might have adduced other evidence or otherwise have conducted the case differently. She went on at [21]:

“If there is any area of doubt, the benefit of it must be given to the party against whom the amendment is sought. It is the party who should have raised the point at trial who should bear any risk of prejudice.”

49. Arden LJ also observed at [28] that where a party had expressly conceded a point, that would “be a strong indication that permission to raise a new point should not be given since a party cannot blow hot and cold and be enabled to act in a manner inconsistent with his express act.”
50. In Slack & Partners Ltd v Slack [2010] EWCA Civ 204, the Court of Appeal approached the question whether a concession could be withdrawn on appeal on the basis that the recanting party had to show that the case would not have been conducted differently if the concession had not been made below, or that there was no risk of prejudice arising from a difference, as to which the other party should have the benefit of the doubt.
51. The authorities cited above were considered by Mann J in BT Pension Scheme Trustees Limited v British Telecommunications Plc, Secretary of State for Business, Innovation and Skills [2011] EWHC 2071 (Ch) (“BT Pension Scheme”). There, in formulating preliminary issues to be decided by the court in a series of separate trials, the Secretary of State, having conceded that liabilities arising from fully funded bulk transfers into the scheme were within a guarantee, whether or not they arose from amendment, sought after a trial of some of the issues to argue that, if such liabilities arose from amendment, they were outside the guarantee. Mann J held that the situation was equivalent to a concession being withdrawn on appeal and went on in [44] of his judgment to extract the following propositions from the cases:

“i)   The resiling party has the burden of establishing that the previously forgone point should be raised.

1. ii) It will be harder to raise a point which has been expressly conceded.

iii)   If taking the point would risk causing prejudice to the other party, in the sense that it might have been deprived of the opportunity of dealing with the case differently in the court below, then it is unlikely that resiling will be allowed. The greater the risk, the less likely it is that it will be allowed.

1. iv) There is a low threshold of risk for these purposes …
2. v) The burden of establishing no risk is on the party who wishes to withdraw the concession, and the other party should have the benefit of any doubt in this area.”
3. Applying these propositions, Mann J held that the Trustee should not be permitted to withdraw the concession. Whilst the other parties could not show that they would be prejudiced from not having put in additional evidence at the first trial:

“… the whole legal landscape would have been different, and they would have been starting from a different point in argument. The questions might even have been ordered differently, and that too would have affected the argument. It is not possible to conclude that the non-Secretary of State parties would not have been able to do anything materially different, or to affect the debate on post-transfer date amendments generally. If I were to allow the Secretary of State to adopt his new position and resile from his concession the other parties might be starting the debate from now on in a different position to that which they would have been in had there been no concession in the first place. There is therefore a risk of prejudice, and it is significantly over the threshold which the above cases seem to set.”

53. Mann J also took into account, inter alia, the fact that: (i) the Secretary of State had not given any reason why he now wished to change his mind other than he wanted to run an important point; (ii) the concession had been an express concession; and (iii) the withdrawing party was not an underfunded, underrepresented individual but was a large government department with extremely able lawyers which had made the concession in the course of carefully conducted negotiations and with eyes wide open.

B. Whether IGPL should be permitted to withdraw the Concessions

54. Relying on the approach taken by Mann J in the BT Pension Scheme case, SCB submits that IGPL has not discharged the burden on it to show that there would be no risk of prejudice if withdrawal of the Concessions were permitted. On the contrary, withdrawal would radically change the “legal landscape”, with the parties starting from a different point in the argument, with the consequence that the order and emphasis given to the legal arguments would have been entirely different.
55. In reply to this submission, IGPL makes no attempt to deal with the considerations articulated in the above-cited cases. Instead, it simply contends that any concession as to the jurisdiction of the DIFC Courts can be withdrawn because jurisdiction cannot be grounded on concession but only on the applicable statutory grounds. In support of this contention, Mr Patchett Joyce for IGPL referred to the following authorities: (i) a decision of the USC (Appeal No.1 of Judicial Year No. 21) (“Appeal 1 of Judicial Year 21”); (ii) Hardy v Sefton Metropolitan Borough Council [2006] EWHC 1928 (Admin) (“Hardy”), a decision in the English Administrative Court; (iii) Hardt and Hardt Trading FZE v Damac (DIFC) Co Ltd et al (CFI 36/ 2009) (“Hardt”); and (iv) National Bonds Corporation PJSC v Taaleem PJSC and Deyaar Development PJSC (CFI 001/2011).
56. In the first of these authorities, it was held that the non-DIFC Dubai Courts had wrongly assumed jurisdiction on the basis of an agreement as to jurisdiction by the parties. Instead, by reason of Article (31)(3) of the CPC (which stipulates that it is the court in the territory where the defendant resides or where the subject agreement was executed which had jurisdiction), the courts with jurisdiction over the dispute were the courts of Abu Dhabi. The USC said:

“It is established in this court that each one of the Emirates in the United Arab Emirates has an independent jurisdiction concerning the legal matters which do not fall under the jurisdiction of the Federal Courts.

Dubai Emirate maintained the judicial power of its local courts. Therefore those courts have the jurisdiction concerning the lawsuits in the territory of the Emirate and in which the judiciary represents a judicial body independent of the federal judicial body. Thence, distribution of jurisdiction for hearing of the legal lawsuits among federal and local courts in Dubai is a territorial jurisdiction related to public order, necessitating for each court, whether affiliated to the association or to any judicial bodies in Dubai, to abide by the borders of its territory, without any negative or positive violation, where such court may not waive its jurisdiction or contend to the jurisdiction of another court according to the provisions of constitution and the laws issued in execution of the same.

The parties may not violate rules of such jurisdiction and the court shall proprio motu rule with the same since it is related to public order.”

57. The Hardy case was an appeal from the determination of the Merseyside Valuation Tribunal (a statutory body) that the appellant was obliged to pay Council Tax on a particular basis. One of the grounds of appeal was that the Tribunal had failed to reduce the tax payable on the basis that there had been a failure of the billing authority’s administration. At the hearing before the Tribunal, it was not contended by the billing authority that the Tribunal had no jurisdiction to take into account the alleged failure of administration, but on appeal the respondent sought to take this point. The appellant cited, inter alia, Jones v MBNA and argued that the respondent had conceded jurisdiction below and should not be allowed to withdraw that concession on appeal. Walker J disagreed, saying:

“I do not in any way underestimate the importance of the principles explained in these two cases. Those principles will often be applied to an appeal to this court. However, the present case is different in at least one crucial respect. The point at issue concerns the jurisdiction of the Tribunal. Jurisdiction cannot generally be acquired by concession. In essence, by paragraphs 12 and 13 of his skeleton argument the appellant asserts that the Tribunal had the jurisdiction not to make the order which would otherwise have been appropriate. If he wishes to advance that proposition, he cannot in my view complain if the respondent in this court questions the Tribunal’s jurisdiction, even though the respondent did not do so below.”

58. In Hardt, Justice Sir Anthony Colman considered the effect of Rule 12.5 of the Rules of the DIFC Courts where a party has failed to make an application disputing the court’s jurisdiction within the specified time. Citing Dicey, Morris & Collins, Conflicts of Law, 14th ed., para 11-138, Justice Colman held that the consensual submission to the court’s jurisdiction contemplated by the rule cannot extend the scope of that jurisdiction beyond that accorded under the national laws that confer jurisdiction on the court.
59. In Taaleem, the DIFC Court of Appeal, having concluded that the parties intended in Clause 14.1 of the Murabaha Agreement to refer to the DIFC Courts and not to the non-DIFC Dubai Courts, went on to consider whether on the facts there was jurisdiction under the provisions of Article 5(A)(1) of the Judicial Authority Law. The Court said at [62] it was taking this course because “it is not open to the parties to a contract to contract into the DIFC Courts’ jurisdiction if the dispute in question falls outside the scope of the Court’s jurisdiction as delineated by the legislation.”
60. The law applicable to the withdrawal of concessions in the DIFC Courts is a matter for the procedural law of the DIFC Courts, and we are of the clear view that that law should be closely modelled on the principles articulated in the decisions cited above, including in particular the propositions formulated by Mann J in the BT Pension Scheme
61. The principle that parties cannot by agreement bring a dispute within the jurisdiction of a court where the case does not come within the delineated ambit of the court’s jurisdiction is well established. In Essex Incorporated Congregational Church Union v Essex County Council [1963] AC 808 at pp. 820-821, Lord Reid said:

“…it is a fundamental principle that no consent can confer on a court or tribunal with limited statutory jurisdiction any power to act beyond that jurisdiction, or can estop the consenting party from subsequently maintaining that such court or tribunal had acted without jurisdiction.”

62. The purpose of the principle is to give effect to the legislation or other instrument establishing the court’s jurisdiction, the delineation of which will have been responsive to a number of important considerations, including, in the case of a national court, the relationship between that court and other courts within the same polity and/or other external courts to whom principles of comity should be extended.
63. The question is whether this “non-facultative principle” applies to the concessions made in this case, so that IGPL is free to withdraw them without regard to the propositions articulated by Mann J in the BT Pension Scheme
64. In our judgment, the answer to this question is “yes” in regard to the Jurisdiction Concession. Although jurisdiction overall was not conceded, a ground of jurisdiction was, and consistently with the non-facultative principle, we find that IGPL must be permitted to withdraw this concession in this appeal. However, given the express nature of the concession and the resulting radical change to the “legal landscape”, which we find will result from permitting withdrawal, our grant of permission will be on terms that IGPL should pay the costs below on an indemnity basis and the costs of this appeal attributable to IGPL’s withdrawal of the Jurisdiction Concession on an indemnity basis.
65. Turning to the Choice of Court Concession, namely that the parties had not by the wording of the relevant agreements opted out of the DIFC Court’s jurisdiction, we think that the non-facultative principle does not apply here. We are of this view because this second concession was not a concession that any of the delineated grounds of jurisdiction was applicable. Instead, it went to an issue of contractual interpretation which, whatever the decision, was going to leave open the question whether one of the specified grounds of jurisdiction had been made out.
66. As we have said, IGPL has not sought to engage with the propositions articulated by Mann J in the BT Pension Scheme Thus, it has not attempted to discharge the burden on it of persuading this Court that there is no risk of prejudice to SCB if the second concession is allowed to be withdrawn. In these circumstances and in view, in particular, of: (i) the express nature of this concession; (ii) the fact that the concession was made with the benefit of competent and experienced legal advice; and (iii) the extent of the change to the legal landscape that would result from withdrawal, we are of the view that IGPL should not be permitted to withdraw the Choice of Court Concession.
67. In any event, for the reasons given at [123] to [154] below, we are entirely satisfied that the Choice of Court Concession was well made.

V. ISSUE 2: THE JURISDICTION OF THE DIFC COURTS TO HEAR THE DISPUTE

A. Whether the DIFC Courts should stay these proceedings

68. Before considering whether the DIFC Courts have jurisdiction to determine the present dispute, we will first consider a preliminary issue arising from IGPL’s argument that these proceedings should be stayed in the light of parallel proceedings taking place in Sharjah.
69. While it is not entirely clear from IGPL’s submissions, we understand IGPL to be advancing two grounds in support of its argument.
70. IGPL’s first ground appears to be that, in the light of parallel proceedings between the parties in the DIFC and in Sharjah, there is a jurisdictional conflict which ought to be resolved by the USC and the DIFC Courts should not determine it now.
71. In our view, the point can be disposed of shortly. As was held by the USC in Case No [10/28 Jurisdictional Conflict], Hearing 5 May 2002 (“Case No 10/28”), a jurisdictional conflict that must be referred for resolution by the USC arises only when conflicting final judgments on jurisdiction have been issued by two or more courts of the UAE. The point was recognized in Allianz at [28]:

“Even though the rules of the Constitution and USC Law No. 10/1973 are silent about the timing of when the conflict can be brought before the USC, the Union Supreme Court with the authority to interpret the Constitution and its Laws given to it by the Constitution formulated a principle derived from the case no. [10/28 Jurisdictional Conflict. Hearing 5/5/2002], where it was held:

This principle states that the USC shall exercise its jurisdiction to determine the conflict of jurisdiction between two final judgments of a federal and local judicial authority or between two local judicial authorities in the UAE.”

72. Given that the Sharjah Court of Appeal had, on 15 September 2015, upheld the Sharjah Action Judgment, there does not presently exist any conflict between the judgments issued by the DIFC Courts and the Sharjah Courts in respect of the present dispute. We appreciate that the Sharjah Appeal Judgment is now the subject of an appeal before the USC. However, the resolution of a jurisdictional conflict pursuant to Article 99 of the UAE Constitution is not a pre-emptive mechanism, as is clear from Case No 10/28, so until the USC issues a jurisdictional finding in favour of IGPL, a jurisdictional conflict has not arisen.
73. Accordingly, the only ground which IGPL may rely on to request a stay is that case management considerations warrant it. To this end, IGPL points out that , the outcome of the appeal against the Sharjah Appeal Judgment before the USC would decisively resolve the issue before this Court now. If the appeal were resolved in IGPL’s favour, the USC’s decision would preclude the DIFC Courts having jurisdiction over this dispute. Conversely, if the appeal is dismissed, then it would “pav[e] the way for resumption of the trial before the DIFC Court”. We understand IGPL’s point to be that, substantial savings in costs might be achieved if the DIFC Courts were to await the USC’s decision on the Sharjah Appeal Judgment.
74. SCB contends that a proper application of case management principles militate against IGPL’s request for a stay of proceedings. Relying on the House of Lords’ decision in Reichold Norway ASA v Goldman Sachs International [2000] 1 WLR 173 (“Reichold”), SCB submits that a stay on the grounds of case management considerations will be granted only in “rare and compelling cases”. The burden of proving this falls on IGPL, the party seeking a stay. SCB argues that the existence of parallel proceedings in Sharjah, which is the only factor which IGPL relies on, does not by itself establish a compelling need for a stay in the present case, and that the decisive consideration in that context is which set of proceedings was commenced first and was most mature. In its submission, this is evident from the English High Court’s decision in Macdermid Offshore Solutions LLC v Niche Products Limited [2013] EWHC 1493 (Ch). The following factors in totality point decisively against granting a stay of these proceedings:
    • the DIFC proceedings were instituted 5 months before the Sharjah Court proceedings;

• the prospect of a “jurisdictional conflict” is unlikely to arise given that the Sharjah Courts have denied jurisdiction to date;
• the jurisdictional issue before this Court is likely to be resolved before the appeal against the Sharjah Appeal Judgment;
• the DIFC Courts are likely to determine the merits of this dispute before the Sharjah Courts would; and
• any incremental costs incurred as a result of a refusal to grant a stay are not sufficient justification to grant a stay;
• jurisdictional question is likely to be resolved by the DIFC Courts before the USC.

75. SCB also points out that it will be prejudiced if a stay were granted by the DIFC Courts, because any further delays could affect the value of the security it seeks to enforce in these proceedings, which has been and looks likely to continue fluctuating.
76. The Parties do not disagree that, as was held in Reichold, a stay would be granted on case management grounds only in rare and compelling cases, and that the burden of proving that this is such a case falls on the party seeking a stay, IGPL. The only case management consideration which IGPL has pointed to is the existence of parallel proceedings in both the DIFC and Sharjah. In our judgment, that is only the starting point, and the question is why the DIFC Courts must grant a stay in deference to those proceedings.
77. We agree with SCB’s submissions that a stay is not appropriate in the present case for all the reasons that SCB has put forward. In particular, we emphasize that the relative maturity of the proceedings in question is a decisive consideration. As the learned authors of Collier’s Conflict of Laws (Cambridge University Press: 4^th Edition, 2013) have explained at p. 170, “it is only when the foreign proceedings are well advanced that the [Courts] will refuse to take jurisdiction in proceedings here”. All of the factors which SCB has pointed to establish the opposite conclusion.
78. Accordingly, we reject IGPL’s submission that these proceedings ought to be stayed on the basis that parallel proceedings in Sharjah are ongoing.

B. Does the UAE Constitution and the CPC preclude the DIFC Courts from having competent jurisdiction over the present dispute?

79. The first question which arises for our consideration is whether the constitutional and federal provisions relied on by IGPL impose any limits on this Court’s jurisdiction. We accept that, as IGPL argues, the DIFC Courts cannot enforce any law which contradicts or subverts the UAE Constitution. Yet it is clear from IGPL’s submissions that it does not rely on any particular provision of the UAE Constitution as directly establishing that the DIFC Courts do not have competent jurisdiction to hear the present dispute. Mr Aidarous for IGPL confirmed this position at the oral hearing:

“Now what is the rule for each emirate claiming their own jurisdiction? The answer we will not find in constitution, I am afraid, you will find the answer in the Civil Procedure Code of the UAE, which is law number 11/92.”

80. IGPL’s case is that certain provisions of the CPC prescribe mandatory limits on jurisdiction for each Emirate, and that the application of those provisions will establish that the DIFC Courts do not have competent jurisdiction to hear the present dispute. IGPL’s conclusion is therefore that this Court’s decision in Corinth was erroneous because it invested in the DIFC Courts a wider jurisdiction than permitted under the CPC.
81. SCB argues that the CPC is inapplicable and that, even if the CPC were applicable, the applicable provision is Article 31 of the CPC which would confer jurisdiction on the DIFC Courts. IGPL denies this, contending that Articles 20 to 24 are the applicable provisions, and that those provisions would establish that the DIFC Courts do not have jurisdiction.
82. Parenthetically, we make two observations at this juncture. First, IGPL has neglected to identify which of Articles 20 to 24 it specifically relies on or to explain how it establishes that the DIFC Courts do not have jurisdiction. Second, in Appeal 1 of Judicial Year 21 and Petition No. 36, decisions which IGPL has cited in its arguments, the USC and the Dubai Court of Cassation respectively applied Article 31 of the CPC to determine which of two alternative Emirate Courts had competent jurisdiction to hear a dispute. As will be explained at [83] to [99] below, the question of what provisions of the CPC delineate each Emirate’s jurisdictional limits may be left aside because, in our view, the CPC does not apply to the DIFC Courts at all.
83. The legal framework creating the DIFC and the DIFC Courts has been canvassed extensively by the DIFC Courts in Meydan. A proper understanding of this framework is pivotal to our decision, so we set this out below. The starting point must necessarily be the UAE Constitution and, in particular, the amendment to Article 121 of the UAE Constitution which deals with the division of powers between Federal and Emirati authorities, and which allows the Federation to enact laws relating to the establishment and regulation of financial free zones. Article 121 of the UAE Constitution, as amended, provides as follows (in an agreed or official translation):

“Without prejudice to the provision of the previous article constitution, the Union shall have exclusive legislative jurisdiction in respect of… organization and method of establishing financial free zones and scope of excluding the same from the implementation of the Federal legislative provisions.”

84. In line with this, Federal Law 8 was enacted to allow financial free zones to be established in any Emirate of the UAE by Federal Decree. Article 3(2) expressly exempts free zones from the application of Federal civil and commercial laws, and states (in an agreed or official translation):

“Further, these zones and Financial Activities are subject to all provisions of Federal Law with the exception of the Federal civil and commercial laws.”

(emphasis added)

85. Article 7(3) of Federal Law 8 further provides (in an agreed or official translation):

“Subject to the provisions of Article 3, for the purpose of establishing a Financial Free Zone, the relevant Emirate may issue regulations necessary for it to perform its activity.”

86. Subsequently, Federal Decree No. 35 of 2004 (“Federal Decree 35”) was enacted specifically to establish the DIFC as a financial free zone in the Emirate of Dubai and demarcate the territorial boundaries of the DIFC within Dubai. Article 1 states (in an agreed or official translation):

“The establishment of financial free zone in the Emirate of Dubai to be named (Dubai International Financial Centre).”

87. Thereafter, the Judicial Authority Law, as amended by Dubai Law No. 16 of 2011, was enacted to establish the DIFC CFI and the DIFC Court of Appeal. It also defined the scope of this Court’s jurisdiction. The applicable article on jurisdiction, otherwise known as the “Gateways”, is Article 5(A), which provides (in an agreed or official translation):

“The Court of First Instance:

1. The Court of First Instance shall have exclusive jurisdiction to hear and determine:
   1. Civil or commercial claims and actions to which the DIFC or any DIFC Body, DIFC Establishment or Licensed DIFC Establishment is a party;
   2. Civil or commercial claims and actions arising out of or relating to a contract or promised contract, whether partly or wholly concluded, finalized or performed within DIFC or will be performed or is supposed to be performed within DIFC pursuant to express or implied terms stipulated in the contract;
   3. Civil or commercial claims and actions arising out of or relating to any incident or transaction which has been wholly or partly performed within DIFC and is related to DIFC activities;
   4. Appeals against decisions or procedures made by the DIFC Bodies where DIFC Laws and DIFC Regulations permit such appeals;
   5. Any claim or action over which the Courts have jurisdiction in accordance with DIFC Laws and DIFC Regulations.
2. The Court of First Instance may hear and determine any civil or commercial claims or actions where the parties agree in writing to file such claim or action with it whether before or after the dispute arises, provided that such agreement is made pursuant to specific, clear and express provisions.

• The Court of First Instance may hear and determine any civil or commercial claims or actions falling within its jurisdiction of the parties agree in writing to submit to the jurisdiction of another court over the claim or action but such court dismisses such claim or action for lack of jurisdiction.

1. Notwithstanding Clause (2) of Paragraph (A) of this Article, the Court of First Instance may not hear or determine any civil or commercial claim or action in respect of which a final judgment is rendered by another court.”

88. Thereafter, DIFC Law No. 10 of 2004 was enacted to provide for the independent administration of justice in the DIFC in accordance with the Judicial Authority Law. Among other items, the law sets out the jurisdiction of the DIFC Courts, including issues relating to the jurisdiction of the DIFC Courts and the practice and procedure that the DIFC Courts will apply. Article 19(1) regarding jurisdiction states (in an agreed or official translation):

“19. Jurisdiction

• The DIFC Court of First Instance has original jurisdiction pursuant to Article 5(A) of the Judicial Authority Law to hear any of the following:
  • civil or commercial cases and disputes involving the Centre or any of the Centre’s Bodies or any of the Centre’s Establishments;
  • civil or commercial cases and disputes arising from or related to a contract concluded or a transaction concluded by any of the Centre’s Establishments or the Centre’s Bodies;
  • civil or commercial cases and disputes arising from or related to a contract that has been executed or a transaction that has been concluded, in whole or in part, in the Centre or an incident that has occurred in the Centre; and
  • any application over which the DIFC Court has jurisdiction in accordance with DIFC Laws and Regulations;”

89. Notwithstanding this legislative framework, IGPL argues that the CPC provisions relating to jurisdiction concern a “a constitutional matter”, so they cannot be contracted out of and ought to be taken into account in determining the scope of the DIFC Courts’ jurisdiction under the Judicial Authority Law. IGPL contends that H.E. Justice Ali Al Madhani erred in law in ARB-001-2014, X1 and X2 v Y (“X1 and X2 v Y”) by holding:

“…by Federal law, the UAE has dis-applied the Civil and Commercial laws of the UAE within the DIFC and has conferred onto the Dubai authorities the power to enact legislation. There can be no conflict between DIFC Law and UAE Law with the CPC, which does not apply.”

90. IGPL submits that a distinction should be drawn between “allocation of jurisdiction between the various courts in the Emirates” on the one hand and “matters of ordinary civil procedure” on the other. It argues that the former is a constitutional matter that cannot be derogated from, and so the exemption of free-zones from Federal Civil and Commercial law should be construed narrowly to cover only the latter. In this regard, IGPL has referred us to Appeal 1 of Judicial Year 21 and Appeal No. 137 of Judicial Year 11 (21 January 1990) (“Appeal 137 of Judicial Year 11”). Further, IGPL also relies on H.E. Justice Ali Al Madhani’s judgment in Allianz at [61].
91. With respect, we do not think that any of the authorities which IGPL relies on supports the proposition it advances.
92. IGPL relies on the following passage in Appeal 1 of Judicial year 21, where it was held that (in an agreed or official translation):

“And whereas, the Emirate of Dubai has maintained its own judicial authority to its local courts. Therefore, this Court [the Court of Dubai] is the competent Court in respect of the cases falling within the territory of the Emirate where its judiciary is an independent jurisdiction from the Federal jurisdiction, and therefore, the distribution of jurisdiction between the Federal Court and the local Court of Dubai is a territorial/state jurisdiction [the Arabic word is “wala-ee”] involving public order and each Court, whether it belongs to the federal or to one of the local judicial authorities in Dubai should adhere to the limitation of its territorial jurisdiction, and may not negatively or positively violate it.

Therefore, it may not relinquish its jurisdiction, nor may it deprive another Court of jurisdiction; this is pursuant to the provisions of the Constitution and the laws issued in implementation of the Constitution, and it is forbidden to the individual to conclude an agreement which is in violation of these jurisdictional rules, and the Court at its own initiative may implement these rules being a matter of public order. ”

93. IGPL also refers to Appeal 137 of Judicial year 11, where the USC held as follows (in an agreed or official translation):

“Pursuant to Article 104 of the Constitution, the Emirate of Dubai has retained judicial authority over its local courts which are accordingly competent to hear cases within the territory of the Emirate of Dubai and their decisions would not be subject to any form of challenge before the Federal Courts. The allocation of competence on court cases between the federal courts and local courts in Dubai is an issue of functional state jurisdiction that defines the competence of the various judicial bodies of the UAE and as such is related to public policy.”

94. We understand the USC to be establishing in these two decisions an uncontroversial proposition, namely that where a UAE court is bound by the CPC, it must adhere to the jurisdictional allocation prescribed by the CPC and disputants cannot contract out of it. This proposition, we unreservedly accept. We also accept that the CPC provisions on jurisdiction concern a matter of public order. But these do not go far enough to support the wider proposition that IGPL now advances, namely that the financial free zones such as the DIFC Courts must take into account the limits imposed by the CPC when determining questions of jurisdiction. The fact that the CPC provisions on jurisdiction are driven by considerations of public order is insufficient; IGPL must also demonstrate that a failure to apply the CPC to free zones would offend public order. Having regard to the legislative history underpinning the establishment of UAE free zones set out above, such a conclusion is not sustainable. It is critical that the exemption of UAE free zones from the CPC is effected both at the constitutional level (Article 121 of the Constitution) and the federal level (Article 3(2) of Federal Law 8). Two conclusions flow from this. First, the UAE free zones’ exemption from the CPC (in its entirety) is consistent with and sanctioned by the UAE’s legislation. Second, far from subverting public goals pursued by the state, the exemption is an essential aspect of the state’s economic policy, as implemented by statute. Accordingly, even on the widest understanding of “public order”, it cannot be said that the DIFC’s exemption from the CPC is contrary to public order.

95. Neither do we think that H.E. Justice Ali Al Madhani had intended to articulate any principle to that effect in Allianz. This is apparent when H.E. Justice Ali Al Madhani’s judgment is examined as a whole. The passage which IGPL relies on is set out at [61] of Allianz and is reproduced below:

“ The DIFC Courts are a common law court. However, since they are subject to the Constitutional and Federal laws which are of a regulatory nature that does not set them apart from the rest of the UAE Courts. Therefore, the only way to apply the FNC doctrine is in circumstances in which the competent forum is outside the jurisdiction of the USC.”

(emphasis added)

96. IGPL submits that the “regulatory” Constitutional and Federal laws which the DIFC is subject to extends to cover “provisions as to jurisdiction”. This is a bare assertion which finds no support from H.E. Justice Ali Al Madhani’s judgment in Allianz. What IGPL ignores is that H.E. Justice Ali Al Madhani in Allianz determined the question of the DIFC’s jurisdiction by applying Article 5 of the Judicial Authority Law (Allianz at [36] to [41]). This clearly impugns IGPL’s suggestion that H.E. Justice Ali Al Madhani contemplated the CPC provisions on jurisdiction to be “regulatory” Federal laws which the DIFC could not derogate from. In our view, H.E. Justice Ali Al Madhani was acknowledging that, while free-zones were exempt from Federal civil and commercial laws, they were still subject to Federal laws in other respects, such as UAE Federal Penal and Criminal Laws, Family Law and Immigration Laws. He was doing no more than articulate what was already provided for in Article 3(2) of Federal Law 8.
97. Accordingly, IGPL’s submission that H.E. Justice Ali Al Madhani erred in law in X1 and X2 v Y is incorrect. His decision is consistent with Article 3(2) of Federal Law 8, which provides that civil and commercial laws of the UAE shall not apply to the free zones. Additionally, pursuant to Article 7(3) of Federal Law 8, power was transferred by the Federal Government to the individual Emirates to issue the necessary legislation for the conduct of a free zone’s activities, within the limits of the goals of establishing the free zone. Accordingly, the Emirate of Dubai was expressly empowered to pass legislation for the conduct of the DIFC in a manner which allowed the DIFC to derogate from UAE civil and commercial laws, which includes the CPC.

98. Consequently, the argument put forth by IGPL that the conferral of jurisdiction on the DIFC Courts by Article 5(A)(1) of the Judicial Authority Law conflicts with the CPC, is misconceived and the argument that the CPC is somehow applicable to the DIFC Courts’ jurisdiction is plainly inconsistent with the express disapplication of UAE civil and commercial laws to free zones as set out in Article 3(2) of Federal Law 8. IGPL’s assertion that the CPC provisions on jurisdiction cannot be derogated from because it concerns a “constitutional matter” is a bare assertion that does not withstand scrutiny. We emphasize that the establishment of free zones and their exemption from the application of Federal Laws are constitutionally sanctioned by Article 121 of the UAE Constitution.
99. We therefore endorse H.E. Justice Ali Al Madhani’s decision in X1 and X2 v Y that the CPC does not apply to the DIFC, and that the DIFC Courts’ jurisdiction is determined solely by the Judicial Authority Law Having so decided, we do not think it is necessary for us to resolve the parties’ dispute over which provisions of the CPC establish each Emirate’s jurisdictional limits.

C. Whether this Court has jurisdiction under the Judicial Authority Law

100. The relevant provision of the Judicial Authority Law which provides for non-consensual bases of the DIFC Courts’ jurisdiction is Article 5A(1):

“(1) The Court of First Instance shall have exclusive jurisdiction to hear and determine:

(a) Civil or commercial claims and actions to which the DIFC or any DIFC Body, DIFC  Establishment or Licensed DIFC Establishment is a party;

(b) Civil or commercial claims and actions arising out of or relating to a contract or promised  contract, whether partly or wholly concluded, finalised or performed within DIFC or will  be performed or is supposed to be performed within DIFC pursuant to express or implied  terms stipulated in the contract;

(c) Civil or commercial claims and actions arising out of or relating to any incident or  transaction which has been wholly or partly performed within DIFC and is related to  DIFC activities;

(d) Appeals against decisions or procedures made by the DIFC Bodies where DIFC Laws and DIFC Regulations permit such appeals;”

(e) Any claim or action over which the Courts have jurisdiction in accordance with DIFC  Laws and DIFC Regulations.”

101. SCB argues that the DIFC Courts have jurisdiction under Article 5A(1)(a) of the Judicial Authority Law, because SCB is a Licensed DIFC Establishment. In this regard, SCB relies on the wide interpretation of “Licensed DIFC Establishment” adopted in Corinth, where this Court held at [59] that the term must refer to the whole legal entity and not merely the branch registered in the DIFC:

“Centre Establishment” must be a legal entity because that is the only way in which the term “entity” used in Article 2 of Law No. 12 can be understood. Where a bank is licensed to carry on business in a place outside its country of incorporation, it is necessary for that bank to carry on business either through an unincorporated branch of the bank or through a separate legal entity which is a subsidiary of the bank. Bank regulators frequently, if not typically, require foreign banks to carry on mainstream banking business through a branch rather than a local subsidiary. However, it would be uncommon for an unincorporated branch of a foreign bank to be treated under local law as a legal entity separate and distinct from its head office unless it has been separately incorporated as a subsidiary. I cannot therefore accept the proposition advanced by the Deputy Chief Justice that a “Centre Establishment” can be an entity which may be (to use the learned Judge’s words) “within the corporation”. A branch is no different in law from a division, and a division of a corporation is part of that corporation, and has no legal entity of its own (although it may be treated as an accounting entity for certain purposes).”

(emphasis added)

102. It was further held in Corinth at [83] and [84] that, beyond the criterion set out above, there is no further transaction-based requirement, such as a requirement that the dispute must concern the activities or conduct of a disputant’s DIFC branch:

“(83) Adopting that approach in the present case, the determinative question becomes “whether access to the jurisdiction of the Court of First Instance through the gateway provided by paragraph (a) of Article 5(A)(1) of the Original Law is restricted … to cases where the civil or commercial claim is connected with (or perhaps, arose out of) the provision or conduct by the entity or enterprise identified as the relevant “Licensed DIFC Establishment” of financial services or other activities in accordance with the DIFC Laws which the entity or enterprise was licensed, registered or authorised by the Dubai Financial Services Authority (“the DFSA”) to provide or conduct?”

(84) In my view the answer to that question is “No”…Once it is shown that the party by or against whom the civil or commercial claim is brought is an entity or enterprise licensed, registered or authorized by the DFSA to provide financial services or to conduct any other activities in accordance with the DIFC Laws, the requirement under paragraph (a) is met. The jurisdiction exists ad hominem: there is no further “transaction-based” requirement comparable to those imposed under paragraphs (b) and (c) of Article 5(A)(1).”

