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CFI 047/2016 Natixis S.A. v Fast Telecom General Trading LLC

CFI 047/2016 Natixis S.A. v Fast Telecom General Trading LLC

May 1, 2017

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Claim No. CFI-047-2016

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

NATIXIS S.A. 

Claimant/Respondent

and

FAST TELECOM GENERAL TRADING LLC 

Defendant/Applicant


ORDER WITH REASONS OF H.E. JUSTICE SHAMLAN AL SAWALEHI


UPON reading the Defendant’s Application No. CFI-047-2016/1 (the “Application”) seeking dismissal of the claim for lack of jurisdiction

AND UPON reviewing the submissions of the parties and the documents included in the court file

AND UPON hearing oral submissions from the parties at the Hearing on 16 April 2017

IT IS HEREBY ORDERED THAT:

1.The Defendant’s Application is dismissed.

2. The Defendant shall pay the Claimant’s costs as to the Application, to be assessed if not agreed.

Issued by:

Natasha Bakirci

Assistant Registrar

Date of Issue: 1 May 2017

At: 12pm

SCHEDULE OF REASONS

1.The Claim Form, filed by Natixis S.A. (the “Claimant”) on 21 December 2016, details alleged breaches by Fast Telecom General Trading LLC (the “Defendant”) of a Facility Agreement entered intobetween them on 22 December 2015 (the “Facility Agreement”). The Claimant has claimed losses and damages in respect of the breaches in the amount of USD 10,610,065 plus interest and costs and other relief as the Court deems fit.

2. The Defendant responded to the Claim on 4 January 2017 with an Acknowledgment of Service indicating its intent to contest the jurisdiction of the DIFC Courts over the Claim. The Defendant then filed Application No. CFI-047-2016/1 (the “Application”) on 18 January 2017 seeking a Court order to dismiss the claim for lack of jurisdiction.

3. In support of the Application, the Defendant argued:

(a) that the parties have chosen the jurisdiction of the French Commercial Courts of Paris to govern their disputes, pursuant to a Pledge Agreement entered into between the parties on 4 January 2016 (the “Pledge Agreement”), which served to amend the jurisdiction clause of the Facility Agreement;

(b) that the Claimant’s DIFC branch cannot bring an action against it in the DIFC Courts considering that the Facility Agreement is with the Claimant’s parent company and that the transaction has no connection, even partly, to the DIFC;

(c) in the alternative, that Clause 28.2 of the Facility Agreement is invalid under French Law as a unilateral optional clause benefiting only the Claimant;

(d) that the principle of good faith requires that the Claimant cannot proceed in both French and UK/DIFC Courts on the basis of two agreements which are “strongly connected by nature, by law and, by the parties themselves”; and

(e) that it is contrary to UAE public policy to enforce an “oppressive, unilateral” provision in a commercial agreement.

4. The Claimant indicated in the Claim Form and Particulars of Claim that the DIFC Courts had jurisdiction pursuant to Article 5(A) of Dubai Law No. 12 of 2004 (the “Judicial Authority Law”) as the Claimant is a “DIFC Establishment” under the terms of the Judicial Authority Law and therefore, in considering the facts of this case and the registration of the Claimant, the requirements of Article 5(A)(1)(a) and (b) have been satisfied. Furthermore, pursuant to Clause 28.2(b) of the Facility Agreement, the Claimant is entitled to bring a claim relevant to that agreement in the DIFC Courts.

5. In response to the Defendant’s Application, the Claimant made the following arguments:

(a) First, it is the Claimant, Natixis (France), who has made a claim against the Defendant, not the Claimant’s DIFC Branch. However, the Claimant and its DIFC Branch are the same legal entity under DIFC Law and DIFC Courts’ precedent.

(b) Second, the Claimant acknowledges no amendment to the Facility Agreement pursuant to the Pledge Agreement’s jurisdiction clause and argues that there is no evidence of any such amendment occurring or being intended by the parties. The Facility Agreement was not entered into “pursuant to” the Pledge Agreement and in fact, it was the other way around.

(c) The Claimant affirmatively argues that the current claim falls under multiple gateways of Article 5(A) of the Judicial Authority Law, specifically Article 5(A)(1)(a), 5(A)(1)(b) and 5(A)(1)(c). Furthermore, Article 5(A)(2) of the Judicial Authority Law is satisfied by consideration of Clause 28.2(b) of the Facility Agreement in conjunction with the satisfaction of one or more of the gateways created under Article 5 of the Judicial Authority Law.

(d) As to the Defendant’s argument that Clause 28.2(b) of the Facility Agreement is invalid under French Law, this argument cannot succeed as French Law does not apply to the Facility Agreement. Furthermore, referece to UAE public policy does not assist the Defendant as the relevant laws and cases cited do not address the specific type of clause at issue.

6. It is relevant to the Application at hand that the Defendant’s former legal representatives filed Application No. CFI-047-2016/2 on 27 February 2017 to be removed from the record as representatives of the Defendant (the “Removal Application”). The Removal Application was granted by the Order of Judicial Officer Nassir Al Nasser dated 2 March 2017. By the time of the Hearing scheduled for 16 April 2017, the Defendant had not named new legal representatives nor had it requested additional time to find legal representatives. Instead, a non-legal representative from the Defendant company, Mr Fadi Aon Ibrahim Alshami, attended the Hearing on the Defendant’s behalf and was unable to make legal arguments relevant to the Application.

