Claim No: ARB 004/2024

IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURT

IN THE COURT OF FIRST INSTANCE

BETWEEN

NAQID

Claimant

and

NAJAM

Defendant

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ORDER WITH REASONS OF JUSTICE RENE LE MIERE

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UPON the Order of H.E. Justice Shamlan Al Sawalehi dated 3 May 2024 (the “Enforcement Order”)

AND UPON the Freezing Order of H.E. Justice Shamlan Al Sawalehi dated 3 May 2024 (the “Freezing Order”)

AND UPON the Claimant’s Application No. ARB-004-2024/3 filed on 13 May 2024 for a writ of sequestration (the “First Sequestration Application”)

AND UPON the Claimant’s Application No. ARB-004-2024/4 filed on 13 May 2024 to refer the Defendant its officers to the Attorney General of Dubai (the “First Committal Application”)

AND UPON the Defendant’s Application No. ARB-004-2024/5 filed on 17 May 2024 seeking to set aside the Enforcement Order and an extension of time to submit evidence (the “Set Aside Application”)

AND UPON the Defendant’s Application No. ARB-004-2024/6 filed on 23 May 2024 seeking to list a Case Management Conference to set a consolidated timetable and an extension of time to submit evidence in reply to the First Sequestration Application (the “Sequestration EOT Application”)

AND UPON the Defendant’s Application No. ARB-004-2024/7 filed on 23 May 2024 seeking to strike out the First Committal Application (the “Strike Out Application”)

AND UPON the Defendant’s Application No. ARB-004-2024/8 filed on 23 May 2024 seeking to discharge the Freezing Order and to seek an extension to submit evidence in support of the Discharge Application and a CMC (the “Discharge Application”)

AND UPON the Defendant’s Application No. ARB-004-2024/9 filed on 7 June 2024 for permission to submit an expert report in support the Set-Aside Application (the “Expert Evidence Application”)

AND UPON the Claimant’s Application No. ARB-004-2024/10 filed on 24 June 2024 for permission to issue a writ of sequestration against the assets of the Defendant (the “Second Sequestration Application”)

AND UPON the Claimant’s Application No. ARB-004-2024/11 filed on 24 June 2024 to refer the Defendant and its officers to the Attorney General of Dubai (the “Second Committal Application”)

AND UPON the Claimant’s Application No. ARB-004-2024/12 filed on 9 July 2024 seeking an antisuit injunction (the “Antisuit Injunction Application”) (the “Applications”)

AND UPON the Order of Justice Rene Le Miere dated 9 August 2024 for the Applications to be heard and determined together at a single consolidated in-person hearing commencing on 7 October 2024 for 5 days (the “Hearing”)

AND UPON the Claimant’s Application No. ARB-004-2024/14 filed on 2 September 2024 seeking continuation of the Freezing Order (the “Continuation Application”)

AND UPON the Order of Justice Rene Le Miere dated 25 September 2024 for the Continuation Application to be determined at the Hearing

AND UPON the Claimant’s Application No. ARB-004-2024/16 filed on 8 October 2024 seeking permission to amend the application notice filed in the First Sequestration Application and the First Committal Application (the “Amendment Application”)

AND UPON hearing Counsel for the Claimant and Counsel for the Defendant at the Consolidated Hearing

AND UPON reviewing the court file and documents set out therein

IT IS HEREBY ORDERED THAT:

1. The First Committal Application is dismissed.

2. The Second Committal Application is dismissed.

3. The First Sequestration Application is dismissed.

4. The Second Sequestration Application is dismissed.

5. The Strike Out Application is dismissed.

6. If, within 7 days of the issue of this order, either party files a minute of proposed orders about costs, with an outline of submissions of no more than five pages and any supporting witness statement, the orders as to costs will be determined on the papers. If neither party files a minute of proposed orders within 7 days, it will be ordered that the Claimant pay the Defendant’s and Individual Respondents' costs that wholly relate to these applications, two-thirds of their costs that partly relate to these applications and partly relate to the other applications, and two-thirds of the Defendant’s and Individual Respondents’ costs of the Hearing, on the standard basis to be assessed at the same time as the costs of the other applications heard at the Hearing, if not agreed

Issued by:
Delvin Sumo
Assistant Registrar
Date: 24 December 2024
At: 2pm

SCHEDULE OF REASONS – Committal, Sequestration, and Strike out Applications

Summary

1. This case concerns a dispute between Naqid (“Naqid”), an Indian company, and Najam (“Najam”), a Liberian company, concerning a subcontract agreement for a pipeline replacement project in Mumbai, India. The conflict arose when Najam allegedly failed to make timely payments, prompting Naqid to initiate arbitration under Indian law.

