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Tavira Securities Limited v (1) Re Point Ventures Fzco (2) Jai Narain Gupta (3) Mayank Kumar (4) Saroj Gupta [2017] CFI 026

Tavira Securities Limited v (1) Re Point Ventures Fzco (2) Jai Narain Gupta (3) Mayank Kumar (4) Saroj Gupta [2017] CFI 026

December 17, 2017

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Claim No: CFI-026-2017 

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

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

 

IN THE COURT OF FIRST INSTANCE

BEFORE JUSTICE SIR RICHARD FIELD

 

BETWEEN

TAVIRA SECURITIES LIMITED

Claimant

and

 

(1) RE POINT VENTURES FZCO

(2) JAI NARAIN GUPTA

(3) MAYANK KUMAR

(4) SAROJ GUPTA

Defendants

 

     

Hearing: 19 September 2017

Counsel: Tom Montagu-Smith QC (instructed by Al Tamimi & Co) for the Claimant

Jonathan Chew (instructed by Clyde & Co LLP) for the Defendants

Judgment:  17 December 2017


JUDGMENT OF JUSTICE SIR RICHARD FIELD


Summary of Judgment

Sir Richard Field dismissed the Defendants’ application to challenge the jurisdiction of the DIFC Courts to hear and determine the claim brought by the Claimant (“Tavira”) seeking damages from the Defendants for the breach of an alleged contract under which the Defendants were obliged to settle trades, including trades in equities.

Tavira is a company incorporated in England. It established a branch in the DIFC and was registered as a foreign recognised company on 20 July 2016.

Article 5(A)(1)(a) (“Gateway (a)”) of DIFC Law No. 12 of 2004 (“the Judicial Authority Law”) provides that:

“(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;”

A “Licensed DIFC Establishment” is defined by Article 2 of the Judicial Authority Law as:

“Any entity or enterprise, licensed, registered or authorised by the Dubai Financial Services Authority to provide financial services, or conduct any other activities in accordance with the DIFC Laws.”

It was not disputed that in the light of the Court of Appeal’s decision in Corinth Pipeworks SA v Barclays Bank plc [2011] DIFC 002 (“Corinth”), Tavira is and was at the time it issued its Claim Form a Licensed Establishment within the statutory definition. Relying on the Corinth decision, it is Tavira’s case that the Court has jurisdiction under Gateway (a).

The Defendants’ primary argument was that Gateway (a) is to be construed as only conferring jurisdiction in respect of a claim brought by a claimant with the status of a DIFC Establishment or Licensed DIFC Establishment, if the events giving rise to the claim occurred after the claimant had obtained that status.

The Defendants’ alternative case was that if the Court has jurisdiction on the true construction of Gateway (a), the Court should nonetheless decline to exercise jurisdiction on the grounds of abuse of process and/or forum non conveniens (“FNC”). The Defendants asserted that Clause 21.0 of Tavira’s General Terms and Conditions of Business provided for the exclusive jurisdiction of the High Court of Justice in England. Moreover, the Defendant submitted, inter alia, that England was where the underlying performance of the contract sued on was to occur; and the putative contract sued on was governed by English law; the shares which were the subject of the sell order were quoted on the London Stock Exchange and that it was likely that regulatory issues arising under the UK Financial Services and Markets Act 2000 (“the FSMA”) would feature in the proceedings.

The Defendants had sought to distinguish the instant case from Corinth, IGPL (2015 DIFC CA 004), Afras (2013 DIFC CFI 008) and Allianz Risk (2012 DIFC CFI 0212) on the ground that in those cases the events giving rise to the claim occurred after the Defendant (in Corinth) and the Claimants in the other cases, became Licensed Establishments. Sir Richard Field considered whether on its true construction, Gateway (a) only confers jurisdiction in respect of a claim brought by a Licensed DIFC Establishment (as defined in Corinth) if the events giving rise to the claim occurred after the claimant became a Licensed Establishment.

Sir Richard held that the Court’s task when construing a legislative enactment is to arrive at its “legal meaning” and in doing so, the Court must first consider what the plain meaning is of the word or words in question. No reliance was placed by either side on any difference between the Arabic version of Gateway (a) and its English translation and in Sir Richard’s judgment, given the interpretation that the Court of Appeal had accorded to the definition of Licensed Establishment in Corinth, the plain meaning of the words of Gateway (a), construed in its context in the Judicial Authority Law, is that where the claimant or the defendant is a Licensed Establishment, the DIFC CFI has jurisdiction over the claim, regardless of whether the events giving rise to the claim occurred before or after that status was acquired. Each of the jurisdiction gateways provided for in Article 5A of the Judicial Authority Law is freestanding with its own jurisdiction criterion. The sole criterion for jurisdiction in Gateway (a) is the status of either the defendant or the claimant as a Licensed Establishment at the time the test for jurisdiction under Gateway (a) is being applied.

Although there may be circumstances where Gateway (a) gives rise to an exorbitant jurisdiction where some other forum is clearly more appropriate, in such a situation the FNC doctrine will be available where the competing forum is outside the UAE; and where the competing forum is located in another Emirate within the UAE, the Union Supreme Court is empowered to decide any conflict of jurisdiction thereby arising. As for jurisdictional contests between the DIFC Courts and the Dubai on-shore Courts, where a defendant based in on-shore Dubai contests jurisdiction asserted by a claimant under Gateway (a), if there is a true jurisdictional conflict, that conflict will be resolved under Article 2 of Dubai Decree No. 19 of 2016.

