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Protiviti Member Firm (Middle East) Limited v (1) Mohammad Bin Hamad Abdul-Karim Al-Mojil (2) Adel Bil Mohammad Bin Hamad Al-Mojil [2016] DIFC CA 003

Protiviti Member Firm (Middle East) Limited v (1) Mohammad Bin Hamad Abdul-Karim Al-Mojil (2) Adel Bil Mohammad Bin Hamad Al-Mojil [2016] DIFC CA 003

August 23, 2016

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Claim No: CA-003-2016

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, JUSTICE SIR RICHARD FIELD AND H.E. JUSTICE ALI AL MADHANI

BETWEEN

PROTIVITI MEMBER FIRM (MIDDLE EAST) LIMITED

                                                                  Defendant / Appellant

and 

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

(2) ADEL BIL MOHAMMAD BIN HAMAD AL-MOJIL

Claimants / Respondents

                                                                                               

Hearing: 26 May 2016

Counsel: Tom Montagu-Smith instructed by Hadef & Partners for the Appellant

Jonathan Adkin QC instructed by Everys Legal Consultancy for the Respondents

Judgment: 23 August 2016


JUDGMENT


Summary of Judgment

This is an appeal from H.E. Justice Omar Al Muhairi’s CFI judgment, dismissing the Appellant’s application contesting the jurisdiction of the DIFC Courts. The Respondents are Saudi nationals who describe themselves as “founding shareholders” in Mohammed Al-Mojil Group Company (“the Company”) which is incorporated in the Kingdom of Saudi Arabia (KSA) and whose business is construction of onshore and offshore facilities in the oil and gas industry. The Appellant is a company incorporated in the DIFC and part of a group of companies which carry on business providing consultancy services.

The Appellant’s application in the CFI was based on the proposition that the Courts of KSA were “clearly the more appropriate forum for the claim”, and it proceeded on the basis that the doctrine of forum non conveniens (“FNC”) as developed in the English Courts was applicable in the instant case. It was the Respondents’ case that no FNC doctrine was applicable because the Appellant was domiciled in the DIFC. In the alternative, the Respondents contended that if FNC could be relied on, it should be the more restrictive doctrine developed in Australia or that developed in the US.

In this appeal, the approach has been to accept that the judge agreed with the Appellant’s submission that the FNC doctrine as developed in England was applicable and to consider whether, in evaluating the factors relied on by the parties and deciding to refuse the Appellant’s application, the judge erred in law.

The Court of Appeal held that Article 8(1) of DIFC Law No. 3 of 2004, which provides 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 of the jurisdictions set out in the “waterfall” provisions of Article 8(2) did not apply as the law relating to appropriate forum is indeed procedural rather than substantive. It followed that it was open to the Court of Appeal to apply whatever FNC principles it regarded as most suitable. Moreover, even if the law of appropriate forum were substantive and not procedural, the European Judgments Regulation would be of no application to the DIFC Courts under Article 8(2)(e). This is because Article 4 of the Regulation provides that, subject to the Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State; and Dubai is not a member state of the European Union. It being free to do so, the Court of Appeal took the opportunity to confirm that the FNC doctrine best suited to be applied in the DIFC Courts is the English doctrine propounded in Spiliada. Lord Goff’s judgment informs the approaches to FNC in Canada and is followed in New Zealand, Singapore and Malaysia.

The Australian doctrine finally settled upon by the Australian High Court in Voth v Manildra Flour Mills Pty Ltd is more restrictive than the English doctrine in that under the former there will only be a stay of proceedings regularly started in an Australian court of competent jurisdiction if that forum is “clearly inappropriate”, in contrast to the “clearly more appropriate” Spiliada test.

The Court of Appeal also confirmed that Spiliada FNC principles will be potentially applicable where there is available another forum outside the UAE that is distinctly more appropriate than the DIFC Courts even where the jurisdiction of the DIFC Courts is not “exorbitant”, whether because the defendant is domiciled in the DIFC or otherwise.
The exercise undertaken by a judge in deciding whether to stay proceedings brought in a court of competent jurisdiction on FNC grounds involved the exercise of an evaluative judgment of the different factors put before the court. Such an exercise is closely akin to but not the same as the exercise of a discretion stricto sensu. Just as in the case of an exercise of a discretion stricto sensu, a judge’s evaluation of the different factors going to the question of the appropriate forum will only be interfered with where he manifestly applied the wrong test, or he failed to take into account matters that he was obliged to have regard to or wrongly took into account irrelevant matters or reached a conclusion that was plainly wrong.

The correct test under Spiliada in deciding if a stay of proceedings brought in a court of competent jurisdiction should be granted is whether the defendant has shown that there is another available forum which is clearly or distinctly more appropriate for the trial of the action. Although H.E. Justice Omar Al Muhairi sitting as a judge at First Instance did not recite this test in terms, when he held at paragraph 31 of his judgment: “… I find that the more convenient would still be the DIFC Courts under the doctrine of forum non conveniens”, he was plainly adopting a shorthand version of the correct test. It was evident that Lord Goff’s speech in Spiliada was examined and explained in considerable detail in the course of each side’s submissions and neither side contended for a “more convenient forum” test. Also, in paragraphs 14 and 29 the First Instance judge used the expression “natural forum” and in paragraph 22 he referred to “the interests of the parties and of justice” both of which expressions derive from Lord Goff’s judgment in Spiliada.

The First Instance judge, as he was entitled to do, took into account the fact that the DIFC Courts had jurisdiction over the claim by reason of the Claimant’s registration in the DIFC, this being an act which connotes, at least to some extent, an acceptance that the DIFC Courts have jurisdiction to resolve disputes (often of an international character) to which the Appellant is a party. In sum, none of the grounds of challenge advanced on behalf of the Appellant succeeded as the judge was entitled to reach the decision he did for the reasons he gave.

