Claim No. CFI 026/2013
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 H.E. JUSTICE SHAMLAN AL SAWALEHI
MR PHILIPPE CHOQUE
MONDIAL (DUBAI) LLC
Applicant/ First Defendant
FINANCIAL PARTNERS HOLDING LIMITED
Hearing: 13 February 2014
Alexander Khan (Al Safar and Partners) for the ClaimantGordian Gaeta for the First Defendant
Judgment: 11 March 2014
JUDGMENT OF H.E. JUSTICE SHAMLAN AL SAWALEHI
1. The Claimant is Philippe Choque, residing in Dubai, United Arab Emirates.
2. The First Defendant is Mondial Dubai LLC, an Independent Financial Advisor (IFA) licensed by the Emirates Securities and Commodities Authority located at Pinnacle Building, Suite 110, Al Barsha 1, Dubai.
3. The Claimant made an investment in a five-year retirement plan with Foundations Program Life Policy totalling US$ 196,600, as recommended by the First Defendant in March 2006.
4. On 17 March 2011, the Claimant wrote to Sean Mahony of the First Defendant, Mondial, to understand how much of a loss he would incur if he cashed money out from the Policy. Mahony subsequently replied that the Claimant would be able to cash out but, “at a loss.”
5. On 18 March 2011, Mahony wrote to the Claimant informing him that he could either withdraw or choose a full surrender, and that for a withdrawal the Claimant would have to leave the first twelve years premium with no penalty other than the loss of bonus and that for full surrender there would be penalties, the amount of which he was unsure.
6. As a result of this correspondence, the Claimant entered into an agreement with a third party for the purchase of a boat in the amount of US$ 199,782 notwithstanding insurance costs on 20 March 2011.
7. On 31 March 2011, the Claimant was informed by Mahony that the plan his policy was assigned to, The Foundation Plan, went into liquidation, and would be fully liquidated in 6 to
9 months. As a result, the Claimant was unable to withdraw funds from the Policy and could not reverse the boat transaction, thereby incurring a bank loan to fulfil the boat purchase.
8. On 11 November 2013, the Claimant filed a claim against the First Defendant Mondial as well as Financial Partners Holding Ltd. in the DIFC Court of First Instance for damages under DIFC laws and the UAE Civil Code relating to the financial losses suffered by Claimant as a result of the information from the First Defendant which the Claimant had relied on.
9. In response to the Claimant’s application, the First Defendant refrained from addressing the substantive merits of the case in order to dispute the jurisdiction of the DIFC Courts. The First Defendant argues that the burden is on the Claimant to prove that the DIFC Courts have jurisdiction and that the Claimant made no argument as to the jurisdiction of the DIFC Courts or claims of a consensual or contractual jurisdiction.
10. The First Defendant claims that they are not licensed to conduct any business in the DIFC and have no business, establishment, activity or transaction in the DIFC as required by law. The First Defendant additionally claims that there was no agreement between the parties as to DIFC jurisdiction should a conflict arise.
11. Furthermore, the First Defendant relies on DIFC Law No. 10 of 2005; Part 5, Article 19(1) to establish that no contract or incident or DIFC establishment was involved or part of any transaction in the instant case.
12. The First Defendant further submits that Financial Partners Holding Ltd. is not a DIFC establishment, rather an affiliate of Mondial with a shared business address for joint marketing purposes.
13. In response to jurisdictional objections, the Claimant argues that the DIFC Courts have jurisdiction because Mondial provides international financial services with a strong connection to the DIFC and because, according to Corinth Pipeworks SA v. Barclays Bank PLC, 22 January 2012, cases previously heard in the Dubai Courts could now fall under the jurisdiction of the DIFC Courts.
14. A hearing to examine the jurisdiction issue was scheduled for 13 February 2014 before the Honorable Judge Shamlan Al Sawalehi.
15. Both parties attended in person, the Claimant was represented by Alexander Khan, Ms Seratha, Ms Alena and Mr Tyrone of Al Safar & Partners while the First Defendant was represented by Gordian Gaeta, an independent non-executive director of Mondial and assisted by compliance officer Brendan Malone.
16. The Claimant opposed the representation of Gordian Gaeta for the First Defendant on the basis of Rules 35.41
of the Rules of the DIFC Courts (RDC), disputing Gaeta as a non-employee of Mondial, citing paragraph 9 of his skeleton argument. According to RDC 35.41
, a company may be represented by an employee who is not otherwise authorised to appear before the court if the employee has been authorised by the company or if the Court gives permission.