As regards the FNC argument, it was held by the Court of Appeal in Protiviti (2016 DIFC CA 003) that the FNC doctrine best suited to be applied in the DIFC Courts is that propounded by the House of Lords in Spiliada [1987] AC 460. In Sir Richard’s judgment, given the Defendants’ blanket denial that there was any contract between them and Tavira, there is no basis for the conclusion that Tavira might be estopped quoad the Defendants from bringing suit in the DIFC Courts; or that Tavira is subject to an equitable obligation owed to the Defendants to comply with Clause 21.0; or that the bringing of the DIFC proceedings amounts to vexatious and oppressive conduct on Tavira’s part.

As to the rest of the Defendants’ argument that Tavira’s suit in this Court should be stayed in favour of proceedings in the London High Court on FNC grounds – the fact that Tavira’s General Terms and Conditions of Business contains Clause 21.0 will have only slight relevance since there is a fundamental difference between enforcing a contractual jurisdictional clause on the basis of a contractual entitlement and determining whether some forum other than that chosen by the claimant is the natural forum where the suit ought to be litigated. Sir Richard found that the Defendants had failed to establish (the burden being on them) that the London High Court is clearly or distinctly more appropriate than the DIFC Courts for the trial of Tavira’s claim. That the alleged contract is highly likely to be governed by English law and England may well be the lex loci solutionis were weak factors in favour of the English High Court being clearly or distinctly the more appropriate forum. The language of the DIFC Courts is predominantly English and the Court is well familiar with English law.

Sir Richard did not accept the submission that enforcement of an English judgment obtained in the London High Court against the Defendants would be more simple than enforcing a judgment of the DIFC Courts. An English judgment would in fact be more difficult to enforce in Dubai than a DIFC Courts judgment because: (i) the Dubai Courts will not permit enforcement of a foreign judgment against an individual domiciled in the UAE, see Articles 31(1), and 235 (2) of the UAE Federal Procedures Law; and (ii) the JJC established under Dubai Decree 19 of 2016 is hostile to conduit enforcement.

 

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

 

UPON hearing Counsel for the Claimant and Counsel for the Defendants at a hearing on 19 September 2017

AND UPON reading the submissions filed on 27 September 2017 and 4 October 2017

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

IT IS HEREBY ORDERED THAT:

1.The Defendants’ application to contest jurisdiction is dismissed.

 

Issued by:

Natasha Bakirci

Assistant Registrar

Date of Issue: 17 December 2017

At: 11am 

 

 

JUDGMENT

1.The Applicants/Defendants (“the Defendants”) apply to challenge the jurisdiction of the Court to hear and determine the claim brought by the Claimant/Respondent (“Tavira”) seeking damages from the Defendants for the breach of an alleged contract under which the Defendants were obliged to settle trades, including trades in equities, on TVP and RPV terms transacted on their behalf by Tavira on an execution-only basis.

2. Tavira is a company incorporated in England. It offers services for trading in commodities, equities and derivatives. It is part of a corporate group of companies which provide similar services in different countries. It established a branch in the DIFC and was registered as a foreign recognised company on 20 July 2016. It had begun discussions with the DFSA in 2008 with a view then to opening a DIFC branch but these plans were put on hold following the on-set of the global financial crisis.

3. The 1st Defendant (“RPV”) is a Jebel Ali Free Zone company. The 2nd Defendant (“Mr J Gupta”) describes himself as “Jai Narain” and states that the name of the 3rd Defendant (“Mr Kumar”) is Mayank Kumar Gupta.

4. On or about 9 September 2015, there was email correspondence between Mr Andrew Hawgood of Tavira and Mr Kumar, RPV’s Investment Manager, in the course of which Tavira offered to execute trades for RPV on Tavira’s terms of business, a copy of which was subsequently provided to RPV by email on 30 September 2015. By an email dated 12 October 2015, RPV, acting by Mr Kumar, instructed Tavira to sell 190,000 shares in SAB Miller. This instruction was executed by Tavira, but RPV failed to provide shares to cover the sale, thereby causing Tavira to acquire shares at a higher price than the sale price to settle the trade. Tavira plead in the Claim Form that in refusing to provide shares to cover the trade, RPV were in breach of a contract which had come into existence between the parties.

5. The Defendants deny generally the allegations pleaded in the Claim Form.

6. Article 5(A)(1)(a) of DIFC Law No. 12 of 2004 (“the Judicial Authority Law”), as amended provides:

“(1) 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”.

Article 5(A)(1)(a) is hereafter referred to as “Gateway (a)”.

7. A “Licensed DIFC Establishment” is defined by Article 2 of the Judicial Authority Law as:

“Any entity or enterprise, licensed, registered or authorised by the Dubai Financial Services Authority to provide financial services, or conduct any other activities in accordance with the DIFC Laws.”

8. It is not disputed that in the light of the Court of Appeal’s decision in Corinth Pipeworks SA v Barclays Bank plc [2011] DIFC CA 002, Tavira is and was at the time it issued its Claim Form a Licensed Establishment within the statutory definition. Relying on the Corinth decision, it was Tavira’s case that the Court has jurisdiction under Gateway (a).