 

2. The arbitration tribunal ruled in favour of Naqid, awarding it substantial sums with interest and costs. Naqid then sought enforcement of the arbitration award through the Dubai International Financial Centre (“DIFC”) Courts, which made an order to recognize and enforce the award. Naqid also secured a worldwide freezing order against Najam to prevent asset dissipation.

3. Naqid alleges Najam has failed to comply with the freezing order and has applied for committal and permission to issue writs of sequestration against Najam and its directors or officers (the ‘’Individual Respondents’’) for contempt of court.

4. The hearing focused on whether Najam breached the freezing order by incurring liabilities or diminishing its assets, and whether Najam failed to disclose required information about its assets,

5. For the reasons which follow I find that Naqid did not prove any breach by Najam beyond a reasonable doubt or on the balance of probabilities.

6. The allegations against the Individual Respondents will be dismissed due to procedural irregularities and lack of evidence of their culpability.

7. These reasons also address Naqid’s applications for permission to issue writs of sequestration against Najam and the Individual Respondents' assets. These applications will be dismissed as Naqid has failed to prove the alleged breaches of the freezing order, and the Court has no power to seize assets outside the DIFC.

8. The Court will order;

The underlying dispute

9. Naqid is incorporated under the Indian Companies Act and provides oil and gas services including project management, procurement, manufacturing, and commissioning. Its registered address is in Mumbai, India.

10. Najam is incorporated under Liberian law and offers services and undertakes projects in the offshore oil and gas industry in the Arabian Gulf and Indian sub-continent. Its registered address is in Liberia, with a branch office in UAE.

11. On 21 August 2019, Najam and Nariyah (“Nariyah”) entered into a turnkey contract for the Pipeline Replacement Project off the coast of Mumbai, India.

12. On 26 September 2019, Naqid and Najam signed a Subcontract Agreement for platform topside modification and related works.

13. Payments from Najam to Naqid were delayed, causing disputes.

14. Najam also leased office premises from Naqid but failed to pay rent and other expenses.

The Award

15. The Subcontract mandates that all unresolved disputes are to be referred to arbitration in Mumbai, India, under the Arbitration and Conciliation Act 1996 (India) (“Indian Arbitration Act”).

16. Naqid issued a Notice of Arbitration on 11 May 2022.

17. Mr. Justice Shiavax Jal Vazifdar was appointed the sole arbitrator.

18. On 2 November 2023, the arbitral tribunal issued his award dated 1 November 2023 (the “Award”).

19. The Tribunal directed Najam to pay Naqid Cr 38,58,54,542 and USD 3,156,658 with 18% annual interest on the amount from 11 May 2022 until payment and Cr 1,06,29,316 in administrative and legal costs. Those amounts total about USD 7.5 million.

Enforcement order

20. On 11 March 2024, Naqid filed a without notice application under Articles 42(1) and 43 of the DIFC Law No. 1 of 2008 (‘’DIFC Arbitration Law’’) and Rules 43.62 and 43.75 of the Rules of the Dubai International Financial Centre Courts 2008 (‘’RDC’’), seeking recognition and enforcement of the Award.

21. On 3 May 2024, H.E. Justice Shamlan Al Sawalehi relevantly ordered:

Freezing Order

22. On 2 May 2024 Naqid applied for a worldwide freezing order against Najam.

23. At a hearing on 3 May 2024 without notice to Najam, H.E. Justice Shamlan Al Sawalehi made a freezing order against Najam the “Freezing Order”). The relevant terms of the order are:

Paragraph 9 of the Freezing Order required Najam to inform Naqid’s legal representatives about the nature, location, and value of its assets within 72 hours of service. Paragraph 10 required Najam to serve an affidavit with this information within 7 working days.

24. The Freezing Order required Najam to provide information as follows:

25. The Freezing Order contained exceptions:

26. The Freezing Order contains an interpretation provision:

27. Finally, the Freezing Order contains provisions directed to parties other than Naqid and Najam:

Najam response to Freezing Order

28. On 3 May 2024, Najam received the Freezing Order and instructed Mayer Brown as its legal representative.

29. On 8 May 2024, Mayer Brown was instructed to represent Najam in setting aside the Enforcement Order and discharging the Freezing Order.