7. Although the Defendant’s non-legal representative sought additional time at the Hearing, the Defendant did not appropriately request additional time to obtain legal counsel in advance of the Hearing. Thus, as the Defendant had the benefit of legal counsel when preparing its Application and did not request additional time in advance of the Hearing, I find it appropriate to adjudicate this Application without further comment from the Defendant.

8. At the Hearing held on 16 April 2017, the Claimant reiterated its argument that the DIFC Courts have jurisdiction over the claim pursuant to Articles 5(A)(1)(a), 5(A)(1)(b) and 5(A)(1)(c) of the Judicial Authority Law. Furthermore, the jurisdiction of the DIFC Courts is not excluded by some other agreement between the parties as Clause 28.2(b) of the Facility Agreement is sufficient to establish jurisdiction provided another limb of Article 5 of the Judicial Authority Law is also satisfied pursuant to the findings of Investment Group Private Limited v Standard Chartered Bank [2015] DIFC CA 004, paragraphs 148 & 152.

9. The Claimant also provided responses to the Defendant’s written arguments, reiterating that there was no amendment to the Facility Agreement based upon the jurisdiction clause in the Pledge Agreement. As regards the argument that the Claimant’s DIFC Branch is not and cannot be a party to the dispute, the Claimant maintains that the Claimant is a DIFC Licensed Establishment and that its DIFC Branch and its main operations are the same legal entity, as supported by the finding in Corinth Pipeworks SA v Barclays Bank PLC [2011] DIFC CA 002, paragraphs 63 & 66.

10. The Claimant also argued that the Defendant’s arguments regarding forum shopping, good faith and UAE public policy are misguided. The forum shopping claim is based on French Law, which has no applicability to the current case. The good faith argument ignores that the Pledge Agreement and the Facility Agreement are separate and distinct agreements. Finally, the jurisdiction provision in the Facility Agreement is valid under UAE law and thus is not contrary to UAE public policy.

11. The Claimant also claimed its costs as to the Defendant’s Application to contest jurisdiction and asked the Court to make an immediate assessment pursuant to Rule 38.30 of the Rules of the DIFC Courts (the “RDC”) considering that the Claimant asked for the Application to be dealt with on the papers and the Defendant did not agree, among other reasons.

12. Based on an assessment of the written submissions of both parties and the oral submissions of the Claimant, I find that the DIFC Courts have jurisdiction over the current dispute and that the Claimant shall be awarded the costs of this Application. I give the following reasoning, addressing the Defendant’s arguments in turn.

13. As to the Defendant’s argument that the Pledge Agreement and Facility Agreement are connected and that the jurisdictional choice of the Pledge Agreement was intended to “amend the jurisdictional provision and to clarify the identity of the parties” to the Facility Agreement, I see no evidence to support such an argument and the Defendant offers none. While these two agreements are surely related, in that the Pledge Agreement was entered into pursuant to the terms of the Facility Agreement, there is nothing to indicate that they should not be treated as legally separate. Reference to “any documents or instruments delivered pursuant to [the Pledge Agreement]” in Clause 14.2 of the Pledge Agreement cannot refer to the Facility Agreement which was entered into in advance of the Pledge Agreement and considering that the Pledge Agreement itself was entered into pursuant to Clause 9 of the Facilitiy Agreement.

14. As to the Defendant’s contention that the Claimant’s DIFC Branch does not have capacity to sue the Defendant and that the transaction has no connection to the DIFC, it is sufficient to note that the Claimant is a DIFC Licensed Establishment under the terms of the Judicial Authority Law and thus the DIFC Courts have jurisdiction over this dispute in accordance with Article 5(A)(1)(a) of the Judicial Authority Law. The Defendant has not convinced me to sway from the reasoning provided in Corinth Pipeworks SA v Barclays Bank PLC.

15. Furthermore, it is clear that the substance of this dispute would additionally fall under Article 5(A)(1)(b) and (c) of the Judicial Authority Law however it is uncessary to delve into detail on these additional gateways. It is sufficient to say that Clause 28.2(b) of the Facility Agreement combined with satisfaction of Article 5(A)(1)(a) of the Judicial Authority Law show decidedly that the DIFC Courts have jurisdiction over the current dispute.

16. In the alternative, the Defendant argues that Clause 28.2(b) of the Facility Agreement is invalid under French Law as a unilateral optional clause benefiting only the Claimant. However, as already discussed above, French Law is not applicable in this dispute. Furthermore, as discussed above, the Pledge Agreement and Facility Agreement, while related, are not so intrincically connected to require legal disputes relevant to both agreements to be brought in the same jurisdiction and therefore the Defendant’s good faith argument fails. Finally, as regards the UAE public policy argument, I find the Defendant’s argument fails as the cited authorities refer to arbitration argreements not jurisdiction clauses.

17. Seeing as the Defendant has failed on all of its arguments, I find it appropriate to follow the default costs rule outlined in RDC 38.7(1) and I see no reason to make an alternative costs order pursuant to RDC 38.7(2). Thus, the Defendant shall pay the Claimant’s costs of this Application and these costs shall be assessed if not agreed by the parties.

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