9. The primary argument advanced by the Defendants is that Gateway (a) is to be construed as only conferring jurisdiction in respect of a claim brought by a claimant with the status of a DIFC Establishment or Licensed DIFC Establishment, if the events giving rise to the claim occurred after the claimant had obtained that status.

10. The Defendants’ alternative case is that if the Court has jurisdiction on the true construction of Gateway (a), the Court should nonetheless decline to exercise jurisdiction on the grounds of abuse of process and/or forum non conveniens (“FNC”).

11. At an early point in the hearing it emerged that Clause 21.0 of Tavira’s General Terms and Conditions of Business, on which it is relying as part of the foundation of its claim, provides that if either party has a claim against the other, the claim shall be referred to the exclusive jurisdiction of the High Court of Justice in England. Mr Chew for the Defendants argued that this clause was binding on Tavira and constituted one of the reasons why the Court should conclude that London, rather than the DIFC, was the appropriate forum. Tavira submitted that it was not open to the Defendants to rely on Clause 21.0 in this way because they (the Defendants) denied that any contract had been concluded between them and Tavira.

12. Faced with these developments, the Court directed that written submissions on the Clause 21.0 point should be served after the hearing that the Court would consider at a later date.

13. At around the time that Tavira served its post-hearing submissions on Clause 21.0, it applied for permission to amend its Claim Form by introducing: (1) a claim that the Defendants fraudulently induced the Claimant to enter into the contract under which Tavira executed RPV’s instruction to sell 190,000 shares in SAB Miller by falsely representing that it had a present intention to meet its contractual obligations in the event that the trade was unprofitable and by representing, through the delivery to Tavira of RPV’s standard settlement instructions, that RPV had an established relationship with clearing banks; and (2) a claim that prior to entering into the contract with Tavira, the Defendants conspired to use unlawful means with the intention of injuring Tavira. This application was opposed by the Defendants and I propose to deal with it after I have determined the jurisdiction challenge on the basis of the unamended Claim Form.

The Defendants’ construction argument

14. The central question raised by the Defendants’ jurisdiction challenge is: Does Gateway (a) only confer jurisdiction in respect of a claim brought by a Licensed DIFC Establishment where the events giving rise to the claim occurred after the Claimant became a Licensed DIFC Establishment?

15. Mr Chew for the Defendants argued that the Court should construe Gateway (a) so as to answer the question “yes”, or otherwise capricious and absurd results could follow, including:

(1) A defendant anywhere in the world could find himself subject to the DIFC Courts’ jurisdiction in circumstances where this could never have been reasonably contemplated at the time of the occurrence of the events giving rise to the claim.

(2) The mechanism provided in Article 5(A)(2) of the Judicial Authority Law by which parties who are not DIFC Licenced Entities are enabled to bring a claim in the DIFC Courts by concluding a clear written agreement giving jurisdiction to the DIFC Courts would be contradicted, because such entities could obtain an entitlement to sue in the DIFC Courts by opening a branch in the DIFC.

(3) Gateway (a) could have retrospective effect undermining the capacity of the parties to arrange their affairs by reference to the facts that prevailed at the time when the events underlying the claim occurred. For example, if the answer to the posed question is “no”, the DIFC Courts could have jurisdiction in respect of matters that occurred even before the DIFC existed.

 (4) The consequence of (1) and (2) are: (a) parties who have not arranged their affairs in advance by including a jurisdiction clause in their standard terms or within particular agreements could find that their legitimate expectations are defeated; (b) extreme forum shopping could be practised by a party establishing itself in the DIFC for the sole purpose of after-the-fact jurisdiction; (c) the DIFC’s objectives[1] would be undermined because consequences (a) and (b) would not be transparent but would be unclear, unpredictable and inefficient; and (d) since the jurisdiction conferred by Article 5(A)(1) is exclusive, there could be unfortunate public policy ramifications where a defendant domiciled in the UAE but outside the DIFC is sued by a Licenced DIFC Establishment established after the events giving rise to the claim and there is no conflict of jurisdiction within Article 2 of Dubai Decree No 19 of 2016, the mitigating influence of the doctrine of forum non conveniens (“FNC”) being inapplicable where the competing jurisdictions are within the UAE[2].

16. Mr Chew argued that Gateway (a) is silent on temporal jurisdiction and should be construed having regard to the purpose of the Judicial Authority Law and the mischief it was intended to deal with. So construed, the gateway should be held to confer jurisdiction only where the facts giving rise to the claim occurred after the Claimant became a DIFC Establishment or a Licensed DIFC Establishment. Mr Chew submitted:

(a) the purpose of claimant personal jurisdiction in the Judicial Authority Law is to ensure that: (1) the DIFC Courts have oversight of those regulated to carry on business within the DIFC; and (2) to offer DIFC Courts services to those regulated to carry on business within the DIFC.

(b) Where a claim is brought by a DIFC Licensed Entity, these purposes are only engaged from the time of the DIFC’s Licensed Entity’s registration. There is no legitimate interest in the DIFC being involved in and its Courts providing jurisdiction over claims brought by a DIFC Licensed Entity in respect of facts arising from a time when the claimant was not a DIFC Licensed Entity. This is in contrast to the situation where a DIFC Licensed Entity is a defendant because the DIFC Courts jurisdiction here is necessary to ensure and oversee the integrity of the DIFC’s licensed entities. Further, personal jurisdiction based on the location of the defendant is common in international conflicts of laws and accords with the principle of efficiency.

