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CFI 020/2015 Mohammad Bin Hamad Bin Abdul Karim Al Mojil & another v Protiviti Member Firm (Middle East) Limited

CFI 020/2015 Mohammad Bin Hamad Bin Abdul Karim Al Mojil & another v Protiviti Member Firm (Middle East) Limited

January 3, 2016

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Claim No. CFI 020/2015

THE DUBAI INTERNATIONL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

(1) MOHAMMAD BIN HAMAD ABDUL-KARIM AL-MOJIL

(2) ADEL BIN MOHAMMAD BIN HAMAD AL-MOJIL

 

Claimants

and

PROTIVITI MEMBER FIRM (MIDDLE EAST) LIMITED

 

Defendant


 ORDER OF H.E. JUSTICE OMAR AL MUHAIRI


UPON reviewing the Defendants’ Application Notice CFI-020-2015/1 dated 28 July 2015 contesting the Jurisdiction of the DIFC Courts’ pursuant to part 12.1.2 (“the Application”);

AND UPON reading the relevant material in the case file;

AND UPON hearing Counsel for the Claimant and Counsel for the Defendant on 17 November 2015;

IT IS HEREBY ORDERED THAT: 

  1. The Defendant’s application to contest jurisdiction is dismissed.
  2. The Claimant is awarded their costs of the Application, to be assessed by the Registrar if not agreed.

Issued by:

Maha Al Mehairi

Judicial Officer

Date of Issue: 31 December 2015

At: 1pm

 

 

SCHEDULE OF REASONS

  1. Before the DIFC Court of First Instance are Claimants Mr Mohammad Al-Mojil and Mr Adel Al-Mojil, Saudi nationals that currently reside in Ajman, UAE. The Defendant is Protiviti Member Firm (Middle East) Limited (“Protiviti”), a business registered in the DIFC that performs various forms of business and management consultancy services including risk consultancy. The Defendant is part of a network of similar companies operating in over twenty countries.
  2. These proceedings arise out of a report produced by the Defendant following an investigation into the operations and financial reporting of the Claimants and others of the Mohammad Al-Mojil Group (“MMG”). MMG is a business involved in the construction of onshore and offshore facilities in the oil and gas industry and the Claimants are the founding shareholders of the company.

Background

  1. Mr Mohammad Al-Mojil was the chairman of MMG’s board until his retirement in March 2009. At that time, his son, Mr Adel Al-Mojil took over as chairman. In May 2008 MMG became a publicly traded company by way of an IPO when Mr Mohammad Al-Mojil sold a 30% stake in the company. Trading in the company’s shares was eventually suspended on 22 July 2012 by the Capital Market Authority of Saudi Arabia (“CMA”) after suffering significant losses.
  2. In December 2012, the CMA appointed the Defendant to conduct an investigation into the operations and financial reporting of MMG for the period of 2005 to 2012. At the conclusion of the investigation, the Defendant was to produce a report (“the Report”) dealing in particular with whether any fraud or other misconduct had occurred.
  3. On 30 June 2013, the Defendant provided the Report to the CMA by email and in hard copy in Saudi Arabia.
  4. On 18 November 2014, the CMA issued a charge sheet in Saudi Arabia against the Claimants, which made various allegations against them in relation to the IPO of shares in MMG. As a result of the charge sheet, several sanctions were imposed against the Claimants and businesses owned by them; including freezing substantial assets in Saudi Arabia, restrictions placed on the transfer of assets by the First Claimant and a travel ban preventing them from leaving Saudi Arabia should they ever enter the country.
  5. As a result, on 28 July 2015, the Claimants filed a claim with the DIFC Courts pursuant to Article 8(2) of the DIFC Court Law No. 3 of 2004. The Claimants seek USD 3,438,177.35 in damages, delivery of the report, and costs.
  6. In response, the Defendant applied for an order seeking a declaration that the DIFC Court does not have jurisdiction over the claim pursuant to Part 12.1(2) of the RDC and that the Court dismiss the claim form or set it aside. The Defendants argue that the DIFC Courts are not the appropriate forum for the claim and that the Courts of the Kingdom of Saudi Arabia (“KSA”) are the more appropriate forum for the claim and that the Particulars of Claim submitted by the Claimants disclose no reasonable grounds for bringing the claim.

The Hearing

  1. On 17-18 November 2015, an oral hearing took place before me which was attended by Mr Jonathan Adkin with Mr Bill Gambrill assisting for the Claimant, and Mr Tom Montagu-Smith with Mr Adrian Chadwick and Ms Reema Ashraf assisting for the Defendant. During the hearing, both parties presented their arguments in full.