Although it was strictly unnecessary to do so, the Court of Appeal went on to deal with the Respondents’ alternative case that the Appellant had submitted to the jurisdiction and was therefore debarred from seeking the stay it did.  The Court of Appeal found that neither Hardt v Damac [CFI-036-2009] and Bank Sarasin v Al Khorafi [CA-033-2011] (12 January 2012) relied on by the Appellant was authority for the proposition that where the Court undoubtedly has jurisdiction under one of the specified jurisdictional gateways, nonetheless that jurisdiction may not be exercised if on the merits the claim is not reasonably arguable.

Where it is plain beyond argument that the DIFC Courts have jurisdiction under Law No. 16 of 2011, it is not open to a defendant to mount a jurisdiction challenge on the ground that the claim is not reasonably arguable. The Appellant had not submitted to the jurisdiction of the Court, but instead it was seeking (albeit under a misconception) to establish that the Court lacked jurisdiction and was not seeking to strike out the claim and thereby invoke the Court’s adjudicative jurisdiction.

For the above reasons, the appeal was dismissed.

 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 26 May 2016

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 Respondents’ costs of this appeal on the standard basis to be assessed if not agreed.

 

Issued by:

Mark Beer

Registrar

Date of Issue: 23 August 2016

At: 12pm 

JUSTICE SIR RICHARD FIELD:

Introduction:

1.This is an appeal from the decision dated 31 December 2015 of H.E. Justice Omar Al Muhairi (“the judge”) dismissing the Appellant’s application contesting the jurisdiction of the Court.

2. The Respondents are Saudi Nationals who describe themselves as “founding shareholders” in Mohammed Al-Mojil Group Company (“the Company)”, which was incorporated in the Kingdom of Saudi Arabia (“the KSA”) and whose business at all material times was construction of onshore and offshore facilities in the oil and gas industry.

3. In May 2008, the Company was listed on the KSA Stock Exchange and 30% of its shares owned by the first Claimant were sold to the public through an IPO realising proceeds of Saudi Arabian Riyads (SAR) 2.1 billion.

4. On 22 July 2012, trading in the Company’s shares on the KSA Stock Exchange was suspended by the KSA Capital Market Authority (“CMA”). On 24 September 2012, the Company announced through an interim financial statement that it has incurred losses of SAR 540.8 million and had a shareholders’ deficit of SAR 279.8 million.

5. The Appellant is a company incorporated in the DIFC. It is part of a group of companies which carry on business providing consultancy services in the fields, inter alia, of finance, operations, technology, governance, risk and internal audit.

6. In December 2012, the Appellant was engaged by CMA to conduct a wide-ranging enquiry into the Company to include an assessment of: (i) the Company’s valuation at the time of the IPO and whether the profitability, assets and liabilities were fairly stated; (ii) the accuracy of the financial data presented in the IPO prospectus; (iii) the fairness of the IPO offer price; (iv) the authenticity of the Company’s financial statements for the years 2005 – 2012; (v) the roles and responsibilities of key personnel to ensure appropriate duties were segregated and any irregularities; and (vi) governance and reporting.

7. The Appellant’s engagement was part of CMA’s investigation into wrongdoing, fraud, gross negligence or misconduct in the operations and financial reporting of the Company in the period 2005 – 2012.

8. Most of the work done in performance of the Appellant’s engagement was done in KSA by individuals employed by other companies in the Prototinti group in Kuwait and also to a much lesser extent in the UK and the UAE.

9. The Appellant’s report on the Company (“the Report”) was provided to CMA on 30 June 2013. Amongst the conclusions expressed in the report were the following:

(a) The IPO prospectus contained an unsupported statement to the effect that “the owner of the Company contributed cash amounting to SAR 271 million in 2006”;

(b) The values of fixed assets were overstated before and after the IPO;

(c) Forecasted costs were understated and unrealistic, while actual past costs were overstated; profitability was thereby deliberately overstated;

(d) The Company made an irregular payment of USD 63 million to Market Management Middle East Limited which had the hallmarks of a corrupt payment;

(e) The Company’s shares were overvalued at the time of the IPO by SAR 1.56 billion;

(f) The Company lacked standard policies and procedures for corporate governance;

(g) There may have been fraud, conflicts of interest and criminal offences justifying imprisonment;

(h) The Second Claimant might be guilty of fraud or other offences as a result of allowing incorrect revenues and other financial figures to be reported in the IPO; and

(i) The First Respondent 2 was identified as a “potential offender”.

10. On 18 November 2014, CMA submitted a charge sheet (“the Charge Sheet”) to a judicial body in KSA, the CRSD. The Respondents allege that the Charge Sheet was based on the Report.

11. On 22 November 2014, at the request of CMA, CRSD ordered provisional measures (“the Provisional Measures”) against 13 individuals connected with the Company including the following:

(1) Suspension of the first Respondent’s bank and brokerage accounts.

(2) A travel ban on the Respondents preventing them from leaving KSA should they return there.

(3) A restriction on the transfer of assets owned by the first Respondent which it is alleged has been erroneously relied on to suspend the commercial licences of various companies owned by the Appellant in KSA.

The Respondents’ claim against the appellant

12. The Respondents issued proceedings in the DIFC Courts on 28 June 2015. Put briefly, they allege that: (i) the conclusions in the Report adumbrated in paragraph 9 above were erroneous, inaccurate, faulty, defamatory and/or negligent; (ii) those conclusions have caused the issuance of the Charge Sheet and the Provisional Measures which in turn have caused the Respondents loss in that: (a) the first Respondent has been unable to meet his daily household and business needs in KSA and commercial obligations to third parties, including banks; (b) the first Respondent is at risk of having to repay SAR 2.5 million received before the Provisional Measures as a down payment for the sale and purchase of land in KSA; (c) “demurrage costs” of SAR 25,000 in connection with Mohammed Al Mojil & Partners Supply and Services Company; and (d) various “anticipated” losses resulting from the inability to repay loans and suspension of commercial licences of businesses owned by the Respondents in KSA.