(c) The proposed construction of Gateway (a) is workable and predictable since it provides businesses with the certainty and transparency they need.

17. Mr Chew submitted in the alternative that Gateway (a) should be construed pursuant to the presumption against absurdity. He cited paragraphs [116] and [117] of Lord Millet’s speech in R v Central Valuation Officer and another, ex parte Edison First Power Ltd [2003] All E R 209:

“[116]     … The Courts will presume that Parliament did not intend a statute to have consequences which are objectionable or undesirable; or absurd; or unworkable or impracticable; or merely inconvenient; or anomalous or illogical; or futile or pointless.

[117]      But the strength of these presumptions depends on the degree to which a particular construction produces an unreasonable result. The more unreasonable a result, the less likely it is that Parliament intended it: see (in a contractual context) Wickman Machine Tool Sales Ltd v L Schuler AG [1974] AC 235 at p 251 per Lord Reid. I do not, therefore, find it profitable to discuss whether the effect of the ESI Order amounts to “double taxation” or “double assessment” … I would prefer to go straight to the real question: whether the scheme established by the ESI Order is so oppressive, objectionable or unfair that it could only be authorised by Parliament by express words or necessary implication.”

18. Mr Chew contended that the literal construction of Gateway (a) produces results that are: (i) anomalous or illogical, in that exclusive jurisdiction is conferred for events that had no connection to the DIFC at the time; (ii) artificial, since the Court has no connection with the dispute itself; (iii) futile and pointless, in that alternative courts will always be available for the dispute to be determined; (iv) impracticable and unworkable, in that it prevents businesses being able to arrange their affairs; (v) inconvenient for businesses, for the reasons given in (i) – (iv); and (vi) a significant counter-mischief, in the form of extreme forum shopping.

The Defendants’ alternative arguments: abuse of process and FNC

Abuse of process

19. Mr Chew submitted that if Gateway (a) is to be construed as giving the Court jurisdiction over the instant claim, the claim should nonetheless be struck out as an abuse of process pursuant to the Court’s power so to do under its inherent jurisdiction to regulate its own process. The claim was an abuse of process for the same reasons Mr Chew submitted Gateway (a) should be construed having regard to the purpose and mischief contemplated by Article 5(A)(1) of the Judicial Authority Law and so as to avoid absurdity and the counter-mischief of extreme forum shopping.

FNC

20. The Defendants undertook to submit to the jurisdiction of the English Courts and contended that England is an available forum and for a number of reasons is a more appropriate forum than the DIFC Courts.

21. In their post-hearing submissions, the Defendants put Clause 21.0 at the forefront of their FNC argument, contending that Tavira was bound by this provision and accordingly the appropriate forum for the determination of the claim was the English High Court. The Defendants expressly abstained from relying on the doctrine of separability, citing instead para 7.19 of Mr Raphael’s book, “The Anti-Suit Injunction”:

“Even if the injunction claimant denies the existence of the contract, if it is inherent in the injunction defendant’s substantive claim that the contractual clause is binding, the injunction defendant may be restrained by a quasi-contractual injunction from acting inconsistently with the exclusive forum clause.”

22. In para 10.23 of his book, Mr Raphael offers three possible analyses in support of this view: (1) the anti-suit defendant is estopped from denying the existence of the contract under which his substantive claims are made, even though the injunction claimant denies the existence of the contract; (2) it is possible to postulate an equitable obligation on the injunction defendant not to bring a claim in a forum inconsistent with that agreed under the contract which he alleges exists or which is the necessary condition of his claims; (3) it could be said that it is vexatious and oppressive to bring an internally inconsistent claim.

23. Mr Raphael cites Steel J’s unreported decision in Sea Premium Shipping Ltd v Sea Consortium Pte Ltd (11 April 2009). There, the charterers of a vessel brought proceedings in Dubai against the vessel’s new owners asserting a quasi-contractual claim based on a charterparty made with the old owners, the existence of which was not disputed by the new owners who, it was accepted, were not a party thereto. The charterparty on which the claim was based contained an arbitration clause stipulating arbitration in London. Steel J granted an injunction restraining the charterers from continuing with the proceedings in Dubai. At page 34 of the judgment he said:

“As I have already indicated, the claim asserted by the respondents is by way of a quasi contractual claim for damages for failing to abide by the terms of the charterparty. In short, it is a claim made against the owners under the charter, albeit the owners are not a party to the charter either by way of novation or assignment. Because the charterparty is governed by English law, the question whether the charterers are bound by the arbitration clause is also governed by English law.    In my judgment, the charterers are bound by the clause vis-a-vis any claim arising between both the owners and the charterers. The new owners, whom the charterers contend are bound to abide by the terms of the charter, are accordingly entitled to prevent the charterers from pursuing the Dubai proceedings in breach of the arbitration clause”.

24. In case this analysis were wrong, Steel J went on to hold that the parties had in any event concluded an ad hoc agreement for arbitration in London which also justified the anti-suit injunction he granted.