The Defendant’s Arguments

  1. On the issue of jurisdiction, the Defendant submits that the DIFC Court has jurisdiction over claims to which Protiviti is a party under the Judicial Authority Law, Art 5(A)(1)(a) due to the fact that the Defendant is registered in the DIFC.
  2. The Defendant argues, however, that a party must advance “a case which can found a dispute” citing Hardt v Damac [CFI-036-2009] (4 April 2010) at [60]. Also cited is Bank Sarasin v Al Khorafi [CA-003-2011] (5 January 2012) at [72], which demonstrated that the test applied was whether the claimants established a “good arguable case.” At [74], this meant whether the claim had “sufficient substance for this court to exercise jurisdiction, provided that one of the jurisdictional gateways is engaged.”
  3. The Defendant argues that the Claimants have not particularized any recoverable loss and therefore fail to establish a case which can found a dispute. Accordingly, the Defendant claims this Court does not have or should not exercise jurisdiction.
  4. Alternatively, the Defendant argues that the Claimants’ claim should be dismissed or stayed on grounds of forum non conveniens, citing Corinth Pipeworks SA v Barclays Bank PLC [CA-002-2001] (22 January 2012) at [67] and [68c] which states, “the DIFC Courts possess the discretion to decline jurisdiction on the grounds of forum non conveniens.
  5. Pursuant to this, the Defendant argues that the natural forum for this claim is the KSA; as the Report was provided to the CMA in the KSA, the alleged tort was committed in the KSA, both parties agree that KSA law applies, KSA judges with training in Shariah law are better placed to decide the issues, and the claim has no substantial connection to the DIFC as none of the work was carried out in the DIFC.
  6. Accordingly, the Defendant asks this Court to dismiss or stay these proceedings.

The Claimants’ Arguments

  1. The Claimants acknowledge that the Defendant accepts that the DIFC Courts have jurisdiction over the present claim made against it and quotes paragraph 7 of Ms Ashraf’s statement for the Defendant which states,

“The Defendant is a company which is registered and licensed in the DIFC. As such, it is accepted that the DIFC Courts have jurisdiction over claims to which the Defendant is a party. The Defendant’s position, however, is that the DIFC Courts should not exercise that jurisdiction to hear this case.”

  1. As such, the Claimants submit that the question is whether the Court should decline to exercise that jurisdiction, and the only identified basis on which it is said it should do so is under the doctrine of forum non conveniens.
  2. The Claimants also cite the Corinth Pipeworks case, (cited above), as it relates to forum non conveniens, but argue that no further observations as to the source of the Court’s powers to order a stay of proceedings on forum non conveniens grounds, or the manner in which such powers should be exercised have been established in Corinth Pipeworks.
  3. Accordingly, the Claimants cite the positions of the scope and content of the common law doctrine of forum non conveniens grounds in England, Canada and New Zealand, Australia, and the United States and conclude that if English law is applied, then the Court would have no power to grant a stay on forum non conveniens This is because previous decisions of the DIFC Courts have only ever considered the doctrine of forum non conveniens in cases where a non-DIFC defendant was involved.
  4. As for an alternate available forum, the Claimants submit that the Defendant has not established the KSA as an available alternative forum because the Defendant is not registered or licensed in the KSA and has no presence there and accordingly there is no reason to assume that the Saudi Courts have personal jurisdiction over the Defendant. Furthermore, the Claimants argue that the Saudi Courts are not an alternative available forum in practice due to the travel ban imposed on the Claimants.
  5. Furthermore, the Claimants argue the appropriateness of the DIFC Courts and maintain that this Court should be slow to deny a claimant the right to sue a defendant which has deliberately chosen to establish its business in the DIFC and thereby place itself within the jurisdiction of its Courts, as it would significantly undermine the purpose and integrity of the DIFC as a financial centre were it readily to refuse claimants access to its courts to remedy wrongs alleged against persons and entities established there.
  6. Additionally, the Claimants contend that the DIFC Courts are the more appropriate forum because the Claimants are residents of the UAE, the travel ban makes it overwhelmingly in the interests of the parties and of justice that the claim is litigated in the DIFC, the bulk of the Defendant’s likely witnesses will be in Kuwait, with some in the UK and the UAE, where none are said to be in the KSA, most of the relevant documents are likely to be outside the KSA, a significant number of the key documents are likely to be in English, the Report itself was produced in English, and the language of the witnesses are likely to be English.
  7. Lastly, the Claimants point out the contention made by the Defendant that the claim is advanced under Saudi law. The Claimants contend that there is no reason to suppose that the DIFC Courts could not adequately deal with issues of Saudi law with the appropriate assistance of expert evidence. The Claimants cite Al Khorafi v Bank Sarasin [CA-003-2011] (5 January 2012) where the Court of Appeal rejected the suggestion that it should surrender jurisdiction in favour of the Swiss Courts merely due to issues of Swiss law that arose.
  8. In summary, the Claimants contend that the jurisdiction challenge raised by the Defendant should be dismissed and that the original claim filed by the Claimants should proceed in the DIFC Courts.