103. Applying the approach adopted in Corinth, SCB would be correct in submitting that the DIFC Courts have jurisdiction pursuant to Article 5A(1)(a) of the Judicial Authority Law. SCB is a Licensed DIFC Establishment since it operates in the DIFC through a licensed branch. The fact that the transaction giving rise to the present dispute involves a non-DIFC branch of SCB does not deprive SCB of its status as a Licensed DIFC Establishment. Accordingly, the present dispute is one to which a Licensed DIFC Establishment is a party.
104. IGPL’s case is that this court’s decision in Corinth was wrongly decided (in particular the holdings set out above), and that the phrase “Licensed DIFC Establishment” should be confined only to the particular branch registered in the DIFC, and not the whole legal entity. To this end, IGPL has advanced various arguments which we think may be understood in three categories, each of which we shall address in turn.
105. First, and in addition to submitting that the UAE Constitution and the CPC precludes the DIFC Courts from having jurisdiction in this case, IGFL argued that the Article 5(A)(1)(a) gateway should be held to be inapplicable and the decision in Corinth overruled on the ground that otherwise the Court would be assuming an “exorbitant jurisdiction”.
106. As Lord Sumption observed in Abela & Ors v Baardarani [2013] UKSC44 at [53], the use of the expression “exorbitant jurisdiction” in English decisions reflects a concern that service on a party in a foreign state as a means of establishing jurisdiction would involve a breach of that foreign state’s sovereignty. In the light of this concern, the English courts adopted: (i) a cautious approach in deciding whether a party served abroad was within the court’s jurisdiction; and (ii) applied a rule of construction which gave a foreign party the benefit of any doubt there might be whether the postulated jurisdictional gateway applied to his case.
107. “Exorbitant jurisdiction” has more than one meaning. It can denote a situation where jurisdiction is assumed even though the connecting factors linking the forum to the dispute are few and unconvincing. It can also denote a jurisdiction which, under the applicable general conflict rules the forum would not recognize as possessed by a foreign court in the absence of some treaty providing for such recognition (see Lord Diplock in Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50 at p.65).
108. We understand IGFL intends to use the expression ‘exorbitant jurisdiction” in both of these senses in advancing its submission that Corinth should be overruled on the ground that Article 5(A)(1)(a) should be construed so as not to confer jurisdiction in this case, else the DIFC would be assuming an “exorbitant jurisdiction”. This submission we reject.
109. In Corinth, this Court took considerable pains to construe Article 5(A)(1)(a) in the light of a strongly advanced exorbitant jurisdiction submission and concluded nonetheless that jurisdiction was established if one of the parties, as here, was a Licensed DIFC Establishment. References in the judgments in that case to the role that FNC might play in conjunction with the Article 5(A)(1) (a) gateway contemplated an available forum in a state outside the UAE. In our judgment, the decision was correct and should be upheld. In Corinth at [67], it was held that there would not be “an exercise of exorbitant jurisdiction by the DIFC Courts over banks outside the DIFC because that universal jurisdiction over foreign banks with an unincorporated branch in the DIFC would be subject to the doctrine of forum non conveniens.” We think the point made is a broad one, viz so long as some mechanism exists to curtail the inappropriate exercise of jurisdiction, the DIFC Courts could not exercise exorbitant jurisdiction in the manner complained of by IGPL. Accordingly, the fact that there may be particular cases where the doctrine of FNC is inapplicable is not by itself a justification for departing from the definition of “Licensed DIFC Establishment” adopted in Corinth, if an alternative mechanism exists to perform a similar function as the FNC doctrine. As we shall explain below at [159] to [197], such cases arise when the alternative forum are all courts of the UAE, in which case the UAE Constitution provides a different solution (in place of the FNC doctrine) by empowering the USC to resolve jurisdictional conflicts between the competing courts.
110. Second, IGPL argues that the concept of a “branch” has special significance under UAE law would only be recognized if its narrow interpretation were adopted. IGPL correctly accepts that (and as we have held above) the DIFC Courts are “not bound to the Federal laws and the legal concepts as prevailing in the UAE legal system”. Nevertheless, IGPL has pressed this Court to take into account the concept of a “branch” under UAE law when interpreting “Licensed DIFC Establishment”, because the concept will be applied by the USC should it be called upon to resolve any jurisdictional conflict between the DIFC Courts and any other court of the UAE.
111. As a matter of UAE procedural law, IGPL submits that the concept of a “branch” is afforded significant weight when determining (i) the applicable law to the dispute (ii) whether a foreign company is subject to UAE regulations and laws and (iii) which Court should have jurisdiction over a particular dispute. To this end, IGPL has referred us to Article 11.2 of the UAE Civil Code, Article 314 of the UAE Commercial Companies Law and Article 33 of the CPC. IGPL has also referred us to a decision of the Dubai Court of Cassation in Petition No. 36 of 2007 (“Petition No. 36”) where it was held that, applying UAE procedural law (namely Articles 31 and 33 of the CPC), a claim may only be brought against a defendant company in the jurisdiction where the particular branch of the defendant company which was involved in the dispute was located.
112. These authorities, which are the only authorities which IGPL has relied on, establish that UAE law attaches some significance to the location of a foreign company’s “branch”. But they do not support IGPL’s principal contention that, if a jurisdictional conflict arose between a CPC-exempt free zone such as the DIFC on the one hand and a UAE Court applying the CPC on the other, the USC would resolve the conflict by disregarding the free zone’s right to derogate from the CPC, and compel it to recognize the concept of a “branch” under UAE law for the purposes of jurisdiction. IGPL has provided no authority for such a proposition, and we are satisfied that no such authorities exist because IGPL’s argument would subvert an economic goal expressly sanctioned by Article 121 of the UAE Constitution.
113. Article 121 of the UAE Constitution envisions that UAE free zones may derogate from UAE federal laws. In our judgment, this feature is the defining quality of a free zone, because such derogations are conducive to and attract foreign investments. Giving effect to the free zones’ exemption from UAE federal laws, as provided for by Federal Law 8, is vital to achieving the economic object of free zones. However, IGPL is now inviting this Court to do the opposite. Taken to its logical conclusion, IGPL’s argument would mean that, notwithstanding the UAE free zones’ ostensible exemption from UAE federal laws by operation of Article 121 of the UAE Constitution and Federal Law 8, the DIFC (and indeed any other free zone) would nevertheless be bound indirectly by UAE federal laws because the USC would adhere to UAE law when a jurisdictional conflict arises between a free zone and another Court of the UAE. The absurdity of this result makes plain that IGPL’s second argument cannot be accepted.
114. IGPL’s third argument is that the wide interpretation of “Licensed DIFC Establishment” adopted in Corinth is wrong because it invests in the DIFC Courts a jurisdictional reach that is wider than the scope of the DIFC’s regulations. IGPL argues that this result is erroneous for several reasons, all of which we reject.

115. IGPL’s first relies on Articles 9 and 10 of Dubai Law No. 9 of 2004 (“Dubai Law No. 9”) which provide as follows:

“Article 9

“Licensed Centre Establishments may carry on financial and banking businesses, including Islamic financing and businesses, and other activities, as permitted by their licenses or registration, including the following:

…

Article 10:

“Centre Establishments shall carry out their activities in accordance with the Centre’s Laws, Centre’s Regulations and the licenses issued to them. Centre Establishments may be located in the Emirate outside the Centre for a period not exceeding four years from the date of the establishment of the Centre and in accordance with the conditions and restrictions determined by the Centre Authority and, in the case of Licensed Centre Establishments ”

(emphasis added)

116. IGPL contends that the term “Licensed DIFC Establishment” must be interpreted consistently with other similar references such as “Centre Establishments” in Dubai Law No. 9. It submits that the term “Centre Establishments” in Dubai Law No. 9 can only refer to the particular branch in the DIFC and not the entire legal entity. In IGPL’s words:

“… it can only be the Branch of SCB in the DIFC which is caught by the definition because it is that Branch, not SCB elsewhere (or as a whole) that has been licensed/registered or otherwise authorised to carry on financial and banking business in the DIFC, or is carrying on business in the Centre. It would be nonsensical to regard SCB’s branch in (for example) Almaty, Kazakhstan (assuming it has one) as being either a Licensed Centre Establishment or a Centre Establishment, and an equal nonsense to regard any other SCB branch in any other jurisdiction as such, too; not least, because the co-relative of being licensed, registered or otherwise authorised is being regulated by the authority that has conferred the licence, registration or other authorisation. On that footing, every SCB branch globally would be subject to regulation by the DIFC competent authorities, and the DIFC’s expressed intention (see, ¶[52], below) to work with the “home regulator” of foreign recognised companies in the DIFC would be meaningless.”

(emphasis added)

117. It is plain from the highlighted section of the extract above that IGPL’s argument is circular and must therefore be rejected. In our view, interpreting “Centre Establishments” to mean the whole legal entity of a company operating in the DIFC does no violence to the language of Articles 9 and 10 of Dubai Law No. 9. Neither would it mean, contrary to what IGPL contends, that the activity of SCB’s (or any other Licensed DIFC Establishment’s) non-DIFC branches would be curtailed by DIFC regulations, since the DIFC’s regulations only apply to activities taking place in or having an effect on the DIFC. For example, Markets Law DIFC Law No. 1 of 2012 expressly provides that its provisions apply only in “the jurisdiction of the Dubai International Financial Centre”, and the general prohibition imposed by Article 11 against the making of security offers is confined to those made “to the Public in or from the DIFC”. Once it is appreciated that the DIFC’s regulations are not extra-territorial in their scope, it becomes clear that the scenario posited by IGPL can only be described as fanciful.
118. IGPL also argues that its narrow interpretation is justified because there must be unity between the territorial scope of the DIFC’s regulations and the DIFC Courts’ jurisdictional reach. IGPL put this argument in the following terms:

“92. In short, once a Branch has been established, licensing/regulation and the carrying on of  business activity are co-relatives. Business can only be carried on pursuant to the  relevant licence, which engages the relevant regulatory (and, jurisdictional) regime. SCB possessed licences to carry on business both in Dubai and the DIFC. The critical question must then become: pursuant to which licence was the business in question carried out? The business relevant to the present dispute was carried out in Sharjah and/or Dubai, but not in the DIFC. Hence, the applicable licensing, regulatory and, jurisdictional, regime cannot be the DIFC.

…

105. Thus, in order to carry on business activities in the DIFC law area, SCB needed separate and distinct licences from those that it needed to carry on business activities in the Dubai law area. The Commercial License issued by the Dubai Government  Department of Economic Development did not cover SCB to carry on business activity in, or through, the DIFC, and SCB needed additionally to obtain a separate annual DIFC  Commercial License (see, I3, at p.[146]).
106. Thus, the separate “law areas” of Dubai on the one hand, and of the DIFC on the other, are strictly maintained and observed. Clearly, the regulatory regime and jurisdictional reach of the DIFC law area can apply only to business activities carried on in the DIFC.”

(emphasis added)

119. Where IGPL’s argument has taken a leap of logic is in conflating the DIFC’s substantive regulatory laws and the DIFC’s procedural In our view, and contrary to IGPL’s suggestion, there is no necessary connection between the two. A jurisdiction may enact extra-territorial statutes prohibiting certain conduct taking place abroad, even though its courts’ jurisdiction over an entity falling afoul of those prohibitions turns narrowly on proper and effective service on that entity. Equally, a jurisdiction may enact regulations which cover only activities taking place within its territory, but prescribe jurisdictional rules which permit its courts to hear disputes concerning conduct taking place abroad. No absurdity arises in either scenario. It seems elementary to us that substantive rules and procedural rules operate on different planes, so there is no merit to IGPL’s unsubstantiated suggestion that there must be unity between them as regards territorial scope.
120. IGPL further argues that the wide interpretation adopted in Corinth is illogical. IGPL points out that a foreign company may choose to operate in the DIFC in two ways. It could either incorporate a subsidiary in the DIFC or register a branch in the DIFC. In the former arrangement, the DIFC Courts would not have jurisdiction over a foreign (parent) company if the dispute only involved the DIFC-incorporated subsidiary, as IGPL correctly submits. IGPL then argues that “[i]t is quite illogical to contend that a less formal, branch-as-opposed-to-subsidiary, presence should invest the DIFC Courts with a broader, and exorbitant, jurisdiction.” Leaving aside the issue of exorbitant jurisdiction, which we have already addressed above, it is not self-evident to us where the illogicality perceived by IGPL lies.
121. In our view, IGPL’s confusion arises from the inappropriate manner in which it has framed the issue. It is not whether the DIFC Courts’ jurisdiction is expanded by the mere fact that a company operates in the DIFC through a branch. Rather, it is whether it is appropriate for an entity to circumscribe its obligations (including the extent to which it is bound by a court’s jurisdiction) and liability by operating through a subsidiary. In Adams v Cape Industries Plc [1990] Ch 433, CA, Slade LJ remarked at p.544 that “the right to use a corporate structure in this manner is inherent in our corporate law”. We agree, and see no merit in IGPL’s complaint against a trite principle of corporate law.
122. Accordingly, we are not persuaded by any of IGPL’s arguments that Corinth was wrongly decided. Applying the interpretation of “Licensed DIFC Establishment” in Corinth, we hold that SCB meets that definition, and that the DIFC Courts therefore have jurisdiction over the present dispute under Article 5A(1) of the Judicial Authority Law.

D. Whether the parties have opted out of the DIFC Courts’ jurisdiction

123. IGPL argues that, should this Court finds Article 5A(1) of the Judicial Authority Law is satisfied, the DIFC Courts would not have jurisdiction because the parties have opted-out of the DIFC Courts’ jurisdiction. As we have held above, IGPL cannot withdraw the Choice of Court Concession and is therefore bound by its earlier concession that the parties did not opt-out of the DIFC Courts’ jurisdiction by excluding the DIFC Courts from the Agreements’ and Share Pledge Agreement’s choice of court provisions. On this basis alone, IGPL’s second argument must fail.
124. In any event, we share Justice Sir David Steel’s view that the Choice of Court Concession was well-founded for the following reasons.
125. It was held in Taaleem that: (i) the burden of establishing that the parties had agreed that the DIFC Courts should not have jurisdiction was on the party so contending; and (ii) the test to be applied was the ordinary and natural meaning of the words of the jurisdiction agreement as they would have been mutually understood by the parties having regard to the background circumstances and the nature of the agreement and the context in which the words are used. The same principle was expressed in Dhir v Waterfront Property Investment Limited CFI 011/2009 (“Dhir”) in relation to construing the meaning of expressions used in arbitration agreements. In Dhir, it was stated at [81] that the question was one of:

“…contractual interpretation to determine what the Parties (objectively) intended by the arbitration agreement they entered into.”

126. Applying the broad approach set out in Taaleem and Dhir, we do not accept IGPL’s submission that (1) the phrase “Dubai Courts” in the Share Pledge Agreement refers only to the non-DIFC Dubai Courts, (2) the phrase “Courts of the UAE” refers only to the UAE Federal Judicial Authority, or (3) that, on a proper construction, the choice of court clauses in the Agreements and Share Pledge Agreement did not give SCB an option to commence proceedings in the DIFC Courts. We now address each argument in turn.
127. The proposition put forward by IGPL, that the meaning of the phrase “Dubai Courts” encompasses only the non-DIFC Dubai Courts (established under Law No. (3) of 1992 and its amendments), does not comport with the reality of the relationship between the DIFC Courts and the non-DIFC Dubai Courts.
128. The DIFC Courts, established under the Judicial Authority Law, is an independent judicial authority in the Emirate of Dubai. However, it is nevertheless an integral part of the Emirate’s judicial system, a fact that was recognized by the DIFC Courts in Taaleem PJSC v National Bonds Corporation PJSC & Deyaar Development PJSC CFI 014/2010 at [6] to [10]. The judgments issued by the DIFC Courts are in the name of His Highness, the Ruler of Dubai. Within the Emirate of Dubai, these judgments are directly enforceable by the competent authority within Dubai Courts as if they were, for enforcement purposes, judgments of the non-DIFC Dubai Courts.
129. IGPL referred us to the decision in Hardt where Justice Sir John Chadwick (as he then was) held that the phrase “Courts of Dubai” in a choice of court clause referred only to the non-DIFC Courts. IGPL argues that factors considered in Hardt are of general applicability and, when applied to the present facts, would demonstrate why the parties could not have intended to choose the DIFC Courts. We fully endorse Justice Sir John Chadwick’s decision, but it is important to appreciate the special facts in Hardt underpinning it, special facts which are not present in this dispute.
130. In Taleem, the DIFC Court of Appeal had occasion to consider whether Hardt was correct in interpreting the phrase “Courts of Dubai” to mean only the non-DIFC Dubai Courts. Deputy Chief Justice Colman (as he then was) held that Hardt was explainable on the basis that the parties had not put forward any arguments that the phrase ought to be construed in so wide a manner as to cover the DIFC Courts. Further, the claimant’s pleaded case in Hardt would not, in any event, have conferred jurisdiction on the DIFC Courts under the Judicial Authority Law as it stood when Hardt was decided. Having regard to these two special circumstances in Hardt, Justice Colman held that Hardt should be confined to its facts

“It is right to emphasise that references in Hardt to the words in question, in their natural meaning, referring to the non-DIFC Courts of Dubai are to that meaning within the range of possible natural meanings which in the particular circumstances of that case the words must be taken to have. But those particular circumstances are not present in this case. This Court, therefore, has to arrive at that particular meaning of those words within the range of their natural and ordinary meaning which, having regard to all the material circumstances in this case, most closely reflects the mutual intention of the parties.”

131. In our view, the present case is factually distinct from Hardt. Here, SCB does contend that the phrase “Courts of Dubai” or “Dubai Courts” should be construed widely to include the DIFC Courts. Further, the DIFC Courts would have competent jurisdiction to hear any dispute between the parties, a possibility that would have been obvious to the parties at the outset of their relationship since SCB is a DIFC Licensed Entity within the meaning of Article 5A(1)(a) of the Judicial Authority Law.
132. IGPL has also referred us to Dhir, where the DIFC Courts held that the phrase “Emirate of Dubai”, an indication of the arbitral seat in an arbitration agreement, was intended by the parties in Dhir to mean only the non-DIFC Dubai Courts. The reasons which supported this conclusion are set out at [85] – [87] of the judgment in Dhir:

“85. There is a close connection with Dubai in the present case (the property is in Dubai, the governing law is Dubai law and the agreement is expressed to be executed in Dubai). In contrast, there is no significant connection with the DIFC because the DIFC-LCIA Arbitration Centre can administer an arbitration with a seat outside of the DIFC. (see Paragraphs 89 to 91 below) i therefore find that the Parties intended Dubai to be the seat.

86. Additionally, the remainder of the MOA refers to Dubai in several places but makes specific reference to the DIFC in only one place, namely within Clause 10.2 of the MOA in selecting “the DIFC-LCIA rules of arbitration applicable to the Dubai International Financial Centre”. It is therefore difficult to accept the) Applicant’s argument that “Dubai” in Clause 10.3 of the MOA was intended by the Parties to mean the DIFC.
87. Furthermore, if the Parties had wanted to stipulate the seat as the DIFC, they could have said so expressly. The Parties are not strangers to the various autonomous zones within the Emirates. Mr Dhir was involved in the negotiations for the land transaction in the related case of CFI 012/2009, and one of the Applicants (Renaissance) in that case is incorporated in the Sharjah Airport International Free Zone. Linarus FZE (Respondent in both cases) is a Jebel Aii Free Zone Company. It would be surprising if the Parties did not know that different laws applied in the DlFC or that they were content to describe the DlFC as simply “the Emirate of Dubai”. The DIFC is within the Emirate of Dubai but the two terms are clearly not synonymous or interchangeable.”

(emphasis added)

133. IGPL argues that Dhir is analogous to the present case and supports its narrow interpretation of the phrase “Dubai Courts”. In its submission, the phrase “Dubai Courts” under the Share Pledge Agreement must have been intended by the parties to mean the non-DIFC Dubai Courts because (i) there is no connection with the DIFC (ii) the parties could not have intended to refer to the DIFC without doing so expressly and (iii) SCB was a sophisticated party which was fully aware of jurisdictional differences and could easily have provided for DIFC jurisdiction had it so desired.
134. In our view, and without detracting from our endorsement of the general approach to contractual construction set out in Dhir, IGPL’s reliance on Dhir should be rejected because it fails to take into account the markedly different context in the present case.
135. In Dhir, the CFI Court was seeking to ascertain the meaning which the parties in Dhir intended the phrase “Emirate of Dubai” to have. It was not disputed that the phrase was intended to designate an arbitral seat. In that context, it was plain that the parties could not have intended the phrase to encompass both non-DIFC Dubai and the DIFC. Non-DIFC Dubai and the DIFC have each adopted different arbitration legislation, and each functions as a mutually-exclusive and independent arbitral seat. Accordingly, it seems to us that the question before the DIFC Courts in Dhir was which of the two alternative seats the parties in Dhir intended to choose by the phrase “Emirate of Dubai”; a choice of either seat is necessarily an implied rejection of the other. It was for these reasons that the DIFC Courts in Dhir drew a sharp distinction between the “DIFC” and the “Emirate of Dubai” (as highlighted in the passage from Dhir set out above) and accorded significant weight to the fact that the dispute bore substantial connection to non-DIFC Dubai but not to the DIFC, in finding that the parties in Dhir had intended the phrase “Emirate of Dubai” to refer only to non-DIFC Dubai.
136. We think that the analysis in Dhir is inapposite because the question before us is a very different one. It falls on us to decide what the parties intended the phrase “Dubai Courts” in a jurisdiction agreement to encompass. With jurisdiction agreements, and in contrast with choosing arbitral seats, parties are free to (and often do) confer jurisdiction on more than one forum. In the present case, the parties could have intended the phrase “Dubai Courts” to mean (i) only the non-DIFC Dubai Courts (as IGPL contends), (ii) only the DIFC Courts, or (iii) both (as SCB contends). IGPL now seeks to persuade us that the parties have chosen to confer jurisdiction on only one forum, the non-DIFC Dubai Courts. The question before us is therefore this: was there any reason why the parties would wish to deprive themselves of the benefit of one of two closely-related and complementary forums in Dubai? In our view, Dhir provides no answer to the question since it was unarguable there that the Parties could not have intended the phrase “Emirate of Dubai” to designate both non-DIFC Dubai and the DIFC as the arbitral seats. Here, where the meaning of “Dubai Courts” in a jurisdiction agreement is concerned, the choice of the non-DIFC Dubai Courts and the DIFC Courts are not mutually exclusive, so the existence or even preponderance of connecting factors pointing towards the former does not evidence an intention by the parties to exclude the latter. We therefore find that the analysis in Dhir is inapplicable to the present facts.
137. Neither are we moved to a different conclusion because the parties’ transaction bore no connection to the DIFC. The jurisdiction of the DIFC Courts covers disputes in which any of the DIFC’s entities, bodies or licensed establishments is a party, as was held in Corinth. It also extends to civil and commercial claims commenced in the DIFC Courts pursuant to a written agreement between the disputing parties, whether before or after the dispute arises, provided that such agreement is founded on specific, clear and express contractual provisions. In these situations, the DIFC Courts are not deprived of jurisdiction even if the claims and underlying facts do not have any connection the DIFC or do not originate from a contract that has been carried out in whole or in part in the DIFC. Bearing in mind that IGPL transacted with SCB with full knowledge that it was a Licensed Entity, we take the view that the parties must surely have contemplated the possibility that the DIFC Courts could assume jurisdiction over any action commenced against either party. In the circumstances, the onus must be on the parties to specifically exclude the DIFC Courts’ jurisdiction, if they so intended, by employing express language to that effect. They did not do so.
138. For the reasons set out at [125] to [137] above, we find that the ordinary meaning of the phrase “Dubai Courts” must include all the courts and judicial committees formed within the territory of Dubai and established by the Emirate’s legislation, regardless of whether these courts exercise separate jurisdictions.
139. We also do not accept IGPL’s argument that the phrase “Courts of the UAE” was intended to refer specifically to the UAE Federal Judicial Authority.
140. An essential plank to the argument is IGPL’s contention that the DIFC Courts is a “court of the UAE” for constitutional purposes, but is not necessarily a “court of the UAE” for jurisdictional purposes.
141. IGPL contends that a court is only a “court of the UAE” when exercising jurisdiction under the Federal Judicial Authority. On the basis that the DIFC Courts was created by Dubai law rather than UAE federal law, IGPL contends that it is not a “court of the UAE” and goes even further to contend that the DIFC Courts is not even a “court of Dubai” in jurisdictional terms because it exercises a specifically devolved jurisdiction. IGPL further claims that, “UAE Law only enacted enabling legislation, which was necessary but not sufficient to create the DIFC.” IGPL has offered no authority in support of this assertion. It relies only on the principle the DIFC Courts’ decision in ARB-002-2013, where it was stated at [34] – [37] that the jurisdictions of the Dubai Courts and the DIFC Courts are mutually exclusive and also complementary, a point which does not carry IGPL’s case any further.
142. The foundation of IGPL’s argument is fundamentally flawed. Notwithstanding (i) the analysis in the preceding paragraphs and (ii) the conclusion reached in Hardt that the DIFC Courts is an integral part of the Dubai legal system and is considered a “court of Dubai”, Article 1 of UAE Federal Decree 35, provided for the establishment of the DIFC within Dubai and directed the competent authorities to implement the Decree in Article 2. It did not simply enable legislation; it created the framework by which the competent authorities were allowed to execute the Decree. The fact that Dubai Laws were enacted to work in tandem with Federal Decree 35 does not negate the fact that the DIFC was a creation of Federal Law. As such, it cannot be maintained, as IGPL contends, that the DIFC Courts are “a creature of Dubai Law, not UAE Law” and thus not a “court of the UAE.” Neither do we see any force in IGPL’s submission that the Dubai Courts are not courts of the UAE because they “apply Dubai Law, not UAE Law”. The Dubai Courts, and indeed the DIFC Courts, are free to apply UAE law if, upon the proper application of the rules of private international law, that is the governing law of the dispute.
143. As a practical matter, it is more conceivable that the meaning of “courts of the UAE” under the Agreements was intended to cover all courts located within the territory of the UAE. This includes all courts within Dubai, which in turn includes the DIFC Courts.
144. The USC, as the highest judicial court in the UAE, has the authority to resolve any conflicts in jurisdiction between Sharjah, Dubai or the DIFC Courts. Surely, the USC has the jurisdiction to hear any jurisdictional or constitutional issues in all of the Emirates, including the DIFC. The establishment of the USC is laid out in Federal Law No 10. of 1973 as amended by Law No. 26 of 1992 and the DIFC is certainly not exempted from the jurisdiction of the USC. As H.E. Justice Ali Al Madhani held in ARB-001-2014, X1 and X2 v Y at [44]:

“I also agree with the Defendant’s submission that the DIFC regime is not exempted from the jurisdiction of the USC when it comes to the Constitutionality Examination, including the fact that the DIFC Court is a UAE Court that can refer a matter to the USC if requested to do so, and then must comply with the decision of the USC rendered in that connection.”

For all intents and purposes, and contrary to IGPL’s assertion, the DIFC Courts are “court[s] of the UAE” for both constitutional and jurisdictional purposes.

145. Finally, and in any event, we also find that the choice of court clauses in the Agreements, properly construed, afford SCB the right to elect to sue in any court of its choice. For convenience, the relevant provisions under the Agreements are reproduced below.
146. The Offer Letter provided that “subject to the terms of this Offer Letter and the Loan Facility General Terms referred to below, we agree to make available to you the Facility described in the schedule hereto” and went on to specify when “[t]his Offer Letter and the General Terms (together referred to as the “Facility Agreement”) would take effect.

147. The Loan Facility General Terms provide:

“(i) by Clause 24.6 (b) that if there were an inconsistency between a Finance Document (other than the Offer Letter) and those of these General Terms, these General Terms shall take precedence

(ii) by Clause 26 that the Facility Agreement was governed by “the laws of the United Arab Emirates”;

(iii) by Clause 27.1(a) that, unless a Finance Document provided otherwise, IPLG submitted to the exclusive jurisdiction of the courts of the United Arab Emirates to settle any relevant any dispute arising out of or in connection with any Finance Document (including a dispute regarding the existence, validity or termination of any Finance Document) (a “Dispute”);

(iv) by Clause 27.1(b), that SCB should not be prevented from taking proceedings relating to a Dispute in the courts of any other jurisdiction where any asset of an Obligor might be located;

(v) by Schedule 1 that: (a) “Finance Document” meant, “this Facility Agreement, any Security Document, any documents identified as such in the Offer Letter and any other document designated as such by the Bank and the Principal Borrower from time to time; (b) “Facility Agreement meant, collectively, the Offer Letter, these General Terms and, if applicable, the General Terms for Financial Covenants.”

148. The SCB General Terms and Conditions provide in Clause 11 that :

“SCB and IGPL agreed “to submit to the jurisdiction of the courts of the U.A.E.” and that “SCB may, at its option, elect to commence proceedings in the courts of other jurisdictions” and IGPL agreed, “in such case, to submit to the jurisdiction of such courts”.

149. The 2010 Agreement consists of a Facility Agreement between IGPL and SCB which provide, inter alia:

“(i) by Clause 1.1 that: (1) “Finance Documents” means: (a) “this Agreement”; (2) “Finance Party” means “ … a Lender”; (3) “Lender” means (a) “any Original Lender…’

(ii) by Clause 36.1 that the agreement and all non-contractual obligations arising out of or in connection therewith shall be governed by and construed in accordance with the laws of England.

(iii) by Clause 36.2 (a) that the Parties agree that the courts of England shall have jurisdiction to settle any disputes or proceedings which may arise in connection with any Finance Document (“Proceedings”) and that  Clause 36.2 (a) is for the benefit of the Finance Party only and shall not limit the right of any Finance Party to bring Proceedings against the Borrower in connection with any Finance Document in any other court of competent jurisdiction or concurrently in more than one jurisdiction.

(iv) by Clause 36.2 (b) that IGPL waives any objections which it may have to the English courts on the grounds of venue or forum non convenient or any similar grounds as regards any Proceedings.”

150. The Share Pledge Agreement provides, inter alia, by Clause 23, that:

“the Share Pledge Agreement was “governed by the laws of the Emirate of [Dubai/Abu Dhabi] and the applicable federal laws of the UAE and the Pledgor [IGPL] irrevocably submits to the non-exclusive jurisdiction of the Dubai courts”

151. Although the Offer Letter referred to the “Facility described in the schedule hereto”, there was no schedule as such. Instead, the Facility was described in the Banking Arrangements Letter which incorporated the SCB General Terms and Conditions, including Clause 11. The Banking Arrangements Letter is therefore to be read as the “schedule” to the Offer Letter and, as such, it is part of the Offer Letter and is a “Finance Document”. This means that, having regard to the carve-outs in Clause 24.6 (b) of the Loan Facility General Terms (“other than the Offer Letter”) and Clause 27.1 (a) (“unless a Finance Document provides as otherwise”), Clause 11 of the SCB General Terms and Conditions is not subservient to but has precedence over Clause 27.1 of the Loan Facility General Terms.
152. Thus, even if, as IGPL submits but SCB denies, the DIFC Courts are not courts of the UAE for the purposes of the 2009 Agreement, by virtue of Clause 11 of SCB General Terms and Conditions, SCB is nonetheless entitled to commence proceedings in the courts of other jurisdictions, including the DIFC Courts, for any claim arising out of or in connection with the 2009 Agreement, and the DIFC Courts would have jurisdiction under Article 5(A)(1)(a) of the Judicial Authority Law on the ground of SCB’s status as a DIFC Establishment (see Corinth [100] to [122] above) and, under Article 8(2)(b) of DIFC Law No. 3 of 2004, the DIFC Courts would be empowered to give effect to the parties’ choice of governing law. It follows that it can be safely concluded that the parties have not agreed under the 2009 Agreement that the DIFC Courts should not have jurisdiction over SCB’s claim herein.
153. In the light of the second sentence of Clause 36.2 of the 2010 Agreement, it is also evident that the parties did not agree under the 2010 Agreement that the DIFC Courts should not have jurisdiction over SCB’s present claim. This is because: (i) SCB is plainly a “Finance Party”; (ii) the 2010 Agreement is equally plainly a “Finance Document”; and (iii) the DIFC Courts is indisputably a court of competent jurisdiction under Article 5(A)(1)(a) of the Judicial Authority Law and empowered to give effect to the parties’ choice of English law under Article 8(2)(b) of DIFC Law No. 3 of 2004.
154. Accordingly we conclude that the parties had not opted out of the DIFC Courts’ jurisdiction. To the contrary, the parties’ jurisdiction agreements cover the DIFC Courts and would also confer jurisdiction under Article 5A(2) of the Judicial Authority Law.

VI. ISSUE 3: IGPL’S STAY APPLICATION ON THE GROUND OF FORUM NON CONVENIENS

155. Although IGPL’s principal submission is that the DIFC Courts do not have competent jurisdiction, its alternative argument, if this Court finds that the DIFC Courts have jurisdiction, is that these proceedings should be stayed on the ground of FNC.
156. We have held that the DIFC Courts have competent jurisdiction to hear SCB’s claims, so it is necessary to address IGPL’s alternative FNC argument.
157. Based on the parties’ respective submissions, there are two questions on which the issue turns.
     • First, whether the DIFC Courts may apply the FNC doctrine in the present case.
     • Second, if the FNC doctrine were applicable, whether its application would point to the Sharjah Courts (as part of the Federal Judicial Authority) as the distinctly more appropriate forum to adjudicate this dispute.
158. We now consider each question in turn.
159. The general power of the DIFC Courts to apply the FNC doctrine was recognized in Corinth, where this Court held that a defendant could apply to stay DIFC Court proceedings on the ground of FNC:

“(18)      In contrast, in the DIFC Courts, service on a defendant outside the jurisdiction can be effected anywhere in the world provided that the claimant can bring himself within Article 5(A)(1) of Law No. 12. It is then open to a defendant to challenge the jurisdiction and apply to set aside service on the grounds that the claim is not covered by Article 5(A)(1). However, like in English law, a defendant can also rely on the principle of forum non conveniens, or the applicability of a clause choosing another Court.

…

(67)       This is not an exercise of exorbitant jurisdiction by the DIFC Courts over banks outside the DIFC because that universal jurisdiction over foreign banks with an unincorporated branch in the DIFC would be subject to the doctrine of forum non conveniens. Indeed, in many jurisdictions, a local Court may assume prima facie jurisdiction over a foreign company which carries on business within its territory even if the matter complained of has limited or tenuous connections with the territory in question, and the principle of forum non conveniens will normally resolve competing jurisdictional claims over the same dispute. There is therefore nothing unusual about this Court having jurisdiction over a foreign company with a branch office in the DIFC in respect of a claim that has no immediate connection with the DIFC other than the presence of the branch office. Indeed, the experience in England, as shown in the cases of South India Shipping Corp v Expon‘—Import Bank of Korea [1985] 1 WLR 585 and Rome and Another v Punjab National Bank (No. 2) [1989] 1 WLR 1211, demonstrates that English Courts allow for service of writs on English branches of overseas companies in respect of claims that do not have a real nexus with England. The relevant English legislation is not identical to the equivalent DIFC legislation, but the point is that there is precedent in international practice for a local court to exercise jurisdiction over a foreign company which is registered to carry on business in that local court’s territory.”

(emphasis added)

160. That the DIFC Courts have a discretionary power to stay its proceedings was also acknowledged by a differently constituted Court of Appeal in Al Khorafi v Bank Sarasin-Alpen CA-003-2011 (“Al Khorafi”), in a different context. In that case, the disputing parties had entered into a jurisdiction agreement conferring jurisdiction on the Swiss Courts over the dispute. The claimant commenced proceedings in the DIFC Courts, and the defendant applied to have the proceedings stayed on the ground that the DIFC Courts should give effect to the parties’ jurisdiction agreement. This Court recognized at [114] that it would ordinarily grant a stay in order to give effect to a foreign jurisdiction clause unless “strong cause” is shown.
161. In both these decisions, the only alternative forum which the defendant could point to was a court of a different state, outside the UAE. These were the English Courts of Appeal in Corinth and the Swiss Courts in Al Khorafi. With those contexts in mind, it seems to us that the Court was not deciding in either case that the FNC doctrine could similarly be invoked to resolve competing claims to jurisdiction by courts within the UAE. The question subsequently arose and was answered in the negative in Allianz, where H.E. Justice Ali Al Madhani held that the FNC doctrine did not apply when the alternative forum is a court of the UAE.
162. The scope of applicability of the FNC doctrine was therefore qualified by Allianz, and confined only to situations where a stay applicant pointed to a “foreign court” as a distinctly more appropriate forum than the DIFC Courts. In the words of H.E. Justice Ali Al Madhani in Allianz at [64]:

“In conclusion, in my opinion, the doctrine of FNC was introduced to give Judges the discretion to stay proceedings in favour of another foreign competent court to enhance justice at the international level. It is not applicable at a national level (inside one country) where the parameters of jurisdiction between the local courts are clearly defined and, more importantly, where there is a higher authority responsible to decide over jurisdictional conflicts. If the FNC doctrine is said to be applicable at national level, there would need to be clarity (through clear policy) and authority to determine the most appropriate court.”