The Appellant’s application below

13. In so far as the Appellant’s application below was based on the proposition that the Courts of KSA were “clearly the more appropriate forum for the claim”, it proceeded on the basis that the doctrine of forum non conveniens (“FNC”) as developed in the English Courts was applicable in the instant case. It was the Respondents’ case that no FNC doctrine was applicable because the appellant is domiciled in the DIFC. In the alternative, the Respondents contended that if FNC could be relied on, it should be the more restrictive doctrine developed in Australia or that developed in the US.

The scope of this appeal

14. On this appeal, the approach has been to accept that the judge agreed with the Appellant’s submission that the FNC doctrine as developed in England was applicable and to consider whether, in evaluating the factors relied on by the parties and deciding to refuse the Appellant’s application, the judge had erred in law.

15. Against the possibility that this Court might set aside the judge’s decision, the parties’ submissions adopted different approaches. On the one hand, the Appellant argued that the applicable FNC doctrine was the English doctrine and on a true application thereof this Court should decide that the claim must be tried in the KSA. On the other hand, the Respondents argued that: (i) there was no basis on which the claim could be stayed on FNC grounds because the Appellant was domiciled in the DIFC; (ii) alternatively, if FNC was applicable, the doctrine to be applied should be the restrictive doctrine developed in Australia or that applied in the US, pursuant to either of which the claim should not be stayed; (iii) alternatively, the Appellant had submitted to the jurisdiction in applying to have the claim dismissed on the ground that it disclosed no reasonable grounds for bringing the claim and accordingly its jurisdiction challenge must fail.

The applicability of FNC in the DIFC Courts

16. There have been numerous statements in decisions of this Court and the CFI that the doctrine of FNC is potentially applicable in determining the question of the DIFC Courts’ jurisdiction.

17. In Al Khorafi et al v Bank Sarasin-Alpen (ME) Ltd [CA-003-2011], this Court applied the English doctrine of FNC when deciding that the claim in question should not be heard in the court specified in an agreed jurisdiction clause (which court was the “natural forum”), but instead should be heard in the DIFC Courts which was the appropriate court “in the interests of justice, convenience and fairness”.

18. In Corinth Pipeworks SA v Barclays Bank Plc [CA 002/2011], Chief Justice Michael Hwang summarised the differences between the jurisdiction of the English Commercial Court and that of the DIFC Courts as follows:

(17) …in the DIFC Courts, extra-territorial jurisdiction is not derived from a discretionary framework of the kind found in the English legal system in CPR 6.37 (read with Practice Direction 6B). The framework in the English Courts precludes service of English proceedings outside the jurisdiction of the English Courts where the claim falls outside the Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters ( … “European Judgments Regulation”…) unless permission is first obtained from the Court upon an application without notice to the intended defendant, which must demonstrate to the Judge that the claim falls within at least one of the many categories listed in paragraph 3.1 of Practice Direction 6B. The Judge then exercises discretion to grant permission. Once permission is granted and service outside the jurisdiction has been effected, the defendant can then challenge the Court’s jurisdiction, including the exercise of the judge’s discretion, on the grounds of forum non conveniens or the existence of a foreign jurisdiction clause.

(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.

19. The Chief Justice went on to observe in paras (67) & (68) that the fact that a foreign bank, together with its branches wherever situated, is a “Centre Establishment” for the purposes of Article 5(A)(1) (a) of Law No. 12 of 2004 does not involve an exercise of exorbitant jurisdiction because that jurisdiction would be subject to the doctrine of FNC. “The principles of private international law limit the powers and discretion of the DIFC Courts so as to prevent the exercise of exorbitant jurisdiction, and the DIFC Courts possess the discretion to decline jurisdiction on grounds of forum non conveniens.” (para 68).

20. In Investment Group Private Ltd v Standard Chartered Bank [CA-004-2015] this Court upheld its earlier decision in Corinth and approved the decision of H.E. Justice Ali Al Madhani in Allianz Risk Transfer AG Dubai Branch v Al Ain Ahlia Insurance Co PJSC [CFI-012-2012] holding that the FNC doctrine was applicable in the DIFC Courts where the competing forum was a jurisdiction outside the UAE but not where it was a jurisdiction within the UAE. In the latter situation, the question of which of two courts within the UAE has jurisdiction was exclusively for determination by the Union Supreme Court of the UAE.

21. Where issues of FNC have arisen in the DIFC Courts, they have been addressed by reference to the English doctrine of FNC founded on the decision of the House of Lords in Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460; see Allianz; Meydan v Banyan Tree [CA-005-2014]; Khorafi v Bank Sarasin (ME) Ltd; Investment Group Private Ltd v Standard Chartered Bank.

22. The leading judgment in Spiliada was given by Lord Goff. It is widely regarded as the locus classicus on the subject. The principles deducible from Lord Goff’s speech may be summarised as follows:

(1) “The basic principle is that a stay will only be granted on the ground of forum non conveniens where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, i.e. in which the case may be tried more suitably for the interests of all parties and the ends of justice”

(2) Generally, the legal burden is on the defendant to persuade the court to grant a stay, but if a party relies on a certain state of affairs in advancing his case, he will be under the evidential burden of proving the same

(3) The burden on the defendant is to show not only that the forum chosen by the plaintiff is not the appropriate forum but also that there is another forum which is clearly or distinctly more appropriate than the chosen forum; thus, where there is no “natural forum”, there will be no reason to grant a stay

(4) The court will look to see what connecting factors point to another forum being the “natural forum” viz the forum with which the proceedings have the most real and substantial connection. Such factors include:

(a) those affecting convenience and expense such as the availability of witnesses; and

(b) other factors such as the governing law and the places where the parties carry on business

(5) If after considering the connecting factors the court decides there is no other available forum that is clearly more appropriate for the trial of the action, the court will ordinarily refuse a stay

(6) If the court concludes there is another available forum which is clearly more appropriate, it will ordinarily grant a stay unless there are reasons for concluding that justice requires that a stay should not be granted

(7) A stay will not be refused merely because the claimant will be deprived thereby of “a legitimate personal or juridical advantage” if the court is nonetheless satisfied that substantial justice will be done in the available forum.