 

Discussion

  1. My order and analysis focuses solely on the issue of jurisdiction to the exclusion of the merits of the claim filed by the Claimants.
  2. It has previously been mentioned above by both parties that the Defendant admits that the DIFC Courts have jurisdiction over the present claims made against it. The Defendant specifically sets out this position in their Skeleton Argument dated 12 November 2015 in paragraph 24 which states, “Protiviti is registered in the DIFC. It is therefore a DIFC Establishment: Judicial Authority Law, Art 2. The Court therefore has jurisdiction over claims to which Protiviti is a party: Judicial Authority Law, Art 5(A)(1)(a).”
  3. Indeed, the DIFC Court has jurisdiction pursuant to Article 5 of the Judicial Authority Law, Dubai Law No. 12 of 2004 as amended by Law No. 16 of 2011. The applicable article on jurisdiction is Article 5(A)(1)(a), which states,
  • The Court of First Instance:
    • The Court of First Instance shall have exclusive jurisdiction to hear and determine:
      • Civil or commercial claims and actions to which the DIFC or any DIFC Body, DIFC Establishment or Licensed DIFC Establishment is a party;”

The Defendant is correct to assert that it is a DIFC Establishment and that the DIFC Court has jurisdiction over claims to which it is a party.

  1. As to the argument put forth by the Defendant that the Claimants have not particularized any recoverable loss and therefore fail to establish a “case which can found a dispute,” citing Hardt v Damac (cited above), I find this argument to be unsubstantiated. It is clear that the Claimants have laid out a case in their Particulars of Claim dated 28 June 2015 outlining their cause of action as well as losses and damages incurred sufficient enough to articulate an arguable claim.
  2. The Defendant further argues that the natural forum for this claim is plainly the KSA because, as it was conceded by the Claimant in their Particulars of Claim (and later refuted in their Skeleton Argument), and as the Defendant asserts, the tort alleged by the Claimant occurred in the KSA. To this point, the Defendant cites Robert Goff L.J. in The Albaforth [1984] 2 Lloyd’s Rep 91 at 96, “If the substance of an alleged tort is committed within a certain jurisdiction, it is not easy to imagine what other facts could displace the conclusion that the courts of that jurisdiction are the natural forum.”
  3. Had the DIFC Court legislators wished to take this approach to defining jurisdiction as it relates to torts, they could have taken the approach of the UAE law as laid out in the Civil and Commercial Procedures, Federal Law No. 11 of 1992, Article 31(2) which states, “It is permissible for a claim to be brought before the court in the jurisdiction of which the damage occurred in claims for compensation due to personal or financial damage.” Silent this provision in the DIFC law, regardless of where the tort occurred, the DIFC Courts maintain jurisdiction by way of Article 5(A)(1) of the Judicial Authority Law.
  4. Nevertheless, the Defendant asks this Court not to exercise its jurisdiction and to dismiss or stay the current proceedings on forum non conveniens If I am incorrect in my analysis regarding jurisdiction based on Article 5(A)(1) of the Judicial Authority Law, and it is decided that the jurisdiction lies where the tort occurred, assuming that the tort occurred in the KSA, I find that the more convenient forum would still be the DIFC Courts under the doctrine of forum non conveniens.
  5. As elucidated by the pleadings, not only is the Defendant registered and licensed in the DIFC, but there is no evidence in the pleadings whatsoever that the Defendant has any physical presence in the KSA and it is clear that the Defendant has no license or office in the KSA.
  6. Additionally, notwithstanding the fact that the Claimants reside in the UAE, the presence of the travel ban imposed on the Claimants in the KSA places a disproportionate obstacle in the way of the Claimants should the claim be litigated in the KSA.
  7. Furthermore, the Report was produced in English, many of the relevant documents are likely to be in English and the language of the witnesses is also in large part likely to be English.
  8. As to the contention that the claim is advanced under Saudi Law and that KSA judges are far better placed to decide the issues as stated by the Defendant in their Skeleton Argument, there is no reason to suggest that the DIFC Court cannot adequately deal with any issues of Saudi law that may arise. As the Claimants correctly pointed out in paragraph 72 of their Skeleton Argument, with the assistance of the appropriate expert evidence, the DIFC Court judges are certainly well equipped to deal with issues of Saudi law. Cited is Al Khorafi v Bank Sarasin (cited above), a case in which the DIFC Court of Appeal rejected the submission that is should surrender jurisdiction in favour of the Swiss Courts because issues of Swiss law arose. At paragraph 119 it was held that, “[t]o the extent that there will need to be consideration by the DIFC Court of relevant principles of Swiss Law, expert evidence can be called to enable the court to give effect to the choice of Swiss Law in the contracts.” There is no reason to assume that the same procedure cannot apply to the present case. Indeed DIFC Court judges are undoubtedly capable to deal with issues of Saudi law.
  9. For these reasons, the request by the Defendant to dismiss or stay the current proceedings filed by the Claimants is denied.

Costs

  1. The final issue to be decided is the question of costs. According to RDC 38.7, if the Court decides to make an order on costs, the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party. I am satisfied that the Defendant, as the unsuccessful party in this case, should pay the costs, and be subject to a detailed assessment if not agreed.

 

 

Issued by:

Maha Al Mehairi

Judicial Officer

Date of Issue: 31 December 2015

At: 1pm

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