163. What is clear from the holding above is that IGPL’s application to stay these proceedings in favour of the Sharjah Courts on the ground of FNC cannot succeed if Allianz remains good law. IGPL now argues that Allianz was wrongly decided. Whether Allianz was correctly decided is therefore at the heart of the issue, since Justice Sir David Steel expressly relied on that decision in deciding that the FNC doctrine should not apply in the present case. SCB supports the decision in Allianz, and relies on the reasoning employed there by H.E. Justice Ali Al Madhani.
164. In IGPL’s submission, the FNC doctrine can apply when the competing courts are courts of the same state. Citing Royal Bank of Scotland v Davidson [2009] CSOH 134, 2010 SLT 92 and Lennon v Scottish Daily Record [2004] EWHC 369 (QB), IGPL argues that the doctrine has been applied by the English Courts when the alternative forum was the Scottish Courts, and vice versa. On that basis, IGPL argues that “[t]he CFI in Allianz however, fell into error in regarding it as necessary for the application of the FNC doctrine that “[t]he proposed forum or court would have to be a foreign court. In other words, the court of another country or state”..
165. SCB’s response is three-fold, and proceeds as follows.
166. SCB’s first objection is that the FNC doctrine should not apply when a state such as the UAE adopts a system of federal law applied throughout the country (save for commercial and civil laws in free zones in the UAE’s case). In contrast, when the same law is not applied in Scotland and in England and Wales, the application of the FNC doctrine is permissible.
167. In our view, the point made by SCB is one of general applicability, and may be directed at any state adopting a federal legal system or some equivalent of it. However, IGPL has correctly pointed to the United States as an example of a federal law system which applies the FNC doctrine when the competing courts belong to other states within the federation. The point is amply demonstrated by the United States decisions in Gulf Oil Corp v Gilbert [1947] USSC 47 and Koster v Lumbermens Mutual Co [1947] USSC 47, which IGPL referred this Court to, and casts serious doubt on this particular argument advanced by SCB.

168. While it is not self-evident to us how a difference or similarity between the laws applied by the alternative forum and the DIFC Courts affects the applicability of the FNC doctrine, SCB’s argument has the same complexion as the highlighted section of the following passage in H.E. Justice Ali Al Madhani’s judgment in Allianz at [54]:

“In fact, Spiliada Maritime v Canulex Ltd introduced the FNC doctrine for international disputes where the Claimant often has a choice between two or more countries in which to bring an action against the Defendant, and where those countries have different systems of law and procedures which govern jurisdiction, therefore allowing for either double proceedings or conflicting decisions that might lead to injustice in one way or another. The basic rationale in applying the doctrine to cases which feature a conflict between international jurisdictions is that the equitable discretion given to a judge to grant or to reject a stay of the proceedings might be the only way to avoid conflict of forums, or injustice between national courts in one country, in another country or state, in the absence of binding international law (or policy) organising and regulating the issue of jurisdiction between different nations, and to protect parties’ interest in getting a fair trial in the most appropriate jurisdiction (forum).”

(emphasis added)

169. It would appear that the mischiefs which SCB has in mind, and described in the passage above, is the unfairness of compelling a defendant to defend himself in duplicate proceedings (which may be referred to as the problem of lis pendens) and the risk of conflicting judgments in the alternative forum as a result of legal differences between the competing courts. We understand SCB to be suggesting that, because the UAE’s federal laws are applied throughout the state (save the application of civil and commercial federal laws in free zones such as the DIFC), the problem of lis pendens and conflicting judgments fall away, along with any impetus for applying the FNC doctrine.
170. We do not accept this argument. It is apparent that, in this case, notwithstanding the consistent application of federal law throughout the UAE save in its free zones, conflicting judgments may still result from duplicate proceedings taking place in the two or more courts in the UAE. Substantial differences still exist between (1) the laws of each Emirate and (2) Emirate laws on the one hand and the laws applied by the UAE’s Federal Judicial Authority. Accordingly, the application of federal laws throughout the UAE does not insulate the parties from the problem of lis pendens. Further, and more fundamentally, the injustice which the FNC doctrine is intended to cure is of a very broad nature, and may arise even if there is no risk of conflicting judgments or the problem of lis pendens. The quintessential metric in any FNC analysis is “appropriateness” or “suitability” of the forum in question, and we can do no better at illustrating this than by referring to the following passage from Lord Goff’s judgment in The Spiliada:

“I feel bound to say that I doubt whether the Latin tag forum non conveniens is apt to describe this principle. For the question is not one of convenience, but of the suitability or appropriateness of the relevant jurisdiction. However the Latin tag (sometimes expressed as forum non conveniens and sometimes as forum conveniens) is so widely used to describe the principle, not only in England and Scotland, but in other Commonwealth jurisdictions and in the United States, that it is probably sensible to retain it. But it is most important not to allow it to mislead us into thinking that the question at issue is one of “mere practical convenience.” Such a suggestion was emphatically rejected by Lord Kinnear in Sim v. Robinow, 19 R. 665 , 668, and by Lord Dunedin, Lord Shaw of Dunfermline and Lord Sumner in the Société du Gaz case, 1926 S.C.(H.L.) 13 , 18, 19, and 22 respectively. Lord Dunedin, with reference to the expressions forum non competens and forum non conveniens, said, at p. 18:

“In my view, ‘competent’ is just as bad a translation for ‘competens’ as ‘convenient’ is for ‘conveniens.’ The proper translation for these Latin words, so far as this plea is concerned, is ‘appropriate.'”

Lord Sumner referred to a phrase used by Lord Cowan in Clements v. Macaulay (1866) 4 Macph. 583, 594, viz. “more convenient and preferable for securing the ends of justice,” and said, at p. 22:

“one cannot think of convenience apart from the convenience of the pursuer or the defender or the court, and the convenience of all these three, as the cases show, is of little, if any, importance. If you read it as ‘more convenient, that is to say, preferable, for securing the ends of justice’”

I think the true meaning of the doctrine is arrived at. The object, under the words ‘forum non conveniens’ is to find that forum which is the more suitable for the ends of justice, and is preferable because pursuit of the litigation in that forum is more likely to secure those ends.”

(emphasis added)

171. Lis pendens and the risk of conflicting judgments are but two of many factors which determine the suitability of permitting an action to subsist in a particular forum. Other weighty factors which may affect the appropriateness of that action include witness convenience, the type of law to be applied, as well as the connections between the underlying dispute and the competing fora. Differences in respect of these factors may exist even as between courts within the UAE, and one may find a distinct disparity between them in terms of appropriateness for determining a particular dispute.
172. Accordingly, we do not accept SCB’s first objection as a basis for the inapplicability of the FNC doctrine in the present case.
173. SCB’s second objection is more specific to the characteristics of the UAE’s legal anatomy. In SCB’s submission, UAE’s predominant composition of civil law courts (with the DIFC Courts being the only common law court) is fatal to the application of the FNC doctrine when the alternative forum is a court of the UAE. This is because, SCB argues, the application of the doctrine would introduce “incoherence into the UAE’s legal order” if the UAE’s other courts did not themselves apply the doctrine. In similar vein, SCB relies on Justice Sir David Steel’s statement during hearing in the CFI:

“…[FNC] will only work if there is some commonality of approach amongst all the members of that federal state…”

174. It is not clear what SCB had in mind when it referred to “incoherence”. If SCB meant “incoherence” in the purely empirical sense of there being different rules being applied and different results reached by various courts within the UAE then, in our view, this does not provide any principled ground for precluding the operation of the FNC doctrine. Preserving the autonomy of each the UAE’s constituent Emirate to apply different procedural rules and to reach different results on a particular issue is the very raison d’être of the UAE’s federal structure.
175. SCB might also be suggesting that there must be some reciprocity in the application of FNC doctrine, so that the alternative forum must also recognize or apply a general FNC doctrine, in order for FNC to be applicable by the DIFC Courts. If that is indeed SCB’s suggestion, we must reject it.
176. It is not unusual for common law jurisdictions to apply the FNC doctrine and decline jurisdiction in favour of civil law jurisdictions, which courts may not recognize or apply the doctrine. In The Xin Yang [1996] 2 Lloyd’s Rep 217, the English High Court granted a stay of the action commenced in England on the basis that the Netherlands, a civil law jurisdiction which does not adopt a general FNC doctrine, was a distinctly more appropriate forum for determining the dispute. In The Al Battani [1996] 1 WLR 1367, where the defendant applied to stay English Court proceedings in favour of Egypt, the English High Court did not refuse to apply the FNC doctrine on the basis that Egypt, like most civil law jurisdiction, would in all likelihood not recognize or apply a general FNC doctrine. Instead, the English High Court applied the FNC doctrine and found that Egypt was the most appropriate forum. It refused a stay only because the plaintiff had showed strong cause in the form of inordinate delays that were likely to impede proceedings in Egypt. In JIO Minerals FZC v Mineral Enterprises Ltd [2011] 1 SLR 391, the Singapore Court of Appeal granted a stay of proceedings on the ground that Indonesia was the distinctly more appropriate forum for determining the dispute. This was notwithstanding that Indonesia was a civil law jurisdiction which does not appear to apply any general doctrine of FNC either. The preponderance of case law in Commonwealth jurisdictions amply rebuts any argument that there must be reciprocity in the application of the FNC doctrine before it is applicable. We are satisfied that no such threshold requirement exists at law. IGPL has also referred this Court to the example of Canada and the state of Québec, which further reinforces our view. It is apparent that Canada’s constituent provinces and territories saw no reason to refrain from applying the FNC doctrine before 1 January 1994, notwithstanding that Québec did not apply the doctrine during that period of time. Furthermore, there is no reported decision from Canada that has ever suggested that its approach to FNC as between provinces was anything other than an adaptation of the Spiliada
177. A slightly different concern was articulated by H.E. Justice Ali Al Madhani in Allianz at [62]:

“Another difficulty arises if one is to assume that the DIFC Courts apply the FNC doctrine and relinquish jurisdiction in favour of another UAE Court, such as a Dubai Court or an Abu Dhabi Court. The rest of the UAE Courts do not recognise by definition or apply the FNC doctrine, which means that the local court in its usual application might still decline to deal with the said case just because there is a jurisdictional link with the other court, which might even be the court which just relinquished the exercise over its jurisdiction.”

(emphasis added)

178. E. Justice Ali Al Madhani’s concern was that the application of the FNC doctrine could lead to a jurisdictional void, when a UAE court in which favour a stay is granted rules that it does not have competent jurisdiction (upon applying the relevant provisions in CPC) to hear the dispute. Justice Sir David Steel also adopted this as a reason in support of his conclusion that the FNC doctrine should not apply. In our view, this problem is more apparent than real, because a proper application of the FNC doctrine would prevent such a jurisdictional void from ever materializing.
179. In order for a stay to be granted on the ground of FNC, the alternative forum must first be one that is “available”. A court will not be regarded as an “available forum” if it does not have competent jurisdiction to hear the dispute, and the point was made in the Privy Council’s decision in Hindocha v Gheewala [2003] UKPC 77 (“Hindocha”) where Lord Walker explained at [22]:

“22 This is potentially a point of some importance, since it is clear that an alternative forum is not available (in the relevant sense) unless it is open to the plaintiff to institute proceedings as of right in that forum (for the law as it stood in 1999 see Dicey and Morris, The conflict of Laws 13th (2000) edition, para. 12–023). But this topic has recently been reviewed (as noted in the second supplement to Dicey and Morris, para. 12–023) by the House of Lords in Lubbe v Cape plc [2000] 1 WLR 1545; [2003] 1 CLC 655. The House upheld the general principle that an available forum must be one in which the plaintiff can sue as of right, but treated an undertaking to submit to the alternative jurisdiction (in that case, an undertaking by the English holding company to submit to the jurisdiction of the South African court) as sufficient to show that the forum is available even though given after the application for a stay.”

(emphasis added)

180. The relevance of Hindocha to this appeal is that a stay on the ground of FNC would never be granted in favour of an alternative forum which does not have jurisdiction to hear the dispute.
181. It is SCB’s third objection which satisfies us of the correctness of H.E. Justice Ali Al Madhani’s decision in Allianz and Justice Sir David Steel’s decision not to apply the FNC doctrine when the alternative forum is a court of the UAE. SCB’s third objection is premised on the fact that the power to decide which of several UAE courts is most appropriate to hear a dispute resides with the USC, by operation of Article 99 of the UAE Constitution. SCB argues that applying the FNC doctrine in the present context would be manifestly incompatible with the constitutional allocation to the USC of the power to resolve jurisdictional conflicts between different courts of the UAE.
182. The same point was made in Allianz, where it was observed at [58] that the USC is empowered to resolve which of several UAE courts is most appropriate for determining a dispute:

“58. …in the case of any conflict over jurisdiction at both local level (inside one Emirate) or at a federal level (between federal and local, or two local courts in two different Emirates) the USC is vested with the power to make binding rulings over the conflict and to allocate what would be the appropriate court to deal with the substantial claim under Article 99 of the Constitution of the UAE and Article 33 (9) and (10) of the Law established the USC in 1973.”

(emphasis added)

183. That this factor was decisive for H.E. Justice Ali Al Madhani in Allianz is apparent from the following extract of his judgment at [64]:

“64. In conclusion, in my opinion, the doctrine of FNC was introduced to give Judge the discretion to stay proceedings in favour of another foreign competent court to enhance justice at the international level. It is not applicable at a national level (inside one country) where the parameters of jurisdiction between the local courts are clearly defined and, more importantly, where there is a higher authority responsible to decide over jurisdictional conflicts. If the FNC doctrine is said to be applicable at national level, there would need to be clarity (through clear policy) and authority to determine the most appropriate court.”

(emphasis added)

184. The same is true of Justice Sir David Steel’s decision, as is evident from the following extract of his judgment:

“13. The judgment of H.E. Justice Ali Al Madhani placed great emphasis on the UAE federal constitutional and statutory provisions which restricted if not eliminated the room for conflict between courts, with any residual dispute as to jurisdiction at federal or local level being resolved by the Union Supreme Court under the UAE Constitution; see Article 99 of the Constitution of the UAE and Article 33 of the Supreme Court Establishment Law No. 10 of 1973.

…

15. The judge formulated his conclusion on the issue at paragraph 64:

“64. in conclusion, in my opinion, the doctrine of FNC was introduced to give Judges the discretion to stay proceedings in favour of another foreign competent court to enhance justice at the international level. It is not applicable at a national level (inside one country) where the parameters of jurisdiction between the local courts are clearly defined and, more importantly, where there is a higher authority responsible to decide over jurisdictional conflicts. if the FNC doctrine is said to be applicable at national level, there would need to be clarity (through clear policy) and authority to determine the most appropriate court.”

…

17. Having now had the benefit of full argument, I fully endorse H.E. Justice Al Madhani’s conclusion. It follows that this application must be dismissed. However in case I am wrong I go on to consider the outcome on the basis that the principles of FNC apply.”

(emphasis added)

185. We agree with SCB’s submissions, H.E. Justice Ali Al Madhani’s conclusion in Allianz set out above and, by extension, Justice Sir David Steel’s decision.

186. It is not disputed by the parties that the power to determine jurisdictional conflicts is vested in the USC under Article 99(8) and 99(9) of the UAE Constitution, which provide as follows:

“Article 99

The Union Supreme Court shall have jurisdiction in the following matters:

…

8. Conflicts of jurisdiction between the Union judicial authorities and the local judicial authorities in the Emirates.
9. Conflicts of jurisdictions between the judicial authority in one Emirate and judicial authority in another Emirate. The rules relating thereof shall be regulated by a Union law.”
10. Although Article 99 does not adopt the language of “exclusive jurisdiction”, it cannot be understood as conferring on the USC anything less than exclusive jurisdiction over the matters set out in that provision. Any other interpretation would make a nonsense of the USC’s primacy in the UAE’s judicial hierarchy, by permitting other UAE courts to pre-empt or supplant the USC’s decision on matters it is charged with hearing.
11. As against this, IGPL’s reliance on the example of England & Wales and Scotland provides no answer. That example is an inappropriate comparator, because the United Kingdom does not adopt an overarching mechanism, constitutional or otherwise, to resolve jurisdictional conflicts between England & Wales on the one hand, and Scotland on the other.
12. Once it is appreciated that the power to determine the appropriateness of a UAE court’s assumption of jurisdiction, relative to other UAE courts, rests exclusively with the USC, it cannot be persuasively argued that the DIFC Courts have any power to determine the same question by applying the FNC doctrine. Doing so would amount to a usurpation of the USC’s constitutional function.
13. It is true that a jurisdictional conflict crystallizes, and the USC intervenes, only after the competing UAE courts issue conflicting and final judgments on jurisdiction, as was held by the USC in Case 10/28. But that fact does not mean that the DIFC can apply the FNC doctrine before a jurisdictional conflict crystallizes, such as in the present case. The power to resolve jurisdictional conflicts under Article 99(8) and 99(9) of the UAE Constitution is vested in the USC absolutely. It is not conditional on the occurrence of an event such as the crystallization of a jurisdictional conflict between two UAE courts. This is unlike the USC’s jurisdiction over inter-Emirate disputes as provided for in Article 99(1) of the UAE Constitution, a jurisdiction which is engaged only when the dispute is submitted to the USC on the request of an interested party:

“1.        Various disputes between member Emirates in the Union, or between any Emirate and the Union Government, whenever such disputes are submitted to the Union Supreme Court on the request of any of the interested parties.”

(emphasis added)

191. The point is that the power to determine jurisdictional conflicts is absolutely and exclusively vested in the USC under the UAE’s Constitution, and is therefore removed from this Court’s power under all circumstances.
192. IGPL argues that the application of the FNC doctrine is necessary to curtail any potential exercise by the DIFC Courts of exorbitant jurisdiction. The thrust of IGPL’s case is that the wide interpretation of Article 5A of the Judicial Authority Law would permit the DIFC Courts to assume jurisdiction over matters which do not bear even the slightest connection to Dubai or the DIFC. Such an exercise of jurisdiction would not be in accordance with the principles of comity, fairness and order. The only means to avoid this result, IGPL argues, is to apply the FNC doctrine.
193. As we have stated above at [109], it is neither correct that the DIFC Courts can exercise ‘exorbitant’ jurisdiction without restraint, nor that the FNC doctrine is the only means to ensure that the DIFC Courts hear only disputes which bear some real and substantial connection to Dubai or the DIFC. Our reasons for so concluding are set out below.
194. The starting point is that, as was held in Corinth, the FNC doctrine will be applied by the DIFC Courts to curtail any inappropriate exercise of jurisdiction. We have held above that the application of the FNC doctrine is subject to one exception, viz it does not apply when the alternative forum is a court of the UAE. Accordingly, it is only in this category of cases where the problem of the DIFC Courts exercising ‘exorbitant’ jurisdiction is, IGPL argues, ostensibly left unchecked.
195. In our view, the manner in which IGPL has framed the problem is apt to mislead, and distracts us from its true complaint. It is incorrect that the DIFC Courts can, with abandon, exercise exorbitant jurisdiction. The reason why the FNC doctrine does not apply in such cases is precisely because the UAE has already instated a solution (albeit a different one from applying the FNC doctrine) to the problem, by empowering the USC to resolve jurisdictional conflicts pursuant to Article 99 of the UAE Constitution. IGPL’s real difficulty therefore lies with its inability to invoke the USC’s jurisdiction to resolve a jurisdictional conflict before one has crystallized. Yet a defendant in IGPL’s shoes is not without a remedy. Such a defendant could commence an action in the alternative UAE Court, seeking from that Court a judgment or declaration that it has jurisdiction to hear the dispute. Once a judgment or declaration to that effect is obtained from the alternative UAE Court, the USC would be empowered to resolve the jurisdictional conflict. This is a slightly more tortuous route than the immediate application of the FNC doctrine by the DIFC Courts, but the resulting inconvenience does not rise to the level of injustice so that a defendant cannot be expected to pursue that route. That is in fact what IGPL has done, although the Sharjah Action Judgment now makes clear that IGPL’s efforts have not yielded any results in its favour.
196. The necessity of pursuing the course of action I have just described is not peculiar to situations where jurisdiction is assumed by the DIFC Courts. It is inherent in the UAE’s legal system, and can arise whenever several of the UAE’s courts are concurrently seized of a matter under the applicable provisions of the CPC. Accordingly, any inconvenience that a defendant is put to by the inappropriate exercise of jurisdiction by one UAE Court relative to another UAE Court is, in the words of H.E. Justice Ali Al Madhani in Allianz at [32], a “risk both parties have brought onto themselves when failing to agree on a jurisdiction clause in their sophisticated contract, or even to reach an agreement at any stage after the dispute had arisen knowing full well the legal system in place in the UAE.”
197. In conclusion, the DIFC Courts cannot apply the FNC doctrine if the alternative forum is another court of the UAE. In the circumstances, the question of what result would be reached by the application of the FNC doctrine is moot, and we see no utility in taking our inquiry beyond this. For these reason, IGPL’s application to stay these proceedings on the ground of FNC must fail in limine.

IV. CONCLUSION

198. For the foregoing reasons, we dismiss IGPL’s appeal on all grounds.

JUSTICE SIR RICHARD FIELD:

1. I agree with the Judgment of Justice Sir David Steel and have nothing further to add.

H.E. JUSTICE OMAR AL MUHAIRI:

2. I agree with the Judgment of Justice Sir David Steel and have nothing to add.

Issued by:

Mark Beer

Registrar

Date of Issue: 18 November 2015

At: 4pm

The post CA-004-2015 Investment Group Private Limited v Standard Chartered Bank appeared first on DIFC Courts.

Claim No: CFI-036-2014

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

VANNIN CAPITAL PCC PLC

for and on behalf of protected cell – Project Ramsey

                                                                                          Claimant

and

(1) MR RAFED ABDEL MOHSEN BADER AL KHORAFI

(2) MRS AMRAH ALI ABDEL LATIF AL HAMAD

(3) MRS ALIA MOHAMED SULAIMAN AL RIFAI

(4) KBH KAANUUN LIMITED

(5) BANK SARASIN-ALPEN (ME) LIMITED

(6) BANK J. SAFRA SARASIN LTD (FORMERLY BANK SARASIN &  CO LIMITED)

Defendants

 ORDER OF REGISTRAR MARK BEER

UPON the Claimant’s Notice of Commencement of Assessment of Bill of Costs dated 14 May 2015 filed pursuant to RDC Part 40

AND UPON reading the First to Third Defendants’ Detailed Points of Dispute dated 4 June 2015

AND UPON reading the Claimant’s Reply to Detailed Points of Dispute dated 25 June 2015

AND UPON the First to Third Defendants’ application CFI-036-2014/5 dated 19 October 2015

AND UPON hearing Counsel for the Claimant and Counsel for the First to Third Defendants at a Detailed Costs Assessment hearing before the Registrar on 20 October 2015 

 IT IS HEREBY ORDERED THAT: 

1. The First, Second and Third Defendants’ application CFI-036-2014/5 is denied.
2. The Claimant’s costs claimed by way of detailed assessment of costs under RDC Part 40 are finally assessed in the amount of USD 48,721.61 pursuant to the Final Costs Certificate issued by Registrar Mark Beer on 19 November 2015.
3. The First, Second and Third Defendants shall pay to the Claimant the sum of USD 48,721.61 within fourteen (14) days. The First, Second and Third Defendants are jointly and severally liable to pay the sum aforesaid in this paragraph.
4. The Claimant is entitled to receive immediate payment of the amount of USD 28,749.30 paid into Court by the First, Second and Third Defendants on 14 October 2015 pursuant to the Interim Payment Order of Judicial Officer Maha Al Mehairi dated 10 September 2015 in partial payment of the sum ordered to be paid in paragraph 3 above. The balance amount payable to the Claimant pursuant to paragraph 3 above shall be paid by the First, Second and Third Defendants in accordance with said paragraph 3.

AND BY CONSENT IT IS HEREBY ORDERED THAT:

5. The First, Second and Third Defendants irrevocably waive any and all rights of appeal or other recourse against the whole or any part of this Order or the Final Costs Certificate issued by Registrar Mark Beer on 19 November 2015.
6. Each party to pay its own costs of the detailed assessment of costs pursuant to the Notice of Commencement of Bill of Costs dated 14 May 2015 and of the First, Second and Third Defendants’ application CFI-036-2014/5 dated 19 October 2015.

Issued by:

Mark Beer

Registrar

Date of issue: 19 November 2015

At: 10am

The post CFI 036/2014 Vannin Capitak Pcc Plc v (1) Mr Rafed Abdel Mohsen Bader Al Khorafi (2) Mrs Amrah Ali Abdel Latif Al Hamad (3) Mrs Alia Mohamed Sulaiman Al Rifai (4) KBH Kaanuun Limited (5) Bank Sarasin-Alpen (ME) Limited (6) Bank J. Safra Sarasin Ltd (Formerly Bank Sarasin & Co Limited) appeared first on DIFC Courts.

Claim No: CFI 025/2015

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

AND IN THE MATTER OF THE DIFC INSOLVENCY LAW NO. 3 OF 2009

ORDER OF H.E. JUSTICE OMAR AL MUHAIRI DATED 19 NOVEMBER 2015

UPON the petition of MAS CLEARSIGHT LIMITED (“the Petitioner”) presented to the Court on 21 October 2015 (“the Petition”);

AND UPON reading the Petition and the evidence recorded on the Court file;

AND UPON there being no notice of objection received;

IT IS HEREBY ORDERED THAT:

1. MAS CLEARSIGHT LIMITED, registered in the DIFC under Registration Number 0875, and Commercial License Number CL0875, and with its Registered Office at Unit A, Level 5, Gate Building East Wing, DIFC, P.O. Box 506811, Dubai, UAE be wound up under the Insolvency Law DIFC Law No. 3 of 2009.
2. Pursuant to Article 58(1) of the Insolvency Law, Mr Shahab Haider of Sajjad Haider Chartered Accountants LLP is hereby appointed as Liquidator of MAS CLEARSIGHT LIMITED.
3. Permission be granted for the Liquidators to apply to the Court for the fixing of their remuneration.
4. The costs of the winding-up petition and of the application for the appointment of the provisional liquidators together be paid as an expense of the liquidation.

Issued by:

Nassir Al Nasser

Judicial Officer

Date: 22 November 2015

At: 10am

The post CFI 025/2015 MAS Clearsight Limited v Not Applicable appeared first on DIFC Courts.

Claim No: CFI 025/2015

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

IN THE MATTER OF THE DIFC INSOLVENCY LAW NO. 3 OF 2009

 ORDER OF H.E. JUSTICE OMAR AL MUHAIRI

UPON reading the Applicant’s Winding-up Petition dated 13 September 2015, pursuant to Part 54 of the DIFC Court Rules, Article 50 of the DIFC Insolvency Law No.3 of 2009, Regulation 8.7.2 of the DIFC Insolvency Regulations and the supporting documents attached.

AND UPON hearing Counsel for the Applicant at the hearing on 21 October 2015

IT IS ORDERED THAT:

1. Mr Shahab Haider of Sajjad Haider Chartered Accountants LLP is hereby appointed as Provisional Liquidator of MAS CLEARSIGHT LIMITED, registered in the DIFC under Registration Number 0875, and Commercial License Number CL0875, and with its Registered Office at Unit A, Level 5, Gate Building East Wing, DIFC, P.O. Box 506811, Dubai, UAE.
2. The Provisional Liquidator has all the powers as set out in Schedule 3 of the DIFC Insolvency Law No. 3 of 2009.
3. The hearing date for the petition for winding up is fixed for Thursday, 19 November 2015, seven days prior to which the advertisement pursuant to RDC 54.62 would be published in accordance with the relevant Practice Direction (PD 3/2011) by no later than Thursday, 5 November 2015.
4. Pursuant to RDC103, which sets out the requirements for the advertisement for appointment, the advertisement shall specifically state that any person intending to appear at the hearing shall give to the Petitioner, the Provisional Liquidator and Galadari Advocates and Legal Consultants, notice of his intention, specifying whether or not he intends to support or oppose the petition, and whether or not he objects to the appointment of Mr Shahab Haider as the Provisional Liquidator, by no later than Sunday, 8 November 2015, and if no such notice is provided, then he shall not be able to appear at the hearing of the petition without further order of the Court.
5. If no notice of objection has been received by Sunday, 8 November 2015, a winding up order shall take effect on Thursday, 19 November 2015 without the need for attendance at a hearing and Mr Shahab Haider of Sajjad Haider Chartered Accountants LLP shall be appointed as Liquidator with immediate effect from the Return Date.
6. The Provisional Liquidator shall be at liberty to apply for such further or other directions as they may deem necessary.
7. The costs of the aforementioned advertisement to be paid by the Petitioner.
8. Costs of this application will be dealt with in the liquidation.

Issued by:

Natasha Bakirci

Assistant Registrar

Date of issue: 22 November 2015

At: 10am

The post CFI 025/2015 MAS Clearsight Limited v Not Applicable appeared first on DIFC Courts.

Claim No: CFI 021/2015

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BEFORE H.E. JUSTICE ALI AL MADHANI                      

BETWEEN

THERON ENTERTAINMENT LLC

                                                                                          Claimant

and

MAG FINANCIAL SERVICES LLC

Defendant

   ORDER OF H.E. JUSTICE ALI AL MADHANI

UPON reviewing the Claimant’s Application Notice CFI 021-2015/4 dated 2 November 2015 seeking an order for the Defendant to deposit into Court original cheques and to return to the Claimant other post-dated cheques (“the Application”)

AND UPON hearing Counsel for the Claimant and Counsel for the Defendant at a hearing on 24 November 2015

AND UPON reading the relevant material in the case file

IT IS HEREBY ORDERED THAT:

1. The Defendant shall deposit into Court the original cheque dated 10 November 2015 until further direction by this Court or the determination of the substantive claim.

2. The Defendant shall return to the Claimant the following cheques dated:

(i) 10 May 2016

(ii) 10 November 2016

(iii) 10 May 2017

(iv) 10 November 2017

(v) 10 May 2018

(vi) 10 November 2018

3. The Claimant is to provide an undertaking to the Court in relation to the cheque dated 10 November 2015, in accordance with Rule 25.25 of the Rules of the DIFC Courts.

4. Costs in relation to this application are to be costs in the case.

Issued by:

Natasha Bakirci

Assistant Registrar

Date of issue: 24 November 2015

At: 4pm

The post CFI 021/2015 Theron Entertainment llc v MAG Financial Services llc appeared first on DIFC Courts.

Some people tend to be less inflexible in their thinking as well as the approach they are doing items. They seem to flow through improvements efficiently and without difficulty whereas for others it may be exceedingly difficult. If you have ever obtained a Yoga class or realize somewhat about any of it, you understand that you wouldnt begin at an advanced class, you’d focus on the beginners. Flexibility subsequently slowly you move up, acquire balance, and you have to understand the basic principles first. If you started with, for example Lizard a Chart, or possibly a Full Pigeon cause, you may find you havent created enough flexibility within you because its not used-to folding in these opportunities. In with and time training you would be astonished at how the human body moves and becomes more adaptable and more. The mind isnt any unique it could learn to become flexible rather than inflexible. You take and can welcome changes, versions, and troubles in your life because these very things are teaching one to start to fresh probabilities of being and doing things. Often our thinking is inflexible, or we’re set in our ways, or its our way or even the highway, or things happen that change our exercises or times and keep us flailing around like a fish from water, or we are consistently second guessing or overanalyzing things. When you find yourself being stubborn to different things than everything you know or are used to, you are able to feel threatened, fearful, annoyed, and occasionally angry. These tendencies are now being brought yourself to expand your change strategies and strategies. You understand the old saying, ” there is a strategy to my chaos”, well, there’s, and that’s your old style of operandi is set for a big change. Im sure you or someone you understand have imagined in black or bright where there is just one thought process. The grey isn’t actually about choice’s scheme as we say; this really is not flexibility. An exemption could be when others perceive you making alternatives that are to be rigid, greatest for you personally, this comes from creating balanced restrictions and honouring yourself, therefore this is flexibility. So how can you become flexible inside your thinking? Phase 1. Problem. Ask yourself, “Am I being stubborn or versatile within this circumstance?” Often we become by trusting which our way is a better approach misled, or even the way there’s. This can be about hoping new tactics and obtaining, compromising, discovering things differently, presenting, considering issues from the diverse perception, and shifting from challenge thinking to likelihood thinking. Doesnt that is adaptable that is being always mean needing alter your techniques to surrender or state yes. What it means is you’re considering issues from a distinct standpoint first, then creating a choice that is greatest, this can be flexibility. Step two. Realize. Begin being inflexible. Can it be in your thinking? Can it be your path of accomplishing items athome or at the job, or can it be with somebody in particular? As soon as your mind-set techniques or are severe established, or inflexible, carry your attention to how you can be more flexible. Have a bit of paper and using one aspect of the report write down most of the ways and regions in your lifetime where you stand set in your approaches; then to the different aspect write down all of the possibilities where you could commence to become more open, sensitive, co operative, and accommodating. It could not maintain every area, nevertheless you might learn two or one that could make use of a minor bending in your part. Notice like a chance to transform way or your thinking of doing things. You never understand when your thinking stretch what could be waiting. Step 3. Clarity. Your emotions could be clouding your inner knowing, if you are jammed in inflexibility. It’s likely you have targets of how items “ought to be” and start to become rapid to bounce to assumptions and falsities coming in control, or from your egos have to be appropriate. Its difficult to notice things obviously and consequently youre / or and likely responding in the place of seeing the problem and answering it, while feelings take over. This can be a time to let the rigidness in way and your thinking of releasing and doing things are more elastic. Getting clarity makes it possible to discover and recognize items in an alternative approach; it makes area for observations to happen. Step 4. Hear. Take a several heavy breaths and become calm and listen to the peaceful voice within. Its difficult for to know if your mind set and activities are youre and not limber too chaotic to pay for attention. When you are listening, you’re beginning patterns, to additional landscapes, tips, ways, methods, and most notably, you’re letting place to understand to stretch beyond comfort areas and your distress, and broaden your “beingness”. When you are currently hearing develop you’re inviting in fresh opportunities and strategies to discover and remember there is much more your than satisfies the attention. Step 5. Creativity. New understandings come in retailer for you personally if you use your eye. Answers and innovative abilities are in function when you let them in. Imagine the individual or scenario you’re feeling gets your awareness as a way to apply folding your techniques, to recognize what your location is being inflexible, to become clear by letting go of whats clouding your inner knowing, and also to pay attention to the direction within and invite your creativity to motivate and primary new ways of being and doing things. The term “region” is the main term imagination. Consider what the planet could be like if we were all a little more adaptable in place of inflexible in our thinking. You cant anticipate others to alter their approaches by adjusting yours however you may begin. Here lies flexibility that is true. Extend the body and brain and your soul is likely to be thrilled from the action of growing, learning and increasing while you do so. Recall, freedom is actually a selection sufficient reason for training you’ll make moves you impossible. The Awareness Technique allows you realizing and altering your inflexibility to help you turn into a variable, freedom thinker.