25. The Defendants cited The Hornbay [2006] arguing that the anti-suit injunction granted in that case was based on the same logic that underlay the first ground for the injunction granted in Sea Premium Shipping. Here, goods being carried under a contract of carriage evidenced by a bill of lading governed by English law and which contained an exclusive English jurisdiction clause and incorporated the Hague-Visby Rules, were seriously damaged en route from Hamburg to Cartagena in Colombia and declared a constructive total loss. Notwithstanding the wording of the bill of lading, the insurer of the goods standing in the shoes of the consignee sued an agent of the carrier in Colombia for the full value of goods, arguing that the choice of law and jurisdiction provisions in the bill of lading were void under Colombian law on grounds of public policy. Morison J granted an anti-suit injunction enforcing the English law and jurisdiction clauses. The fact that the consignees had offended Colombian public policy was not of itself a good reason for holding that their consent to cl 37 had not been truly given, or that it would be unfair or unreasonable to hold them to their bargain, whatever system of law applied.

26. Mr Chew submitted that in addition to the Clause 21.0 point, there were 5 reasons why England was a more appropriate forum than the DIFC Courts. First, England was where the underlying performance of the contract sued on was to occur; and the putative contract sued on is governed by English law. Second, the shares which were the subject of the sell order were quoted on the London Stock Exchange (“LSE”). Third, it was likely that regulatory issues arising under the UK Financial Services and Markets Act 2000 (“the FSMA”) would feature in the proceedings. Fourth, the actions of the Defendants relied on by Tavira were communications between the parties located in their respective jurisdictions — England and onshore Dubai were neutral as to appropriate forum. Fifth, the alleged non-payment occurred in on-shore Dubai which is also a neutral factor.

27. Mr Chew also stated that the personal defendants were willing to travel to England to give evidence and claimed that there is no relevant connection whatsoever with the DIFC. Further, enforcement of an English judgment against parties based in the UAE would be more simple than enforcement of a judgment of the DIFC Courts.

Discussion

The Defendants’ construction arguments

28. When construing Gateway (a), the Court must first have regard to the interpretation placed on that provision in cases decided by the DIFC Courts, particularly the DIFC Courts of Appeal.

29. In Corinth Pipeworks SA v Barclays Bank plc [2011] DIFC CA 002, the claimant claimed damages for a tort committed outside the DIFC founded on the acts and omissions of an employee who was employed at the Emaar Square Branch of the defendant. No complaint was made against the defendant’s DIFC Branch. The claimant contended that the DIFC Courts had jurisdiction under the unamended Gateway (a) on the basis that it was a “Centre Establishment”. At first instance, the Deputy Chief Justice, the late Sir Anthony Colman, held that where a single corporation established a branch in the DIFC, that corporation was a “Centre Establishment” within Gateway (a) only to the extent that the claim or dispute is connected with or arises out of the activities of the corporation conducted through its DIFC branch. The Court of Appeal overruled DCJ Colman’s decision. Chief Justice Hwang held that Sir Anthony Colman had erred in holding that what was licenced by the DFSA was not the defendant corporation but an independent division of the defendant capable of being treated as a legal entity. In paragraphs (66) – (71) he went on to say:

“(66) …. Once it is established that an unincorporated DIFC branch of a foreign bank cannot be regarded as an independent entity for purposes of qualifying as a “Centre Establishment”, it follows that this term can only be interpreted to mean the Respondent and its various branches, wherever located. Accordingly, the DIFC Courts do have jurisdiction over the conduct of the Respondent’s Dubai branch, as it would have over any other branch of the Respondent, wherever located.

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

(68)  ….

(69)  ….

(70) It is true that the effect of this decision is that cases which would otherwise have been heard in the Dubai Courts will now be heard in the DIFC Courts, but this has always been the potential consequence of the setting up of the DIFC Courts, because every conferment of exclusive jurisdiction on the DIFC Courts in Dubai necessarily means a reduction of jurisdiction of the Dubai Courts to that extent. This decision has simply clarified the extent of the jurisdiction of the DIFC Courts and has not expanded its nature.

(71) I must also emphasise that the decision in this case does not necessarily imply that a “Recognised Company” in the DIFC can sue any party outside the DIFC in respect of any matter which has no connection with the DIFC. That question will have to be separately analysed when the occasion arises, and may also be a question that will have to be considered when the appropriate authorities review the implications of this decision in the light of Law No. 12 as it now stands.”

30. Justice Sir Chadwick said:

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

(84) In my view the answer to that question is “No”: access to the jurisdiction of the Court of First Instance through the gateway provided by paragraph (a) of Article 5(A)(1) of the Original Law as amended by Law No 16 of 2011 is not so restricted. Whatever may have been the position before the issue of Law No 16 of 2011 — and I should not be taken as indicating any disagreement with the view expressed by the Chief Justice in his judgment on this Appeal — the position following the issue of that Law seems to me free from doubt. Access through the gateway provided by paragraph (a) of Article 5(A)(1) is available in the case of civil or commercial claims and actions to which a Licensed DIFC Establishment is a party. Once it is shown that the party by or against whom the civil or commercial claim is brought is an entity or enterprise licensed, registered or authorised by the DFSA to provide financial services or to conduct any other activities in accordance with the DIFC Laws, the requirement under paragraph (a) is met. The jurisdiction exists ad hominem: there is no further “transaction-based” requirement, comparable to those imposed under paragraphs (b) and (c) of Article 5(A)(1).”