30. On 9 May 2024, Mayer Brown informed the DIFC Court and Naqid’s legal representatives, Singularity Legal LLP, of their involvement. They requested an extension to comply with the Freezing Order until 20 May 2024.

31. On 10 May 2024, Singularity provided the case bundle but did not agree to an extension. Mayer Brown requested an extension of time from the DIFC Court.

32. On May 11, 2024, Singularity opposed the extension, and alleged that Najam had not complied with the orders.

33. On 13 May 2024 Naqid filed applications that Najam and named individuals (the “Individual Respondents”) be committed for contempt of court and Naqidhave permission to issue a writ of sequestration against the assets of Najam and the Individual Respondents for failing to comply with [4], [6(b)], [11] and [12] of the Freezing Order.

34. On 13 May 2024, Mayer Brown sent a letter to Singularity (the “Asset Disclosure Letter”) addressing compliance with the Freezing Order. The letter denied any allegations of non-compliance and refuted claims of evading compliance or engaging in unauthorized discussions regarding the sale of a vessel. Najam confirmed that it had not breached the order by spending money on legal advice.

35. The letter explained that Najam was initially unable to provide the information required by paragraph 9 of the Freezing Order within the 72-hour timeframe due to the complexity and time-consuming nature of the task. However, Najam had now complied with the order by including the necessary information in the letter.

36. Regarding paragraph 10, Najam noted that the deadline for submitting an affidavit had not yet expired and requested a 48-hour extension to provide a comprehensive list of assets. The letter urged Naqid to withdraw unfounded applications for a writ of sequestration and committal and to agree to the requested extension.

37. The information required by paragraph 9 of the Freezing Order provided in the letter included:

38. Singularity did not respond to the letter that day or the next day.

39. On 14 May 2024, Najam submitted an affidavit sworn by Nevis , confirming compliance with the Freezing Order, (the “Asset Disclosure Affidavit”). The information provided was the same as that in the Asset Disclosure Letter.

40. Naqid objected to the affidavit, arguing it was not sworn before a notary public, did not provide asset values, and contained false information about the location of the Nola vessel and the status of the Niya vessel sale.

41. Najam responded that Mr Nevis was authorized to sign the affidavit, asset values could not be provided without a formal valuation, confirmed the Nola vessel was in Abu Dhabi, and denied any ongoing negotiations for the sale of the Niya vessel.

42. Novak, the managing director of Najam, made a witness statement dated 7 June 2024, in which he stated that Najam had complied with the Freezing Order and addressed Naqid’s objections, denying any inaccuracies or non-compliance.

43. Mr Novak provided information about Najam’s assets including:

44. Naqid alleged a risk of asset dissipation by Najam, which Mr Novak denied, stating that its assets are encumbered and cannot be sold without mortgagee approval.

The Applications

First Committal Application

45. On 13 May 13 2024, Naqid filed the "First Committal Application," asking the court to find Najam and its officers - Nori , Nawaf, Naufil , Novak , Neal, and Nobel (the "Individual Respondents") - guilty of contempt of court for failing to comply with sections [4], [6(b)], [11], and [12] of the Freezing Order. Naqid seeks the following orders:

First Sequestration Application

46. On 13 May 2024, Naqid filed the "First Sequestration Application," alleging Najam had not complied with [4], [6(b)], [11], and [12] of the Freezing Order. Naqid seeks the following orders:

Strike Out Application

47. On 23 May 2024 Najam filed the “Strike Out Application” to strike out the First Committal Application because:

Second Committal Application

48. On 24 June 2024, Naqid filed the “Second Committal Application” that Najam and the Individual Respondents are guilty of contempt of court in failing to comply with [9] and [10] of the Freezing Order and consequently:

Second Sequestration Application

49. On 24 June 2024, Naqid also filed the Second Sequestration Application alleging Najam had not complied with [9], and [10] of the Freezing Order. Naqidseeks orders:

Consolidated Hearing

50. On 9 August 2024, the Court ordered that the First and Second Committal Applications, the Strike Out Application, and the First and Second Sequestration Applications, along with Naqid’s applications to continue the Freezing Order and for an anti-suit injunction, and Najam 's application to set aside the Enforcement Order, be heard and determined in a single hearing (the “Hearing”).”