23. As is well known, these principles envisage two stages of enquiry. The first stage is to consider whether the defendant has shown that there is another available forum (the natural forum) which is clearly or distinctly more appropriate than the forum chosen by the claimant. The natural forum will be that, judged by reference to factors connecting it to the parties, which is the forum that has the most real and substantial connection with the proceedings. If a natural forum distinct from the chosen forum is established, there will be a presumption in favour of a stay.

24. The second stage is to consider whether justice requires that a stay of the proceedings in the chosen court should not be granted, for instance where there are great delays in the natural forum and the proceedings involve a claim for personal injury or where necessary financial support is available for the proceedings in the chosen court but is not available in the natural forum

25. As stated above, the respondent argued in this appeal that if the decision of H.E. Justice Omar Al Muhairi were to be set aside and revisited, this Court should hold that: (i) FNC had no application and no stay should be granted on the ground that the Appellant was domiciled in the DIFC; alternatively, the Court should not apply the English doctrine of FNC but should adopt the Australian FNC approach or that applied in the US.

26. The Respondent submitted that the proper application of FNC was a matter of substantive law and pursuant to Article 8 of the Law on the Application of Civil and Commercial Laws in the DIFC, Law No. 3 of 2004, the law applicable was English law including the EC Judgments Regulation, the effect of the latter being that the court has no power to stay proceedings where the defendant is domiciled in the state of the court seised with the proceedings.

27. Article 8 (1) of Law No. 3 of 2004 provides 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 of the jurisdictions set out in the “waterfall” provisions of Article 8(2) as follows:

“8.2 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.”

28. In the submission of the Respondent: (i) there is no regulatory content; (ii) there is no jurisdiction chosen by DIFC law, or agreed between the parties; (iii) to the extent that the law of the KSA may be engaged under Article 8(2)(d), there is no suggestion or evidence that any KSA law of forum non conveniens exists; (iv) accordingly, the laws of England and Wales are to be applied under article 8(2)(e).

29. The law of England and Wales includes the European Judgments Regulation (EC Regulation 1215/2012) referred to in para 67 of the Chief Justice’s judgment in Corinth (see para 19 above). By virtue of Article 4 of that Regulation, subject to certain irrelevant exceptions, persons domiciled in a member state of the EU must be sued in the Courts of that state. Accordingly, an English Court has no power to stay proceedings against a defendant domiciled in England on forum non conveniens grounds, even where the alternative forum is outside the EU, see Owusu v Jackson [2005] ECR I-1383. It follows, submitted the Respondent, that the DIFC has no power to apply FNC principles where the forum chosen by the claimant (‘the chosen forum”) is where the defendant is domiciled.

30. I reject this submission. Mr Adkin QC for the Respondents very properly accepted that if the law relating to FNC were procedural, rather than substantive, Article 8 would not apply and the DIFC Courts would be free to apply whatever FNC principles it decided were the most suitable. In my opinion, the law relating to appropriate forum is indeed procedural rather than substantive; see Lord Neuberger in VTB Capital plc v Nutritek International Corpn [2013] UKSC 5 at [81]: “When a court is called upon to decide whether an action should proceed in this, as opposed to another, jurisdiction, it is being asked to decide a procedural issue at a very early stage”.  It follows, as conceded by Mr Adkin, that it is open to this Court to apply whatever FNC principles it regards as most suitable.

31. Even if the law of appropriate forum were substantive and not procedural, the European Judgments Regulation would in my opinion be of no application to the DIFC Courts under Article 8(2) (e). This is because Article 4 of the Regulation provides that, subject to the Regulation, persons domiciled in a Member State[1] shall, whatever their nationality, be sued in the courts of that Member State; and Dubai is not a member state of the European Union.

32. It being free to do so, in my view this Court should now take the opportunity to confirm that the FNC doctrine best suited to be applied in the DIFC Courts is the English doctrine propounded in Spiliada. Lord Goff’s judgment informs the approaches to FNC in Canada (eg Morguard Investments Ltd v De Savoye [1990] 3 SCR 1077) and is followed in New Zealand (Export Trade Corporation v Irie Blue New Zealand Ltd [2013] NZCA 675; Singapore (JIO Minerals FZC et al v Mineral Enterprises Ltd [2010 SGCA 41] and Malaysia (American Express Bank Ltd v Mohamed Taufic Al- Ozeir & Anor [(1995) 1 MLJ 160]) .

33. The Australian doctrine finally settled upon by the Australian High Court in Voth v Manildra Flour Mills Pty Ltd (1990) CLR 538 is more restrictive than the English doctrine in that under the former there will only be a stay of proceedings regularly started in an Australian court of competent jurisdiction if that forum is “clearly inappropriate”, in contrast to the “clearly more appropriate” Spiliada The US approach to FNC is even more restrictive than the Voth test. In the US, a stay of proceedings may only be granted when an alternative forum has jurisdiction to hear the case, and when trial in the chosen forum would ‘establish…oppressiveness and vexation to a defendant…out of all proportion to plaintiff’s convenience, or when the ‘chosen forum [is] inappropriate because of considerations affecting the court’s own administrative and legal problems” per Marshall J in the US Supreme Court decision of Piper Aircraft Co v Reyno [1982] USSC 28.

34. The Singapore Court of Appeal in JIO Minerals FZC was not persuaded to jettison the Spiliada approach in favour of the Voth test because in its view Spiliada involves a less parochial, more liberal approach in favour of international comity than does the test in Voth. I respectfully agree. As Professor Briggs says in his Civil Jurisdiction and Judgments, 6th ed para 4.39: “The law as finally put in place by Spiliada, striking the balance, as it now stands, is the brilliant product of true judicial creativity.”

35. I also think that this Court should make it clear that Spiliada FNC principles will be potentially applicable where there is available another forum outside the UAE that is distinctly more appropriate than the DIFC Courts even where the jurisdiction of the DIFC Courts is not “exorbitant”, whether because the defendant is domiciled in the DIFC or otherwise.

Are there grounds for setting aside the judge’s decision?