The post Some people tend to be less inflexible in their thinking as well as the approach they are doing items. They seem to flow through improvements efficiently and without difficulty whereas for others it may be exceedingly difficult. If you have ever obtained a Yoga class or realize somewhat about any of it, you understand that you wouldnt begin at an advanced class, you’d focus on the beginners. Flexibility subsequently slowly you move up, acquire balance, and you have to understand the basic principles first. If you started with, for example Lizard a Chart, or possibly a Full Pigeon cause, you may find you havent created enough flexibility within you because its not used-to folding in these opportunities. In with and time training you would be astonished at how the human body moves and becomes more adaptable and more. The mind isnt any unique it could learn to become flexible rather than inflexible. You take and can welcome changes, versions, and troubles in your life because these very things are teaching one to start to fresh probabilities of being and doing things. Often our thinking is inflexible, or we’re set in our ways, or its our way or even the highway, or things happen that change our exercises or times and keep us flailing around like a fish from water, or we are consistently second guessing or overanalyzing things. When you find yourself being stubborn to different things than everything you know or are used to, you are able to feel threatened, fearful, annoyed, and occasionally angry. These tendencies are now being brought yourself to expand your change strategies and strategies. You understand the old saying, ” there is a strategy to my chaos”, well, there’s, and that’s your old style of operandi is set for a big change. Im sure you or someone you understand have imagined in black or bright where there is just one thought process. The grey isn’t actually about choice’s scheme as we say; this really is not flexibility. An exemption could be when others perceive you making alternatives that are to be rigid, greatest for you personally, this comes from creating balanced restrictions and honouring yourself, therefore this is flexibility. So how can you become flexible inside your thinking? Phase 1. Problem. Ask yourself, “Am I being stubborn or versatile within this circumstance?” Often we become by trusting which our way is a better approach misled, or even the way there’s. This can be about hoping new tactics and obtaining, compromising, discovering things differently, presenting, considering issues from the diverse perception, and shifting from challenge thinking to likelihood thinking. Doesnt that is adaptable that is being always mean needing alter your techniques to surrender or state yes. What it means is you’re considering issues from a distinct standpoint first, then creating a choice that is greatest, this can be flexibility. Step two. Realize. Begin being inflexible. Can it be in your thinking? Can it be your path of accomplishing items athome or at the job, or can it be with somebody in particular? As soon as your mind-set techniques or are severe established, or inflexible, carry your attention to how you can be more flexible. Have a bit of paper and using one aspect of the report write down most of the ways and regions in your lifetime where you stand set in your approaches; then to the different aspect write down all of the possibilities where you could commence to become more open, sensitive, co operative, and accommodating. It could not maintain every area, nevertheless you might learn two or one that could make use of a minor bending in your part. Notice like a chance to transform way or your thinking of doing things. You never understand when your thinking stretch what could be waiting. Step 3. Clarity. Your emotions could be clouding your inner knowing, if you are jammed in inflexibility. It’s likely you have targets of how items “ought to be” and start to become rapid to bounce to assumptions and falsities coming in control, or from your egos have to be appropriate. Its difficult to notice things obviously and consequently youre / or and likely responding in the place of seeing the problem and answering it, while feelings take over. This can be a time to let the rigidness in way and your thinking of releasing and doing things are more elastic. Getting clarity makes it possible to discover and recognize items in an alternative approach; it makes area for observations to happen. Step 4. Hear. Take a several heavy breaths and become calm and listen to the peaceful voice within. Its difficult for to know if your mind set and activities are youre and not limber too chaotic to pay for attention. When you are listening, you’re beginning patterns, to additional landscapes, tips, ways, methods, and most notably, you’re letting place to understand to stretch beyond comfort areas and your distress, and broaden your “beingness”. When you are currently hearing develop you’re inviting in fresh opportunities and strategies to discover and remember there is much more your than satisfies the attention. Step 5. Creativity. New understandings come in retailer for you personally if you use your eye. Answers and innovative abilities are in function when you let them in. Imagine the individual or scenario you’re feeling gets your awareness as a way to apply folding your techniques, to recognize what your location is being inflexible, to become clear by letting go of whats clouding your inner knowing, and also to pay attention to the direction within and invite your creativity to motivate and primary new ways of being and doing things. The term “region” is the main term imagination. Consider what the planet could be like if we were all a little more adaptable in place of inflexible in our thinking. You cant anticipate others to alter their approaches by adjusting yours however you may begin. Here lies flexibility that is true. Extend the body and brain and your soul is likely to be thrilled from the action of growing, learning and increasing while you do so. Recall, freedom is actually a selection sufficient reason for training you’ll make moves you impossible. The Awareness Technique allows you realizing and altering your inflexibility to help you turn into a variable, freedom thinker. appeared first on DIFC Courts.

Claim No. CFI 027/2014

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN COURT OF FIRST INSTANCE

BETWEEN

LEGATUM LIMITED

Claimant

and

ARIF SALIM

Defendant

ORDER WITH REASONS OF JUSTICE SIR RICHARD FIELD ON COSTS AND INTEREST

UPON the Judgment of Sir Richard Field dated 11 May 2015 ordering the Claimant and the Defendant to file submissions on costs and interest;

AND UPON the Claimant filing their submissions on 18 November 2015;

AND UPON the Defendant filing their submissions on 25 November 2015;

IT IS HEREBY ORDERED THAT: 

1. The Defendant shall, within 21 days of the date of this Order, make a payment on costs to the Claimant in the amount of USD 300,000.
2. The Defendant shall pay to the Claimant damages amounting to USD 690,533.
3. The Defendant shall pay interest on the damages awarded at the rate of 1.82171% per annum which to date amounts to USD 11,476.92 and continues to accrue at the daily rate of USD 34.46.

Issued by:

Natasha Bakirci

Assistant Registrar

Date of Issue: 29 November 2015

At: 12pm

REASONS

1. The parties were invited to serve written submissions as to costs and interest following the delivery of the Court’s judgment upholding the Claimant’s claim. In its submissions, the Claimant seeks its costs of the action to be assessed on the indemnity basis, if not agreed. It also claims an interim payment on account of its entitlement to costs in the sum of USD 358,041.33 and seeks interest on the damages awarded at the rate of 1.82171% p.a. (equivalent to 1% over the EIBOR 3 months’ reference rate) from 1 January 2015.
2. The Defendant through his attorneys has simply informed the Court of the amount of his costs in the proceedings.
3. The Claimant having succeeded on all issues in the trial is entitled to be awarded its costs of the action and I so order. I also find that the Defendant’s conduct in maliciously sabotaging the Claimant’s IT system and then defending the claim by giving dishonest and false evidence is so unreasonable and “out of the norm” that the Claimant is entitled to have its costs assessed on the indemnity basis.
4. The normal practice is to order an interim payment on account of the costs awarded by the Court. The Claimant asks for USD 358,041.33 which is 75% of its total costs. I think this sum is somewhat too high and I order instead that the Defendant must pay USD 300,000 on account of costs within 21 days of the date of this ruling.
5. In my judgment, the Claimant is entitled to simple interest on the damages awarded and the rate claimed is a reasonable rate. I accordingly order that the Defendant must pay interest on the damages awarded at the rate of 1.82171% per annum which to date amounts to USD 11,476.92 and continues to accrue at the daily rate of USD 34.46.

Issued by:

Natasha Bakirci

Assistant Registrar

Date of Issue: 29 November 2015

At: 12pm

The post CFI 027/2014 Legatum Limited V Arif Salim appeared first on DIFC Courts.

Dubai, United Arab Emirates; 26 November 2015: The DIFC Courts and DIFC Wills and Probate Registry celebrated UAE Innovation Week by winning two separate industry awards for the success of various new initiatives launched in the past year.

A key theme running throughout UAE Innovation Week has been the importance of innovation to the successful delivery of government services, which is evident in the work of both the DIFC Courts and DIFC Wills and Probate Registry.

On November 25, 2015, the DIFC Courts division took home the “Excellence in Innovation Award” at The Middle East Legal Awards in Dubai organised by The Oath. The Courts were recognised for putting innovation at the centre of their operational model, for instance becoming the first Dubai Government entity to receive five stars under a new rating system for government services, appointing the UAE’s first female judge, and launching the country’s first pro bono scheme, small claims tribunal and code of conduct for lawyers.

The award also acknowledges the DIFC Courts work to become the world’s most connected court system, with a number of important cooperation agreements signed in 2015, including with the Supreme Court of Singapore, United States District Court for the Southern District of New York, Supreme Court of the Republic of Kazakhstan and Supreme Court of Korea.

On the same evening and in the same city the DIFC Wills and Probate Registry was honoured in the “Excellence in Innovation” category of the Middle East Accountancy and Finance Excellence Awards, organised by the Institute of Chartered Accountants in England and Wales. The award recognised how the innovative Registry has provided legal certainty and a comprehensible inheritance solution for non-Muslims with assets in Dubai since launching in May 2015.

The Registry provides individuals with the ability to register English language wills that allow their Dubai-based assets to be transferred upon death according to their instructions. The rules governing the Registry reflect the spirit of existing UAE laws, which provide non-Muslims the right to choose the way in which their estates are distributed.

The DIFC Courts and DIFC Wills and Probate Registry are two divisions of the DIFC Dispute Resolution Authority (DRA). It was established in 2014 as a platform for delivering legal excellence in the Middle East and as the gateway to a suite of services available to businesses operating in Dubai. Other DRA divisions include the DIFC-LCIA Arbitration Centre and Academy of Law.

Mark Beer, OBE, Chief Executive of the Dubai International Financial Centre’s Dispute Resolution Authority, said: “The DRA’s divisions have been on a journey of innovation and achievement throughout 2015, with the DIFC Courts handling a record caseload and the DIFC Wills and Probate Registry being fully booked from day one.  Innovation is at the heart of both success stories and I congratulate the teams on winning these two prestigious awards.”

The post DIFC COURTS AND DIFC WILLS AND PROBATE REGISTRY CELEBRATE UAE INNOVATION WEEK WITH TWO INDUSTRY AWARDS appeared first on DIFC Courts.

Claim No: CFI-026-2009

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF APPEAL

BETWEEN

(1) RAFED ABDEL MOHSEN BADER AL KHORAFI

(2) AMRAH ALI ABDEL LATIF AL HAMAD

(3) ALIA MOHAMED SULAIMAN AL RIFAI

                                                                                          Claimants

and

(1) BANK SARASIN-ALPEN (ME) LIMITED

(2) BANK SARASIN & CO. LTD

Defendants

ORDER OF CHIEF JUSTICE MICHAEL HWANG

UPON reviewing the following documents:

(a) The Claimants’ letter application dated 10 November 2015 seeking the Order of Chief Justice Hwang dated 9 November 2015 granting the Defendants permission to appeal to be set aside.

(b) The Defendants’ response to the Claimants’ Application filed by letter dated 10 November 2015

(c) The Order of the Deputy Chief Justice dated 3 November 2015

(d) The Order of Chief Justice Hwang dated 9 November 2015

IT IS HEREBY ORDERED THAT:

1. The Order of the Chief Justice granting the Defendants permission to appeal dated 9 November 2015 shall stand.
2. Skeleton Arguments for the appeal, along with any application to amend the grounds of appeal attached to the Appeal Notice dated 21 October 2015, shall be filed within 14 days of the date of delivery of the Court of Appeal Judgment in CA-003-2015.
3. Paragraph 7 of the Order of the Deputy Chief Justice dated 3 November 2015 shall be of no effect.

Issued by:

Natasha Bakirci

Assistant Registrar

Date of issue: 30 November 2015

Time: 10am

SCHEDULE OF REASONS 

1. The discrepancy between the different orders issued by the Deputy Chief Justice on 3 November 2015 and my Order on 9 November 2015 arose because the parties, when invited to make written submissions on costs and interest only arising out of the Judgment dated 7 October 2015, chose to also make submissions on permission to appeal.
2. However, the effect of Rules 44.6 and 44.7 of the Rules of the DIFC Courts (“RDC”) is that, unless an application for permission to appeal is made to the trial judge at the hearing when the decision to be appealed against was made, any appeal against the trial judge’s decision must be made to the Court of Appeal by way of appeal notice, and that this application cannot be determined by the judge whose decision is being appealed.
3. Since the Judgment of the Deputy Chief Justice was delivered in writing and was released to the parties on 7 October 2015, no application could have been made to him under RDC 44.6(1). Accordingly any appeal against that order would have had to be made to the Court of Appeal. Indeed the Defendants filed two notices of appeal dated 21 October 2015 to the Court of Appeal. As a result, there is no legal basis under the RDC for any order to be made by the trial judge on the issue of permission to appeal.
4. With respect, paragraph 7 of the Order of the Deputy Chief Justice dated 3 November 2015 was of no effect, since the application for permission to appeal was before the Court of Appeal. However, for practical reasons, I consider it appropriate for case management purposes for the Defendants to review the decision of the Court of Appeal on liability in CA-003-2015 before they formulate their Skeleton Arguments and, if so advised, apply to amend their grounds of appeal in light of the decision of the Court of Appeal in CA-003-2015 within 14 days of that decision being handed down.

Issued by:

Natasha Bakirci

Assistant Registrar

Date of issue: 30 November 2015

Time: 10am

The post CFI 026/2009 (1) Rafed Abdel Mohsen Bader Al Khorafi (2) Amrah Ali Abdel Latif Al Hamad (3) Alia Mohamed Sulaiman Al Rifai v (1) Bank Sarasin-Alpen (ME) Limited (2) Bank Sarasin & Co. Ltd appeared first on DIFC Courts.

Claim No: CFI 014/2010

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

TAALEEM P.J.S.C.

                                                                              Claimant

and

(1) NATIONAL BONDS CORPORATION P.J.S.C.

First Defendant

(2) DEYAAR DEVELOPMENT P.J.S.C.

Second Defendant

  CONSENT ORDER

UPON the Second Defendant withdrawing Ground 1 of its appeal against the Order of Justice Sir David Steel dated 23 March 2015 (the “Order“)

IT IS HEREBY ORDERED BY CONSENT THAT:

1. The Second Defendant’s appeal against paragraphs 1(a), 2 and 5 to 8 of the Order is dismissed.
2. The Second Defendant’s appeal against paragraph 1(b) is dismissed, save to the extent that the Court of Appeal allows any appeal against the amount (if any) of the Murabaha profit charges which the Second Defendant was ordered to pay in paragraph 3(b) of the Order.
3. The Second Defendant shall pay the Claimant’s costs of the Appeal, to be assessed if not agreed.

Issued by:

Natasha Bakirci

Assistant Registrar

Date of issue: 25 November 2015

At: 4pm

The post CFI 014/2010 Taaleem P.J.S.C. v (1) National Bonds Corporation P.J.S.C. (2) Deyaar Development P.J.S.C. appeared first on DIFC Courts.

Claim No: CFI-021-2015

          THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BEFORE H.E. JUSTICE ALI AL MADHANI

BETWEEN

THERON ENTERTAINMENT LLC

Claimant

and

MAG FINANCIAL SERVICES LLC

                                                                                                                                                                                                                                     Defendant

 CASE MANAGEMENT ORDER OF H. E. JUSTICE ALI AL MADHANI

UPON reading the Case Management Bundle

AND UPON hearing Counsel for the Claimant and Counsel for the Defendant at the Case Management Conference held on 24 November 2015.

IT IS HEREBY ORDERED BY CONSENT THAT:

Settlement Negotiations

1. The parties will engage in settlement discussions in the period between 25 November 2015 and 17 December 2015.

Agreed List of Issues

2. Adjacent to each paragraph of each witness statement, reply witness statement (if any) and skeleton argument shall be inserted the issue or issues to which that paragraph relates as numbered in the Agreed List of Issues, in order for the Court to understand to which of the agreed issues that paragraph relates.

Production of Documents

3. Standard production of documents to be made by each party on or before 4pm on Thursday, 17 December 2015.

4. The parties to file and serve any Request to Produce by no later than 4pm on Monday, 11 January 2016.

5. The parties shall produce documents, to the extent they do not object to the Request to Produce, or file and serve Objections to Requests to Produce by no later than 4pm on Monday, 25  January 2016.

6. Where objections to any Requests to Produce have been made, the Court will determine those objections and will make any Disclosure Order within the following 10 days and in any event by no later than 4pm on Thursday, 4 February 2016.

7. The parties shall comply with the terms of any Disclosure Order within 14 days thereafter and in any event by no later than 4pm on Thursday, 18 February 2016.

Witness Statements

8. Signed statements of witnesses of fact are to be exchanged by no later than 4pm on Monday, 14 March 2016.

9. Any witness statement in reply to be filed and served within 14 days thereafter and in any event by no later than 4pm on Monday, 28 March 2016.

Progress Monitoring Date

10. Parties to send the Registry (with copy to all other parties) a Progress Monitoring Information Sheet within 10 days from filing of any witness statement evidence in reply and in any event no later than 4pm on Thursday, 7 April 2016.

Pre-Trial Review

11. A pre-trial review is to be listed in April 2016.

Trial Bundles

12. Agreed trial bundles to be completed in accordance with Part 35 of the RDC and lodged by not later than 1 week before trial.

Reading List

13. A single reading list approved by all parties’ legal representatives for trial to be lodged with the Registry not later than 2 clear days before fixed trial date, together with an estimate of time required for reading.

Skeleton Argument, Opening Statements and Chronology

14. Skeleton Arguments and Written Opening Statements to be served on all other parties and lodged with the Court 4 days before the start of the trial.

15. Parties to prepare a Chronology of significant events cross-referenced to significant documents, pleadings and witness statements to be agreed, insofar as possible, and to be filed together with the Skeleton Arguments.

Trial

16. The trial of this matter is to take place in May 2016 with an estimated duration of 2-3 days.

Issued by:

Natasha Bakirci

Assistant Registrar

Date of issue: 7 December 2015

At: 10am

The post CFI 021/2015 Theron Entertainment LLC v MAG Financial Services LLC appeared first on DIFC Courts.

Claim No. CFI 024/2015

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

In the name of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Ruler of Dubai

IN THE COURT OF FIRST INSTANCE

BEFORE H.E. JUSTICE OMAR AL MUHAIRI

BETWEEN

ZIAD AZZAM

  Claimant

and

DEYAAR DEVELOPMENT PJSC

                                             Defendant

Hearing:            18 October 2015

Counsel:           Vernon Flynn QC assisted by Tom Montagu-Smith instructed by Hogan                                                       Lovells (Middle East) LLP for the Claimant

Tom Leech QC assisted by Stuart Patterson and Nathan Hooper  (Herbert Smith Freehills LLP) for the Defendant

Judgment:        9 December 2015

JUDGMENT OF H.E JUSTICE OMAR AL MUHAIRI

Summary of Judgment

This summary is not part of the Judgment and should not be cited as such 

JUDGMENT

UPON hearing Counsel for the Claimant and Counsel for the Defendant at a hearing on 18 October 2015

AND UPON reading the submissions and evidence filed and recorded on the Court file

IT IS HEREBY ORDERED THAT:

1. The Claimant’s claim is dismissed.

2. There be no order as to costs. If not agreed, the parties shall furnish details of their costs together with short written submissions within 21 days of the date of this judgment.

Issued by:

Natasha Bakirci

Assistant Registrar

Date of Issue: 9 December 2015

At: 3pm

REASONING

1. Before the DIFC Court of First Instance is Claimant Ziad Azzam, the former CEO of Taaleem PJSC (“Taaleem”). The Defendant is Deyaar Development PJSC (“Deyaar”), a local and regional real estate developer and real estate services company located in Dubai.

2. On 24 August 2015 the Claimant filed an RDC Part 8 claim with the Court of First Instance seeking an injunction prohibiting the Defendant from pursuing a Dubai Court proceeding (“Dubai Court Claim”) against the Claimant as well as a declaration that the DIFC Courts have exclusive jurisdiction over the Dubai Court Claim. The Claimant also seeks a declaration that the said claim is an abuse of process.

Background

3. This claim stems from an underlying dispute adjudicated by the DIFC Courts in Taaleem PJSC v (1) National Bonds Corporation PJSC (2) Deyaar Developments PJSC [CFI-014-2010] (19 Feb 2014). In that judgment Justice Sir David Steel found that Taaleem sold an interest in the Sky Gardens Tower (a residential property development in the DIFC) to Deyaar (“the Transaction”). Deyaar denied a contract for sale was concluded and alleged that the transaction was concluded in breach of fiduciary duty and should be set aside. Justice Sir David Steel rejected both arguments and Deyaar was found liable to National Bonds Corporation (“NBC”), the party that provided the finance.

4. Subsequently the Court listed a hearing to settle the orders consequential to the Taaleem Judgment, and Deyaar raised a series of new points. Following a hearing, Justice Sir David Steel issued a further judgment dismissing Deyaar’s arguments. Deyaar then sought permission to appeal the second Taaleem judgment and permission was refused on 3 August 2015. An oral permission hearing took place on 7 September 2015, in which an Order dated 18 November 2015 granted permission to appeal.

5. In the meantime, on 30 June 2015, Deyaar commenced the Dubai Court Claim alleging that its officers (the first, second and fourth defendants in the Dubai Court Claim) made payments to Taaleem and third parties in respect of the Transaction without the authority of Deyaar and without any legal agreements to justify those payments, thus acting in breach of their duties to Deyaar.

6. As a result, the Claimant filed the RDC Part 8 claim with the DIFC Courts seeking an injunction prohibiting the Defendant from pursuing the Dubai Court Claim and seeking a declaration that the DIFC Courts have exclusive jurisdiction over the Dubai Court Claim and that the said claim is an abuse of process.

The Hearing

7. On 18 October 2015, an oral hearing took place before me which was attended by Mr Vernon Flynn with Mr Tom Montagu-Smith assisting for the Claimant, and Mr Tom Leech with Mr Stuart Paterson and Mr Nathan Hooper assisting for the Defendant. During the hearing, both parties presented their arguments in full.

Jurisdiction

8. The jurisdiction issue is two-pronged as the Defendant not only disputes the jurisdiction in the present Part 8 claim, but also disputes jurisdiction over the Dubai Court Claim against the Claimant. Although the two disputes are different the conclusion will be identical for both issues of jurisdiction.

9. The legal framework creating the DIFC and the DIFC Courts has previously been discussed in this Court in CA-005-2014, Meydan Group LLC v Banyan Tree Corporate Pte Ltd, but will be elucidated once more in the present case in light of the jurisdiction dispute. The legal framework begins with the UAE Constitution; in particular an amendment to Article 121 which deals with the division of powers between Federal and Emirati authorities and which allows the Federation to enact a Financial Free Zone Law. The relevant provisions of Article 121 state,

“Without prejudice to the provision of the previous article constitution, the Union shall have exclusive legislative jurisdiction in respect of… organization and method of establishing financial free zones and scope of excluding the same from the implementation of the Federal legislative provisions.”

10. In line with this, Federal Law No. 8 of 2004 was enacted concerning financial free zones which allow a financial free zone to be established in any Emirate of the UAE, by Federal Decree. Article 3(2) states,

“Further, these zones and Financial Activities are subject to all provisions of   Federal Law with the exception of the Federal civil and commercial laws.”

Article 7(3) states,

“Subject to the provisions of Article 3, for the purpose of establishing a Financial Free Zone, the relevant Emirate may issue regulations necessary for it to perform its activity.”

11. Subsequently, Federal Decree No. 35 of 2004 was enacted to specifically establish the DIFC as a financial free zone in the Emirate of Dubai and prescribe the specific geographical location of the DIFC in the heart of Dubai. Article 1 states,

“The establishment of financial free zone in the Emirate of Dubai to be named (Dubai International Financial Centre).”

12. Furthermore, Dubai Law No. 12 of 2004 as amended by Dubai Law No. 16 of 2011 (otherwise known as the “Judicial Authority Law”) was enacted to establish the DIFC Court of First Instance and Court of Appeal and the jurisdiction of the DIFC Courts. The applicable Article on Jurisdiction, otherwise known as the “Gateways” is Article 5(A), which states in full,

(A) The Court of First Instance:

(1) The Court of First Instance shall have exclusive jurisdiction to hear and determine:

(a) Civil or commercial claims and actions to which the DIFC or any DIFC Body, DIFC Establishment or Licensed DIFC Establishment is a party;

(b) Civil or commercial claims and actions arising out of or relating to a contract or promised contract, whether partly or wholly concluded, finalized or performed within DIFC or will be performed or is supposed to be performed within DIFC pursuant to express or implied terms stipulated in the contract;(c) Civil or commercial claims and actions arising out of or relating to any incident or transaction which has been wholly or partly performed within DIFC and is related to DIFC activities;

(d) Appeals against decisions or procedures made by the DIFC Bodies where DIFC Laws and DIFC Regulations permit such appeals;

(e) Any claim or action over which the Courts have jurisdiction in accordance with DIFC Laws and DIFC Regulations.

(2) The Court of First Instance may hear and determine any civil or commercial claims or actions where the parties agree in writing to file such claim or action with it whether before or after the dispute arises, provided that such agreement is made pursuant to specific, clear and express provisions.

(3) The Court of First Instance may hear and determine any civil or commercial claims or actions falling within its jurisdiction of the parties agree in writing to submit to the jurisdiction of another court over the claim or action but such court dismisses such claim or action for lack of jurisdiction.

(4) Notwithstanding Clause (2) of Paragraph (A) of this Article, the Court of First Instance may not hear or determine any civil or commercial claim or action in respect of which a final judgment is rendered by another court.”

13. Thereafter, DIFC Law No. 10 of 2004 was enacted to provide for the independent administration of justice in the DIFC in accordance with Dubai Law No. 12 of 2004. Among other items, the law sets out the jurisdiction of the DIFC Courts, including issues relating to the jurisdiction of the Courts and the Practice and Procedure that the Court will apply. Article 19(1) regarding Jurisdiction states, 

“19. Jurisdiction

(1) The DIFC Court of First Instance has original jurisdiction pursuant to Article 5(A) of the Judicial Authority Law to hear any of the following:

(a) civil or commercial cases and disputes involving the Centre or any of the Centre’s Bodies or any of the Centre’s Establishments;

(b) civil or commercial cases and disputes arising from or related to a contract concluded or a transaction concluded by any of the Centre’s Establishments or the Centre’s Bodies;

(c) civil or commercial cases and disputes arising from or related to a contract that has been executed or a transaction that has been concluded, in whole or in part, in the Centre or an incident that has occurred in the Centre; and

(d) any application over which the DIFC Court has jurisdiction in accordance with DIFC Laws and Regulations;”

14. The Claimant argues that the Dubai Court Claim is subject to the jurisdiction of the DIFC Courts for three reasons: the Transaction was concluded in the DIFC under Article 5 (A)(1)(b) (cited above), it involves an event that occurred in the DIFC under Article 5 (A)(1)(c) and the claim relates to a DIFC Trust in respect of property within the DIFC under DIFC Trust Law, Article 20 and Article 5(A)(1)(e) (cited above).

15. In response, the Defendant submits that the Dubai Courts Claim does not fall within exclusive jurisdiction of the DIFC Courts and that Article 5(A) “carves out” of the general jurisdiction of the Dubai Courts exclusive jurisdiction over civil or commercial claims which have a sufficient connection with the DIFC. Pursuant to this, the Defendant argues that Article 5(A) should be construed narrowly as the proceedings are not so closely connected with matters of DIFC contract law or the DIFC law of trusts that the proceedings should not be tried anywhere but in the DIFC Courts.

16. It is plain to me that the claim in this case and indeed the Dubai Courts Claim arises out of and relates to the same matters dealt with in the Taaleem judgments by Justice Sir David Steel.

17. According to the Defendant, the case against the Claimant in the Dubai Courts Claim is summarised by arguing that the Claimant signed an MOU which he knew to be false and misled Deyaar’s board as to the Transaction and is therefore liable under Articles 282 and 106 of the UAE Civil Code. (See paragraph 18 of Defendant’s Skeleton Argument, 14 Oct 2014)

18. The claim against the Claimant therefore arises out of and relates to the same agreement that was the subject of the Taaleem proceedings, the same Transaction that was concluded in part in the DIFC.

19. As a result, there is no material difference between the subject matter of the Taaleem proceedings and the subject matter of the Dubai Court Claim and by extension the present claim. Accordingly, the DIFC Court has jurisdiction over both the present claim and the Dubai Court Claim to the exclusion of the Dubai Courts. (The question of jurisdiction as to the Taaleem proceedings has been previously adjudicated in full with two judgments by Justice Sir John Chadwick as well as a Court of Appeal judgment upholding DIFC jurisdiction[1]).

20. It is noteworthy to add that in the course of the present proceedings, the Dubai Court of First Instance dismissed the Dubai Court Claim brought by Deyaar against the Claimant (and other defendants) for lack of jurisdiction on 28 October 2015, which further illustrates that the DIFC Courts undoubtedly have jurisdiction over these proceedings.

The Injunction and Abuse of Process

21. Due to the interrelated nature of the remedy and declarations sought by the Claimant, I will consider the issues of the interim injunction and abuse of process together.

22. In the present proceedings the Claimant seeks an injunction requiring Deyaar to withdraw the Dubai Court Claim against the Claimant in the interests of justice. The Claimant’s argument is that the Dubai Court Claim is vexatious and oppressive and constitutes an abuse of process.

23. As to the abuse of process argument, the Claimant’s position is that the Dubai Courts Claim is an abuse of process for two reasons. First, that it is a claim that could and should have been brought together with the Taaleem proceedings and second, that the claim is a collateral attack on the Taaleem

24. In response, the Defendant argues that had Deyaar brought the proceedings in the DIFC Courts rather than the Dubai Courts it would not have been an abuse of process so a priori it cannot be an abuse of process to bring them in the Dubai Courts. Additionally the Defendant argues that it is not an abuse of process to re-litigate an issue the determination of which was not fundamental or essential to the conclusion reached in the earlier proceedings or where re-litigation would not be manifestly unfair. As such, the Defendant maintains that the application for an injunction should be dismissed.

25. On the injunction issue, I am inclined to take the view of Justice Sir John Chadwick in Taaleem v National Bonds [CFI-014-2010] (21 Oct 2010). In those proceedings the Claimant Taaleem asked this Court for an injunction requiring the First Defendant NBC to stay the proceedings in the Dubai Civil Court. To this, Justice Sir John Chadwick ruled,

“15. I am asked, in effect, to make an order which is intended to have the result that the Dubai Civil Court will not have the opportunity…of considering the question whether or not it claims jurisdiction. I put it that way because, if the Dubai Civil Court were to accept that the dispute fell within one or other of the five heads in Article 3 of the Protocol, it could be expected to recognise, under the terms of the Protocol, that exclusive jurisdiction lay in this Court. Equally, if the Dubai Civil Court were to reach the conclusion that the matter did not fall within one or other of those five heads then [sic] Article 4 of the Protocol it would be led to the view that the matter was exclusively within its own jurisdiction.

16. In those circumstances, as it seems to me, the sensible course is to allow the Dubai Civil Court to consider the matter unimpeded by any order of this Court in the terms sought in the present application. The Dubai Civil Court will know that this Court has made the order of 26 September accepting jurisdiction. It will have the opportunity to consider, first, whether it accepts that view of jurisdiction; second whether, it prefers to await a reasoned judgment of this Court before coming to a conclusion on that point; and third, whether it would prefer to wait until there was an appeal judgment in this Court on the point.

…

18. What, as it seems to me, is unlikely to be helpful is for this Court to seek to appropriate to itself the right to decide questions of jurisdiction to the exclusion of the Dubai Civil Court; without affording to the Dubai Civil Court the opportunity of considering the problem in the individual case. It may be expected – that as the jurisprudence develops and as more cases come before the two Courts – a pattern will emerge which enables the parties and their advisors to predict with reasonable certainty which Court will accept jurisdiction and which will not.

19. It is plainly not intended either that both Courts will accept jurisdiction; or that both Courts will decline jurisdiction. The framework within the legislation in force in the Emirate contemplates these matters will be heard in one Court rather than the other and sets out provisions which enables a decision to be made as to which Court that should be.”

26. I concur with the idea that to grant the injunction and seek the right to decide questions of jurisdiction to the exclusion of the Dubai Court (and to the neglect of the Protocol) is unlikely to be helpful. Furthermore the DIFC Courts should hesitate to stop a party from filing a claim in another court regardless of whether or not we have assumed jurisdiction.

27. As Justice Sir John Chadwick noted in paragraph 19 cited above, the framework within the legislation between the two courts operate to produce a reasonable and accurate outcome with regards to jurisdiction. Given the facts of the underlying case and the fact that the Dubai Court of First Instance has already dismissed the Dubai Court Claim for want of jurisdiction, it seems wholly unnecessary to grant an injunction at this stage. In addition to this, the Union Supreme Court, (“USC”) as the highest judicial court in the UAE has amongst other powers, the authority to hear any conflicts in jurisdiction between Dubai and the DIFC Courts. Surely, the USC has the jurisdiction to hear any jurisdictional or constitutional issues in all of the Emirates, including the DIFC. The establishment of the USC is laid out in Federal Law No 10. of 1973 as amended by Law No. 26 of 1992 and the DIFC is certainly not exempted from the jurisdiction of the USC. As his Excellency Justice Al Madhani directed in ARB-001-2014, X1 and X2 v Y,

“I also agree with the Defendant’s submission that the DIFC regime is not exempted from the jurisdiction of the USC when it comes to the Constitutionality Examination, including the fact that the DIFC Court is a UAE Court that can refer a matter to the USC if requested to do so, and then must comply with the decision of the USC rendered in that connection.”

28. In view of this and for the reasons stated above, I am not inclined to make a declaration asserting abuse of process.

29. For these reasons I dismiss the remedy sought in the Claimant’s application for an injunction and a declaration that the Dubai Court Claim constitutes an abuse of process.

Costs

30. My provisional view is that there should be no order as to costs but this is without the benefit of any argument. If the parties are unable to agree on the costs issue, I invite each side to furnish details of their costs together with short written submissions within 21 days of the date of this judgment.

Issued by:

Natasha Bakirci

Assistant Registrar

Date of Issue: 9 December 2015

At: 3pm

The post CFI 024/2015 Ziad Azzam v Deyaar Development PJSC appeared first on DIFC Courts.

Claim No. CFI 027/2014

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN COURT OF FIRST INSTANCE

BETWEEN

       LEGATUM LIMITED

Claimant

and

ARIF SALIM

Defendant

AMENDED ORDER OF JUSTICE SIR RICHARD FIELD ON COSTS AND INTEREST

UPON the Judgment of Sir Richard Field dated 11 November 2015 awarding the Claimant damages in the sum of USD 690,533 and ordering the Claimant and the Defendant to file submissions on costs and interest;

AND UPON the Claimant filing their submissions on 18 November 2015;

AND UPON the Defendant filing their submissions on 25 November 2015;

IT IS HEREBY ORDERED THAT:

1. The Defendant shall pay to the Claimant within 21 days of the date of the original order (29 November 2015) damages in the sum of USD 690,533.

2. The Defendant shall pay to the Claimant its costs of the action herein to be assessed on the indemnity basis if not otherwise agreed.

3. The Defendant shall pay to the Claimant within 21 days of the date of the original order (29 November 2015) the sum of USD 300,000 on account of the costs awarded to the Claimant in paragraph 2 hereof.

4. The Defendant shall pay interest on the said damages awarded in paragraph 1 hereof at the rate of 1.82171% per annum which to the date of the original order (29 November 2015) amounts to USD 11,373.54 and continues to accrue at the daily date of USD 34.46

Issued by:

Natasha Bakirci

Assistant Registrar

Date of Issue: 9 December 2015

At: 4pm

The post CFI 027/2014 Legatum Limited v Arif Salim appeared first on DIFC Courts.

Claim No: CA 002/2015

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai

IN THE COURT OF APPEAL

BEFORE THE CHIEF JUSTICE MICHAEL HWANG SC, JUSTICE SIR RICHARD FIELD AND H.E. JUSTICE OMAR AL MUHAIRI

BETWEEN

Y

                                                                  Appellant/Defendant

and

 (1) X1

(2) X2

Respondents/Claimants 

Hearing:           5 May 2015

Counsel:           Steven Thompson QC for the Appellant

Tom Montagu-Smith instructed by Fichte & Co for the Respondents

Judgment:        22 November 2015

JUDGMENT

Summary of Judgment

 This summary is not part of the Judgment and should not be cited as such

ORDER

UPON hearing Counsel for the Appellant and Counsel for the Respondents on 5 May 2015

AND UPON reading the submissions and evidence filed and recorded on the Court file

IT IS HEREBY ORDERED THAT:

1. The Appellant’s appeal is dismissed.

2. The Appellant will pay the Respondent’s costs of the appeal, such costs to be assessed if not agreed.

3. Pursuant to Rule 43.42(4) of the Rules of the DIFC Courts, a report of the judgment in the appeal shall be published, subject to paragraph 4 of this Order.