51. The Hearing was held in person at the DIFC Courts for 5 days, starting on 7 October 2024.

Law and procedure

52. To find a person guilty of contempt by disobeying a court order, it must be proved beyond reasonable doubt:

53. It is not necessary to prove that the alleged contemnor intended to breach the order; it is enough that they voluntarily engaged in conduct that resulted in a breach. In this regard, liability for contempt is strict. However, to find someone in contempt due to disobedience of an order, the disobedience must be deliberate; it cannot be casual, accidental, or unintentional. For conduct to be classified as casual, accidental, or unintentional, it must lack the deliberate and voluntary nature required to establish contempt., see eg Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 99.

54. It is essential to have adequate procedural safeguards in place to protect individuals facing contempt charges due to the severe consequences of such charges.

55. The procedural principles governing a contempt trial for violating an order were discussed by Judge Pelling in Navigator Equities Limited v Deripaska [2023] EWHC 788 (Comm). These principles were later endorsed by Lord Justice Males on appeal to the England and Wales Court of Appeal, with the agreement of the other members of the court, in Navigator Equities Limited v Deripaska [2024] EWCA Civ 268. These principles apply in this Court.

56. Judge Pelling said at [31]:

57. Counsel for Naqid, Mr Bagaria, disputed that an applicant is confined to attempting to prove the contempt allegations set out in the application notice, and the court is confined to considering only those allegations.

58. Mr. Bagaria submitted that the committal application notice, together with the affidavits in support of the application, may provide sufficient notice of the alleged breaches of the order.

59. Mr. Bagaria contended that RDC 52.9(2) is met if the application notice and affidavits provide enough detail for respondents to understand and respond to the claims. Further details can be clarified later through correspondence or court proceedings.

60. RDC 52.9(2) provides:

61. Mr. Page, counsel for Najam and the Individual Respondents, argued that the rule’s use of “must” twice indicates a strict requirement for detailed grounds of each breach, ensuring respondents know the specific allegations against them. Broad statements without specifics are not allowed.

62. The parties have differing views on two points: (1) whether the grounds and facts for each alleged act of contempt must be included in the application notice, or if they can be presented in both the notice and supporting affidavits; and (2) the necessary level of detail required for the facts regarding each alleged act of contempt.

63. Mr Bagaria referred to legal precedents, particularly in England and Wales. In England and Wales, the requirements of a contempt application are set out in CPR 81.4 which relevantly provides

I pause to observe that that is the rule referred to by Judge Pelling in Navigator Equities Limited v Deripaska, referred to earlier in these reasons.

64. The general principle is that the application should, within its four corners, contain information giving sufficient particularity of the alleged contempt to enable the alleged contemnor to meet the charges. The allegations must be set out with sufficient particularity in the application notice itself and cannot be supplemented by reference to some other document, such as a supporting affidavit. See Ocado Group PLC and another v McKeeve [2021] EWCA Civ 145, [89]; Harmsworth v Harmsworth [1987] 1 WLR 1676, 1683; City of Westminster v Addbins Ltd & Ors [2012] EWHC 3716 (QB), [43].

65. In 2022, Justice Nicklin addressed the requirements of CPR r.81.4(2) in QRT v JBE [2022] EWHC 2902 (KB). The claimant alleged that the defendant took explicit photos without consent and threatened to release them unless a payment was made. As a result, the claimant obtained an interim injunction for protection.

66. Later on, the claimant filed an application for contempt, claiming that the defendant had violated the anonymity order and disclosed witness statements. The court dismissed this application because it did not provide a clear summary of the facts and evidence directly related to the defendant. According to CPR r.81.4(2)(h), a contempt application must include a summary of the facts that are alleged to constitute the contempt. However, the claimant failed to meet this requirement. Instead of providing a clear summary, the claimant merely referenced K's affidavit, which presented a narrative of events. Merely pointing the defendant to the supporting evidence in a contempt application does not satisfy the obligation to identify the facts of the alleged contempt.

67. I conclude that the Claimant is confined to attempting to prove the contempt allegations set out in the application notice, and the court is confined to considering only those allegations

68. I turn to consider the level of detail required in an application notice.

69. In Deutsche Bank AG v Sebastian Holdings Inc [2020] EWHC 3536 (Comm), the court emphasized that the level of detail required in an application notice for contempt depends on the nature of the alleged contempt. The notice must provide sufficient clarity and particularization of the allegations to ensure the defendant understands the case against them. This includes specifying the acts of contempt in a clear and detailed manner.