The judge’s reasoning

36. The judge’s reasons for his decision are contained principally in paragraphs 31 – 36 of his judgment. (In paragraphs 1 – 8 of his judgment he introduced the issue before the Court and set out the factual background and in paragraphs 10 – 24 he summarised the parties’ arguments).

37. In paragraphs 26 and 27, the judge observed that the DIFC Courts had jurisdiction over the claim and in paragraph 28 he dismissed the submission that the Court should not exercise jurisdiction on the ground that the Claimants had failed to establish a case which can found a dispute.

38. In paragraphs 29 and 30, the judge recited the Defendant’s submission that the natural forum was the KSA because it was in the KSA that the alleged wrongdoing occurred and he then proceeded to point out that unlike the approach in the UAE Civil and Commercial Procedures Federal Law No. 11 of 1992, the DIFC Judiciary Authority Law establishing the jurisdiction of the DIFC Courts makes no provision for claims to be brought in the jurisdiction where the damage occurred. He observed: “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.”

39. In paragraph 31 the judge turned to the defendant’s case founded on FNC grounds and, on the basis that the tort sued for occurred in the KSA, he concluded that “the more convenient forum would still be the DIFC Courts under the doctrine of forum non conveniens.”

40. The judge’s reasons for this conclusion were: (i) the Defendant (Appellant) was registered and licenced in the DIFC and there was no evidence that the Defendant had any physical presence in the KSA and it was clear it had no licence or office in the KSA (para 32); (ii) notwithstanding that the Claimants reside in the UAE, the travel ban imposed on them placed “a disproportionate obstacle in the way of the Claimants should the claim be litigated in the KSA (para 33); (iii) the Report was produced in English, many of the relevant documents are likely to be in English and the language of the witnesses in large part will be English (para 34); and (iv) although Saudi Law will be the law governing the claim, with the assistance of the appropriate expert evidence, there was no reason to suggest that the DIFC Courts could not adequately deal with any issues of Saudi law that might arise.

The case advanced by the Appellant

41. The Appellant submitted as follows.

(1) In holding that “the more convenient forum would still be the DIFC Courts under the doctrine of forum non conveniens,” in paragraph 31 of his judgment, the judge applied the wrong Spiliada test. He should have asked whether the DIFC Courts were “clearly or distinctly the more appropriate forum.”

(2) The judge failed to take into account the following matters:

(i) The Respondents had admitted in paragraphs 54-55 of their Particulars of Claim that the courts of KSA were the natural forum for the claim. In these paragraphs it was pleaded:

“KSA…is the jurisdiction most closely related to the facts of and the persons concerned with this case.”

“By way of example and to demonstrate the jurisdiction being asserted, the Claimants are domiciled in KSA, the CMA is the regulatory authority based in KSA, the investigation by the Defendant took place in KSA and the damage occurred in KSA.”

(ii)    The place of the alleged tort was KSA which is a strong factor pointing to KSA being the natural forum; see eg The Albaforth [1984] 2 Lloyd’s Rep 91 at 96.

(iii)   The claim concerned the internal management of a KSA company, this being another strong pointer to the courts of the KSA being the natural forum; see para 12-034 of Dicey, Morris & Collins, The Conflict of Laws, 15 ed; Konamaneni v Rolls Royce International Industrial Power (India) Ltd [2002] 1 WLR 1269 at [55]; Ceskoslovenska Obchadni Banka AS v Nomura International plc [2002] All E R (D) 157 (Dec).

(iv) The subject matter of the proceedings is already the subject matter of proceedings in the KSA.

(v)   The Appellant’s registration in the DIFC was the only connection between the claim and the DIFC.

(3) The judge failed to give appropriate weight to the fact that the claim is subject to the law of KSA which law is uncodified, applies no doctrine of precedent, is derived from the Qur’an and the Sunnah and is a very difficult system of law for outsiders to understand.

(4) The judge wrongly took into account the following matters:

(i) The travel ban preventing the Claimants from leaving KSA: As a party’s unwillingness to enter a forum to face proceedings cannot support an argument that foreign proceedings would be unjust, even where return would result in arrest and detention: see Askin v ABSA Bank Ltd [1999] EWCA Civ 680.

(ii) If the judge took into account the averment that the Respondents resided in UAE he was wrong to do so given that in paragraphs 1 and 2 of the Particulars of Claim it is pleaded that the Respondents reside in KSA.

(iii)The fact that 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 in English.

The Report was produced in English and Arabic and there is no evidential basis for concluding that many of the relevant documents are in English or that the language of the witnesses is likely to be English. 

The approach to be taken on appeal

42. The exercise undertaken by a judge in deciding whether to stay proceedings brought in a court of competent jurisdiction on FNC grounds involves the exercise of an evaluative judgment of the different factors put before the court; see Lord Neuberger at [97] and Lord Wilson at [156] in VTB Capital plc v Nutritek International Corpn [2013] UKSC 5. Such an exercise is closely akin to but not the same as the exercise of a discretion stricto sensu.

43. In Spiliada, Lord Templeman said:

“The factors which the court is entitled to take into account in considering whether one forum is more appropriate are legion. The authorities do not, perhaps cannot, give any clear guidance as to how these factors are to be weighed in any particular case. Any dispute over the appropriate forum is complicated by the fact that each party is seeking an advantage and may be influenced by considerations which are not apparent to the judge or considerations which are not relevant for his purpose… In the result, it seems to me that the solution of disputes about the relative merits of trial in England and trial abroad is pre-eminently a matter for the trial judge. Commercial court judges are very experienced in these matters… I hope that in future the judge will be allowed to study the evidence and refresh his memory of the speech of my noble and learned friend Lord Goff of Chieveley in this case in the quiet of his room without expense to the parties; that he will not be referred to other decisions on other facts; and that submissions will be measured in hours and not days. An appeal should be rare and the appellate court should be slow to interfere. [Emphasis supplied].”