17. I allowed that Mr Gaeta to represent the First Defendant. Mr Gaeta has been authorised in writing by the sole manager and authorised legal representative of Mondial to represent the company at the jurisdictional hearing. Accordingly, the Court rejects the objection made by the Claimant contesting Mr Gaeta representing the First Defendant because he was given express permission to represent Mondial at the hearing.
Argument of Validity of Jurisdiction of the DIFC Courts
18. The relevant provisions of law identifying the scope of the Court’s jurisdiction are set out in Dubai Law No. 12 of 2004; Article (5)(A) (Amended by Dubai Law No. 16 of 2011) covering Jurisdiction in The Court of First Instance:
(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, 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.
(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 if 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.
19. The other relevant provision of law identifying the scope of jurisdiction is laid out in DIFC Law No. 10 of 2005; Part 5, Article 19(1):
(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 of 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
20. A relevant case to the present argument is Dr Lothar Ludwig Hardt and Hardt Trading FZE v. Hussain Al Habib Sajwani and Peter Riddoch CFI 036/2009;  DIFC. C.L.R. 13 at , which held that,
“…one cannot invoke the court’s jurisdiction over claims for damages or compensation based on breaches of DIFC Law unless such claims either fall within art.5(A)(1)(a), (b) or (c) or fall within another law which expressly and specifically gives the courts’ jurisdiction over such claims and so engages art.5(A)(1)(d).”
21. Here, the Claimant maintains that the DIFC Courts have Jurisdiction because Mondial, the First Defendant provides international financial services with a strong connection to the DIFC and because cases previously heard in the Dubai Courts could now fall under the jurisdiction of the DIFC Courts, citing Corinth, Supra.
22. None of the parties involved are licensed or established parties in the DIFC and, “close ties with the DIFC and…Defendant having its address at…Pinnacle Building Suite 110, 1st floor, Al Barsha 1 PO Box 50060.” is not sufficient to meet DIFC Law No. 10 of 2005; Part 5, Article 19(1)(a).
23. Furthermore, in the case of Khalil v. Shuaa Capital PSC CFI 017/2009; [2006-09] DIFC. C.L.R. 10 at , the court held that,
“…in order to establish the claim arose from or related to such a contract or transaction the claimant must be a party to any such contract or transaction and further the contract or transaction must form an essential part of his cause of action.”
24. Accordingly, in order to establish DIFC jurisdiction, the Claimant must show a contract or transaction has been concluded in the DIFC or an incident occurred in the Center. To date, the Claimant merely asserts that the DIFC Courts have Jurisdiction because Mondial, the First Defendant provides international financial services with a strong connection to the DIFC, despite there having been no contract or claim or DIFC establishment involved or part of any transaction, concluded in the DIFC involving the DIFC or any of its establishments.
25. As for the Corinth case cited by Claimant, Corinth is distinguished from the case at hand in that the crux of the case fell on the definition of “Centre’s Establishment.” in Corinth the defendant was a bank incorporated in England with an unincorporated branch office in the DIFC and had been registered as a, “Recognized Company” within the meaning of DIFC Law No.2 of 2009 Art.115. The First Defendant in the present case however, is discernable from the defendant in Corinth because Mondial is not licensed or registered in the DIFC nor does it conduct any business in the DIFC and has no business, branch, establishment, activity or transactions in the DIFC.
26. The Claimant also relies on paragraph 6.9 in the Foundations Program Assignment of Life Policy which states, “This Deed shall be governed by, and construed in accordance with English law and the Company and the Assignor hereby submit to the non-exclusive jurisdiction of the English Courts.” This document from 1996 between the Claimant and the second and third respondents is not only irrelevant, it in no way involves the DIFC directly nor does it create a link in which DIFC jurisdiction can be inferred.
27. For the reasons stated above, it is hereby decided that the DIFC Courts are not the competent jurisdiction to hear the dispute in question and that the First Defendant’s application to contest jurisdiction is GRANTED.
28. The First Defendant Mondial is entitled to its costs of the application and of the hearing, such costs to be on the standard basis to be assessed if not agreed
Nassir Al Nasser
Date: 17 March 2014