70. In Ocado Group PLC and another v McKeeve [2021] EWCA Civ 145, the court highlighted the necessity for the application notice regarding contempt to clearly outline the grounds for contempt in a single document. This requirement ensures that the respondent can fully comprehend and address the accusations against them. The court underscored the importance of clarity and specificity in the allegations to prevent any prejudice to the respondent.

71. In QRT v JBE [2022] EWHC 2902 (KB), the court highlighted that an affidavit in narrative form is insufficient to provide clear notice of the specific actions or inactions alleged against the defendant. The court emphasized the need for detailed and precise allegations to ensure the defendant understands the exact nature of the contempt charges.

First Committal Application: Claimant’s allegations of contempt by Najam

72. Naqid claims in the First Committal Application that Najam is in violation of paragraphs [4], [6 (b)], [6 (c)], and [12] of the Freezing Order.

73. In its skeleton argument Naqid alleges that Najam breached those paragraphs of the Freezing Order on two counts:

74. First, Naqid says that between 22 January 2021, and 9 May 2024, Nariyah deposited a total of USD 2,403,073 with the High Court of Bombay. These funds were receivables of Najam from Nariyah. On the date the Freezing Order was issued, the deposited amount remained with the High Court of Bombay. The purpose of this deposit was to secure a claim by Narda against Najam.

75. Six days after the Freezing Order was imposed, on 9 May 2024, Najam agreed to release a portion of this sum, specifically USD 336,461.68, as part of a settlement with its creditor, Narda. This agreement is documented in paragraphs [8] and [9] of the 9 May 2024, order from the High Court of Bombay (“9 May Order”). Furthermore, the High Court, in paragraph [13] of the 9 May Order, directed the release of the remaining amount to the creditor, Narda.

76. Naqid says that, as a result, Najam has disposed of the entire sum of USD 2,403,073. I will refer to this aspect of the application as the “Nariyah Receivables Disposal Ground”.

77. Secondly, Naqid has expressed ongoing concerns regarding a potential sale of the Niya . There have been multiple offers for the sale of the Niya , and Najam has actively negotiated commercial terms with each of these buyers. Notably, on 25 April 2024, Najam received an offer of USD 43 million. Naqid says these actions by Najam are violations of the freezing order imposed by the Tribunal on 1 December 2022, which restricts Najam from disposing of, alienating, encumbering, or creating any third-party rights, titles, or interests in the vessels, including the Niya.

78. Furthermore, Najam 's attempts to negotiate and finalize the sale of the Niya during meetings with a buyer, Nyoka, on 13 and 14 May 2024, also constitute a breach of the Freezing Order.

79. According to "Gee on Commercial Injunctions" at [4-005], terms such as "remove," "dispose of," "deal with," and "diminish the value of" are interchangeable. For there to be a dealing with the asset by the defendant, there must be a positive act conducted by them.

80. Naqid says that Najam 's effort to negotiate the sale of the Niya vessel is a positive act to "dispose of, deal with, or diminish" the asset, which is contrary to the freezing order. I will refer to this basis for the application as the “Niya Dealing Ground”.

81. Naqid alleges that Najam has violated paragraph [11] of the Freezing Order by not adhering to the three obligations outlined in that paragraph. First, Najam has incurred legal expenses exceeding USD 5,000 per week. Second, Najam has not informed the Claimant's lawyers about the source of the funds used for these legal expenses prior to making any expenditures. Third, Najam has failed to provide the Claimant's lawyers with an account of the money spent on legal representation each month. I will refer to this basis for the application as the “Legal Representation Expenses Ground”.

Nariyah Receivables Disposal Ground

82. Najam is not guilty of contempt on the Nariyah Receivables Disposal Ground.

83. The First Committal Application Notice does not refer to receivables of Najam deposited by Nariyah with the High Court of Bombay, or the release of those funds by the Bombay Court with the consent of Najam.

84. Najam cannot be found guilty of contempt on a ground not stated in the application notice.

85. If, contrary to my finding, adequate notice of the alleged contempt may be contained in the affidavit filed in support of the application, that requirement is still not met in this case.

86. The affidavit filed in support of the First Committal Application is the Second Affidavit of Nixon. The application notice frequently references this affidavit. However, the affidavit does not mention the receivables of Najam deposited by Nariyah with the High Court of Bombay, nor the release of those funds by the Bombay Court with Najam 's consent.