44. In Lubbe v Cape plc [2000] 1 WLR 1545 at 1556, Lord Bingham said, in the context of an application for a stay of proceedings on grounds of FNC:

 “This is a field in which differing conclusions can be reached by different tribunals without either being susceptible to legal challenge. The jurisdiction to stay is liable to be perverted if parties litigate the issue at different levels of the judicial hierarchy in the hope of persuading a higher court to strike a different balance in the factors pointing for and against a foreign forum.”

45. In paragraph 10 of his judgment in Deripaska v Cherney [2009] EWCA Civ 849, Waller LJ said in regard to a judge’s reasoning when granting leave to serve out of the jurisdiction[2]:

“It is not the function of the Court of Appeal to go through the whole exercise again unless it can be shown that the judge has misdirected himself in some way. What an appellant is (I accept) entitled to do is to argue (if it is arguable) that there was no evidence to support a finding or indeed in a case such as this (assuming for the present that the extreme submission, that no stage 2 question arises, fails) argue that the evidence is simply not at the level of cogency to allow a conclusion that the natural forum should be displaced. But in conducting that exercise the Court of Appeal should be slow to interfere with the judge’s assessment of the affidavit evidence.”

46. In my judgment, just as in the case of an exercise of a discretion stricto sensu, a judge’s evaluation of the different factors going to the question of the appropriate forum will only be interfered with where he manifestly applied the wrong test, or he failed to take into account matters that he was obliged to have regard to or wrongly took into account irrelevant matters or reached a conclusion that was plainly wrong.

Discussion

47. The correct test under Spiliada in deciding if a stay of proceedings brought in a court of competent jurisdiction should be granted is whether  the defendant has shown that there is another available forum which is clearly or distinctly more appropriate for the trial of the action. The judge did not recite this test in terms, but in my opinion, in saying in paragraph 31 of his judgment: “…I find that the more convenient would still be the DIFC Courts under the doctrine of forum non conveniens”, the judge was plainly adopting a shorthand version of the correct test. I say this because it is evident that Lord Goff’s speech in Spiliada was examined and explained in considerable detail in the course of each side’s submissions and neither side contended for a “more convenient forum” test. Also, in paragraphs 14 and 29 the judge used the expression “natural forum” and in paragraph 22 he referred to “the interests of the parties and of justice” both of which expressions derive from Lord Goff’s judgment.

48. In short, in expressing himself as he did, the judge was doing no more than using the language of Lord Templeman in Spiliada:

“The principles which the courts of this country should apply are comprehensibly reviewed and closely analysed in the speech of my noble and learned friend Lord Goff of Chieveley. Where the plaintiff is entitled to commence his action in this country, the court, applying the doctrine of forum non conveniens, will only stay the action if the defendant satisfies the court that some other forum is more appropriate. [Emphasis supplied]”

49. I do not accept that the judge was obliged to conclude that the KSA was the natural forum because in paragraphs 54-55 of their Particulars of Claim the Respondents plead: “KSA… is the jurisdiction most closely related to the facts of and the persons concerned with this case.” In my judgment, this plea was a poorly formulated contention as to the proper law of the tort alleged and does not constitute a binding concession that for FNC purposes, the courts of the KSA are the natural forum.

50. The judge made no finding as to where the alleged tort or torts occurred but it is clear from paragraph 31 of his judgment that he undertook his FNC evaluation on the assumption that the tort occurred in the KSA and I reject the submission that he failed to give this factor adequate weight. In many cases the jurisdiction in which the tort occurs is likely to be the natural forum (see eg The Albaforth [1984] 2 Lloyd’s Rep 91 at 96) but this is not inevitably so. As Lord Mance said in VTB Capital plc v Nutritek International Corpn [2013] UKSC 5:

“The Albaforth line of authority is no doubt a useful rule of thumb or a prima facie starting point, which may in many cases also prove to give a final answer on the question whether jurisdiction should appropriately be exercised. But the variety of circumstances is infinite, and the Albaforth principle cannot obviate the need to have regard to all of them in any particular case. The ultimate over-arching principle is that stated in The Spiliada, and, if a court is not satisfied at the end of the day that England is clearly the appropriate forum, then permission to serve out must be refused or set aside. [18]”

51. In my opinion, the primary issue to be determined at trial in these proceedings does not go to a question of the internal management of the Company as submitted by the Appellant but is whether the conclusions in the Report complained of were inaccurate having been negligently arrived at due to a failure to conduct a competent and thorough investigation.

52. I reject the contention that the judge erred in failing to take into account the asserted fact that the subject matter of the proceedings is already the subject of proceedings brought by CMA in the KSA. In my judgment, there is no evidence that the Respondents’ claim against the Appellant could be brought within the CMA proceedings. And the mere fact that the CMA proceedings are on foot in the KSA falls well short of the degree of relevance necessary for any failure of the judge to advert to these proceedings in reaching his evaluative conclusion to afford a ground of challenge.

53. I also cannot accept that the judge erred in not concluding that the only factor connecting the claim to the DIFC arose from the registration of the Appellant in the DIFC. I say this because the judge, as he was entitled to do, took into account the fact that the DIFC Courts had jurisdiction over the claim by reason of the Claimant’s registration in the DIFC, this being an act which connotes, at least to some extent, an acceptance that the DIFC Courts have jurisdiction to resolve disputes (often of an international character) to which the Appellant is a party.

54. I also reject the submission that the judge gave inadequate weight to the fact that the law applicable to the Respondents’ claim was the law of the KSA. The weight to be given to this factor was a matter for the judge and, in my opinion, his consideration of this aspect of the case does not fall outside the permissible ambit inherent in the evaluative exercise he was undertaking. True it is that that law of the KSA is derived from the Qur’an and the Sunnah and knows no doctrine of precedent, but amongst the judges of the DIFC Courts there are three Arabic speaking justices and the international approach to deciding issues of foreign law adopted by this Court in Y v X1 and X2 [CA -002-2015] will assist in the determination of such issues under the law of the KSA as may arise following the service by the Appellant of a Defence

55. Citing Askin et al v ABSA Bank Ltd et al (CA 29 January 1999), Mr Montagu-Smith for the Appellant argued that, whether the travel ban came in at the first stage of the Spiliada enquiry or only at the second stage, the judge erred in law in taking this matter into account.