31. Justice Ali Al Madhani agreed with both judgments.

32. In Rafed Abdel Mohsen Bader Al Khorafi et al v Bank Sarasin-Alpen (ME) Ltd et al [2011] DIFC CA 003, the Court of Appeal held that the appeal on the question whether the CFI had jurisdiction in respect of the claims brought by the claimants should be decided by the law as it had been subsequently amended by Law No. 16. Implicit in this approach is the notion that the time at which jurisdiction is to be determined is the time at which the test for jurisdiction is to be applied and not by reference to a time in the past. The Court of Appeal also said in paragraph 58:

 “In construing Article 5(A) it is necessary to keep very clearly in mind that the ultimate and dominant text is in Arabic and that this court is using a translation to arrive at the true meaning and intent of that Arabic text. In this correction it is to be remembered that Arabic may not lend itself to as precise a facility of expression of legal phraseology as English. Thus translation may result in what appears to be a very precise expression in English but which too narrowly defines the meaning of the original Arabic text. That is why it is important when construing DIFC legislation such as Law 16 not by a literalist construction of the English to lose sight of the legislative purpose underlying the text.”

33. In Investment Group Private Ltd v Standard Chartered Bank [2015] DIFC CA 004, the respondent (“SCB”) sued the appellant (“IGPL”) in respect of two loans it had advanced to IGPL. SCB was a Licensed DIFC Establishment by reason of having a licensed branch in the DIFC. The Court of Appeal, adopting the reasoning of Sir John Chadwick in paragraph (84) in Corinth, held that the DIFC Courts had jurisdiction over SCB’s claim notwithstanding that the loans were not advanced by SCB’s DIFC branch. The Court of Appeal rejected the contention that it should decline jurisdiction on the ground that such jurisdiction would be “exorbitant”. Where there was a more appropriate forum outside the UAE, the proceedings could be stayed in favour of that forum pursuant to the FNC doctrine. If the competing forum was within the UAE, the UAE Constitution provides a different (non-FNC) solution by empowering the USC to resolve jurisdiction between the competing Courts within the Union.

34. It has also been held at first instance that there is jurisdiction under Gateway (a) where it is the claimant that is a Licenced Establishment by reason of having a licenced branch office, as well as where, as in Corinth, it is the Defendant that is a Licenced Establishment by reason of having a licensed branch office, see Barclays Bank plc v Afras Ltd et al [2013] DIFC CFI 008 (Justice Sir John Chadwick) and Allianz Risk Transfer AG Dubai Branch v Al Ain Ahlia Insurance Company PJSC [2012] DIFC CFI 012 (Justice Ali Al Madhani).

35. Another pertinent decision is that of Justice Shamlan Al Sawalehi in Seren v Lufti & Co Advocates and Legal Consultants [2016] DIFC CFI 001. This was an appeal from the Small Claims Tribunal which had dismissed the claimant’s claim for breach of an employment agreement, inter alia, on the ground that the court lacked jurisdiction. On appeal, the employee argued that there had been a material change of circumstance since the SCT hearing in that the employer had registered a DIFC branch of the firm. Justice Shamlan dismissed the appeal on the ground that the employer was not currently authorised to operate as a law firm. In reaching this conclusion he identified the main issue in the appeal to be whether the current status of the employer satisfied the definition of a “DIFC Body, DIFC Establishment or Licenced DIFC Establishment”. In so doing, Justice Shamlan proceeded on the basis that the correct moment to determine whether the test for jurisdiction under Gateway (a) was satisfied was the current status of the party said to be within the definition of “DIFC Body DIFC Establishment or Licenced DIFC Establishment”.

36. The Defendants seek to distinguish the instant case from Corinth, IGPL, Afras and Allianz Risk on the ground that in those cases the events giving rise to the claim occurred after the Defendant (in Corinth) and the Claimants in the other cases, became Licenced Establishments.

37. I turn then to consider whether on its true construction Gateway (a) only confers jurisdiction in respect of a claim brought by a Licensed DIFC Establishment (as defined in Corinth) if the events giving rise to the claim occurred after the claimant became a Licensed Establishment.

38. The Court’s task when construing a legislative enactment is to arrive at its “legal meaning”[3] and in doing so, the Court must first consider what the plain meaning is of the word or words in question. As Lord Reid said in Pinner v Everett [1969] 1 WLR 1266 at 1273:

“In determining the meaning of any word or phrase in a statute the first question to ask always is what is the natural or ordinary meaning of that word or phrase in its context in the statute. It is only when that meaning leads to some result which cannot reasonably be supposed to have been the intention of the legislature that it is proper to look for some other possible meaning of the word or phrase.”

39. No reliance was placed by either side on any difference between the Arabic version of Gateway (a) and its English translation and in my judgment, given the interpretation that the Court of Appeal has accorded to the definition of Licensed Establishment in Corinth, the plain meaning of the words of Gateway (a), construed in its context in the Judicial Authority Law, is that where the claimant or the defendant is a Licensed Establishment, the DIFC CFI has jurisdiction over the claim, regardless of whether the events giving rise to the claim occurred before or after that status was acquired. Each of the jurisdiction gateways provided for in Article 5(A)(1) of the Judicial Authority Law is freestanding with its own jurisdiction criterion. The sole criterion for jurisdiction in Gateway (a) is the status of either the defendant or the claimant as a Licensed Establishment at the time the test for jurisdiction under Gateway (a) is being applied.