87. Notwithstanding that Naqid maintained that the application notice and supporting affidavits sufficiently identified the alleged breach, Mr Bagaria applied to amend the application notice to allege Najam breached the Freezing Order on the Nariyah Receivables Disposal Ground.

88. By Application Notice ARB-004-2024/16 issued on 8 October 2024, the second day of the Hearing, Naqidapplied to amend the First Contempt Application to allege that Najam breached paragraph 6(c) of the Freezing Order in that it entered into Consent Minutes filed before the High Court of Bombay which resulted in the disposal of receivables of USD 2,403,073.

89. On 10 October 2024, the Court heard oral submissions in support of and in opposition to the amendment application. The Court refused the application for the following reasons.

90. In any event, the evidence does not establish that Najam breached the Freezing Order as Naqid alleges by the Nariyah Receivables Disposal Ground.

91. That is also the reason the proposed amended ground did not have a real prospect of success.

92. Assuming that Najam consented to release part of the funds Nariyah deposited with the High Court of Bombay, which represents Najam 's receivables from Nariyah, Najam did not disobey the Freezing Order.

93. Paragraph 8 of the freezing order provides:

94. The encumbered value of an asset refers to its value with claims or liens against it, while the unencumbered value of an asset indicates its worth free from any claims or liens.

95. On 9 May 2024, when Najam allegedly agreed to release to Narda a portion of the sum deposited with the Bombay Court, the Niya was located in Abu Dhabi and had an estimated market value well in excess of USD 7.5 million. Consequently, its encumbered value exceeded USD 7.5 million.

96. According to paragraph 8 of the Freezing Order, Najam is allowed to dispose of or deal with assets located outside the DIFC, provided that the total encumbered value of all its assets, whether inside or outside the DIFC, remains above USD 7.5 million.

97. Since the encumbered value of the Niya in Abu Dhabi is more than the USD 7.5 million threshold, Najam was at liberty to dispose of other assets outside the DIFC while retaining the vessel in Abu Dhabi.

98. Mr. Bagaria argued that the word "encumbered" in paragraph 8 of the Freezing Order is a typographical error and should be corrected to read "unencumbered." He pointed out that the Niya was subject to charges that exceeded its market value, meaning its unencumbered value did not reach the threshold of USD 7.5 million.

99. It appears that the term "encumbered" in paragraph 8 of the Freezing Order may be a typographical error made by Naqid. The order was issued based on a draft provided by Naqid. It generally follows the standard form of the freezing order outlined in Schedule A of RDC Part 25. In the standard form, paragraph 8(2) states that the respondent may dispose of or deal with assets outside the DIFC, provided that the total "unencumbered" value of all their assets remains above a specified threshold. The term "unencumbered value" is used because the assets intended for freezing should be available for the execution of a judgment.

100. However, when someone is charged with contempt for violating a court order, the order is interpreted strictly. This means the court will read the order based on its clear and explicit language. The reasoning behind this approach is to ensure that individuals have a precise understanding of their obligations and to uphold the principle of due process. Therefore, the order must be clear and definitive in its terms.

101. In Banca Generali SPA v CFE (Suisse) SA and another [2023] EWHC 323 (Ch), in addressing the interpretation of an injunction, Richards J applied three principles outlined by Flaux LJ in Pan Petroleum AJE Ltd v Yinka Folawiyo Petroleum Co Ltd and others [2017] EWCA Civ 1525 (paragraph 41), which are based on Lord Clarke's judgment in JSC BTA Bank v Ablyazov (No. 10) [2015] UKSC 64. These principles can be summarized as follows:

102. The principle that freezing orders ought to be strictly construed was recently affirmed by the England and Wales Court of Appeal in ADM International Sarl v Grain House International SA and another [2024] 1 W.L.R. 3262 at [64] where Popplewell LJ, with whom Singh and Snowden LJJ agreed, said:

103. In other words, given the serious consequences of being held in contempt for disobeying a court order, the court will interpret the order based solely on its actual wording. This interpretation applies as long as the wording is not absurd, and it is not apparent to an ordinary reader in the respondent's position that the order implies something different or more demanding than what it explicitly states.

104. There is no ambiguity in the order. If Najam has assets outside the DIFC, it may dispose of or deal with those assets as long as the total encumbered value of all its assets, both inside and outside the DIFC, remains above the specified threshold amount.