56. In Askin, the claimant brought proceedings in England against the first defendant for negligent and incompetent advice given in respect of investments he made in South Africa. The defence was that the claimant’s losses were as a result of his own mismanagement of his and his companies’ affairs. The South African Office of Serious Economic Offences (“OSEC”) conducted an investigation into the activities of the claimant and following his departure from South Africa it brought criminal charges against him including a charge of theft from one his companies. On the defendants’ application for a stay of the English proceedings, the judge below granted a stay on the ground that South Africa was the natural forum and justice did not require that nonetheless the action in England should proceed. The judge found that although the defendant would be detained in custody in South Africa pending the trial of the charges laid against him, he could at the same time still obtain a fair trial of his claim against the defendants in the South African Courts. The Court of Appeal held that it was open to the judge so to decide and dismissed an appeal against his judgment.

57. In my opinion, it does not inevitably follow from Askin that the judge erred in taking into account the travel ban in the manner he did. The issue in Askin was whether the judge below was entitled to take the course he did. The issue was not whether the judge was bound to have taken that course. Askin is also distinguishable from the instant case in that the judge there found that the claimant could obtain a fair trial in the natural forum notwithstanding that he would be in custody pending trial on the charges he faced, whereas H.E. Justice Omar Al Muhairi found that “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”.

58. In my view, on the evidence before him, the judge was entitled to take into account the travel ban in the manner that he did. And although it would have been better if he had specified clearly under which stage of the Spiliada approach he was taking this factor into account, I think that it matters not that the judge failed to do so. In saying this I have in mind the following passage in para 12-035 of Dicey, Morris and Collins:

“That said, the line which divides the two limbs of Spiliada from each other is neither completely impermeable, nor drawn in such a way that there are no factors which do not appear on both sides of it: from time to time a court will locate under the one limb of Spiliada material which, arguably at least, might more comfortably belong to the other. But when it is recalled that the overall test is one which asks what the interests of justice require, and when it is remembered that the analysis in Spiliada is designed to manage, rather than to constrain, that test, it will rarely be a matter of legitimate complaint that this has happened.”

59. In my judgment, if (which is not clear) the judge proceeded on the basis that the Respondents resided in the UAE, he was entitled to do so. He had before him the witness statement of the second Respondent who deposed therein that the Respondents live in the UAE and have done so for two decades.

60. The judge was also entitled to conclude that: (i) the Report was produced in English (this is plain from the witness statements of a Mr Simon Padget and the second Respondent); and (ii) that many of the relevant documents were likely to be in English and the language of the witnesses was also in large part likely to be in English. I so hold because the evidence showed that the work on the investigation into the Company was sub-contracted to three other Protiviti companies – Protiviti Kuwait, Protiviti Abu Dhabi and Protiviti Sharjah with most of the work being done out of Protiviti Kuwait under the supervision of Mr Manoj Kabra who is an Indian citizen and whose witness statement in these proceedings is in English. Further, the final review and sign off of the Report was undertaken by Mr Padget of Protiviti Abu Dhabi whose language is English. It is therefore likely that the work product reviewed by Mr Kabra and Mr Padget was in English and that the common language between the companies in the Protiviti group was English.

61. Professor Briggs rightly says at page 412 of his The Common Law Rules of Jurisdiction 6th ed: “The process is, as the court said [in VTB Capital plc] an evaluative one, and unless the first instance judge has careered right off the rails, his decision should be respected.”

62. For the reasons I have given, in my judgment none of the grounds of challenge advanced on behalf of the Appellant succeeds. Far from careering right off the rails, the judge was entitled to reach the decision he did for the reasons he gave.

The Respondents’ case that the Appellant had in any event submitted to the jurisdiction

63. It follows from the above conclusion that it is strictly unnecessary to deal with the Respondents’ alternative case that the appellant had submitted to the jurisdiction and was therefore debarred from seeking the stay it did. However, in the circumstances of this case, I think it appropriate that this point should be dealt with, albeit briefly.

64. Part A of the Appellant’s application notice reads:

“The applicant intends to apply for orders that

(1) The Court declares that it shall not exercise its jurisdiction over the claim.

(2) The claim is dismissed and the claim form is set aside or stayed

(3) …

(4) This application is made pursuant to Part 12.1 (2) of the Rules of the DIFC Courts.

because –

1)   The DIFC Courts are not the appropriate forum for the claim.

2)   The Courts of the Kingdom of Saudi Arabia are clearly the more appropriate forum for the claim.

3)   The Particulars of Claim disclose no reasonable grounds for bringing the claim.”

The Appellant filed with its application a witness statement of Ms Ashraf of Hadef & Partners who stated therein that her evidence was served “in support of the Defendant’s application challenging the jurisdiction of the DIFC Courts to hear this case”. She then went on to state that it was accepted that the DIFC Courts had jurisdiction over the respondents’ claims but it was the Appellant’s position that the DIFC Courts should not exercise jurisdiction to hear the case on two grounds: (1) the claim should be stayed or dismissed on FNC grounds; (2) the Particulars of Claim disclose no reasonable grounds for bringing the claim.

65. In the concluding paragraph of her witness statement, Ms Ashraf said: “In the circumstances, I believe that the DIFC Courts should refuse to exercise jurisdiction over this claim and these proceedings should be dismissed or stayed.”

66. The Appellant contended that the Points of Claim disclosed no reasonable grounds for bringing the claim because: (i) absolute or qualified privileged attached to the issuance of the Report; (ii) the Appellant could not be held responsible for the actions taken by the Saudi authorities in reliance on the Report; and (iii) many of the parts of the Report complained of were expressions of opinion and not statements of fact.

67. The Respondents submit that by issuing its application to have the claim stayed or dismissed on the ground that it disclosed no reasonable cause of action the Appellant was seeking to engage the court’s adjudicative jurisdiction and was thereby submitting to the jurisdiction of the Court.