4. Pursuant to Rule 43.42(5) of the Rules of DIFC Courts, the report of the judgment shall be amended to conceal:

(a) The identity of the parties; and

(b) The identity of the law firm instructed by the Appellant.

5. For the avoidance of doubt, the following matters shall not be concealed in the judgment:

(a) The identity of the law firm instructed by the Respondent; and

(b) The identity of counsel for the parties.

Issued by:

Mark Beer

Registrar

Date of Issue:  23 November 2015

At: 10am 

JUDGMENT

CHIEF JUSTICE MICHAEL HWANG:

Introduction

1. This is an appeal by the Appellant against the decision of H.E. Justice Ali Al Madhani (the “Judge”) dated 12 October 2014 dismissing the Appellant’s application of 2 October 2014 (ARB-001-2014/3) for permission to adduce expert evidence on the public policy of the United Arab Emirates (“UAE”) with regard to the Appellant’s application to challenge the jurisdiction of the Dubai International Financial Centre (“DIFC”) Courts to entertain a claim for recognition and enforcement of two arbitration awards dated 14 September 2012 and 12 April 2013 respectively.

The Facts

2. The Appellant is the unsuccessful party in arbitration (“Arbitration”) under the London Maritime Arbitrators Association (“LMAA”) Terms (2006) brought against it by the Respondents pursuant to a Request for Arbitration dated 29 July 2011. The Arbitration was commenced pursuant to an arbitration agreement in a charterparty in respect of a vessel known as “ABC”. The seat of the arbitration was London, United Kingdom, and the governing law of the charterparty was English law. Two awards were issued by the Tribunal: (i) the first Partial Award, issued on 14 September 2012; and (ii) the second Partial Award, issued on 12 April 2013 (the “Two Awards”).

3. On 17 April 2014, the Respondents filed a claim (the “R&E Claim”) with the DIFC Courts (ARB-001-2014) for the recognition and enforcement of the Two Awards in accordance with Articles 42 and 44 of the DIFC Arbitration Law (DIFC Law No. 1 of 2008) (“DIFC Arbitration Law”), which was served on 29 April 2014. On 27 May 2014, the Appellant issued an application with the DIFC Courts to challenge the jurisdiction of the DIFC Courts to entertain the R&E Claim, in particular, on the ground that recognition and enforcement of the Two Awards would be contrary to the public policy of the UAE under Article 44(1)(b)(vii) of the DIFC Arbitration Law. According to the Appellant, the underlying issue was whether, on the facts of the case, it would be in accordance with UAE public policy to permit a claimant to use the DIFC as a conduit to enforcement in Dubai (outside the DIFC) when the defendant has no connection whatsoever to the DIFC, thereby circumventing the rules that would otherwise apply to recognition and enforcement of foreign arbitration awards in the UAE.

4. On 7 August 2014, the Appellant issued an application for: (i) a referral of the issue of the constitutionality of the DIFC laws upon which the Respondents relied on vis-à-vis UAE federal law for determination by the Union Supreme Court of the UAE under Article 151 of the UAE Constitution; and (ii) a stay of the R&E Claim pending the determination of the Union Supreme Court of the UAE (the “Constitutionality Application”). On 17 September 2014, H.E. Justice Ali Al Madhani heard and dismissed the Appellant’s Constitutionality Application (with reasons to follow), and issued certain directions.

5. On 2 October 2014, the Appellant made an application (ARB-001-2014/3) for permission of the Court to rely upon expert evidence of UAE law of public policy (the “Expert Evidence Application”), pursuant to Rule 31.13 of the Rules of the DIFC Courts 2014 (“RDC”). In particular, the Appellant requested the Court for permission to submit and rely on expert evidence on the following issues, namely:

(a) What constitutes public policy in the UAE;

(b) What is the scope and applicability of UAE public policy;

(c) What is the UAE public policy set out in UAE law and/or other relevant sources; and

(d) Whether the relief sought by the Respondents in these proceedings (if granted and if the Respondents were to seek to enforce any such order or judgment against the Appellant under the DIFC Judicial Authority Law (DIFC Law No. 12 of 2004) (“DIFC JAL”) would violate public policy.

The Appellant argued that the application should be allowed because an expert would be needed to consider the unique position of the DIFC Courts (being the courts of an English language, common law jurisdiction that is independent of the UAE and Dubai’s other legal systems) with regard to recognising and enforcing arbitral awards that are wholly unconnected to the DIFC.

6. On 12 October 2014, H.E. Justice Ali Al Madhani dismissed the Expert Evidence Application and directed that the Parties could provide copies of relevant legislation, commentary, case law and written submissions for consideration at trial (the “Expert Evidence Decision”). The reasons for the Judge’s decision on the Expert Evidence Application were released on 15 December 2014 (see below).

7. On 23 October 2014, the Appellant served evidence of UAE law, including the fourth witness statement of Mr Robert Irvine Marr (a solicitor acting for the Appellant) (“Mr Marr’s Fourth Statement”) and a statement of Mr James Whelan (a commentator on UAE law) (“Mr Whelan’s Statement”) together with associated commentary, legislation and case law. On 27 October 2014, the Respondents issued an application (ARB-001-2014/4) to strike out certain sections of the Appellant’s evidence (including Mr Marr’s Fourth Statement and Mr Whelan’s Statement), arguing that those pieces of evidence were plainly introducing expert evidence that the Appellant was denied permission to introduce in the Judge’s decision on the Expert Evidence Application. On 10 November 2014, the Judge determined the Respondents’ application to strike out the evidence without a hearing, striking out parts of Mr Marr’s Fourth Statement and the entirety of Mr Whelan’s Statement (the “Striking Out Order”).

8. On 17 November 2014, the Appellant issued an application to set aside the Striking Out Order and for a hearing to consider the Respondents’ application afresh at an oral hearing. On 27 November 2014, the Judge heard the Appellant’s application of 17 November 2014 and affirmed his decision in the Striking Out Order.

9. On 15 December 2014, the Judge released to the Parties his written reasons for his decision on the Expert Evidence Application of 12 October 2014 (the “Reasons for the Expert Evidence Decision”).

10. On 16 December 2014, the trial for the R&E Claim took place, with judgment being reserved after the hearing.

11. On 6 January 2015, the Appellant filed an Appeal Notice against the Judge’s Expert Evidence Decision dated 12 October 2014 (the “Appeal”). On 13 January 2015, the Appellant filed a Skeleton Argument (“Appellant’s Skeleton Argument”).

12. On 29 January 2015, Chief Justice Michael Hwang SC issued an order granting leave to appeal pursuant to Rule 44.8(2) of the RDC, on the basis that the subject matter of the appeal was one of public importance.

13. On 28 April 2015, the Respondents filed their Skeleton Argument (“Respondents’ Skeleton Argument”).

14. On 5 May 2015, the hearing for the Appeal was held. At the conclusion of the oral hearing, the Court delivered an oral judgment dismissing the Appeal with costs to the Respondent to be assessed if not agreed. After the close of the hearing, the Court conferred and (through myself) delivered an oral judgment dismissing the Appeal, with costs to the Respondents to be assessed if not agreed. I now proceed to give the reasons for my decision, with which my brother judges are in agreement.

The Statutory Provisions

15. The relevant provisions of the DIFC Arbitration Law are as follows (with emphasis added):

“42. Recognition and enforcement of awards

(1) An arbitral award, irrespective of the State or jurisdiction in which it was made, shall be recognised as binding within the DIFC and, upon application in writing to the DIFC Court, shall be enforced subject to the provisions of this Article and of Articles 43 and 44. For the avoidance of doubt, where the UAE has entered into an applicable treaty for the mutual enforcement of judgments, orders or awards the DIFC Court shall comply with the terms of such treaty.

(2) The party relying on an award or applying for its enforcement shall supply the original award or a duly certified copy thereof and the original Arbitration Agreement referred to in Article 12 or a duly certified copy thereof. If the award or the agreement is not made in English, the DIFC Court may request the party to supply a duly certified translation thereof.

(3) For the purposes of the recognition or enforcement of any award within the DIFC, an original award or an original Arbitration Agreement shall be duly certified if it is a copy that is certified in the manner required by the laws of the jurisdiction in the place of arbitration or elsewhere. A translation shall be duly certified if it has been certified as correct by an official or sworn translator in the place of arbitration or elsewhere.

(4) Awards issued by the DIFC Court may be enforced within the DIFC in the manner prescribed in this Law and any rules of Court made for this purpose. Awards recognised by the DIFC Court may be enforced outside the DIFC in accordance with the Judicial Authority Law and recognition under this Law includes ratification for the purposes of Article 7 of the Judicial Authority Law.

…

44. Grounds for refusing recognition or enforcement

(1) Recognition or enforcement of an arbitral award, irrespective of the State or jurisdiction in which it was made, may be refused by the DIFC Court only:

(a) at the request of the party against whom it is invoked, if that party furnishes to the DIFC Court proof that:

(i) a party to the Arbitration Agreement as defined at Article 12 of this Law was under some incapacity; or the said Arbitration Agreement is not valid under the law to which the parties have subjected it or, in the absence of any indication thereon, under the law of the State or jurisdiction where the award was made;

(ii) the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case;

(iii) the award deals with a dispute not contemplated by or not falling within the terms of the submission to Arbitration, or it contains decisions on matters beyond the scope of the submission to Arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to Arbitration may be recognised and enforced;

(iv) the composition of the Arbitral Tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, in the absence of such agreement, was not in accordance with the law of the State or jurisdiction where the arbitration took place; or

(v) the award has not yet become binding on the parties or has been set aside or suspended by a Court of the State or jurisdiction in which, or under the law of which, that award was made; or

(b) if the DIFC Court finds that:

(vi) the subject-matter of the dispute would not have been capable of settlement by Arbitration under the laws of the DIFC; or

(vii) the enforcement of the award would be contrary to the public policy of the UAE.

(2) If an application for the setting aside or suspension of an award has been made to a Court referred to in paragraph (1)(a)(v) of this Article, the DIFC Court may, if it considers it proper, adjourn its decision and may also, on the application of the party seeking recognition or enforcement of the award, order the other party to provide appropriate security.

(3) Any party seeking recourse against an arbitral award made in the Seat of the DIFC shall not be permitted to make an application under paragraph (1)(a) of this Article if it has made or could have made an application under Article 41 of this Law.”

16. The relevant provisions of the DIFC JAL are as follows:

“Article 2 – Definitions

The following words and expressions, wherever mentioned in this law, shall have the meaning indicated opposite each of them unless the context implies otherwise:

…

Ruler:                                       His Highness the Ruler of Dubai

…

DIFC Laws:                               Any laws issued by the Ruler in relation to DIFC

DIFC Regulations:                    Any rules, regulations, bylaws or orders relating to DIFC issued by the President or by DIFC Bodies

…

Article 6 – Governing Law

The Courts shall apply the Centre’s Laws and Regulations, except where parties to the dispute have explicitly agreed that another law shall govern such dispute, provided that such law does not conflict with the public policy and public morals.”

17. The relevant provisions of the DIFC Court Law (DIFC Law No. 10 of 2004) (“DIFC Court Law”) are as follows:

“9. Appointment of Judges

…

(3) A person is qualified to be appointed as a Judge if:

(a) the person is or has been the holder of high judicial office in any jurisdiction recognised by the Government of the United Arab Emirates; and

(b) the person has significant experience as a qualified lawyer or judge in the common law system.

…

30. Governing Law

(1) In exercising its powers and functions, the DIFC Court shall apply:

(a) the Judicial Authority Law;

(b) DIFC Law or any legislation made under it;

(c) the Rules of Court; or

(d) such law as is agreed by the parties.

(2) The DIFC Court may, in determining a matter or proceeding, consider decisions made in other jurisdictions for the purpose of making its decision

…

50. Application of Evidence

Where proceedings are instituted in the DIFC Court, the rules of evidence to be applied in the proceeding will be the rules that:

(a) are prescribed in DIFC Law; or

(b) are applied in the courts of England and Wales; or

(c) the DIFC Court considers appropriate to be applied in the circumstances.”

18. The relevant provisions of the DIFC Law on the Application of Civil and Commercial Laws in the DIFC (DIFC Law No. 3 of 2004) (“DIFC LACCL”) are as follows:

“8. Application

(1) Since by virtue of Article 3 of Federal Law No. 8 of 2004, DIFC Law is able to apply in the DIFC notwithstanding any Federal Law on civil or commercial matters, the rights and liabilities between persons in any civil or commercial matter are to be determined according to the laws for the time being in force in the Jurisdiction chosen in accordance with paragraph (2).

(2) The relevant jurisdiction is to be the one first ascertained under the following paragraphs:

(a) so far as there is a regulatory content, the DIFC Law or any other law in force in the DIFC; failing which,

(b) the law of any Jurisdiction other than that of the DIFC expressly chosen by any DIFC Law; failing which,

(c) the laws of a Jurisdiction as agreed between all the relevant persons concerned in the matter, failing which,

(d) the laws of any Jurisdiction which appears to the Court or Arbitrator to be the one most closely related to the facts of and the persons concerned in the matter; failing which,

(e) the laws of England and Wales.”

The Decision Below

19. In the Reasons for the Expert Evidence Decision, the Judge held that the appropriate course was to refuse permission to adduce the expert evidence because he was a judge trained and qualified in UAE civil law (in addition to English common law), and that it was open to the parties to serve materials (including any legislation, case law, textbook writings or other academic commentary) that they would have put before an expert in relation to UAE public policy for the Judge’s review.

20. The Judge relied on Taaleem PJSC v National Bonds Corporation PJSC and anor (12 May 2013) CFI 014/2010 (“Taaleem”), in which Deputy Chief Justice Sir Anthony Colman (as he then was) (“DCJ Colman”) had allowed an application to adduce expert evidence on non-DIFC Dubai law, stating that, in a case where the Court is manned by a judge whose training is in the common law (and not in non-DIFC UAE Law) and there are numerous complex matters of non-DIFC Dubai law, “the ordinary approach will be for expert evidence to be given, unless the parties are able to agree that the Dubai non-DIFC law can be put before the judge in some agreed form or in some other way” (at [9]), but also adding in obiter that “[w]here the case is manned by a judge who has been trained in Dubai non-DIFC law, it seems to me that in the ordinary way it should not be necessary for such a judge to require that expert evidence should be called, either evidence given by witnesses or evidence given in a written form, for him to resolve the issues which may arise. There may be cases where the issues of non-DIFC law are particularly complex or where views of writers upon the subject, or decisions of the courts in Dubai, are in conflict. In those circumstances, it may be of assistance to the judge in question to hear the views of writers and academic opinion as to what the law may be” (at [8]) (emphasis added).

21. In Taaleem, DCJ Colman explained that this was because, while matters to be tried in the Court of First Instance could be heard either by a judge whose training was in the Common Law or by a judge whose training was in non-DIFC Dubai law as well as DIFC law, the latter judge, being trained in non-DIFC Dubai law, would be in a completely different position from the former when it came to deciding issues of law that were essentially issues of non-DIFC Dubai law, as he would be drawing upon his own legal and judicial training, supported by reference to the relevant texts and writings (and not upon opinions by witnesses as to the content of the non-DIFC Dubai law). This approach will be referred to in this judgment as the “Taleem approach”.

The Issues before the Court

22. The central premise of the Appellant’s argument in this appeal is that the learned Judge erred in following the Taaleem approach and in refusing to admit formal expert evidence on UAE public policy because non-DIFC UAE law is ‘foreign’ law in the DIFC Courts, which must be proved as a fact by relevant expert evidence.

23. There are essentially three issues in this appeal.

(1) Whether the DIFC Courts are bound to construe non-DIFC UAE law as ‘foreign’ law and require it to be proved as a fact via expert evidence in accordance with the position in English law (“Issue 1”);

(2) If Issue 1 is found in the negative, whether the English approach (as described in Issue 1), the Taaleem approach, or some other approach should apply to questions of non-DIFC UAE law before the DIFC Courts (“Issue 2”);

(3) If the Court be minded to allow the Appeal, whether the Court should make an order for a rehearing of the R&E Claim or an order reserving any relevant issue of non-DIFC UAE law until after the hearing of the R&E Claim (“Issue 3”).

24. This Court is aware that the decision being appealed against is a case management decision. As a general rule, a case management decision should not be interfered with by an appellate court unless it is satisfied that the judge below had: (a) erred in principle; (b) taken into account irrelevant matters; (c) failed to take into account relevant matters; and/or (d) come to a decision so plainly wrong that it must be regarded as outside the generous ambit of the discretion entrusted to the judge: see e.g. Royal & Sun Alliance Insurance PLC v T&N Limited [2002] EWCA Civ 1964 at [38]. 

The Grounds of Appeal

Issue 1: Whether the DIFC Courts are bound to construe non-DIFC UAE law as ‘foreign’ law and require it to be proved as a fact via expert evidence in accordance with the position in English law (the “English approach”)

Appellant’s Arguments

25. The Appellant argued at the appellate hearing that the DIFC Courts should be considered to be common law courts in which non-DIFC UAE law is deemed to be foreign law, so that non-DIFC UAE law must be proven as a fact by expert evidence in accordance with the position under English law, because: (i) the DIFC Courts were required under the relevant DIFC statutory provisions to apply English law by default; and (ii) DIFC judges were not required under Art 9(3) of the DIFC Court Law to have any non-DIFC UAE background or training.

26. According to the Appellant, the DIFC Courts would be required to apply English law by default through the following logical sequence.

27. First, the DIFC Courts are required to apply Art 8(2) of the DIFC LACCL pursuant to two statutory provisions: (i) under Art 6 of the DIFC JAL, the DIFC Courts are to apply the DIFC’s Laws and Regulations, which would include the DIFC LACCL, in which Art 8(1) states that, “the rights and liabilities between persons in any civil or commercial matter are to be determined according to the laws for the time being in force in the Jurisdiction chosen in accordance with [Art 8(2) of the DIFC LACCL]”; and (ii) under Art 30(1)(b) of the DIFC Court Law, the DIFC Courts are to apply “DIFC Law or any legislation made under it”, which would also include Art 8(2) of the DIFC LACCL.

28. Second, Art 8(2) of the DIFC LACCL provides for a cascade of laws in which the laws of England and Wales are provided as the default position under Art 8(2)(e) if Art 8(2)(a)-(d) do not apply. Since there is no specific DIFC law that deals with the question of the treatment of non-DIFC UAE law in the DIFC Court, and Arts 8(2)(b)-(d) do not apply, English law (and the English approach of treating any foreign law, including non-DIFC UAE law, as fact) applies by default pursuant to Art 8(2)(e) of the LACCL.

Respondents’ Arguments

29. The Respondents argued at the appellate hearing that the DIFC Courts are not confined to the English approach when dealing with the issue of evidence because Art 50 of the DIFC Court Law provides the DIFC Courts with the discretion to apply the rules of evidence they consider appropriate in the circumstances.

Issue 2: if Issue 1 is found in the negative, whether the Taaleem approach or some other approach should apply to questions of non-DIFC UAE law before the DIFC Court

Appellant’s Arguments

30. The Appellant has argued that the English approach should be applied to all questions of non-DIFC UAE law before the DIFC Court, so that non-DIFC UAE law is treated as a fact that must be proven by expert evidence, and that Taaleem should not be followed. The Appellant had initially argued that the principle set out in Taaleem was correct, but that the Judge had applied it incorrectly (as stated in the Second Witness Statement of Mr Keith Lyall Hutchison at [23]-[24]). The Appellant subsequently took the position in its Skeleton Argument and before this Court of Appeal that Taaleem was wrongly decided and that the DIFC Courts should always decide issues of non-DIFC law by reference to expert evidence.

31. First, the Appellant argues that there are several practical concerns with Taaleem’s approach of resolving the issue purely as one of practicality.

(a) As the majority of Counsel appearing in the DIFC Courts are not trained in UAE law, such Counsel may, absent the benefit of an expert in UAE law, misunderstand or misinterpret the law without the Court appreciating the possibility that an unintended side effect of Taaleem may be that the parties will be forced to instruct two Counsel or even two firms of lawyers (the “Inadequate Counsel Argument”);

(b) It requires each case to be docketed to one judge (or at least one of the two types of judges) from the beginning of the case (the “One Docketed Judge Argument”);

(c) A party will not know whether a decision made on the UAE law is one of law or fact, which might be critical for an appeal (the “Law/Fact Uncertainty Argument”); and

(d) The DIFC Court of Appeal may well comprise only a minority of judges (or even none at all) familiar with the UAE law interpreted by the Court of First Instance judge, which may lead to the conduct of such appeals being at best confusing and at worst unjust (the “Conduct of Appeals Argument”).

(e) By refusing to receive the commentary of Mr Whelan in an expert’s report but at the same time being willing to accept a commentary by him published in a book, the Judge drew an artificial distinction, which arose only because the Taaleem case avoided deciding the status of non-DIFC UAE law in the DIFC Courts.

32. Second, the Appellant submits that, as a matter of principle, the DIFC Courts ought to accept (in some or all cases) expert evidence on the UAE law of public policy, for the following reasons.

(a) The area of public policy is a “notoriously difficult one”, being liable to change over time and with social and judicial attitudes likely dissimilar to the public policy of common law countries.

(b) The public policy of the UAE at any time is not something that will be automatically familiar to all of the judges of the DIFC (even those who had previously been judges in the non-DIFC Dubai Courts).

(c) It is unlikely that UAE public policy will be similar to the public policy of common law countries.

33. Third, the Appellant submits that, for the following reasons, the DIFC Courts should not adopt the approach of treating all UAE law as ‘DIFC law’ and allowing the expert evidence in question to be submitted as part of Counsel’s legal submissions.

(a) Unlike expert evidence, legal submissions cannot be tested by cross-examination; and

(b) Counsel untrained in UAE law would be forced to make legal submissions and address questions on them that are outside their expertise. 

Respondents’ Arguments

34. In their Skeleton Argument, the Respondents submit that, rather than having a rigid approach of either requiring UAE law to be (or not to be) proved by expert evidence in all cases, the DIFC Courts should instead adopt a flexible approach, taking into account all the circumstances of the case. The Respondents also submitted that the alleged practical concerns with Taaleem’s approach are not insurmountable, and that the Judge’s conclusion was in any event correct.

35. First, the Respondents submit that the DIFC Courts should not adopt the English approach of requiring all ‘foreign’ law (in this case, non-DIFC UAE law) to be proved by means of expert evidence, for the following reasons.

(a) The English approach is inconsistent with the way in which the DIFC Courts have approached issues of non-DIFC UAE law to date; see: (i) the cases of Lutfi v DIFCA (CA 003/2014) (26 November 2014) (“Lutfi”) at [65]-[71] and Herz v DIFCA (CA 004/2014) (26 November 2014) (“Herz”) at [61]-[65], [87]-[93], where the DIFC Court of Appeal considered pension rights eligibility under non-DIFC UAE law; (ii) TVM Capital Healthcare Partners Ltd v Ali Akbar Hashemi (CA 006/2014) (16 December 2014) (“TVM Capital”) at [14]-[23]; (iii) Injazat Capital Ltd v Denton Wilde Sapte & Co (CFI 019/2010) (6 March 2012) (“Injazat”) at [32]-[34]; (iv) International Electromechanical Services Co. LLV v Al Fattan Engineering LLC (CFI 004/2012) (14 October 2012) (“Al Fattan”) at [50]-[57]; and (v) X v Y (ARB 001/2014) (5 January 2015) (“X v Y”), in which the Appellant’s Constitutionality Application, which necessarily involved a comparison between DIFC and non-DIFC UAE law, was resolved by the Court without either Party submitting expert material on non-DIFC UAE law.

(b) The wholesale adoption of the English approach would produce an inflexible regime, with the following effects: (i) the Court could not consider passages in foreign law materials that had not been referred to by the experts: Bumper Development Corporation v Commissioner of Police of the Metropolis and others [1991] 1 WLR 1362 (“Bumper Development”) at 1369B; (ii) uncontradicted expert evidence could not be rejected by the Court unless it was patently absurd: Bumper Development at 1369B; and (iii) the Court could not ignore evidence of foreign law on the basis that a conclusion unsupported by the evidence appeared more coherent: Harley v Smith [2010] EWCA Civ 78 (“Harley”) at [48]-[50].

(c) Even the English Courts accept the existing English approach with a degree of reluctance. In Morgan Grenfell & Co Ltd v SACE Instituto Per I Servizi Assicurativi Commercio [2001] EWCA Civ 1932 (“Morgan Grenfell”), Clarke LJ (as he then was) stated (at [53]) that he hoped that the English Courts could soon be permitted to take judicial notice of decisions of foreign courts (including those in the European Union), and perhaps academic writings, in deciding the content of the relevant foreign law.

(d) Even under English law, the approach of a judge to foreign law is not uniform, as where a judge has a degree of familiarity with the concepts of a particular foreign law (e.g. where the foreign law is written in English and/or its concepts are not so different from English law), he would be expected to apply that knowledge and experience to the issue: MCC Proceeds Inc v Bishopsgate Investment Trust plc [1999] CLC 417 (“MCC Proceeds”) at [12]-[13], per Evans LJ (as he then was). In the DIFC Courts, where the majority of the judges have very significant experience in non-DIFC UAE law (three out of the ten current judges are fully familiar with UAE law, and three more sit on the Dubai World Tribunal, where disputes are frequently decided in accordance with non-DIFC UAE law), it would be “surprising” if, for example, a member of the Dubai World Tribunal were, when sitting in the DIFC Courts, deemed to be not competent to apply non-DIFC UAE law without expert assistance.

(e) The value of the English approach has been doubted in the arbitration context, where the arbitral tribunal may comprise arbitrators from varying legal traditions, including those not of the governing law or lex arbitri in question. In such cases, all ‘law’ is treated as ‘law’, with Counsel making legal submissions on all disputed areas of the law in question: see Redfern and Hunter on International Arbitration (London: Sweet & Maxwell, 2009) (“Redfern and Hunter”) at [6.169]-[6.172].

(f) The line between DIFC law and non-DIFC UAE law could be difficult to draw. Certain provisions of Federal and Dubai Law apply directly in the DIFC (e.g. the laws establishing the legal framework of the DIFC and its Courts and the laws establishing special tribunals, such as the Dubai World Tribunal, the Tamweel Tribunal and the Amlak Tribunal).

(g) If expert evidence of non-DIFC UAE law were required in every case because it is a ‘foreign’ or ‘non-DIFC’ law, then expert evidence would a fortiori be required of all other foreign laws, including English law, which would be an “absurd” result. The Appellant attempted to avoid this conclusion by stating that DIFC law “incorporates common law”, but DIFC law is not (solely) the law of England and Wales or of any other common law jurisdiction, and differs from orthodox common law in several respects (including on matters as fundamental as contractual interpretation).

(h) The Appellant’s assertion that DIFC law “incorporates” common law is a tacit admission that having experts give evidence on English, Singapore, Malaysian or Australian law, for example, would be absurd, which can only be because: (i) the DIFC Courts have judges with expertise in those systems of law; and (ii) the similarities between common law systems means that all judges have a firm and common foundation from which to approach the laws of other common law countries. In other words, the Appellant is in fact saying that the experience and qualifications of a DIFC judge in another system of law is a relevant factor in deciding whether expert evidence is required – which was the effect of the Taaleem

36. Second, the Respondents submit that the Appellant’s “practical concerns” with the Taaleem approach (i.e. to have no need for non-DIFC UAE law proved by expert evidence where the presiding judge has expertise in such non-DIFC UAE law) are not insurmountable, for the following reasons.

(a) On the Inadequate Counsel Argument, even if experts were hired, there would still be a need in practice to hire two counsel or law firms in practice in any event. However, the appointment of experts is more cumbersome as it requires reports, meetings and oral evidence. This extra procedural layer is unnecessary if UAE lawyers were instructed to simply make submissions (written or oral).

(b) On the One Docketed Judge Argument, the practice of docketing each case to one judge does not appear to have caused any difficulty to date – by the time the issue came for decision (in both Taaleem and in this case), the final hearing had been allocated to a single judge.

(c) On the Law/Fact Uncertainty Argument, even if the non-DIFC UAE law decision were deemed to be a fact, it is a “peculiar kind” of fact, which well places the DIFC Court of Appeal to review the material that was before the judge, whether or not experts were engaged (citing Richard Fentiman, International Commercial Litigation (United Kingdom: Oxford University Press, 2012) (“Fentiman”) at paragraphs 20.135-20.136). In any case, the point on this appeal is not about the status of foreign law being fact or law, but rather on how the DIFC Courts may receive evidence of ‘foreign’ law. Even the Court of Appeal of England and Wales has expressed a desire that the law be changed so that judicial notice may be taken of foreign law (citing Morgan Grenfell (above)).

(d) On the Conduct of Appeals Argument, the Respondents contend that it is unconvincing as: (i) in practice, it is unlikely for the DIFC Court of Appeal to include a minority or no judge familiar with non-DIFC UAE law, as the majority of DIFC judges have significant experience of non-DIFC UAE law; and (ii) in any event, there is little difference between this situation and the one that would be faced in England, where the appeal court would not have the benefit of assessing the experts.

37. Third, the Respondents submit that, even if the Judge’s approach were wrong in principle, his conclusion was correct.

(a) The disputed issue was one of DIFC law in any event, and DIFC judges should not, as a matter of principle, receive expert opinion on the meaning of DIFC law. The defence advanced was that recognition and enforcement of the Two Awards would be contrary to the public policy of the UAE within the meaning of Article 44(1)(b)(vii) of the DIFC Arbitration Law, which did not simply import into DIFC law the UAE law of public order.

(b) It is particularly incongruous to require expert evidence of non-DIFC UAE law in this case, considering that it is open to the DIFC Courts to consider the approach of courts in other States which are signatories to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1957) (“New York Convention”), without the need for expert evidence, to decide on issues pertaining to the various defences to enforcement of arbitration awards under the DIFC Arbitration Law (which are derived from the New York Convention).

(c) The issues involved are not so complex as to require expert assistance. The Appellant’s position at the hearing in December was effectively that: (i) the organisation of courts was a matter of public order, within the meaning of Article 3 of the UAE Civil Code; (ii) the provisions of the Federal Civil Procedure Law imposed certain mandatory rules and conferred certain rights on defendants; and (iii) those rules and rights would be infringed if the Two Awards were enforced in the DIFC and execution was subsequently sought in Dubai (outside of the DIFC). However, the Appellant did not identify any particular point that it would (but could not) make because it lacked expert evidence.

(d) The DIFC Courts have, in any event, already interpreted and applied the relevant provision. In Banyan Tree Corporate Pet Ltd v Meydan Group LLC (ARB-003-2013) (2 April 2015) at [30]-[31], H.E. Justice Omar Al Muhairi considered and rejected the public policy defence in circumstances similar to this case without requiring any expert evidence.

(e) There would be considerable practical consequences of requiring expert evidence in a case like this. Arbitration enforcement proceedings were intended to be quasi-administrative but, by raising the public policy defence involving the use of expert witnesses, a Defendant would be able to put the Claimant to the considerable cost and delay associated with a full trial.

(f) No injustice was done to the Appellant at the hearing for the R&E Claim because the Appellant had already at that hearing deployed all the material that was in Mr Whelan’s Statement (save for the Statement itself), including all exhibits and case reports, and had a full opportunity to make legal submissions based on Mr Whelan’s Statement.

Issue 3: should the Court be minded to allow the Appeal, and whether the Court should make an order for a rehearing of the R&E Claim or an order reserving any relevant issue of non-DIFC UAE law until after the hearing of the R&E Claim

Appellant’s Arguments

38. The Appellant submitted at the appellate hearing that, should the Court be minded to allow the Appeal, the Court should direct the Judge to convene a rehearing of the R&E Claim rather than issuing an order reserving any relevant issue of non-DIFC UAE law until after the hearing of the R&E Claim, on the grounds that: (i) the Judge would have had conducted the trial without all the evidence that he ought to have had before him; and (ii) should the Judge be of the opinion that the rehearing dealing with any relevant issue of non-DIFC UAE law turn out to have added nothing to the case, that could be dealt with by way of appropriate cost orders.

Respondents’ Arguments

39. The Respondents submit that, even if the Court were to allow this appeal, the Court should only replace the Expert Evidence Decision with an order reserving any relevant issue of non-DIFC UAE law until after the hearing of the R&E Claim, so as to avoid the delay and expense of reconvening a hearing to deal with the issues of UAE law in circumstances where, depending on the Judge’s view of the Respondents’ arguments raised at the hearing for the R&E Claim, nothing may turn on the content of non-DIFC UAE law.

40. The Respondents stated that they had made several arguments during the hearing for the R&E Claim that, if accepted by the Judge, would render any question on non-DIFC UAE law irrelevant for the purposes of disposal of the case. The Respondents had argued, inter alia, that:

(a) The public policy of the UAE incorporates DIFC law; discrete features of non-DIFC UAE law that are not present in DIFC law could not therefore form part of the public policy of the UAE;

(b) The Appellant’s complaint was about something that was permitted by legislation; therefore, it could not be contrary to public policy;

(c) The public policy defence was not engaged, as the Appellant’s complaint was about the manner in which the Awards were being enforced, while the public policy defence (under the New York Convention and so under the DIFC Arbitration Law) was about the rights granted by an arbitral award and the manner in which an arbitral award was obtained;

(d) The Appellant failed to establish (or the Court could not decide) that it had no assets in the DIFC, and accepted that, if it did have such assets, the public policy defence would not arise;

(e) Even if there were no assets, the Respondents had a legitimate interest in enforcement in the DIFC independent of any subsequent execution through the Dubai Courts; and

(f) Any problems with execution through the Dubai Courts would arise at that stage, and would be an issue for the Dubai Courts, not the DIFC Courts.

41. The Respondents also pointed out that, during the hearing for the R&E Claim, the Appellant advanced another defence under Article 44(1) of the DIFC Arbitration Law which, if accepted, would also lead to the case not turning on non-DIFC UAE law.

The Decision

Decision on Issue 1

42. I do not accept the Appellant’s argument on Issue 1 that the DIFC Courts are required under the relevant statutory provisions to apply English law by default.

43. The starting point of this discussion is what rules of evidence should be applied in this dispute, as the matter is clearly one of evidence. While it is true that, under Article 6 of the DIFC JAL and Article 30(1)(b) of the DIFC Court Law, the DIFC Courts are to apply the DIFC’s laws and regulations, including Art 8 of the DIFC LACCL, Article 8 of the DIFC LACCL is concerned with the governing law of the substantive rights and liabilities between persons in any civil or commercial matter, and not on evidence and procedure; for that, one must look to the other laws of the DIFC.

44. Under Article 50 of the DIFC Court Law, where proceedings are instituted in the DIFC Courts, the rules of evidence to be applied in the proceedings are “the rules that: (a) are prescribed in DIFC law; or (b) are applied in the courts of England and Wales; or (c) the DIFC Court considers appropriate to be applied in the circumstances” (emphasis added). It is therefore clear that the DIFC Courts possess the discretion to apply rules of evidence they consider appropriate in the circumstances, and are not bound by the rules as prescribed in either DIFC law or English law.

45. It should be noted that, besides Article 50 of the DIFC Court Law, there are no prescribed statutory rules of evidence as to how the DIFC Courts should treat matters of foreign or non-DIFC UAE law. The only other relevant rules are those in the RDC, which do not impose the English approach upon the DIFC Court with regard to all questions of non-DIFC UAE law, and in fact suggest otherwise.