105. The Freezing Order would be more effective by replacing the word “encumbered” with “unencumbered”. However, the order is not absurd as it stands.

106. A lawyer familiar with the standard form freezing order may suspect that the word “encumbered” is a typographical error. However, that would not be obvious to a lay respondent.

107. The court must interpret paragraph 8 of the Freezing Order based on its clear and explicit terms. When the order is so interpreted, Najam did not breach it by consenting to the release of the funds deposited by Nariyah with the Bombay High Court.

108. Najam denies that it consented to release a part of the sum deposited by Nariyah to the legal representatives of Narda. However, it is unnecessary to decide that contested question because I have concluded the Nariyah Receivables Disposal Ground is not made out for the reasons I have stated.

109. Naqid has not proved beyond a reasonable doubt, or on the balance of probabilities, that Najam breached the Freezing Order by consenting to release a part of the sum deposited by Nariyah with the High Court of Bombay, which were receivables of Najam from Nariyah, as part of a settlement to the legal representatives of its creditor, Narda .

Niya Dealing Ground

110. Naqid has not proved beyond a reasonable doubt, or on the balance of probabilities, that Najam is in contempt by disobeying the Freezing Order by offering the Niya vessel for sale and negotiating commercial terms of sale.

111. The key points of the freezing order are:

112. Najam has not removed the Niya from the DIFC. Niya has not at any relevant time been in the DIFC.

113. There is no evidence that Najam has sold or agreed to sell the vessel. Naqid does not submit there is any such evidence.

114. Therefore, Najam has not disposed of, dealt with, or diminished the value of the vessel. Negotiating and discussing a potential sale does not dispose of, deal with, or diminish the value of the vessel as long as no transaction has been completed that would reduce the value of Najam’s interest in the vessel.

115. I accept that the words “remove,” “dispose of,” “deal with,” and “diminish the value of” are alternatives and that for there to be dealing with the asset by the defendant, there must be some positive act done by it.

116. However, there must be a positive act that amounts to dealing with the asset. In the context of a freezing order, the term "deal with" means that the defendant is prohibited from engaging in any actions that would affect the ownership, control, or value of the assets. This includes:

117. The purpose of this restriction is to ensure that the assets remain available to satisfy any potential judgment or claim. If Najam were to "deal with" the assets in any of these ways, it could potentially reduce the value or availability of the assets, which would be a breach of the Freezing Order.

118. However, unless and until Najam does a positive act that affects the ownership, control, or value of the asset, it has not dealt with the asset contrary to the Freezing Order.

119. Naqid has not proved beyond a reasonable doubt, or on the balance of probabilities, that Najam breached the Freezing Order by negotiating the sale of the Niya.

Legal Representation Expenses Ground

120. Naqidhas not proved beyond a reasonable doubt, or on the balance of probabilities, that Najam is in contempt by disobeying the Freezing Order by spending more than USD 5,000 a week towards legal advice and representation without informing Naqid’s legal representatives where the money was to come from and not, accounting to Naqid’s legal representatives every month for the amount of money spent.

 

121. Naqid submitted that paragraph 11 of the Freezing Order creates a threefold obligation on Najam when it spends money on legal representation. First, it must cap its fees for legal advice and representation at USD 5,000 a week. Second, Najam must inform Naqid’s lawyers of the source of funds before spending any money. Third, Najam must account to Naqid’s lawyers every month for money spent.

122. Naqid says it must be inferred from the nature and details of proceedings in three different jurisdictions that Najam has exceeded the USD 5,000 limit but has failed to inform Naqid’s lawyers of the source of its money and provide monthly accounts for its expenditures.

123. The Freezing Order was made on 3 May 2024. Therefore, Naqid must prove that between 3 May 2024 and 13 May 2024, when Naqid issued the First Committal Application, Najam had spent more than USD 5,000 per week on legal representation. There is no evidence to that effect.

124. I find Naqid has not proved that Najam incurred legal expenses exceeding USD 5,000 a week between 3 May 2024 and 13 May 2024.

125. Further, Naqid has not proved that Najam has incurred any legal expenses.

126. Nils is the head of legal of Nesbit (Nesbit), the parent company of Najam. Mr Nils gave evidence that Nesbit has paid Najam 's legal expenses. These payments were made directly to Najam’s lawyers, Mayer Brown, and not by Najam.

127. Paragraph 4 of the Freezing Order prohibits Najam from disposing of, dealing with, or diminishing the value of any assets up to a specified amount. This establishes the general rule for what is prohibited.