68. Mr Adkin relied on the decision of the Court of Appeal of England and Wales in Astro Exito Navegacion SA v W T Hsu [1984] 1 Lloyds Rep 266. Here, a claim was brought in England in respect of a contract for the sale of a ship and the defendant sought a stay on the ground that the courts of Taiwan were the natural and proper forum for the resolution of the dispute. The defendant also sought to strike out a paragraph of the claim endorsed on the writ. The Court of Appeal held that in making his strike out claim, the defendant had submitted to the jurisdiction and therefore was disentitled to seek a stay on FNC grounds. Goff LJ said at p. 270:

“…it was the submission of Mr. Gee for the respondents that the appellant had voluntarily submitted to the jurisdiction of the court, by applying to the court for a stay of proceedings and for an order striking out paragraph 4 of the claim indorsed on the writ; so that in any event it was no longer open to the appellant to dispute the jurisdiction of the court. Now a person voluntarily submits to the jurisdiction of the court if he voluntarily recognises, or has voluntarily recognised, that the court has jurisdiction to hear and determine the claim which is the subject matter of the relevant proceedings. In particular, he makes a voluntary submission to the jurisdiction if he takes a step in proceedings which in all the circumstances amounts to a recognition of the court’s jurisdiction in respect of the claim which is the subject matter of those proceedings. The effect of a party’s submission to the jurisdiction is that he is precluded thereafter from objecting to the court exercising its jurisdiction in respect of such claim. Whether any particular matter, for example an application to the court, amounts to a voluntary submission to the jurisdiction must depend on the circumstances of the particular case.

Applying these principles, it is plain to us that the appellant in the present case did indeed submit voluntarily to the jurisdiction. We need not decide whether his application for a stay was alone sufficient for this purpose; for his application for an order striking out paragraph 4 of the claim indorsed on the writ puts the matter beyond doubt. For if he had been successful in that application the court would have decided that issue in his favour and against the respondents. The court’s decision on the point would then have created an issue estoppel against the respondents, which the appellant could have invoked to prevent the respondents pursuing such a claim in the courts of this country, and possibly also in courts overseas. Plainly, therefore, by making his application for an order striking out paragraph 4, the appellant was voluntarily submitting to the jurisdiction of the court. In these circumstances, it was in any event not open for the appellant thereafter to dispute the jurisdiction of the court.”

69. Mr Montagu-Smith for the Appellant submitted that in making its application the Appellant was not seeking to strike out the claim and thereby engage the adjudicative jurisdiction of the Court but, as the application notice itself made clear, was contesting the jurisdiction of the Court. He explained that, in seeking a stay or dismissal of the claim on the ground that it was not reasonably arguable, the Appellant had relied on dicta in Hardt v Damac [CFI-036-2009] and Bank Sarasin v Al Khorafi [CA-033-2011] (12 January 2012).

70. In Hardt, Justice Sir Anthony Colman struck out a claim against an entity that was a DIFC Centre Establishment whose name had been added to the names of other defendants but against whom no discernible claim had in fact been made. In paragraph 60 his judgment, Justice Colman said:

“60. This total absence of any specific allegation against the First Defendant is, in my judgment, important. If a Claimant fails to make any coherent allegation against a Centre Establishment, although the party may be joined as a defendant, he is not a party against whom the Claimant raises a case which can found a dispute. All he has done is put a name on a DIFC Courts’ Claim Form and nothing else. In these circumstances, no dispute involving that defendant has been properly identified and the DIFC Courts do not have jurisdiction under Article 5 (A) (1) to do more than strike out the claim against that party. Where there is no formulated claim, there is nothing which engages the Courts’ jurisdiction.”

71. In Sarasin v Al Khorafi one of the issues was whether the DIFC Courts had jurisdiction to hear a claim against Bank Sarasin, a Swiss bank, on the basis that it was liable for the acts and/or defaults of an associated DIFC company, Bank Sarasin Alpen (ME) Ltd. The claimants argued that there was jurisdiction under the Article 5A(1)(c) gateway contained in Law No. 16 of 2011. Bank Sarasin submitted that these claims did not have sufficient substance for the Court to exercise jurisdiction. This Court held that on the assumption that Swiss law was the same as English law, there was sufficient substance in the claim for the Court “to exercise jurisdiction, provided that one of the jurisdiction gateways is engaged.” [para 74]

72. In my judgment, neither of these decisions is authority for the proposition that where the Court undoubtedly has jurisdiction under one of the specified jurisdictional gateways, nonetheless that jurisdiction may not be exercised if on the merits the claim is not reasonably arguable. In Hardt, Justice Colman was doing no more than deciding that a claim (whatever its merits) against the party in question must be discernible before jurisdiction will be exercised. That is not this case.

73. In Sarasin v Al Khorafi, the language used by the Court is somewhat ambiguous, but in my opinion, here too, the Court was determining whether the gateway was engaged in the first place and was not striking out the claim.

74. In the circumstances, I think it important for this Court to make it clear that where it is plain beyond argument that the Court has jurisdiction under Law No. 16 of 2011, it is not open to a defendant to mount a jurisdiction challenge on the ground that the claim is not reasonably arguable. And if such a challenge is mounted following this appeal, there will be a real risk that the defendant will be found to have submitted to the jurisdiction in accordance with Goff LJ’s reasoning in Astro Exito Navegacion SA v W T Hsu.

75. On the facts of this case, did the appellant submit to the jurisdiction of the Court? In my view, it did not. Instead it was seeking (albeit under a misconception) to establish that the Court lacked jurisdiction and was not seeking to strike out the claim and thereby invoke the Court’s adjudicative jurisdiction. 

Conclusion

76. For the reasons I have given, this appeal should be dismissed.

CHIEF JUSTICE MICHAEL HWANG:

77. I agree with the abovementioned judgment and have nothing further to add.

H.E. JUSTICE ALI AL MADHANI:

78. I agree with the judgment and have nothing further to add.

Issued by:

                                                                                                Mark Beer

                                                                                                Registrar

                                                                                                Date of Issue: 23 August 2016

       At: 12pm