46. Rule 29.131 of the RDC requires any party who intends to put in evidence “a finding on a question of non-DIFC law” to follow the procedure set out in Rules 29.133 to 29.135 of the RDC, which are essentially notice requirements. Rules 29.131 to 29.135 are materially similar to Rule 33.7 of the English Civil Procedure Rules, which sets out the procedure that must be followed by a party who intends to introduce as evidence “a finding on a question of foreign law” by virtue of section 4(2) of the English Civil Evidence Act 1972 (c. 30) (“English CEA”). However, there is no DIFC statutory equivalent to section 4(2) of the English CEA defining what ‘non-DIFC law’ is; that is instead defined under Rule 29.132 of the RDC to mean “any law other than: (i) DIFC law or any other law in force in the DIFC; (ii) the law of any jurisdiction (other than that of the DIFC expressly chosen by any DIFC law); (iii) the laws of a jurisdiction as agreed between all the relevant persons concerned in the matter; (iv) the laws of any jurisdiction which appear to the Court to be the one most closely related to the facts of the persons concerned in the matter; and (v) the laws of England and Wales” (emphasis added).

47. The existence of Rule 29.132(i) does suggest to some extent that any law in force in the DIFC, including the UAE law of public policy on the recognition and enforcement of arbitral awards (to the extent that it applies in the DIFC pursuant to Art 44(1)(b)(vii) of the DIFC Arbitration Law), would be deemed to be a DIFC law rather than a ‘non-DIFC law’ requiring proof by expert evidence. Alternatively, it is also arguable that the question of whether the recognition and enforcement of the Two Awards would be contrary to UAE public policy within the meaning of Article 44(1)(b)(vii) of the DIFC Arbitration Law is a matter of DIFC law, on the basis that Art 44(1)(b)(vii) does not simply import into DIFC law the UAE law of public policy. However, strictly speaking, Rules 29.133 to 29.135 concern matters of procedure for a defined category of laws, and are not equivalent to the imposition of the English approach on all questions of non-DIFC UAE law before the DIFC Courts. In any event, as stated above, the DIFC Courts are not bound to treat foreign law as a fact to be proved as such, as they possess a discretion under Art 50(c) of the DIFC Court Law to apply such rules of evidence they may consider appropriate in the circumstances.

Decision on Issue 2

48. It is clear from the above discussion that the relevant DIFC Court possesses the discretion to apply such rules of evidence as it considers appropriate in the circumstances of any particular case, including the rules as prescribed in DIFC law and English law. The question then is what rules of evidence would be considered appropriate to apply to questions of non-DIFC UAE law before the DIFC Court, whether it be the English approach, the Taaleem approach (as applied by the Judge), or some other approach altogether.

49. In my judgment, neither the English approach nor the Taaleem approach is appropriate for the DIFC Courts; rather, the DIFC Courts should adopt the approach of accepting all submissions on non-DIFC UAE law as part of legal submissions, as is usually done in international arbitration with regard to issues of any national law. I now elaborate on this propisition.

The English Approach

50. Under the English approach, foreign law is to be treated as a fact, which must be pleaded and proved by the submission of expert evidence (the “Fact Doctrine”): see e.g. Bumper Development Corp. Ltd v Metropolitan Commissioner of Police [1991] 1 WLR 1362. In England and Wales, ‘foreign law’ is defined under section 4(2) of the English CEA as, “the law of any country or territory outside the United Kingdom, or of any part of the United Kingdom other than England and Wales”.

51. The Fact Doctrine is based on the old distinction between the courts of admiralty and the courts of common law; while the former had jurisdiction in matters with a foreign element, the latter decided cases on purely domestic issues. When the common law courts extended their jurisdiction to matters with a foreign element in the 18^th century, they were bound to treat foreign law as fact because the only ‘law’ they could apply was English common law: see Richard Fentiman, “Foreign Law in English Courts” (1992) 108 L.Q.R. 142 (at 143-144); Sass, “Foreign Law in Civil Litigation: A Comparative Survey” (1968) 16 Am.J.Comp.L. 332 at 335-340.

52. The reason why the foreign law must be proved by expert evidence (as opposed to putting the text of a foreign enactment before the court or citing foreign decisions or authoritative textbooks) is that the English judge is untrained in the foreign law in question and therefore requires the assistance of a lawyer who knows how to interpret it: Bumper Development at 1369, per Purchas LJ; Duchess Di Sora v Phillipps (1863) 10 H.L.Cas. 624 at 640, per Lord Chelmsford; Sussex Peerage Case (1844) 11 Cl. & Fin. 85 at 115, per Lord Brougham. Further, in the common law system, “the trial is not an inquisition into the content of relevant foreign law any more than it is an inquisition into other factual issues that the parties tender for decision by the court”: Neilson v Overseas Projects Corp of Victoria Ltd [2005] HCA 54, (2005) 223 C.L.R. 331 at [118].

53. The corollary to this is that the English judge is, in determining the content of the foreign law in question, prohibited from doing the following acts:

(a) Considering passages in foreign law materials that are not referred to by the experts (Bumper Development at 1369B; Nelson v Bridport (1845) 8 Beav. 527 at 542; Waung v Subbotovsky [1968] 3 N.S.W.R. 261 at 499);

(b) Rejecting uncontradicted expert evidence, except in exceptional circumstances e.g. where the expert evidence is patently biased, false or absurd (Bumper Development at 1369B; Sharif v Azad [1967] 1 Q.B. 605 at 616; O’Callaghan v O’Sullivan [1925] 1 I.R. 90 at 119; Allen v Hay (1922) 69 D.L.R. 193 at 195-196; Buerger v New York Life Assurance Co (1927) 96 L.J.K.B. 930 at 941; Debt Collect London Ltd v SK Slavia Praha Fotbal AS [2010] EWCA Civ 1250, [2011] 1 W.L.R. 866 at [33], [36]; A/S Tallinna Laevauhisus v Estonian State Steamship Line (1947) 80 Ll.L.R. 99 at 108; Re Valentine’s Settlement [1965] Ch. 831 at 855, per Salmon LJ, dissenting); and

(c) Ignoring evidence of foreign law on the basis that a conclusion unsupported by the evidence appears more coherent (Harley at [48]-[50]).

54. However, foreign law is not treated simply as any other fact. Foreign law is treated as a fact “of a peculiar kind”, so that, where an English judge has a degree of familiarity with the foreign law in question (e.g. where the foreign law is written in the English language and/or its concepts are similar to those in English law), he would be expected to apply his own legal knowledge and/or experience (MCC Proceeds at [12]-[13]; Morgan Grenfell at [51]-[52]; Bumper Development at 1370; Parkasho v Singh [1968] P 233 at 250; Dalmia Dairy Industries Ltd v National Bank of Pakistan [1978] 2 Lloyd’s Rep 223 at 286; see also Fentiman at [20.139]).

55. It is immediately apparent from its origins that the Fact Doctrine does not readily apply to the DIFC. Unlike the English courts, the DIFC Courts are not restricted to applying only English common law or even DIFC law. With regard to substantive law, the DIFC Courts are, pursuant to Art 8(2) of the DIFC LACCL, allowed to apply laws other than DIFC law, including the laws of any jurisdiction expressly chosen by any DIFC law, the laws of a jurisdiction as agreed between all the relevant persons concerned in the matter, the laws of any jurisdiction which appears to the Court to be the one most closely related to the facts of and the persons concerned in the matter, and the laws of England and Wales. With regard to rules of evidence, the DIFC Court may, pursuant to Art 50(c) of the DIFC Court Law, apply rules it considers appropriate to be applied in the circumstances.

56. More important, however, is the fact that the composition of the DIFC Courts bench differs radically from that of the English courts by having judges who have expertise in the laws of various jurisdictions, including Singapore, Australia, Malaysia, New Zealand and the UAE (and possibly in the future from other common law jurisdictions). The justification for the ‘proof by expert evidence’ requirement (i.e. lack of expertise) plainly does not apply where the foreign law in question belongs to a jurisdiction in which the judge hearing the case is qualified. As rightly pointed out by the Respondents, if expert evidence of non-DIFC UAE law were to be required in every case because it is a ‘foreign’ or ‘non-DIFC’ law, then expert evidence would a fortiori be required of all other foreign laws, notwithstanding the individual legal expertise of the DIFC judge hearing the case. This has been described as unworkable in the arbitration context, where the arbitral tribunal may well be qualified in the applicable law on the merits, but the applicable law is a wholly different set of laws from the lex arbitri (see Redfern and Hunter at [6.169-6.172]). If, for example, the issue before me as a judge in the Court of First Instance involved questions of Singapore law, it would certainly be unnecessary for Counsel to be compelled to adduce expert evidence on Singapore law. Nor would it be necessary if the issue involved Australian law before Justice Roger Giles, or Malaysian law before Justice Tun Zaki Azmi, and certainly not English law before any of our English brethren or, in particular, non-DIFC UAE law before any of the UAE-qualified judges.

57. On non-DIFC UAE law specifically, as rightly pointed out by the Respondent, the majority of the current DIFC judges have expertise and experience in UAE law, either as a result of having trained in and practised in UAE law or having sat on tribunals to resolve disputes in accordance with non-DIFC UAE law (e.g. the Dubai World Tribunal). Further, each overseas judge will have had exposure to substantive UAE law from hearing a number of cases in the DIFC Courts involving issues of UAE law. Given that even an English judge is expected to draw upon his own legal and judicial training when dealing with foreign laws that bear some similarity to English law (see MCC Proceeds at [12]-[13]; Morgan Grenfell at [51]-[52]), it is difficult to see any good sense in a blanket approach of requiring all DIFC judges, regardless of his or her background in UAE law, always to decide questions of non-DIFC UAE law by reference to expert evidence and subjecting them to the prohibitions that follow from the Fact Doctrine.

58. It should also be noted that, as pointed out by the Respondents, the DIFC Courts have thus far not adopted the English approach with regard to issues of non-DIFC UAE law, though the decisions made thus far are of limited assistance as they did not directly deal with the issue of the treatment of non-DIFC UAE law before the DIFC Courts.

(a) In Lutfi at [65]-[71] and Herz at [61]-[65], [87]-[93], the DIFC Court of Appeal considered pension rights eligibility under UAE federal law (in particular, UAE Federal Law No. 7 of 1999 as amended by UAE Federal Law No. 7 of 2007 in respect of the Federal Authority for Pensions and Social Security and UAE Federal Law No. 6 of 1999 in respect to the establishment of the Federal Authority for Pensions and Social Security) without any resort to expert evidence.

(b) In TVM Capital at [14]-[23], the DIFC Court of Appeal considered the effect of Article 269 of the UAE Federal Criminal Procedure Code (UAE Federal Law No. 35 of 1992) upon the DIFC Court without any resort to expert evidence.

(c) In Injazat at [32]-[34] and Al Fattan Engineering at [50]-[57], the DIFC Court of First Instance considered the effect of Article 203(2) of the UAE Civil Procedure Code (Federal Law No. 11 of 1992) without any resort to expert evidence.

(d) In X v Y, the Appellant alleged that the DIFC JAL and the DIFC Arbitration Law were unconstitutional vis-à-vis the UAE Civil Procedure Code (UAE Federal Law No. 11 of 1992, as amended by UAE Federal Law No. 30 of 2005), and requested inter alia for the issue to be referred to the Union Supreme Court of the UAE pursuant to Articles 99(3), 121 and 151 of the UAE Constitution. The DIFC Court of First Instance dismissed the Appellant’s Constitutionality Application without any resort to expert evidence, notwithstanding the fact that the resolution of the application involved a comparison between UAE federal law and DIFC law.

59. Notably, English judges have already expressed some discomfort with the rigidity of the English approach. In Morgan Grenfell, which involved issues of Italian law, the Court of Appeal of England and Wales commented that, while the correct approach under English law was to consider the evidence of foreign law substantially in the same way as other evidence of fact and opinion, it added (at [53]) that it hoped the English courts could soon be permitted to “take judicial notice of decisions of foreign courts, including those in the European Union, (and perhaps academic writings) in deciding what the relevant foreign law is in cases of this kind”. This rigidity arguably has even less place in the DIFC Courts, where the judge hearing the case may be fully qualified in the national law in question.

The Taaleem Approach

60. In the decision below, the Judge applied the Taaleem In Taaleem, DCJ Colman did not address the issue of whether non-DIFC UAE law would be construed as ‘foreign’ law for the purposes of admitting expert evidence, and instead took a “realistic and practical approach”, which is a two-pronged approach (with the second prong being obiter dicta), as follows.

(a) In cases where the relevant DIFC Court is manned by a judge whose training is in the common law system, that judge should generally require that the non-DIFC UAE law in question be established by expert evidence, unless the parties are able to agree on the non-DIFC UAE law to be put before the judge in some form or other.

(b) In cases where the relevant DIFC Court is manned by a judge whose training includes non-DIFC UAE law, that judge should not be required to call for expert evidence to prove the interpretation of the non-DIFC UAE law in question.

61. Ultimately, I take the view that the Taaleem approach should no longer be followed as an inflexible rule (to the extent that it ever was such a rule owing to the obiter nature of DCJ Colman’s remarks) for two reasons. The first reason is that, while I agree with DCJ Colman’s obiter observation that a judge who is trained in non-DIFC UAE law should not be required to call for expert evidence to resolve issues on non-DIFC UAE law, I do not think that there is any practical reason why any other DIFC judge (i.e. one not fully conversant with UAE law) should require expert witnesses to assist him, as any DIFC judge should in general be able to fully analyse any legal submissions (including those on UAE law) that are given to him, whether drafted by lawyers trained in non-DIFC UAE law or not.

62. The second reason is that the Taaleem approach suffers from certain practical difficulties that make it inappropriate as a universal practice. As observed by the Respondents, most of the practical difficulties of the Taaleem approach are not insurmountable. However, the Taaleem approach meets particular difficulty in two areas.

63. The first difficulty is with dealing with the question of whether the DIFC judge hearing the case is “untrained” in non-DIFC UAE law to the extent that expert evidence is required. As the Taaleem approach essentially adopts the English approach whenever the DIFC Court is manned by a judge whose training is in the common law system and the issue involves questions of non-DIFC UAE law, it brings with it all of the prohibitions of the English approach, notwithstanding that the judge in question may have significant judicial experience in non-DIFC UAE law. The problems with the rigidity of this approach have been canvassed above and will not be repeated here.

64. The second difficulty is dealing with the conduct of appeals. This is illustrated by the following scenarios.

(a) In one scenario, suppose that the trial judge were not qualified in non-DIFC UAE law, and expert evidence was then required to prove the content of the non-DIFC UAE law in question. An appeal is then brought, and the DIFC Court of Appeal, made up of judges both qualified and unqualified in non-DIFC UAE law, would have to deal with the issue of the correctness of the trial judge’s findings on the content and interpretation of non-DIFC UAE law. Should the non-DIFC UAE law-qualified judges resolve the issue by reference to the expert evidence, notwithstanding that they are fully qualified in it? Further, since the English approach expects the appellate court to apply its own legal skill and experience in resolving questions of foreign law, should the DIFC judges who were qualified in non-DIFC UAE law apply their own expertise to the issue, with the DIFC judges who were not so qualified deferring to their opinions, notwithstanding that they may have substantial judicial experience in non-DIFC UAE law?

(b) In another scenario, suppose the trial judge were qualified in non-DIFC UAE law, with expert evidence on non-DIFC UAE law not being required, and an appeal was made to the DIFC Court of Appeal composed of judges both qualified and unqualified in non-DIFC UAE law. Should the DIFC judge(s) who were unqualified in non-DIFC UAE law, but possess judicial experience of UAE law, defer to the opinions on UAE law of: (a) the UAE qualified trial judge; or (b) the UAE qualified appellate judge(s)?

(c) In a further scenario, suppose the trial judge were not qualified in non-DIFC UAE law and expert evidence were duly admitted, and an appeal was then made to the DIFC Court of Appeal composed of judges who were all qualified in non-DIFC UAE law. It would evidently be absurd to expect such an appellate court to resolve such issues of non-DIFC UAE law by reference to expert evidence.

65. These practical difficulties render the Taaleem approach unworkable in most scenarios where an appeal is made. It should therefore no longer be followed. There is a far more appropriate approach for the DIFC Courts in dealing with questions of non-DIFC UAE law, to which I shall now turn.

The International Approach

66. As stated by DCJ Colman in Taaleem, the DIFC Courts are no ordinary courts; they are common law courts administering justice within a circumscribed jurisdiction covering civil and commercial matters only, within a wider jurisdiction exercised by the non-DIFC Dubai Courts in the UAE. The non-DIFC Dubai Courts administer local law that is derived from the civil law system, with different principles applying both in relation to substantive civil law and in relation to the adducing of evidence. Some, but not all, of the DIFC judges are trained in non-DIFC UAE law. The result is that, where questions of non-DIFC UAE law arise before the DIFC Courts, the judge hearing the case may or may not be qualified in non-DIFC UAE law, and where such questions arise before the DIFC Court of Appeal, the judges hearing the appeal may be comprised of only some judges that are qualified in non-DIFC UAE law.

67. Such a situation is analogous to the situation in international arbitration and international commercial courts, where the arbitral tribunal or court may be made up of arbitrators or judges with very different qualifications, with some who may not be qualified in the applicable (or relevant) law for the issue at hand. In such a scenario, the Fact Doctrine is an inapplicable legal fiction, and international arbitral tribunals and international commercial courts instead treat all ‘law’ as ‘law’, with Counsel making legal submissions on disputed areas of the applicable (or relevant) law, appending expert opinions if necessary, and, in the case of international commercial courts, the court being allowed to take judicial notice of the foreign law in question (the “International Approach”).

68. In Redfern and Hunter, the following remarks are made (at [6.169]-[6.172]) on the subject of experts on foreign law in the context of international arbitration:

“In the common law system judges sitting in their national courts expect the substantive law of foreign country to be ‘proved as fact’ by expert evidence. This convenient fiction has worked satisfactorily for hundreds of years in the court system, and it appears to work reasonably well in domestic arbitration, although in a domestic arbitration it is not likely that the system of law governing the substance of the parties’ relationship will be ‘foreign’ either to the place of arbitration or to the arbitral tribunal.

It takes only a brief moment of reflection to appreciate that the convenient fiction that ‘foreign law is fact’ does not work in the context of an international arbitration. Imagine three French lawyer arbitrators, sitting in England, with French avocats presenting arguments on the applicable French substantive law. Any suggestion that English procedural law would require the relevant French substantive law to be proved as fact would surely be greeted with some hilarity.

Equally, if a hybrid tribunal composed of one French lawyer, one Egyptian lawyer, and one Canadian lawyer were sitting in London applying the substantive law of Kuwait, how would the Kuwaiti law issues be handled? Would experts on Kuwaiti law give oral evidence to the tribunal, and solemnly change places to cross-examine each other? This would be absurd.

In practice, the international arbitration community has solved this dilemma in a pragmatic and efficient way. In the twenty-first century, in almost all international arbitrations, ‘law’ is treated as ‘law’. Each party usually has a duly qualified lawyer, often an academic, from the relevant jurisdiction in its team of counsel. Written expert opinions on disputed issues of the applicable law will be submitted with the memorials (with replies if necessary), and the relevant counsel from each team are ready to answer questions from the tribunal and to make oral submissions by reference to legal authorities from the relevant jurisdiction.” (emphasis added).

69. In Lew, Mistelis & Kröll, Comparative International Commercial Arbitration (The Netherlands: Kluwer Law International, 2003) at pp 440- 443, the authors make the following comments:

“The situation in international arbitration is different. There are no “forum” procedural requirements to follow. Rather, the composition of the tribunal and the attitude of the arbitrators, often influenced by their own legal background, is a crucial factor. Equally there is no “foreign” law.

…

A third and preferred option is a hybrid procedure, fixed for each arbitration and drawing on both the inquisitorial and adversarial systems. The parties make full legal argument, in writing and orally, about the applicable rules. They may support this with legal materials and independent expert reports. The tribunal may request further specific details about the applicable law. It will, however, decide itself what the specific applicable rules are rather than rely on any expert. This approach leaves considerable discretion to the tribunal and is increasingly the norm in international arbitration.” (emphasis added).

70. The Singapore International Commercial Court (“SICC”) is a division of the Singapore High Court that is designed to deal with transnational commercial disputes, and is in several ways similar in nature to the DIFC Courts. The SICC has the option of adopting the International Approach in certain situations. Under O 110 rr 25-29 of the Singapore Rules of Court (Cap 322, R 5, 2014 Rev Ed), the SICC may, on the application of a party, make an order allowing any question of law to be determined on the basis of submissions (oral or written or both) instead of proof (provided that the SICC is satisfied that all parties are or will be represented by counsel who are competent to submit on the relevant questions of foreign law), and in determining the question of foreign law, the SICC judges are allowed to take judicial notice of foreign law, including of the legislation and decisions of the courts in the foreign country in question. In an appeal from a SICC judgment or order to the Singapore Court of Appeal, the Singapore Court of Appeal may also determine any question of foreign law on the basis of submissions, either on its own motion or on a party’s application, or where the question of foreign law has already been ordered by the SICC to be determined on the basis of submissions.

71. I believe that there are two reasons why the International Approach (and not the English or Taaleem approach) should be applied to questions of non-DIFC UAE law before the DIFC Courts, pursuant to the discretion conferred under Art 50(c) of the DIFC Court Law. First, unlike the rigid English approach, the International Approach enables the DIFC Courts to tap on the collective wisdom of its judges on issues of non-DIFC UAE law, whether it be derived from qualifications, practice or judicial experience. Second, by having Counsel make legal submissions on the non-DIFC UAE law in question, appending relevant expert opinions (if any), the DIFC Courts will not meet any of the practical concerns with the Taaleem Although legal submissions cannot be tested by cross-examination as in the case of expert evidence, legal submissions may be criticised by opposing Counsel from the bar. Further, there is nothing to stop Counsel from having on their team a duly qualified expert in non-DIFC UAE law so as to ensure that they would be ready to make oral submissions and answer any questions from the Court. Although this may lead to the effect that parties will need to instruct two Counsel or even two firms of lawyers, the Respondents have made the cogent observation that, even where legal experts are going to be hired, there would usually be in practice a need to hire two Counsel or law firms in any event (as is the common practice in international arbitrations).

72. Further, my view is that the International Approach should apply for all questions of non-DIFC law, whatever that law may be. While international arbitration has historically and in general followed the practice of the English courts in requiring experts on legal issues to give formal evidence by way of witness statements in the same way as other technical experts, and to have them cross-examined individually on such witness statements, the tide is now turning. Increasingly, experienced international arbitration practitioners have concluded that this method of receiving the opinions of legal experts is both doctrinally unnecessary as well as forensically inefficient to discover and understand the relevant principles of “foreign” law. It may be questioned why legal experts should be treated differently from other experts, whom it is agreed should continue to give the expert evidence in the traditional way. There are (at least) three reasons for this.

(a) First, international arbitration tribunals are usually well-equipped to assess for themselves the persuasiveness of legal (as opposed to technical) arguments. An international arbitration tribunal is usually made up of a panel of three legally qualified persons. It is only very rarely that one would find an arbitral tribunal made up of a panel of three non-lawyers, or even a majority of non-lawyers. An all-lawyer panel would already be familiar with the methodology of acquiring legal knowledge, and can assess for itself whether or not an opinion on ‘foreign’ law is persuasive, but the same cannot be said when an all-lawyer panel has to decide issues involving detailed knowledge of non-legal fields, e.g. technology and measurement of financial loss, as the arbitral tribunal will for this purpose be composed of laymen listening to experts in a field of study with which the tribunal will not be expected to be familiar.

(b) Second, while the role of any expert is to analyse the known facts (or the facts to be proved) and to offer expert opinions on the relevant questions arising from such facts, arbitral tribunals have found that legal experts that have been asked to opine on legal doctrines so as to educate the arbitral tribunal on the principles of the governing law (or any other relevant law) often overstep their proper role and offer their opinions by applying the principles of the applicable (or relevant) law to the facts in question and giving their conclusions on the ultimate decision that should be made by the arbitral tribunal on those facts. The arbitral tribunal then has to sift through the witness statements of the legal experts to separate the experts’ opinions on the relevant principles of law from the conclusions on the facts based on the applicability of the relevant principles of law. In such situations, arbitral tribunals have often dispensed with cross-examination of expert witnesses, as their witness statements are, to a certain extent, tainted by their attempt to usurp the function of the arbitral tribunal on the ultimate decision to be made on the question of law in issue. They often forget (or are not briefed by their instructing lawyers) that, as stated by Cresswell J in National Justice Compania Naviera S.A. v Prudential Assurance Co Ltd (“The Ikarian Reefer”) [1993] 2 Lloyd’s Law Rep 68 at 81, “[a]n expert witness … should never assume the role of the advocate”. This principle is also found in the DIFC Courts, where Rule 31.6 of the RDC states that an expert “should assist the Court by providing objective, unbiased opinion on matters within his expertise, and should not assume the role of an advocate”. The common solution to such situations is then to treat the expert witness statements as part of counsel’s arguments, with the expert witnesses being able to make oral submissions, both on the legal principles and their applicability to the facts, and to answer questions on those submissions from the opposing side. Such a solution may have difficulties in a national common law court, where: (i) witness statements lead inevitably to cross-examination (except in the SICC); and (ii) a Court that decides that some part of the witness statement is objectionable must either disallow the entire witness statement or excise the objectionable part, which is an unwieldy and time consuming process. For the sake of completeness, I should mention that an alternative solution would be for the arbitral tribunal to appoint its own independent expert(s) to report to it on specific issues designated by the arbitral tribunal. I note here that the DIFC Courts also have that option, pursuant to Rule 31.29 of the RDC, although neither party to this present appeal has suggested recourse to this option.

(c) Third, the practice of cross-examination of legal experts has been found to be a relatively inefficient way of testing their legal opinions. The usual tactics of forensic cross-examination are particularly unsuitable for this function and take up more time than the results justify. Furthermore, cross-examination of experts in all fields has been found to be not the best way of presenting the relevant issues to the arbitral tribunal and organising the points agreed or disagreed between the respective experts. This has led to the wide-scale adoption of witness conferencing in the case of experts of all disciplines. This entails two or more experts with differing views appearing together at the same time to present their respective opinions, indicating: (a) where they are in agreement; (b) where they disagree; and (c) why they disagree. Such a practice is not easily workable under the traditional method of cross-examination of expert witnesses, which is both time inefficient (because it means doubling the time for hearing both experts separately examined, cross examined and re-examined as compared with witness conferencing) and could also lead to rebuttal evidence from the experts, thereby exacerbating the inefficiency of the process. The adoption of the International Approach would therefore mean that the practice of witness conferencing will generally not be available for legal experts; however, the same effect of witness conferencing can be achieved by a Socratic dialogue between the Court and the legal experts (and between the legal experts themselves) in oral submissions.

73. Accordingly, given the jurisdiction that this Court has to adopt such rules of evidence as it sees fit, including the rules on the receipt of opinions of legal experts, I take the view that, in all cases where legal experts are offering expert reports on issues of any law other than DIFC law (i.e. not merely non-DIFC UAE law), the practice I have described above should be the starting point for deciding on the procedure to be adopted for the presentation of expert legal reports. The presumptive rule should be that legal experts are to write briefs with their analysis of the relevant legal principles of the applicable or relevant law, and to make further submissions applying the legal principles to the facts as alleged by the respective parties, or to argue for a particular decision to be delivered by the Court. I should make it clear that this is only a presumptive rule, and the trial judge should always have the discretion to proceed in the manner in which he considers most beneficial for his education – in a system of law with which he is not confidently familiar, even if this results in adopting either of the other approaches described above (or possibly even some other approach). For example, the relevant legal expert may not be qualified to act as counsel in the case because he does not meet the requirements for registration as a practitioner with rights of audience under Part II of the Register of Practitioners. In such cases the trial judge may wish to adopt, pursuant to Rule 31.48 of the RDC, some variant of expert conferencing (by whatever name called) between the two legal experts involved for greater elucidation of where the disagreements (and the reasons for such disagreements) lie. The relevant approach to adopt should therefore be discussed at some appropriate case management conference at an appropriate time before the filing of witness statements. This would emphasize the flexibility of treatment of the subject of proving the content and interpretation of all non DIFC laws in line with the Overriding Objective.

74. In this case, Counsel for the Appellant have had, at the hearing for the R&E Claim, a full opportunity to make legal submissions based on Mr Whelan’s Statement, and have indeed deployed all the material that was in Mr Whelan’s Statement (save for the Statement itself). This is borne out by the exchange between Counsel for the Appellant and the Court, as recorded in the hearing transcript as follows:

“MR THOMPSON: Turning to the substance of the appeal, as I say it, it is an appeal from the decision of His Excellency Judge Ali … You will have noticed that it is a decision of 12 October last year in response to an application made about ten days earlier. That order was made and provided to parties at the time without reasons, and the reasons were only provided on 15 December, and that is at the next tab, in tab 3. The reasons were provided – it is dated 15 December, but the parties received it on 16 December. You see, the difficult is that it was on 16 December that the parties attended before the same judge, His Excellency Judge Ali, to hear the substance of the trial, and my learned friend and I both appeared on what, and the trial proceeded, as one would expect, without the expert evidence that the defendant had sought and which the judge had already denied. The net effect was that the trial, which was listed for two days but actually we managed to complete in one, proceeded without the benefit of any expert evidence.

JUSTICE SIR RICHARD FIELD: But were there any submissions made to the judge that were founded in fact on Mr Whelan’s report?

MR THOMPSON: Yes, there were. There were submissions made by me found in that report and submissions made by my learned friend in response to that. That is absolutely right. …” (emphasis added).

75. This was later confirmed by Counsel for both Parties in the following exchange with the Court:

“MR MONTAGU-SMITH: … what I can tell you is that effectively what happened, or at the very least what should have happened, is that the arguments that are set out and described in an opinion by Mr Whelan and the supporting material were deployed in the December hearing, which is the final hearing. …

Effectively what is the value of introducing a statement from Mr Whelan at this stage if it is right that they have had the opportunity to convey the content of that report to the judge already by way of submission and underlying material? What is the additional value? The only additional value can be that it comes from Mr Whelan in deciding these sorts of issues. …

…

CHIEF JUSTICE MICHAEL HWANG: … I just wanted to clarify. You say that Mr Thompson or another counsel at the hearing has already deployed the material that was in Mr Whelan’s statement. Did you say that?

MR MONTAGU-SMITH: Yes. Effectively, yes. All of the material save for the statement itself, so all of the exhibits he relies on, all of the case law, all of that was included in the trial bundle.

CHIEF JUSTICE MICHAEL HWANG: So they adopted the fruits of his research, if you like?

MR MONTAGU-SMITH: Exactly. Exactly.

…

CHIEF JUSTICE MICHAEL HWANG: I think you were saying earlier that certainly all of the secondary materials that were attached to Mr Whelan’s reports were submitted. They are in, right, but then I suppose Mr Thompson is going to say that you need somebody to make sense of all of the secondary material so to arrive at an analysis.

MR MONTAGU-SMITH: This is what we have –

CHIEF JUSTICE MICHAEL HWANG: That particular material, that analysis is not somehow before the court. I have not compared the submissions with Mr Whelan’s statement. Is there a deprivation in some way of the defendant’s presentation of its case before the trial judge?

MR MONTAGU-SMITH: No. There is absolutely no respect in which the trial judge has curtailed the capacity of the parties to make whatever submissions they want. We can make whatever submissions we want to, and do.

CHIEF JUSTICE MICHAEL HWANG: Yes. And that is on the ability to and Mr Thompson has conceded that he could have done it that way.

MR MONTAGU-SMITH: Yes.

CHIEF JUSTICE MICHAEL HWANG: But you are telling us, in fact, there is no injustice because, in fact, the judge was aware of exactly the line that Mr Whelan was advocating because it is summarised or to be found somewhere else in the materials that the judge is receiving.

MR MONTAGU-SMITH: What happened was at the December hearing, my learned friend took what he wanted from Mr Whelan’s statement and made it into a legal argument, made it into a submission.

JUSTICE SIR RICHARD FIELD: That was in the original skeleton argument?

MR MONTAGU-SMITH: Yes. So there were submissions on the issue. Now it may be that it does not match precisely the wording of the witness statement from Mr Whelan but that is a matter for my learned friend as to which submission he submits (Overspeaking)

…

CHIEF JUSTICE MICHAEL HWANG: … I am going to ask Mr Thompson to come back after lunch and deal with the last point that Mr Montagu-Smith has been addressing us on, which is (a) that effectively you have got Mr Whelan’s views in by incorporating them into your own submissions at the trial, and (b) if you did not for some reason incorporate any arguments, should we take that into account having regard to the fact that you could have incorporated by cut and paste the entirety of Mr Whelan’s opinions and therefore you could have adopted it wholesale. You chose not to do so, so should we give you a second bite at the cherry as it were? …

MR THOMPSON: … We have a position where at the first opportunity, my client said, “This is expert evidence and we want it in” that was denied and so they put in factual evidence saying it falls within the rubric of the exception in the judge’s order. That was also denied. So it was only really as the fallback position that the opinions and comments of Mr Whelan could have been put in qua submissions in my mouth.

To answer your Lordship’s question directly, was this something which was put before the court by me, was this something that I had if I did not do it at all or property, if I had an opportunity to do it, the short answer to the question is yes. I accept what my learned friend says about that. …

…

MR THOMPSON: … If the solution to this case lies in allowing further submissions to be made I would have some sympathy with my learned friend’s position that we, the defendant, have really already had the opportunity to do it. The point is that the opportunity to do it is inadequate. The opportunity of an expert helping me make submissions, or making submissions on his own, is not the solution to the problem. The solution to the problem, in my submission, lies in the fact that this is expert evidence, which ought to be dealt with in the usual way of foreign law, and can then be addressed using the mechanisms that are very familiar to the court. …” (emphasis added)

76. In the circumstances, the Appellant has already made its legal submissions on non-DIFC law before the relevant hearing, and has in effect made substantial use of the International Approach. For this reason (and the reasons stated earlier in this Judgment), I decided that the Appeal should be dismissed.

Decision on Issue 3

77. Given the findings on Issues 1 and 2, it was unnecessary for a decision to be made on Issue 3.

H.E. JUSTICE OMAR AL MUHAIRI:

78. I have no comments to add and agree with the above Judgment of the Chief Justice.

JUSTICE SIR RICHARD FIELD:

79. I have no comments on the above and agree with the above Judgment of the Chief Justice.   

Issued by:

Mark Beer     

Registrar

Date of Issue: 23 November 2015

At: 10am

The post CA 002/2015 Y v (1) X1 (2) X2 appeared first on DIFC Courts.

Claim No: CA-006-2015

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai

IN THE COURT OF APPEAL

BEFORE CHIEF JUSTICE MICHAEL HWANG, DEPUTY CHIEF JUSTICE SIR JOHN CHADWICK AND H.E. JUSTICE ALI AL MADHANI

BETWEEN

DAMAC PARK TOWERS COMPANY LIMITED

                                                                                                Appellant/Defendant

and

YOUSSEF ISSA WARD

                                                                                                Respondent/Claimant

Hearing:            8 September 2015

Counsel:           Rupert Reed QC and Jonathan Chew for the Appellant

Jeffrey Bacon and Bushra Ahmed for the Respondent

Judgment:        14 December 2015

JUDGMENT

Summary of Judgment

 This summary is not part of the Judgment and should not be cited as such

ORDER

UPON hearing Counsel for the Appellant and Counsel for the Respondents on 8 September 2015

AND UPON reading the submissions and evidence filed and recorded on the Court file

 IT IS HEREBY ORDERED THAT:

1. The Appellant’s appeal is allowed.
2. The parties file written submissions on costs, if any, within 14 days from the date of this order.