40. I reject the contention that, having regard to its purpose and the mischief at which it is aimed, Gateway (a) is to be construed as only conferring jurisdiction where the claimant is a Licensed Establishment if this status was achieved prior to the events giving rise to the claim. In my judgment, the purpose and mischief of Gateway (a) are one and the same, namely, to confer jurisdiction where a civil or commercial claim is brought by or against a party which is a Licensed Establishment; and such a purpose is fully concordant with the objectives of the DIFC as expressed in Article 4 of DIFC Law No. 9.

41. Further, I do not accept that the consequences of construing Gateway (a) so as to give it its natural and ordinary meaning are so capricious or absurd that it is to be inferred that the intended meaning of Gateway (a) is something different from that which is to be derived from its natural and ordinary meaning. As CJ Hwang observed in Corinth, there is nothing unusual about the DIFC Courts having jurisdiction over a foreign company with a branch office in the DIFC in respect of a claim that has no immediate connection with the DIFC other than the presence of the branch office. True it is that there may be circumstances where Gateway (a) gives rise to an exorbitant jurisdiction where some other forum is clearly more appropriate, but in such a situation the FNC doctrine will be available where the competing forum is outside the UAE; and where the competing forum is located in another Emirate within the UAE, the Union Supreme Court is empowered to decide any conflict of jurisdiction thereby arising. As for jurisdictional contests between the DIFC Courts and the Dubai on-shore Courts where a defendant based in on-shore Dubai contests jurisdiction asserted by a claimant under Gateway (a), if there is a true jurisdictional conflict, that conflict will be resolved under Article 2 of Dubai Decree No. 19 of 2016. Where there is no such conflict, the DIFC Courts will have exclusive jurisdiction if the claimant satisfies the definition of “DIFC Establishment” or “Licensed DIFC Establishment”, this being the will of the Ruler as expressed in the clear wording of Gateway (a).

42. As for extreme forum shopping where a claimant establishes a branch in the DIFC simply for the purpose of bringing a claim in the DIFC Courts, in my judgment, in this situation, the claimant will not come within the definition of “DIFC Establishment’ or “Licensed DIFC Establishment” because the activity of bringing a claim will not be an activity that will be capable of being “licensed, registered or authorised” within the relevant definition.

43. I should add for completeness that there is a stark want of the necessary detailed and probative evidence to establish any allegation that Tavira set up its DIFC branch office simply to bring these proceedings against the Defendants.

Abuse of process

44. I doubt that there is room for the operation of the Court’s inherent jurisdiction to protect its process where the Court finds that it has jurisdiction under Article 5(A)(1) of the Judicial Authority Law. If the Court has jurisdiction, the intention of the Judicial Authority Law is that this kind of claim should be heard in this Court. In any case, even if the Court had power to strike out a claim over which it had jurisdiction under the Judicial Authority Law, I would not exercise that power in this case. In my judgment, there is nothing abusive about this claim being tried in the DIFC Courts, assuming that there are no good reasons to stay the proceedings pursuant to the FNC doctrine. And if such a stay were to be granted, there could be no possibility of any abuse of process.

FNC

45. It was held by the Court of Appeal in Protiviti Member Firm (Middle East) Ltd v Mohammed Bin Hamed Abdel-Karim Al-Karim Mojil et al [2016] DIFC CA 003 that the FNC doctrine best suited to be applied in the DIFC Courts is that propounded by the House of Lords in Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460.

46. As noted in Protiviti, the Spiliada approach involves a two-stage 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 second stage is to consider whether justice requires that a stay of the proceedings in the chosen court should not be granted, for instance on account of great delays or lack of financial support.

47. The Defendants’ reliance on Clause 21.0 of Tavira’s General Terms and Conditions of Business in this part of its case amounts in substance to an application for an anti-suit injunction. In my judgment, for this argument to succeed the Defendants must establish at least a good arguable case that they have a contractual right to have the proceedings against them litigated in London rather than in the DIFC. Such, in my view, is the inevitable result of applying well established law, see eg The Angelic Grace [1995] 1 Lloyd’s Rep 87 and, more recently, the decision of Cooke J (now Justice Sir Jeremy Cooke of this Court) in Starlight Shipping Co v Tai Ping Insurance Co Ltd [2008] 1 Lloyd’s Rep 230 at paras [36] – [42].

48. With great respect, I therefore do not agree with Mr Raphael’s view expressed in paragraph 7.19 of The Anti-Suit Injunction that if an anti-suit injunction claimant denies the existence of the contract containing the exclusive jurisdiction clause relied on, the injunction defendant may be restrained by a quasi-contractual injunction from departing from that clause. As recorded in paragraph 22 above, the 3 possible legal bases advanced by Professor Raphael in support of his view are: estoppel; an equitable obligation binding the injunction defendant; and vexatious and oppressive conduct. In my judgment, given the Defendants’ blanket denial that there was any contract between them and Tavira, there is no basis for the conclusion that Tavira might be estopped quoad the Defendants from bringing suit in the DIFC Courts; or that Tavira is subject to an equitable obligation owed to the Defendants to comply with Clause 21.0; or that the bringing of the DIFC proceedings amounts to vexatious and oppressive conduct on Tavira’s part.