Issued by:

Amna Al Owais

Deputy Registrar

Date of Issue: 14 December 2015

At: 4pm 

CHIEF JUSTICE MICHAEL HWANG S.C.:

1. This is an appeal from the judgment of H.E. Justice Omar Al Muhairi dated 10 May 2015 (the “Order”) granting the reliefs sought by the Respondent, Mr Youssef Issa Ward (“Mr Ward”), against the Appellant, Damac Park Towers Company Limited (“Damac Park”).
2. Damac Park is a real estate asset management company licensed in the Jebel Ali Freezone, and specializes in the development of real property in the Middle-East.
3. Mr Ward is a Canadian National.

I.     BACKGROUND FACTS

4. In 2007, Mr Ward entered into various contracts with Damac Star Properties LLC (“Damac Star”), a company within the Damac group of companies (which includes Damac Park), to purchase seven properties developed under the Executive Bay Project (the “Executive Bay Properties”). These were the Executive Bay Agreements (“EBAs”), under which Mr Ward was to make regular instalment payments of the purchase price for the Executive Bay Properties.
5. The EBAs provided that, should Mr Ward fail to make timely payment of instalment payments due under the EBAs, Damac Star would be entitled to terminate the EBAs and forfeit all sums paid by Mr Ward. Subsequently, Mr Ward fell into arrears on instalments due under the EBAs. Thereafter, Damac Star was entitled to terminate the EBAs and forfeit the sums paid in accordance with the EBAs.
6. On 28 October 2009, Mr Ward and Damac Star entered into a compromise arrangement which entailed Mr Ward purchasing Plot No. DFO/1A/111 (the “Unit”), a commercial property in the Park Towers Development in the DIFC developed by Damac Park, at the price of AED 4,544,000 (the “Full Unit Price”), in place of the Executive Bay Properties. As part of the arrangement, all sums paid by Mr Ward to Damac Star under the EBAs would not be forfeited (as Damac Star was entitled to do so) under the EBAs but would, instead, be credited towards his purchase of the Unit. By this date, the total amount paid by Mr Ward under the EBAs totalled AED 1,279,890 (the “Transferred Sum”). Accordingly, Mr Ward would only have to provide a further sum of AED 3,264,110 (the “Reduced Unit Price”) to complete his purchase of the Unit. To this end, Mr Ward executed the following agreements on 28 October 2009.
7. First, Mr Ward, Damac Star and Damac Park executed seven Waiver, Release and Undertaking Letters (the “Waiver Agreements”), one for each of the seven Executive Bay Properties. The Waiver Agreements purported to provide for the credit of the Transferred Sum towards the Unit Price by providing as follows:

“I/We hereby acknowledge and accept the Termination and agree that [DAMAC] shall credit an amount equal to Paid Purchase Price-1 against [the Unit Price], provided I/we fulfil all my/our obligations as set out within the URC including having made full payment of the amount equal to [the Unit Price] less the Paid Purchase Price-1.”

8. Second, Mr Ward also contracted with Damac Park to purchase the Unit under an Office Unit Reservation Form (the “Reservation Agreement”). The Reservation Agreement described the “Office Unit Price” as AED 4,544,000 and set out a payment schedule at Clause 3 (the “Payment Schedule”), which is reproduced below:

“3. My/Our signing the Agreement of Sale for this office unit within one week of being provide for execution and subsequent payments as per the payment schedule below:

At the hearing, Mr Rupert Reed, the Counsel for Damac Park, clarified that the reference to “210 Days” in Payment Schedule was the result of a typographical error and should have read “270 Days” instead. Mr Jeffrey Bacon, Counsel for Mr Ward, did not contend otherwise.

9. Clause 4 of the Reservation Agreement further provides:

“In case the payments above are not realized… [Damac Park] shall also have an option to terminate the reservation, and in order to mitigate [Damac Park’s] damages arising out of termination of this reservation, sell or otherwise dispose of the unit as it deems fit without any further reference to me/us. In such an event, all monies paid by me/us, including the money in terms of clause (1) and (3) above, is also subject to forfeiture in full and shall not be refunded back to me/us.”

10. Although the Reservation Agreement envisaged the conclusion of an Agreement of Sale between Mr Ward and Damac Park, no Agreement of Sale was subsequently issued by Damac Park to Mr Ward for execution.
11. Eventually, Damac Park began dispatching notices to Mr Ward to demand payment of the second instalment which was allegedly outstanding since April 2010. On 13 June 2010, Damac Park issued a letter to Mr Ward informing him that payment of the second instalment of AED 816,027.50 under the Reservation Agreement was due. On 16 June 2010 and 22 June 2010, Damac Park sent to Mr Ward emails reiterating that the second instalment under the Reservation Agreement was due and outstanding since 26 April 2010. Damac Park alleges that a Statement of Account was attached to the email dated 22 June 2010, but Mr Ward’s position is that the Statement of Account was not attached to any of these emails or letters.
12. By 15 July 2010, Damac Park received no response from Mr Ward. It proceeded to issue a Notice of Termination to Mr Ward that day (the “First Termination Notice”), declaring that Mr Ward had failed to comply with his payment obligations under the Reservation Agreement and notifying him that the Reservation Agreement would be terminated if Mr Ward failed to pay the outstanding sums within 14 days of the First Termination Notice. Damac Park’s position is that, by 25 July 2010, the third instalment under the Reservation Agreement (in the amount of AED 979,233) had also fallen due.
13. On 4 August 2010, Mr Ward emailed Damac Park (using the same email address to which Damac Park had sent its emails of 16 June 2010 and 22 June 2010), proposing to hold a meeting with Damac Park to discuss and resolve all issues arising from the First Termination Notice. The meeting was held on 15 August 2010 and, on that day, Damac Park emailed Mr Ward to confirm in writing that Damac Park had granted Mr Ward an extension of time to settle the total amount of AED 1,795,260.50 then owing to Damac Park “in 4 equal instalments starting from 10 Sep 2010 till 10 Dec 2010 for an amount of AED 448,815 each” (the “First Extension”).
14. On 30 August 2010, Mr Ward requested from, and was granted by, Damac Park a further extension of time such that the payment dates for the outstanding sum owed would take place from 28 September 2010 to 28 December 2010 instead (the “Second Extension”). Mr Ward did not make payment of the first instalment by 28 September 2010.
15. On 6 October 2010, Mr Ward requested from, and was granted by, Damac Park a further extension of time so that the payment date for the first two instalments on the outstanding sum was 27 October 2010, and on condition that he also provide a post-dated cheque for each of the remaining two instalments (the “Third Extension”).
16. On 19 October 2010, Mr Ward provided to Damac Park Cheque No. 00130 dated 31 October 2010 (“Cheque 130”) for the sum of AED 1,346,445 and Cheque No. 00129 dated 28 February 2011 (“Cheque 129”) for the sum of AED 448,815. Damac Park successfully encashed Cheque 130 on 31 October 2010. No further payments were made by Mr Ward to Damac Park thereafter.
17. On 22 March 2011, Damac Park issued a second Notice of Termination to Mr Ward (the “Second Termination Notice”), with contents similar to the First Termination Notice. Mr Ward’s position is that he never received the Second Termination Notice. On 28 March 2011 and 5 April 2011, Damac Park attempted to encash Cheque 129, but Cheque 129 was dishonoured on each occasion.
18. Subsequently, Damac Park cancelled Mr Ward’s reservation of the Unit. Damac Park then informed Mr Ward that he was no longer entitled to the Unit and that all sums paid by him would be forfeited.
19. On 2 December 2014, Mr Ward commenced a suit against Damac Park in the DIFC Courts seeking compensation by way of damages and/or restitution (the “Suit”).
20. The thrust of Mr Ward’s case is that Damac Park’s termination of the Reservation Agreement was wrongful because, on a proper construction of the Reservation Agreement, Mr Ward was not in arrears of payment at the time Damac Park purported to terminate the Reservation Agreement. On that basis, he sought a return of the monies paid to Damac Park.

II.    THE JUDGMENT BELOW

21. At the Court of First Instance, Justice Omar heard the Suit and issued the Order after resolving the following issues that were before him.

• Whether the Reservation Agreement was a binding contract.
• What was the meaning of “Sale Date” in the Reservation Agreement.
• What was the effect of the Transferred Sum on Mr Ward’s payment obligations under the Reservation Agreement.
• Whether Damac Park had breached the Reservation Agreement by issuing the First Termination Notice and Second Termination Notice.
• Whether Damac Park had breached the Reservation Agreement by failing to issue the Agreement of Sale to Mr Ward timeously.
• What relief ought to be granted to Mr Ward if Damac Park had materially breached the Reservation Agreement.

22. Before setting out the trial judge’s findings on the issues above, it seems to me that the principal issue raised in Damac Park’s appeal relates to the effect of the Transferred Sum on Mr Ward’s payment obligations under the Reservation Agreement and whether Damac Park was in breach of the Reservation Agreement.

A. Preliminary Points: Whether the Reservation Agreement was valid and binding, and proper construction of the phrase “Sale Date” in the Reservation Agreement.

23. First, the trial judge held that the Reservation Agreement was a valid and binding contract. He further found that the absence of a concluded Agreement of Sale did not affect the validity of the Reservation Agreement. To this end, he relied on Article 27 of the DIFC Contract Law, which effect was that any terms relating to the sale of the Unit which the Parties intended to leave open in the Reservation Agreement would not preclude the Reservation Agreement from coming into existence.
24. Second, the trial judge held that the expression “Sale Date” in the Reservation Agreement referred to the date of the Reservation Agreement, 28 October 2009. He rejected Mr Ward’s contention that the “Sale Date” referred to the date when legal title to the Unit passed to him, an event which never took place.

B. The effect of the Transferred Sum on Mr Ward’s payment obligations under the Reservation Agreement

25. The trial judge found that, determining the effect of the Transferred Sum on Mr Ward’s payment obligations under the Reservation Agreement was contingent on two related questions:
    • First, how were the instalments payments and subsequent percentages in the Payment Schedule to be calculated?
    • Second, whether the Transferred Sum would rest in Mr Ward’s account as a credit towards payments and used to defray the instalment payments as they fell due, or whether the Transferred Sum operated as a credit to alter the purchase price and therefore the instalment payment percentages to be payable as they became due on 26 April and 25 July 2010.
26. The trial judge decided that the instalment payment percentages set out in the Payment Schedule should be calculated according to the Full Unit Price and not the Reduced Unit Price. In reaching this conclusion, he referred to Articles 52 and 53 of the DIFC Contract Law which provide as follows:

“Part 5: INTERPRETATION

52. Reference to contract or statement as a whole

Terms and expressions shall be interpreted in the light of the whole contract or statement in which they appear.

53. All terms to be given effect

Contract terms shall be interpreted so as to give effect to all the terms rather than to deprive some of them of effect.”

27. He then reasoned that, because the Reservation Agreement described the “Office Unit Price” as “AED 4,544,000” (the Full Unit Price), the percentages representing the instalment payments set out in the Payment Schedule must necessarily be based on the Full Unit Price and not the Reduced Unit Price. In his view, adopting the contrary conclusion would be inconsistent with Article 53 of the DIFC Contract Law, because it would “deprive effect to some of the contract terms”, i.e., the express terms of the Reservation Agreement.
28. He then proceeded to answer the second question by holding that the Transferred Sum operated as a standing pool of funds which would be used to offset instalment payments under the Reservation Agreement as and when they fell due. He held that, if the Transferred Sum did not so operate, the Transferred Sum would have to be deducted from the Full Unit Price in determining the payment instalments set out in the Payment Schedule. Such a result could not be permitted for the reasons set out at [27] above.
29. The effects of the trial judge’s decision were that (1) the instalment payments under the Payment Schedule were based on the Full Unit Price and (2) that the Transferred Sum would operate as a standing pool of funds that would be applied to discharge Mr Ward’s payment obligations as and when they fell due. Accordingly, Mr Ward’s payment obligations under the Reservation Agreement ought to be understood as set out in the table below. The header titled “Amount Due” represents the portion of the Full Unit Price which Mr Ward was liable for and the header titled “Amount Payable” represents the amount of money which Mr Ward was required to actually pay after taking into account any offsets of the balance. Transferred Sum against what was due to Damac Park.

C. Whether Damac Park’s purported termination of the Reservation Agreement amounted to a repudiation of the Reservation Agreement.

30. Having decided that Mr Ward’s payment obligations were such that Mr Ward was not required to make any cash payments to Damac Park for the second instalment, the trial judge found that, when the First Termination Notice was issued on 15 July 2010, Mr Ward was not in arrears. The First Instalment was fully paid for by the Transferred Sum when it fell due on 26 April 2010. It follows that, the First Termination Notice was premature and erroneous. In issuing the First Termination Notice, Damac Park was in breach of the Reservation Agreement.
31. Following the issuance of the First Termination Notice by Damac Park, Mr Ward made two further payments to it in October 2010 totalling AED 1,346,445. Given that the amount payable as at 25 July 2010 was less than AED 1,291,720, Mr Ward not only settled all amounts due to Damac Park, he actually overpaid the Full Unit Price by 3%. Since Mr Ward was not in arrears when the Second Termination Notice was subsequently issued on 22 March 2011, the trial judge held that the Second Termination Notice was also invalid and Damac Park’s cancellation of Mr Ward’s reservation of the Unit amounted to a wrongful termination of the Reservation Agreement.

D. Damac Park’s failure to issue an Agreement of Sale

32. The trial judge also found that Damac Park committed a separate and distinct material breach of the Reservation Agreement, because it was contractually required but failed to issue an Agreement of Sale to Mr Ward timeously.
33. In the trial judge’s view, Clause 9 of the Reservation Agreement expressly imposed on Damac Park an obligation to issue an Agreement of Sale “in due course”. A reasonable time for issuing the Agreement of Sale should not have exceeded the time when the second instalment was due, namely 180 days from the date of the Reservation Agreement. Since Damac Park had not issued an Agreement of Sale to date, it was plainly in breach of this obligation.
34. The breach was a material one amounting to fundamental non-performance within the meaning of Article 86 of the DIFC Contract Law, which entitled Mr Ward to terminate the Reservation Agreement for the following reasons.
35. First, he observed that Clause 3 provided that Mr Ward’s failure to sign the Agreement of Sale would entitle Damac Park to terminate the Reservation Agreement. Next, Clause 16 provided that the Reservation Agreement would cease to be effective once the Agreement of Sale was executed. These provisions, in his view, underscored the essentiality of the Agreement of Sale to the Reservation Agreement. Finally, the trial judge was of the view that the absence of an Agreement of Sale prejudiced Mr Ward because it could have afforded Mr Ward more substantive rights than under the Reservation Agreement, such as expected dates by which the Unit would be handed over to Mr Ward and detailed calculations of payment terms.

E. Whether the Reservation Agreement had been terminated

36. Having found that Damac Park had committed two separate repudiatory breaches of the Reservation Agreement, the trial judge found that it was Mr Ward who was entitled to elect to terminate the Reservation Agreement.
37. Having regard to the Parties’ extensive period of non-performance since the Parties’ last correspondence in 2011 until the commencement of the Suit in 2014, the trial judge found that an intention to abandon and terminate the Reservation Agreement had been evinced by Mr Ward.

F. The relief Mr Ward was entitled to in the event the Reservation Agreement was terminated

38. Given that the Reservation Agreement had been terminated, without any legal title to the Unit passing to Mr Ward, the trial judge found that Damac Park had been enriched by an amount equal to the sums paid by Mr Ward to date. This amount was AED 2,626,335, which included the Transferred Sum and monies paid under the Reservation Agreement (the “Claimed Sum”).
39. The trial judge therefore found that Article 48 of the DIFC Damages and Remedies Law No. 7 of 2005 and Article 90 of the DIFC Contract Law applied in these circumstances, with the result that Mr Ward would be entitled to restitution of the sums paid to Damac Park to date.

III.THE PARTIES’ ARGUMENTS ON APPEAL

A. Damac Park’s Case

40. The thrust of Damac Park’s appeal is that the trial judge had wrongly construed the Reservation Agreement in preferring Mr Ward’s interpretation of the Payment Schedule. The trial judge’s error flows from the following matters.
    • First, he did not give proper weight to the requirement in the Payment Schedule that a payment was to be made at the time of the second instalment.
    • Second, he failed to give proper weight to the specific conditional language of the credit in the Waiver Agreements.
    • Third, he failed to consider and/or give any weight to the Parties’ conduct after the Reservation Agreement had been concluded.
    • Fourth, his decision ignored the commercial purpose of the Reservation Agreement and Waiver Agreements.
    • Finally, he gave undue weight to the “Office Unit Price” as adopted in the Reservation Agreement.
41. Mr Reed argues that the critical issue is how the Transferred Sum would be applied to the purchase price set out in the Reservation Agreement. The inquiry must be guided by the following considerations.
    • First, it is necessary to construe the Reservation Agreement together with the Waiver Agreements (which refer to the Reservation Agreement), as two parts of a larger arrangement.
    • Second, the Waiver Agreements make clear that the crediting of the Transferable Sum was conditional, and the question is how that conditionality should be applied.
42. As to the approach which this Court should adopt in its interpretative exercise, Mr Reed has referred to Article 49 of the DIFC Contract Law, which provides that the exercise is one of ascertaining the parties’ common intention or, alternatively, the understanding that a reasonable person in the parties’ position would have in the circumstances.  Mr Reed also points out that Article 51(c) of the DIFC Contract Law permits this Court to take into account the subsequent conduct of the parties in this regard.
43. Further, Mr Reed has pressed us to adopt the iterative process endorsed by Lord Mance in Re Sigma Finance Corp (in admin. Rec.) [2010] UKSC 2 (“Re Sigma Finance”) at [12] where he said:

“…the resolution of an issue of interpretation in a case like the present is an iterative process, involving “checking each of the rival meanings against other provisions of the document and investigating its commercial consequences” ([2009] B.C.C. 393 at [98], and also [115] and [131]).”

44. Applying the iterative process of construing the Reservation Agreement, Mr Reed has canvassed three permutations as to how the credit could operate under the Reservation Agreement.
    • First, the Transferred Sum would be credited only at the time the final instalment falls due. Mr Ward would be required to pay the second and third instalments based on the Full Unit Price. When making payment of the final instalment, the credit would be effected by reducing the amount payable as the final instalment by an amount equal to the Transferred Sum. Damac Park refers to this as the “Deferred Credit Interpretation”.
    • Second, the Transferred Sum reduced the total amount payable by Mr Ward at the outset, with the effect that Mr Ward was required to pay the second, third and fourth instalments but with reference to the Reduced Unit Price. If Mr Ward failed to do so, the crediting of the Transferred Sum would be reversed and Mr Ward would be required to pay an additional amount equal to the Transferred Sum in addition to the instalments set out in the Payment Schedule. Damac Park refers to this as the “All Instalments Credit Interpretation”.
    • Third, the instalment payments under the Payment Schedule would be based on the Full Unit Price and the Transferred Sum would be applied towards payment of the second instalment (which was less than the Transferred Sum) when it fell due. Accordingly, Mr Ward need only pay the third and fourth instalments. Damac Park refers to this as the “Immediate Credit Interpretation”.
45. Damac Park’s case is that the All Instalments Credit Interpretation is correct, and that the trial judge erred by adopting the Immediate Credit Interpretation instead. Its reasons are as follows.
46. The Immediate Credit Interpretation should be rejected because it ignores the fact that the Payment Schedule clearly envisaged that some payment should be made at the time of the second instalment.
47. A second reason why the Immediate Credit Interpretation should be rejected is because it fails to recognize that, as is expressly provided under the Waiver Agreements, the credit of the Transferred Sum is conditional on Mr Ward making prompt payment in accordance with the Payment Schedule. That condition would not be given effect if Mr Ward were able to benefit from the Transferred Sum without first having to perform his payment obligations.
48. Mr Reed further contends that the trial judge’s bases for rejecting the All Instalments Credit Interpretation are erroneous for the following reasons.
    • First, in holding that the All Instalments Credit Interpretation contradicts the “Office Unit Price” stated in the Reservation Agreement, the trial judge fell into error by equating the application of credit with amending the purchase price. In Damac Park’s submission, the All Instalments Credit Interpretation merely affects the level of payments required from Mr Ward to complete the purchase and not the “Office Unit Price”.
    • Second, the trial judge also fell into error in demanding that there be “clear agreement” that the Payment Schedule be applied to anything other than the “Office Unit Price” for Damac Park’s argument to succeed. He effectively imposed an evidential burden on Damac Park, but he had no basis for doing so since the point is one of legal construction.
    • Third, the trial judge gave undue weight to the “Office Unit Price”. The fact that the Payment Schedule makes no reference to the Office Unit Price is striking evidence that the instalments were based on some other There is nothing unusual about recording the total value which Mr Ward was to provide as the Full Unit Price even though there would be a further calculation of a net price. The application of a “Recovery Transfer” was recorded under the section titled “Remarks” under the Reservation Agreement.
49. Finally, the Immediate Credit Interpretation is wrong because it contradicts the Parties’ subsequent conduct. In this regard, Mr Reed relies on the following facts as evidence that Mr Ward understood the credit to operate in accordance with the All Instalments Credit Interpretation.
    • Mr Ward did not question the amount of AED 816,027.50 which was stated as due in Damac Park’s letter of 22 June 2010.
    • When negotiating the First Extension and Second Extension, Mr Ward accepted the amounts owing for the second and third instalments as 25% and 30% respectively of the Reduced Unit Price. He eventually provided cheques for those amounts.
    • If the Immediate Credit Interpretation properly reflected the Parties’ understanding, Mr Ward would have resisted Damac Park’s demand for payment set out in its letter of 22 June 2010 and the First Termination Notice. That he sought to renegotiate the payment schedule supports the All Instalments Credit Interpretation.
50. A final point made by Mr Reed is that only the All Instalments Credit Interpretation would achieve the commercial object of the Reservation Agreement and Waiver Agreements. The Immediate Credit Interpretation is uncommercial because it involves extending substantial credit immediately to Mr Ward and requiring no payment until the third instalment. In contrast, a proper balance is struck between crediting the Transferred Sum and requiring Mr Ward to make regular payments to Damac Park. There was no reason why Damac Park would seek more commercial risk by proposing a plan in accordance with the Immediate Credit Interpretation.

B.  Mr Ward’s Case

51. Mr Ward’s case is that the trial judge was correct in his decision and none of the arguments advanced by Damac Park establishes that the trial judge erred.
52. As a threshold issue, Mr Bacon argues that, because two of the five grounds of appeal advanced by Damac Park were not raised at trial, they should fail in limine. Those two grounds are:
    • Damac Park’s argument that there was a common intention held by the Parties that there should be some payment made for the second instalment under the Payment Schedule; and
    • Damac Park’s argument that the Parties’ subsequent conduct is evidence that the All Instalments Credit Interpretation is correct.

53. In answer to Mr Reed’s argument that the Immediate Credit Interpretation failed to give effect to the conditional nature of the Transferred Sum, Mr Bacon’s argument is that the Immediate Credit Interpretation does recognize the conditionality of the Transferred Sum. As Mr Ward was required to make further payments after the credit was applied, the credit was conditional until all subsequent payments were made.
54. Further, Mr Bacon argues that the trial judge was right to regard the All Instalments Credit Interpretation as contradicting the express terms of the Reservation Agreement. Damac Park in the Court of First Instance did argue that the All Instalments Credit Interpretation would give rise to a new “net purchase price”, so the trial judge did not misunderstand Damac Park’s argument at trial but squarely addressed it. Further, the trial judge did not confuse the application of credit with the level of the purchase price, as Mr Reed contends. He expressly found the purchase price to be AED 4,544,000 and that it was accordingly incorrect for any sums to be deducted from it to give rise to any “net” purchase price.
55. Mr Bacon also rejects Damac Park’s contention that the trial judge imposed any burden of proof on Damac Park when he found that the Immediate Credit Interpretation was correct “in the absence of a clear agreement to the contrary”. In Mr Bacon’s submission, all that the trial judge had decided was that the circumstances and evidence supported a finding that the Payment Schedule was based on the Original Purchase Price, especially since that was the only figure which appeared in the Reservation Agreement. Mr Bacon emphasizes that, in reaching this conclusion, the trial judge was persuaded by Mr Ward’s oral evidence and witness statements. On that basis, Damac Park would have required clear evidence to advance a contrary construction, and the trial judge found that no such evidence was available.
56. Mr Bacon denies that the Parties’ subsequent conduct provides any basis for overturning the trial judge’s decision for the following reasons.
    • First, it is not permissible for Damac Park to raise in this appeal factual points that were not raised at trial and, more importantly, not put to Mr Ward at the witness stand.
    • Second, and more fundamentally, the trial judge did take into account the Parties’ subsequent conduct in reaching his decision.
    • Third, Mr Bacon argues that none of the subsequent conduct relied on by Damac Park clearly establishes that the Parties’ mutual intentions were for the Payment Schedule to be calculated according to the Reduced Unit Price. Mr Ward never received a copy of the Reservation Agreement, and the letter from Damac Park dated 22 June 2010 only referred to an outstanding amount without setting out the basis of the calculation of those sums or attaching a Statement of Accounts. Further, Mr Ward never received the First Termination Notice dated 13 June 2010 which was sent to Mr Ward by letter. Finally, Mr Ward had given evidence that his only interest in renegotiating payment terms under the First Extension was to secure an extension of time, and was not approving an interpretation of the Reservation Agreement which he had never read or been given a copy of.
57. Finally, Mr Bacon disagrees that only the All Instalments Credit Interpretation would give effect to the commercial object of the Parties’ transaction. To the contrary, it would give rise to an unreasonable result by requiring Mr Ward to pay a significantly higher percentage of the Office Unit Price than what was stated in the Payment Schedule, namely 55%. The Immediate Credit Interpretation does not, as Damac Park contends, amount to granting Mr Ward the full benefit of the credit before paying any money to Damac Park or extending substantial credit to him immediately.
58. By way of Supplemental Skeleton Arguments dated 7 September 2015, Mr Ward contends that, even if Damac Park were to succeed on its interpretation of the Reservation Agreement, Mr Ward would still be entitled to a return of his monies. Since the trial judge found that Damac Park had separately committed a repudiatory breach by failing to issue the Agreement of Sale to date, a finding which Damac Park has not appealed against, then Mr Ward was entitled to terminate the Reservation Agreement in any event.

IV. ISSUES TO BE DECIDED

59. In this appeal, the issues requiring decision are as follows.
    • First, on a proper construction of the Reservation Agreement, what were Mr Ward’s payment obligations to Damac Park.
    • Second, whether Mr Ward breached his payment obligations under the Reservation Agreement. If not, whether Damac Park was in breach of the Reservation Agreement by purporting to terminate it on 21 April 2011.
    • Third, whether Damac Park was in breach of the Reservation Agreement by failing to issue an Agreement of Sale to Mr Ward timeously.
    • Fourth, which party was entitled to and did lawfully terminate the Reservation Agreement.
    • Fifth, whether Mr Ward is nevertheless entitled to a return of the monies paid to Damac Park if Damac Park lawfully terminated the Reservation Agreement.

V. DISCUSSION

60. The claim at the centre of this appeal is a simple one. Mr Ward seeks a return of all monies he has paid to Damac Park for the purchase of the Unit. He never acquired this Unit because Damac Park alleged that Mr Ward had failed to meet his payment obligations and, on that basis, terminated the Reservation Agreement. The basis of Mr Ward’s case is that, on a proper construction of the Reservation Agreement, he had in fact discharged his payment obligations so Damac Park’s purported termination of the Reservation Agreement was wrongful. Additionally, Mr Ward argues that Damac Park also committed a separate repudiatory breach of the Reservation Agreement by failing to issue the Agreement of Sale to him. On either ground, he argues that he was entitled to (and did) terminate the Reservation Agreement and obtain a return of the Claimed Sum as damages or restitution.
61. In the Court of First Instance, the trial judge found in favour of Mr Ward on both grounds and held that he was entitled to terminate the Reservation Agreement. In particular, the trial judge preferred Mr Ward’s interpretation of the Reservation Agreement (the Immediate Credit Interpretation) and held that he did not breach his payment obligations, so that Damac Park’s purported termination of the Reservation Agreement was wrongful. The principal controversy is whether the trial judge was correct to have so decided.
62. As will be apparent later, the outcome of this issue is determinative of all other ancillary issues, including the question of which party was entitled to terminate the Reservation Agreement and what remedy, if any, Mr Ward is entitled to.
63. Before considering these issues, I first address Mr Ward’s preliminary objections against the admissibility of certain points raised by Damac Park in this appeal.

A.  Preliminary Issue: Whether and how new points may be raised on appeal

64. Mr Ward has challenged the admissibility of various points raised by Damac Park in this appeal. He argues that, because they were not advanced at trial, it is too late for the following points to be advanced now.
    • The argument that there was a common intention of the Parties that some payment be made at the time of the second instalment (the “Second Instalment Argument”).
    • The argument that the Parties’ subsequent conduct reinforces the All Instalments Credit Interpretation. In this regard, certain factual allegations by Damac Park which support the subsequent conduct argument were not raised at trial or put to Mr Ward at the witness stand (the “Subsequent Conduct Argument”).
65. Notwithstanding that Mr Bacon has not referred to any authority which establishes the basis of his objection, I understand his complaint to be that Damac Park should not be permitted to raise new points in an appeal. While the principle is not as wide as Mr Bacon has suggested, I recognize the importance of the long-standing principle that an appellant should not have free rein to introduce points on appeal that were not advanced at trial. In The Tasmania (1890) 15 App Cas 223, Lord Herschell articulated the principle in the following terms at p. 225:

“My Lords, I think that a point such as this, not taken at the trial, and presented for the first time in the Court of Appeal, ought to be most jealously scrutinised. The conduct of a cause at the trial is governed by, and the questions asked of the witnesses are directed to, the points then suggested. And it is obvious that no care is exercised in the elucidation of facts not material to them.

It appears to me that under these circumstances a Court of Appeal ought only to decide in favour of an appellant on a ground there put forward for the first time, if it be satisfied beyond doubt, first, that it has before it all the facts bearing upon the new contention, as completely as would have been the case if the controversy had arisen at the trial; and next, that no satisfactory explanation had been afforded them when in the witness box.”

66. Where the question raised is one of pure law which involves no further factual investigation, then a court has no reason to preclude admission of the new point. To the contrary, as explained in the House of Lords’ decision in Connecticut Fire Insurance Co v Kavanash [1892] AC 473 (“Connecticut Fire”) at p. 480, the interests of justice requires the point to be considered:

“When a question of law is raised for the first time in a court of last resort, upon the construction of a document, or upon facts either admitted or proved beyond controversy, it is not only competent but expedient, in the interests of justice, to entertain the plea.”

67. Thus, in New Zealand Meat Board v Paramount Export Ltd (in liquidation) [2004] UKPC 45, the Privy Council permitted a new argument to be raised on appeal in relation to the proper construction of a document when no further evidence was required:

“47. It therefore appears to their Lordships that despite the fact that the true construction of the contract was not argued before the judge, the plaintiffs could not have complained of prejudice if the point had been taken before the Court of Appeal. It was a question of law on which no further evidence could have been called. The position is the same before their Lordships’ Board. It is no doubt very disappointing for the plaintiffs, having succeeded in the courts below, to lose on a new point in the final court. On the other hand, it would be a miscarriage of justice if the Meat Board were required to pay some $7m out of public funds when it had no legal liability to do so, merely on account of the way its advisers had conducted the litigation.”

(emphasis added)

68. The position is more restrictive where the new point raised presents factual questions which might affect the evidence or conduct of the trial if the new point was raised then. In the words of Rix LJ in Lowe v W Machell Joinery Ltd [2011] EWCA Civ 794 at [83]:

“83        This court may often, in dealing with issues on appeal which had previously been debated at trial, have been required and prepared to draw inferences where the findings of a trial judge are incomplete. However, it has generally resisted doing so where a new issue of law is raised in this court which, if it had been raised below, might have affected the evidence or conduct of the trial.”

69. It is important to be clear about what Rix LJ precisely meant in the passage above. He was not suggesting that an appellate court could not make any new findings of fact which an appellant did not put to the trial judge. It would only be impermissible if raising the point at trial might have called for more evidence to be adduced in answer to the point. This is a sensible qualification; an appellate court should not embark on an exercise in establishing primary facts, a task which can only be properly undertaken at trial. The same view was expressed in Connecticut Fire at p. 480:

“The expediency of adopting that course may be doubted, when the plea cannot be disposed of without deciding nice questions of fact, in considering which the Court of ultimate review is placed in a much less advantageous position than the Courts below. But their Lordships have no hesitation in holding that the course ought not, in any case, to be followed, unless the Court is satisfied that the evidence upon which they are asked to decide establishes beyond doubt that the facts, if fully investigated, would have supported the new plea. To accept the proof adduced by a defendant in order to clear himself of a charge of fraud, as representing all the evidence which he could have brought forward in order to rebut a charge of negligence, might be attended with the risk of doing injustice.”