49. I am also of the opinion that Premium Shipping is to be distinguished from the instant case. There, the existence of the charterparty containing the arbitration clause enforced by the Court was not denied by the anti-suit claimant and my reading of Steel J’s judgment is that he held as a matter of construction that the charterers were bound by the arbitration clause in any dispute between them and the owners, whether the owners were the original owners or new owners. It is therefore not a case where the injunction claimant denied the existence of the contract containing the jurisdiction clause in question, which is the situation before me. If, contrary to my reading of his judgment, Steel J was proceeding on the basis that it was enough that the charterers were party to a contract containing an arbitration clause even though the new owners were denying being party to any part of the charterparty, I respectfully disagree with his reasoning and decline to follow it. In this connection, it has to be remembered that Steel J also upheld the injunction application on an entirely separate alternative ground and gave his judgment in circumstances of great urgency.

50. In my opinion, The Hornbay is not authority that supports the Defendants’ case. The insurers were bound by the terms of the bill of lading including the exclusive jurisdiction clause (see The Jay Bola [1997] 2 Lloyd’s Rep 279) and the question for the court was whether those terms were overridden by Colombian law on public policy grounds.

51. I also reject Mr Chew’s submission that Tavira should be held to Clause 21.0 pursuant to the “doctrine of approbation and reprobation”. As pointed out by Mr Montagu-Smith QC for Tavira, it is clear from Lord Atkin’s speech in Lissenden v CAV Bosch Ltd [1940] AC 412 at 429, that this doctrine is of application only within the narrow parameters of the rules of election at common law and equity and there is no basis for finding that those rules apply here.

52. I turn to consider the rest of the Defendants’ argument that Tavira’s suit in this Court should be stayed in favour of proceedings in the London High Court on FNC grounds. The fact that Tavira’s General Terms and Conditions of Business contain Clause 21.0 will have only slight relevance since there is a fundamental difference between enforcing a contractual jurisdictional clause on the basis of a contractual entitlement and determining whether some forum other than that chosen by the claimant is the natural forum where the suit ought to be litigated.

53. In my judgment, the Defendants have failed to establish (the burden being on them) that the London High Court is clearly or distinctly more appropriate than the DIFC Courts for the trial of Tavira’s claim. That the alleged contract is highly likely to be governed by English law and England may well be the lex loci solutionis are weak factors in favour of the English High Court being clearly or distinctly the more appropriate forum. The language of this Court is predominantly English and the Court is well familiar with English law. Nor is the fact that the shares which were the subject of the sell order were quoted on the LSE anything other than a weak connecting factor, this Court being well familiar with how the LSE operates and how equity bargains are settled in London. Turning to the contention that it was “likely” that there would be regulatory issues arising under the FSMA, the problem here for the Defendants is that they have not begun to explain how on the facts this might be the case and, in my judgment, merely to assert that FSMA regulatory issues are likely to arise is not enough to establish that for this reason the London High Court is the more appropriate forum. Moreover, even if it had been demonstrated that such issues were indeed likely to arise, it is far from clear to me why those issues would be more suitable to be tried in London than in the DIFC, when the DIFC financial services regulatory regime is closely modelled on the London regulations, as was evident when the DIFC CFI determined the regulatory claims made in the Al Khorafi mis-selling litigation.

54. The Defendants say that their witnesses, all of who are based in Dubai, are willing to travel to London to give evidence. It would, however, be much easier for them make the short journey from where they are based in on-shore Dubai to the DIFC. As to the two witnesses likely to be called by Tavira, Mr Goodfellow comes to Dubai fairly frequently and Mr Andrew Hawgood is willing to come to Dubai to attend the trial and give evidence as necessary.

55. Further, I do not accept Mr Chew’s submission that enforcement of an English judgment obtained in the London High Court against the Defendants would be more simple than enforcing a judgment of the DIFC Courts, which is an additional factor in favour of London. In my judgment, an English judgment will in fact be more difficult to enforce in Dubai than a DIFC Courts judgment because: (i) the Dubai Courts will not permit enforcement of a foreign judgment against an individual domiciled in the UAE, see Articles 31(1), and 235 (2) of the UAE Federal Procedures Law; and (ii) the JJC established under Dubai Decree 19 of 2016 is hostile to conduit enforcement, see eg Endofa DMCC v D’Amico Shipping Italy CBA (Cassation No. 4/2017) and Gulf Navigation Holding PSC v Jinhai Heavy Industry Co Limited (Cassation No. 1/2017).

56. Finally, in my opinion, although the inclusion of Clause 21.0 in Tavira’s General Terms and Conditions of Business indicates that in general Tavira’s preference is to have all claims arising out of its dealings with its customers determined exclusively in London, this is not a factor on the facts of the instant case that renders the High Court in London distinctly and clearly a more appropriate forum than the chosen forum, the DIFC CFI.

Conclusion on the jurisdiction challenge

57. For the reasons I have given, the Defendants’ challenge to the jurisdiction of the DIFC CFI to determine Tavira’s claim is dismissed.

Tavira’s application to amend its Claim Form

58. I shall give separate directions for the service of evidence and written submissions by the Defendants in opposition to Tavira’s application to amend its claim form and for the service by Tavira of evidence and submissions in reply.

 

Issued by:

Natasha Bakirci

Assistant Registrar

Date of Issue: 17 December 2017

At: 11am

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