70. It is therefore clear that this Court may make new factual findings on appeal that were not in issue at trial, so long as it is not in a “much less advantageous position than the Courts below”. This is especially true when the factual dispute revolves around an inference to be drawn rather than a question of primary fact.
71. Having set out the applicable legal principles above, I now consider whether each of the two new points raised by Damac Park should be admitted for consideration.
72. I have no difficulty deciding that the Second Instalment Argument should be admitted because it falls squarely within the first situation envisaged in Connecticut Fire. The narrow inquiry is simply whether the text of the Payment Schedule in the Reservation Agreement suggests that some payment had to be made at the time of the second instalment. This point is purely one of legal construction which does not rely on any disputed facts. It is difficult to imagine what further evidence Mr Ward could have put forward on the question had it been raised at trial, and Mr Bacon has not suggested any.
73. The position with the Subsequent Conduct Argument is less straightforward. It is plainly an argument of mixed fact and law, comprising some factual assertions which Mr Bacon denies and argues were not put to Mr Ward at trial. The crux of Mr Bacon’s objection is that, had certain of those factual assertions been raised at trial, Mr Ward would have provided further evidence (whether oral or documentary) to refute Damac Park’s assertions.
74. The essential factual assertions which Damac Park is putting forward to this Court, and which Mr Ward now challenges, is that Mr Ward had full knowledge of and accepted Damac Park’s understanding of the Payment Schedule. As with all questions of knowledge or mental culpability, this is plainly a matter of inference and not a question of primary fact. To this end, Damac Park relies only on the following facts and evidence, as set out at [55] to [61] in its Skeleton Arguments.
    • Mr Ward received Damac Park’s email of 22 June 2010, which Damac Park says contained a statement of account which stated that the sum of AED 816,027.50 (being 25% of the Reduced Unit Price) was payable in April 2010, and the First Termination Notice. Mr Ward did not challenge the basis on which the outstanding amounts stated in those documents were calculated.
    • Mr Ward proceeded with the First Extension, Second Extension and Third Extension which calculated the second and third instalments according to the Reduced Unit Price. Mr Ward even provided post-dated cheques in accordance with those figures.
75. As against the above, Mr Bacon makes the following points.
    • Mr Ward never received a copy of the Reservation Agreement.
    • Mr Ward never received Damac Park’s letter of 13 June 2010.
    • Damac Park’s emails of 22 June 2010 and 28 June 2010 did state AED 816,027.50 as the amount which Mr Ward was due to pay, but did not attach a statement of account explaining how the sum was derived.
    • Mr Ward had given evidence that he only agreed to the First Extension, Second Extension and Third Extension because he trusted Damac Park to accurately calculate the amounts actually owing by him to Damac Park, and that his only interest was in securing an extension of time for payment. The inference which Damac Park is inviting this Court to draw should have been put to Mr Ward at the witness box.
76. I have already explained that there is nothing inherently objectionable about an appellate court drawing an inference which the trial judge was not asked to consider, as long as it could not have affected the evidence had it been raised at trial. The only question which remains for consideration is whether the inference which Damac Park now invites us to draw could be affected by any further evidence which might have been put forward at trial. I can see none.
    • First, Damac Park does not deny Mr Ward’s assertion that he did not receive a copy of the Reservation Agreement or Damac Park’s letter of 13 June 2010. In any event, Damac Park does not specifically rely on Mr Ward’s receipt of these documents in its Subsequent Conduct Argument.
    • Second, although Damac Park has asserted in its Skeleton Arguments that its email of 22 June 2010 contained a Statement of Account and Mr Ward denies this, the email was produced at trial and Damac Park’s error in this regard is plainly reflected in the email which states “Attachment: none”. Apart from the Statement of Account, Mr Ward does not deny receiving all other documents which Damac Park relies on in its Subsequent Conduct Argument. In particular, Mr Ward admits that he received the email of 22 June 2010 (Second Witness Statement of Youssef Issa Ward dated 28 January 2015 at [12] and Hearing Transcript at p. 180) as well as the First Termination Notice (First Witness Statement of Youssef Issa Ward dated 31 October 2014 at [24]).
    • Finally, Mr Bacon argues that Mr Ward’s motives (as asserted by Damac Park) for requesting the extensions of time ought to have been put to him at the witness stand. But Mr Bacon also accepts that Mr Ward had already given evidence on that question. Indeed, Mr Ward had put forward in very clear terms his explanation of his motivations for renegotiating payment terms with Damac Park, in his First Witness Statement dated 31 October 2014 at [27]:

“Under normal circumstances, I would have been careful to check the details of the payment plan contained in the Reservation Agreement, why it was alleged that I was in breach of the payment plan and the figures of the proposed revised payment plan. However, because I was distracted with other matters at that point in my life, and because I had what I thought was a good relationship with Damac, I trusted that the figures that were presented to me as being outstanding were correct and that the revised payment plan was to my benefit.”

(emphasis added)

Had Damac Park put the Subsequent Conduct Argument to Mr Ward, it is difficult to imagine what further evidence Mr Ward would have given other than to reinforce a point that was already made at trial in his witness statement. Cross-examining Mr Ward on the statement would not have yielded any fresh evidence in his favour.

77. What remains of Mr Bacon’s objections are really arguments about whether the inference put forward by Damac Park is appropriate. That is a matter which an appellate court is fully empowered to determine under RDC 44.141.
78. Accordingly, I conclude that Damac Park is not foreclosed from advancing either the Second Instalment Argument or the Subsequent Conduct Argument.

B.            Mr Ward’s payment obligations under the Reservation Agreement

79. Mr Ward’s payment obligations under the Reservation Agreement are set out in the Payment Schedule. The Parties have advanced competing constructions of the Payment Schedule, and it falls on this Court to determine its proper construction. In construing the Reservation Agreement, this Court will be guided by Article 49 of the DIFC Contract Law which defines the nature of the exercise:

“49. Intention of the parties

(1) A contract shall be interpreted according to the common intention of the parties.

(2) If such an intention cannot be established, the contract shall be interpreted according to the meaning that reasonable persons of the same kind as the parties would give to it in the same circumstances.”

80. Although Article 49(1) provides that a contract shall be interpreted according to the “common intentions of the parties”, this provision is only engaged when disputing parties have jointly put forward an interpretation of the contract.
81. Since the Parties disagree on the proper interpretation of the Reservation Agreement, it is Article 49(2) that applies. In providing that a contract shall be interpreted according to the meaning that would be ascribed to it by a reasonable person in the parties’ positions, Article 49(2) mandates that the inquiry should be an objective one.
82. The starting point in objectively ascertaining the parties’ common intentions is to give the instrument in question its plain and ordinary meaning if there exists unambiguous language to that effect, regardless of what commercial result arises from it (Investors Compensation Scheme LTD v West Bromwich Building Society [1998] 1 WLR 896 at p. 902).
83. As Lord Steyn observed in his extra-judicial writings (“Contract Law: Fulfilling the reasonable expectations of honest men” in 113 LQR 433 at p. 441), however, it is a rare thing to be able to identify the “plain and ordinary” or “natural” meaning of a document. In that case, the appropriate course of action is to prefer an interpretation which better accords with commercial sense:

“Often there is no obvious or ordinary meaning of the language under consideration. There are competing interpretations to be considered. In choosing between alternatives a court should primarily be guided by the contextual scene in which the stipulation in question appears. And speaking generally commercially minded judges would regard the commercial purpose of the contract as more important than niceties of language. And, in the event of doubt, the working assumption will be that a fair construction best matches the reasonable expectations of the parties.”

(emphasis added)

84. The same view was echoed by the English Supreme Court in Rainy Sky SA v Kookmin bank [2011] UKSC 50, where Lord Clarke said at [21]:

“21 The language used by the parties will often have more than one potential meaning. I would accept the submission made on behalf of the appellants that the exercise of construction is essentially one unitary exercise in which the court must consider the language used and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant. In doing so, the court must have regard to all the relevant surrounding circumstances. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other.”

(emphasis added)

85. Thus, where the language used in an agreement is capable of bearing more than one meaning, the ambiguity must be resolved in favour of a construction which best gives effect to the commercial object of the agreement. This is squarely in line with the iterative process prescribed in Re Sigma Finance which Mr Reed has referred us to.
86. The principles set out above are not the subject of controversy; neither Mr Reed nor Mr Bacon has challenged them. Applying these principles, Damac Park’s interpretation is eminently preferable
87. I am mindful that, if there was an unambiguously natural meaning to the Reservation Agreement and Payment Schedule, that meaning should be adopted. It seems to me that in the trial judge’s view, there was such a natural meaning. He found that the Reservation Agreement expressly provided the “Office Unit Price” to be the Full Unit Price. He then reasoned that, since the “Office Unit Price” was the only price identified in the Reservation Agreement, it could only be the “Office Unit Price” which the instalments set out in the Payment Schedule could be derived from. With respect, I do not think that the meaning which the trial judge ascribed to the Payment Schedule was self-evident at all.

88. In my judgment, there was no unambiguous “natural meaning” which the Payment Schedule could be understood to have. It is striking that each instalment under the Payment Schedule was denoted only by numerical percentages and no mention is made of what sum those percentages would be calculated according to. If the Reservation Agreement constituted the only document upon which the Parties’ transaction was founded, I would be more inclined to agree with the trial judge’s analysis. However, that is not the present case.
89. Mr Ward’s purchase of the Unit from Damac Park was but one facet of a larger effort to prevent the forfeiture of sums he had paid to Damac Star under the EBAs. To secure that principal goal, Mr Ward entered into the Waiver Agreements (on the same day he executed the Reservation Agreement) with Damac Star and Damac Park, under which Damac Park and Damac Star would permit Mr Ward to retain the benefit of the sums paid under the EBAs if he purchased the Unit in place of the Executive Bay Properties. To the extent that the purchase of the Unit was subservient to and a component of the wider compromissory arrangement which Mr Ward reached with Damac Park and Damac Star, the trial judge erred by construing the Reservation Agreement in isolation. This is evident from [50] to [63] of his judgment where, in construing the Reservation Agreement, no reference is made whatsoever to the Waiver Agreements or the way they might have affected the operation of the Payment Schedule.
90. The error of such a narrow approach is all the clearer when one considers that the Reservation Agreement does allude to the operation of credit envisaged by the Waiver Agreements. On the first page of the Reservation Agreement, the section titled “Remarks” states “Recovery Transfer from EB/14/1401 to 1407 – AED 4,544,000/-”. “EB/14/1401 to 1407” are clearly references to the seven Executive Bay Properties which Mr Ward had purchased, and the same documentary references are made in the Waiver Agreements. Accordingly, notwithstanding that the Reservation Agreement did not specifically identify the existence of the Waiver Agreements, it was evident on the face of the Reservation Agreement that the EBAs might have had some effect on Mr Ward’s payment obligations under the Reservation Agreement.
91. Further, Mr Ward has not been able to offer any explanation as to why, if (under the Immediate Credit Interpretation) no payment was required at the time of the second instalment, the Payment Schedule specified a payment date and payment percentage for the second instalment. The discordance between the Payment Schedule and the Immediate Credit Interpretation is accentuated by the fact that, in respect of the deposit and the first instalment (where it is undisputed that payment was not required), the Payment Schedule does not specify a percentage and payment date. While this disparity is not conclusive, it plainly suggests that the Immediate Credit Interpretation was not free from difficulty or obviously preferable to the All Instalments Credit Interpretation.
92. In the light of the foregoing, it cannot be persuasively argued that the “Office Unit Price” or Full Unit Price was, as the trial judge held, the only sum which the Payment Schedule was referring to. To the contrary, the precise operation of the Payment Schedule is fraught with ambiguity. In the face of ambiguity, the proper approach should have been to give close appraisal to the commercial outcome arising from the Parties’ respective interpretations, an exercise which was not undertaken at trial. It is this inquiry which I now turn to.
93. The Parties have advanced competing arguments as to why their respective interpretations would better accord with commercial sensibility.
94. Before embarking on the iterative process of comparing the commercial results flowing from each Party’s interpretation of the Reservation Agreement, it is worth setting out the commercial context to the Parties’ transaction on 28 October 2009, which has its origins in Mr Ward’s prior dealings with Damac Star in relation to the EBAs.
95. Following Mr Ward’s purchase of the Executive Bay Properties on 8 April 2007, he fell into arrears in less than a year. By 29 January 2008, Damac Star saw fit to issue termination notices to Mr Ward in respect of the EBAs, which were eventually terminated by notices which Damac Star issued on 24 March 2008. Notwithstanding that Damac Star was thereafter entitled to forfeit the Transferred Sum, it withheld the exercise of that right and entered into a compromise with Mr Ward, by requiring him to purchase the Unit for AED 4,544,000 while permitting him to credit sums paid under the EBAs towards the Unit’s purchase price.
96. In my view, three crucial points emerge from this historical account:
    • Damac Star’s principal concern was to secure cash flow and maximize the recovery of debt that was due under the EBAs by incentivizing Mr Ward to make timely payment under the Reservation Agreement.
    • The credit risk of transacting with Mr Ward, a defaulting party, was high. Accordingly, Damac Park would have been eager to minimize this risk by requiring regular payments at the earliest possible time.
    • Damac Star did not receive any payment from Mr Ward for amounts due under the EBAs for almost one and a half years (since the date they were terminated) at the time it entered into the Waiver Agreements with Mr Ward in October 2009.
97. Mr Bacon’s position is that it would be unreasonable to adopt the All Instalments Credit Interpretation because it would require Mr Ward to pay a greater amount than that required under the Payment Schedule, namely 55% of the Full Unit Price. In my judgment, the argument is circular and must be rejected. It presupposes that the Payment Schedule is to be calculated according to the Full Unit Price, but that is the very issue in dispute. If the All Instalments Credit Interpretation were correct, then Damac Park would be legally entitled to payment of 63% of the Full Unit Price (the sum of 55% of the Reduced Unit Price and the Transferred Sum) before completion, and it could hardly lie in Mr Ward’s mouth to complain of the amounts that he was legally obliged to pay.
98. Mr Reed has made two arguments to demonstrate why the All Instalments Credit Interpretation better accords with the commercial object of the Parties’ transaction.
99. First, he contends that it is only the All Instalments Credit Interpretation which gives effect to the conditionality of the credit. He refers in particular to the language of the Waiver Agreements which describe the Transferred Sum as being conditional on Mr Ward fulfilling all his “obligations as set out within the [Reservation Agreement] including having made full payment of the amount equal to Purchase Price-II less the Paid Purchase Price-I”. The Immediate Credit Interpretation would not give effect to the conditional nature of the credit, because Mr Ward would receive the benefit of the credit without first making full payment of the balance. Mr Bacon is correct to contend that the conditional nature of the credit does not assist Damac Park. In my view, this argument does not assist Damac Park; the Immediate Credit Interpretation is equally capable of being conditional, albeit in a different way. For instance, the credit could be applied immediately, so that payment of the second instalment was not required, but that credit could be reversed in the event that Mr Ward defaulted on subsequent payments due under the Payment Schedule. The point is that there is no obvious mechanism by which the conditionality of the credit could be effected, so neither of the Parties’ arguments bring them closer to shore.
100. Second, Mr Reed argues that, as between the All Instalments Credit Interpretation and the Immediate Credit Interpretation, the former better accords with the commercial object of the Parties’ transaction because it would involve Damac Park taking on the least commercial risk and securing cash flow at the earliest possible date.
101. I accept this submission, which is fully informed by the historical background to the Parties’ transaction set out at [94] and [96] above. It bears emphasizing that Damac Park and Damac Star were extending to Mr Ward an indulgence by permitting him to retain the benefit of monies that Damac Star was otherwise entitled to forfeit. In exchange, Damac Park’s objective was to secure a stream of cash that Damac Star would otherwise have obtained under the EBAs, which were already overdue by approximately one and a half years at the time the Waiver Agreements were entered into. In that context, the interpretation which imposes the least commercial risk on Damac Park and requires the earliest payment by Mr Ward best reflects Parties’ common intentions. That is undoubtedly the All Instalments Credit Interpretation.
102. Mr Bacon’s suggestion that Damac Park would permit Mr Ward to provide no payment until 9 months after the Reservation Agreement had been executed has a surreal quality about it, particularly when one considers Mr Ward’s nearly one and a half year-long default under the EBAs when the Waiver Agreements were executed. In the light of Mr Ward’s credit history, Mr Bacon’s proposition clearly calls for an explanation, but he has not been able to provide any.
103. On this basis alone, and without reference to the Parties’ subsequent conduct, I am satisfied that it is the All Instalments Credit Interpretation which is correct. That conclusion is only reinforced when I consider the Parties’ subsequent conduct.
104. Mr Reed’s Subsequent Conduct Argument is as follows. Mr Ward had knowledge of Damac Park’s interpretation of the Payment Schedule. Notwithstanding this, he not only failed to challenge that understanding but in fact proceeded to make payments in accordance with it. That demonstrated an acceptance on his part that the All Instalments Credit Interpretation was correct. In this regard, Mr Reed has relied on Article 51(c) of the DIFC Contract Law, which permits this Court to take cognizance of the Parties’ subsequent conduct in interpreting any agreement between them.

105. Mr Bacon has argued that the inference which Damac Park is inviting us to draw is inappropriate for the following reasons.
     • Mr Ward could not have realized what the basis was of the calculation of the sums which Damac Park demanded from him at all times. Mr Ward never received a Statement of Account from Damac Park. He also did not read the contents of the Reservation Agreement before signing it, nor was he provided a copy.
     • Mr Ward’s entry into the First Extension, Second Extension and Third Extension do not evince an acceptance of the All Instalments Credit Interpretation. He completely trusted Damac Park to have calculated the sums correctly, and his only interest was to secure an extension of time for payment.
106. None of Mr Bacon’s arguments can be accepted. The suggestion that Mr Ward could not have known what the contents of the Reservation Agreement were because he did not retain a copy is legally and factually unsustainable.
107. As a matter of law, it is trite that a party who signs a document will be regarded as being bound by all its terms, even if he claims that he did not take notice of particular provisions (L’Estrange v F. Graucob Ltd [1934] 2 KB 394; Peekay Intermark Ltd v Australia & New Zealand Banking Group Ltd [2006] EWCA Civ 386 at [43]).
108. Neither am I persuaded that, as a matter of fact, Mr Ward was ignorant of his payment obligations under the Payment Schedule.
     • First, Mr Ward had knowledge of the contents of the Reservation Agreement, even if he did not receive a copy of the document thereafter. The Reservation Agreement is a succinct, two-page document. The Payment Schedule is set out conspicuously in a table on the second page, on which Mr Ward placed his signature. That information could not have been lost on a sophisticated businessman like Mr Ward, so Mr Ward would have been able to test his interpretation of the Payment Schedule against Damac Park’s as soon as a disagreement became apparent.
     • Second, by 22 June 2015, Mr Ward must have known what Damac Park’s understanding was of the Payment Schedule. Mr Ward admits receiving Damac Park’s email of 22 June 2015, which demanded payment of “AED 816,027.50”. That email does not attach a Statement of Account which calculates or explains the basis of the sum demanded. But it should have been obvious to Mr Ward at the time that Damac Park did not adopt the Immediate Credit Interpretation because (1) Damac Park was demanding payment for the second instalment and (2) Damac Park was using a sum other than the Full Unit Price to calculate the instalments since the sum of “AED 816,027.50” which Damac Park demanded was less than 25% of the Full Unit Price. It is telling that Mr Ward did not subsequently ask for an explanation of the sum demanded by Damac Park. Damac Park subsequently issued the First Termination Notice, which Mr Ward also admits receiving, purporting to exercise the very drastic remedy of terminating the Reservation Agreement and forfeiting the Transferred Sum. Thereafter, at no point in time did Mr Ward challenge Damac Park’s adoption of the All Instalments Credit Interpretation. He in fact agreed to the First Extension, Second Extension and Third Extension, which required him to pay an amount which corresponded with the All Instalments Credit Interpretation and, when taken together with the Transferred Sum, exceeded the pre-completion amount payable under the Immediate Credit Interpretation. The unavoidable inference is that he understood the Payment Schedule in terms of the All Instalments Credit Interpretation, and therefore saw no basis to contest Damac Park’s demands at the time.
109. Accordingly, I accept that the Subsequent Conduct Argument reinforces the conclusion that I had independently reached based on a proper commercial understanding of the Reservation Agreement. It is the All Instalments Credit Interpretation which is correct, under which Mr Ward’s payment obligations would be as set out in the table below.

C.           Whether Mr Ward was in breach of the Reservation Agreement

110. Having found that the All Instalments Credit Interpretation is correct, it follows that Mr Ward was in breach of the Reservation Agreement by failing to make timely payment of the third instalment, which is the breach Damac Park relies on in terminating the Reservation Agreement. Thus far, Mr Ward has only paid to Damac Park the sum of AED 1,346,445 by way of cheque 130 towards payment of the second and third instalments, which falls short of the total amount due under those instalments, AED 1,795,260.50.
111. Accordingly, Damac Park was entitled to terminate the Reservation Agreement by issuing the Second Termination Notice in accordance with Clause 4 of the Reservation Agreement.

D.           Whether Damac Park was in breach of the Reservation Agreement by failing to issue the Agreement of Sale

112. Having found that Damac Park had lawfully terminated the Reservation Agreement, I must now consider whether Damac Park was also in breach of the Reservation Agreement in failing to issue an Agreement of Sale to date, such that Mr Ward would be entitled to terminate the Reservation Agreement on an alternative ground. Mr Bacon has argued in his Supplemental Skeleton Arguments dated 7 September 2015 that, because Damac Park did not specifically appeal against the trial judge’s finding that the absence of an Agreement of Sale amounted to a material breach of the Reservation Agreement, Damac Park must be bound by that finding.
113. The question is whether Damac Park’s entire appeal must fail in limine for the reasons raised by Mr Bacon in his Supplemental Skeleton Arguments. In my view, this Court is not so constrained. Even though Damac Park has not specifically challenged the trial judge’s finding on the absence of an Agreement of Sale, Damac Park’s Notice of Appeal clearly states “Entire Judgment Under Appeal”. Notwithstanding that Damac Park has not specifically challenged the trial judge’s finding on the absence of an Agreement of Sale, that finding is clearly in issue given the relief sought by Damac Park This Court may, in its capacity as an appellate court, independently consider alternative legal theories not raised in the parties’ submissions. It is our charge to ensure that no miscarriage of justice arises simply because one or both parties have not fully addressed a point which we consider material to the outcome of the dispute. For these reasons, this Court is entitled to “make or give any order that could have been made or given by the Court of First Instance” (RDC 44.133(1)), and may also “make any other order that the Court of Appeal considers appropriate or just” (RDC 44.133(6).
114. The relevant portion of the trial judge’s reasoning on the issue is set out below:

“77. Clause 9 of the Reservation Agreement states that, “The Agreement of Sale will be issued by the Developer in due course in its [sic] standard format.” The Agreement of Sale failed to be issued over a period of at least a year and a half during the time the Reservation Agreement was signed on 28 October 2009 until the date the Second Termination Letter was issued on 22 March 2011 and to date, the Agreement of Sale has still not been issued.

78. Surely the term, “in due course” was not envisaged to exceed six months when the first instalment payment came due, let alone over a year. Even the most liberally applied reasonable test would interpret this amount of time as unreasonable…

…

80. As a result, the absence of the Agreement of Sale throughout this nearly two-year process despite the express mention of it being issued “in due course” in the Reservation Agreement constitutes a material breach of the contract by the Defendant; thereby placing the Claimant in the position of claiming breach and terminating the contract according to DIFC Contract Law, Part 8, Article 86 and 89… ”
81. It is appropriate now to examine the provision which Damac Park had allegedly breached, Clause 9 of the Reservation Agreement provides as follows:

“The Agreement of Sale will be issued by the Developer in due course on it’s [sic] standard format. In the meantime, I/we shall continue to abide by the payment plan and other terms and conditions of the Reservation.”

(emphasis added)

116. I accept, as the trial judge had found, that Clause 9 plainly provides that an Agreement of Sale must eventually be issued by Damac Park. Where we part ways is in relation to whether there has been a breach of Clause 9 at all and, if so, whether the breach was a material one entitling Mr Ward to terminate the Reservation Agreement. In my judgment, the trial judge fell into error on both issues when he made the following conclusions.
     • First, he found that there would be a breach of Clause 9 if Damac Park failed to issue an Agreement of Sale within six months from the date of the Reservation Agreement, when the first instalment payment fell due.
     • Second, he found that the absence of an Agreement of Sale amounted to “a material breach” of the Reservation Agreement.
117. Before addressing each finding in turn, I will elaborate on the commercial and legal significance of the Reservation Agreement and Agreement of Sale, a proper appreciation of which is essential to the two issues decided on by Justice Omar.
118. In contracts for the purchase of immovable property, it is common for parties to first reach an agreement which envisages the subsequent execution of a more detailed contract between them. The potential forms and contents of such an initial agreement are myriad. It is often described as an “Option to Purchase” or, as is the present case, a “Reservation Agreement”. Regardless of what name the initial agreement is given, its legal significance turns on its proper construction.
119. The Reservation Agreement is, in substance, a sale and purchase agreement. It is not merely an agreement granting Mr Ward an option to purchase property, with the Agreement of Sale being the agreement that is envisaged to transfer title over the property to Mr Ward. Damac Park’s entry into the Reservation Agreement was the commitment to transfer the Unit to Mr Ward, and this is evident from the following provision in the Reservation Agreement:

“I/We are aware that by signing this irrevocable Office Unit Reservation, I/we hereby enter into a binding contract with the Developer for purchase of the above office unit…”

(emphasis added)

120. The Reservation Agreement is peculiar in its relative brevity as a two-page document, but that does not mean it is so uncertain that it is not an enforceable contract. It is elementary that an agreement for the sale and purchase of property will possess sufficient certainty to be enforceable so long as the following three aspects of the transaction are provided for:
     • identification of the Parties (Cohen v Roche [1927] 1 KB 169);
     • identification of the Property and interest to be disposed of (Vale of Neath Colliery Co v Furness (1876) 45 LJ Ch 276); and
     • specification of the consideration or the means by which it is to be ascertained (Re Kharashkhoma Exploring and Prospecting Syndicate Ltd [1897] 2 Ch 451; Milnes v Gery (1807) 14 Ves 400).
121. Once the three matters above are addressed by the contract’s provisions, all other essential terms may be implied to give business efficacy to the contract. These include the seller’s obligations to complete within a reasonable time (Re Bayley and Shoesmith’s Contract (1918) 87 LJ Ch 626), deliver vacant possession on completion (Cook v Taylor [1942] Ch 349) and to make a good title free from incumbrances (Johnson v Jumphrey [1946] 1 All ER 460). A contract possessing the anatomy I have just described is often described as an open contract. So understood, an open contract is sufficient to consummate the purchase transaction without more. Although the minutiae of the parties’ legal obligations are not spelt out, they are broadly discernable and capable of being performed with sufficient certainty. The fact that an open contract might well be varied or superseded by a more extensively drafted contract (such as the Agreement of Sale) does not detract from this. The subsequent contract would typically cover matters not previously dealt with under the open contract, such as mode of delivery of property and its precise specifications. But none of these provisions are intended, however, to affect the essence of the parties’ bargain under the open contract.
122. Accordingly, after executing the Reservation Agreement, Mr Ward possessed all legal rights necessary to acquire title to the Unit (provided he also fulfilled his obligations under the Reservation Agreement). There was nothing further he required to complete the transaction, even if his rights and obligations could be further delineated by an Agreement of Sale. His principal obligation was to make regular payments for the Unit, and the manner in which those payments were to be made was already provided for in the Payment Schedule.
123. Against this backdrop, what arises for decision is how the expression “in due course” in Clause 9 should be understood.
124. The trial judge found that the phrase “in due course” was intended to mean “within a reasonable time”, and this is evident from the following passage of his judgment:

“Surely the term “in due course” was not envisaged to exceed six months when the first instalment payment came due let alone over a year. Even the most liberally applied reasonable test would interpret this amount of time as unreasonable.”

(emphasis added)

125. I accept that an Agreement of Sale must be issued within a reasonable time. It is trite law that, in the absence of a stipulation as to time for the performance of an obligation, the law implies that performance shall take place within a reasonable time (Pantland Hick v Ramond & Reid [1893] AC 22 at pp. 32 and 33). However, that is only the beginning of the inquiry. In determining whether there has been a breach of an obligation to perform within a reasonable time, the nature of the inquiry was explained in the judgment of Judge Richard Seymour QC in Astea (UK) Ltd v. Time Group LTD [2003] EWHC 725, which was adopted by the English Court of Appeal in Peregrine Systems Ltd v Steria Ltd [2005] EWCA Civ 239 (“Peregrine”) at [15]. There, Judge Seymour said that the inquiry involves:

“…a broad consideration, with the benefit of hindsight, and viewed from the time at which one party contends that a reasonable time for performance has been exceeded, of what would, in all the circumstances which are by then known to have happened, have been a reasonable time for performance.”

(emphasis added)

126. Not only does the passage above demonstrate that the inquiry is a fact-centric exercise, it makes clear that one can look to events taking place after the contract’s formation to determine what a reasonable time would be, with the benefit of hindsight.
127. With respect, the trial judge’s finding that a reasonable time could not exceed the time when the first instalment fell due is unsustainable. While he has not explained how he reached that conclusion, it could only be justified if the terms of the Agreement of Sale would materially affect or was required for Mr Ward’s performance of his payment obligations under the Reservation Agreement. But that connection is plainly absent since Mr Ward’s payment obligations have been extensively provided for in the Payment Schedule; there was no reason why Mr Ward would require the Agreement of Sale by the time the first instalment was due or, for that matter, by the time any particular instalment was due.
128. Indeed, the terms of the Reservation Agreement strongly suggest that Damac Park was intended to have wide latitude in deciding when to issue the Agreement of Sale. Whereas Mr Ward was required to sign an Agreement of Sale “within one week” of its delivery to him under Clause 3, Damac Park was entitled to issue one “in due course” under Clause 9.
129. In my judgment, a reasonable time for issuing the Agreement of Sale is at or before completion, when title was to be transferred to Mr Ward and when some specification (in the Agreement of Sale) as to the precise procedure for how completion was to take place might facilitate it.
130. A hindsight assessment further supports this view. Mr Ward had never once requested a copy of the Agreement of Sale. It is testament to how, at all material times, he did not believe that Damac Park had fallen behind on issuing an Agreement of Sale timeously. Further, in light of Mr Ward’s repeated defaults under the Reservation Agreement at a very early stage, Damac Park was entitled to exercise greater circumspection before issuing an Agreement of Sale. The convergence of these factors firmly establish that Damac Park was not obliged to issue an Agreement of Sale in as short as a time as the trial judge found.
131. As Mr Reed rightly argued at the hearing, given that Damac Park was entitled to and did terminate the Reservation Agreement before completion by issuing the Second Termination Notice, Damac Park was discharged from its obligation to issue an Agreement of Sale before the latest time it was required to do so. It follows that the continuing absence of an Agreement of Sale to date cannot amount to a breach of the Reservation Agreement by Damac Park, let alone a material breach entitling Mr Ward to terminate the Reservation Agreement.
132. In any event, I also disagree with the trial judge’s finding that a breach of Clause 9 would be a material one entitling Mr Ward to terminate the Reservation Agreement. A breach of an obligation to perform within a reasonable time is not the same as contravening an obligation where time was “of the essence”, the latter being the type of breach which gives rise to a right of termination. The point was recognized by Kay LJ in Peregrine at [15]:

“First, even if Mr Blunt’s construction of the contractual obligation had been correct, it does not follow that any breach of it would have been repudiatory. In his submissions he tended to elide the obligation to perform within a reasonable time and the concept of time being “of the essence”. The two things are not the same. If there had been a breach of the obligation to perform within a reasonable time, it would still have been necessary for Steria to establish that it was a repudiatory breach, that is to say one “which will deprive the party not in default of substantially the whole benefit which it was intended he should obtain from the contract” (per Diplock LJ in Hongkong Fir Shipping Co v. Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 ,70).”

(emphasis added)

133. It is self-evident from the expression “substantially the whole benefit” that a repudiatory breach must be so serious that it undermines the very purpose for which the parties transacted.
134. The trial judge did not address the issue in terms of a breach which would deprive the innocent party of “substantially the whole benefit” of the contract, but he did consider the potential effects of a breach of Clause 9 by Damac Park:

“It is very possible that clauses contained therein could have transferred more accountability onto the Defendant and put the Claimant in a more favourable position than he was with the existing Reservation Agreement. At the very least, surely it would have contained additional express terms and assurances such as the expected date of handover and a more detailed calculation of the payment terms.”

135. With respect, I do not think that any of the reasons set out above establishes that a breach of Clause 9 would be a repudiatory one depriving Mr Ward of substantially the whole benefit of the contract. Mr Ward’s primary interest in the transaction was to obtain good title over the Unit and have the benefit of its use within a reasonable time. Having found that the Reservation Agreement was a valid and effective open contract that was capable of effecting the sale and purchase transaction, the trial judge did not take that finding to its logical conclusion, namely that, as I have explained above, an open contract such as the Reservation Agreement was capable of achieving the purpose of the transaction. The “additional express terms and assurances” which the trial judge had in mind would simply make explicit what was already (broadly) implicit under the Reservation Agreement, and their absence cannot by any stretch deprive Mr Ward of substantially the whole benefit of the Reservation Agreement.
136. Accordingly, even if Damac Park had been in breach of Clause 9 of the Reservation Agreement, it would not have been a repudiatory breach entitling Mr Ward to terminate the agreement.

E. Whether Mr Ward is entitled to restitution of the monies paid to Damac Park

137. The trial judge ordered that all sums paid by Mr Ward were to be returned to him by Damac Park on the grounds of restitution. In this regard, he relied on Article 48 of the DIFC Damages and Remedies Law 2005 (“DIFC Damages and Remedies Law”) and Article 90 of the DIFC Contract Law 2004 (“DIFC Contract Law”) which provide as follows:

“48. Right to restitution

Restitution is available where the remedy is expressly provided in the DIFC Contract Law or where there has been unjust enrichment of one party at the expense of another party and there has been no subsequent change in the position of the enriched party which would render it unjust to order the enriched party to restore the benefits received.”

138. It seems to me that restitution under these provisions would only be available to Mr Ward if he was the party who terminated the contract because of Damac Park’s wrongful breach.
139. First, it is clear that, subject to the provisions of the DIFC Contract Law, restitution under Article 48 of the DIFC Damages and Remedies Law 2005 would only be available when there has been an “unjust enrichment” of the party which restitution is sought against.
140. The notion of “unjust enrichment” comprises two elements. First, the party which restitution is sought against must have been enriched. Second, the enrichment must be tainted by an unjust factor. It is beyond controversy that Damac Park was enriched by the sums paid by Mr Ward. The issue is whether any unjust factor operates to unravel that enrichment. In my judgment, there are none.
141. Mr Ward’s payments to Damac Park were not made by mistake. He did so voluntarily in exchange for title to the Unit, as he was required to under the Reservation Agreement. Accordingly, Damac Park was not an unintended recipient of those monies. Far from it, it was legally entitled to receive them as payment for the Unit and retain them even if the Reservation Agreement were terminated. All of this is expressly set out in Clause 4 of the Reservation Agreement.
142. The only other relevant ground for establishing a right to restitution is if Damac Park’s receipt and retention of the money was the result of some wrongful conduct on its part. Although the law on what categories of wrongs would justify restitution is in flux, that controversy need not detain us because Damac Park is not guilty of any wrongful conduct. Indeed, it is Mr Ward who has committed a repudiatory breach of the Reservation Agreement, so I do not accept that there is anything “unjust” about Damac Park’s retention of the monies paid by Mr Ward.
143. Neither does Article 90 of the DIFC Contract Law assist Mr Ward. The provision is reproduced below:

“90. Restitution

(1) On termination of contract pursuant to Articles 86 or 88 either party may claim restitution of whatever it has supplied, provided that such party concurrently makes restitution of whatever it has received. If restitution in kind is not possible or appropriate allowance should be made in money whenever reasonable.

(2) However, if performance of the contract has extended over a period of time and the contract is divisible, such restitution can only be claimed for the period after termination has taken effect.”

144. On a plain reading of Article 90(1), it would appear that any party may seek restitution upon termination of a contract, even the party which committed the repudiatory breach of the contract in question. However, that cannot be the correct interpretation of Article 90(1). Such an expansive reading of the provision would facilitate and encourage opportunistic breaches as well as terminations of contracts whenever mutual restitution (effectively, a rescission of the contract) would best suit the interests of the wrongdoer. In my judgment, the proper construction of Article 90(1) entails understanding the phrase “either party” to mean only the party which lawfully exercised the right of termination pursuant to Articles 86 and 88 of the DIFC Contract Law.
145. Given that Mr Ward was not lawfully entitled to terminate the Reservation Agreement, it follows that he cannot avail himself of the remedy provided by Article 90(1) of the DIFC Contract Law.

F. Conclusion & Costs

146. For the reasons set out above, I allow Damac Park’s appeal. While I am minded to also order that Mr Ward pay to Damac Park the costs of the appeal and below, I will first consider any written submissions on costs which the parties may wish to file, and direct that they do so within 14 days from the date of this judgment.

DEPUTY CHIEF JUSTICE SIR JOHN CHADWICK:

147. I agree with the judgment of Chief Justice Michael Hwang S.C. and, for the reasons he has given, would allow the appeal.

H.E. JUSTICE ALI AL MADHANI:

148. I agree with the judgment of Chief Justice Michael Hwang S.C. and, for the reasons he has given, would allow the appeal.

Issued by:

Amna Al Owais

Deputy Registrar

Date of Issue: 14 December 2015

At: 4pm

The post CA-006-2015 DAMAC Park Towers Company Limited v Youssef Issa Ward appeared first on DIFC Courts.