128. Paragraph 11 provides an exception. It allows the respondent to spend up to USD 5,000 per week on legal advice and representation, provided it promptly informs the applicant’s legal representatives of the source of the funds and accounts to the applicant’s legal representatives monthly for the amounts spent.

129. Naqid has not proved that Najam disposed of, dealt with, or diminished the value of any of its assets by paying legal expenses. To the contrary, I find that Najam 's legal expenses have been paid directly by Nesbit to Mayer Brown.

130. Mr. Bagaria argued that Najam had incurred a liability to Nesbit for the legal expenses paid on its behalf, which would constitute a breach of the Freezing Order.

131. Mr Bagaria argued that even if Najam did not directly spend the money, incurring a liability to Nesbit for the legal expenses would still fall under the prohibition of the Freezing Order.

132. Both counsel made submissions about the meaning of "spending" in the context of the Freezing Order. Mr. Bagaria's position is that incurring a liability to Nesbit for the legal expenses should be considered as "spending" under the terms of the order. Mr. Bagaria argued that Najam had indirect control over the funds paid by Nesbit, as the same officers controlled both companies. This indirect control over the funds used to pay legal expenses constituted a breach of the Freezing Order.

133. Mr Bagaria referred to JSC BTA Bank v Ablyazov [2015] UKSC 64, where the UK Supreme Court concluded that a loan taken and used for legal expenses was considered an asset of the respondent, and not disclosing it was a breach of the freezing order. Similarly, Mr Bagaria argues that the loan or liability incurred by Najam to Nesbit for the legal expenses should be considered an asset and a breach of the Freezing Order.

134. Mr. Bagaria pointed out that on several occasions during his evidence Mr. Nils referred to the payments to Mayer Brown as a loan or debt, indicating that Najam had incurred a liability to Nesbit. This liability or loan should be considered as Najam having control over the funds, thus breaching the Freezing Order.

135. Arguably, incurring a liability to pay legal expenses can be seen as diminishing the assets of a defendant, as it creates an obligation to pay money, which ultimately reduces the defendant's net asset value. This aligns with the concept of "diminishing the value of any of its assets" as mentioned in paragraph 4 of the Freezing Order.

136. However, I find it unnecessary to decide that issue because Naqid has not proved that Najam has incurred a liability to Nesbit for the legal expenses Nesbit paid to Mayer Brown.

137. Whilst Mr. Nesbit referred to the payments as a loan or debt on several occasions, he later clarified the nature of the payments made by Nesbit to Mayer Brown for Najam’s legal expenses. Mr Nesbit said that the payments were not provided directly to Najam as loans. He said that such transactions were part of the regular intercompany dealings within the group. Initially, these payments were not specifically categorized as loans for legal expenses. The payments had not yet been reflected in Najam 's books. They might be distributed among the respondents in the future or might be struck down, but as of the moment, they have not been recorded as loans in Najam 's books. I find that Mr Nils’ references to a loan or debt were loose language not intended to convey that a legal relationship of creditor and debtor had arisen between Nesbit and Najam. I accept Mr. Nils’ considered evidence that no loans had been reflected in Najam’s books or otherwise legally established.

138. I find that by 13 May 2024, Najam had not incurred a liability to Nesbit for the legal expenses paid by Nesbit to Mayer Brown, even if those payments exceeded USD 5,000.

139. Naqid has not proved beyond a reasonable doubt, or on the balance of probabilities, that Najam breached the Freezing Order by spending more than USD 5,000 per week and not informing Naqid’s lawyers of the source of funds before spending any money, and not accounting to Naqid’s lawyers every month for money spent.

First Committal Application against Najam dismissed

140. Naqid has not proved any of its allegations that Najam is in contempt by breaching the Freezing Order as alleged in the First Committal Application. The First Committal Application against Najam must be dismissed.

Second Committal Application: alleged contempt by Najam

141. Naqid asserts in the Second Committal Application that Najam has breached paragraphs [9] and [10] of the Freezing Order.

142. In its skeleton argument, Naqid alleges that Najam breached those paragraphs of the Freezing Order because it failed to provide complete information about the details, value, and location of its assets in five respects.

143. As previously stated, a charge of contempt must set out in full the grounds on which the committal application is made and must identify, separately each alleged act of contempt. Generally, the test is whether the notice provides the person alleged to be in contempt with enough information to enable them to meet the charge.

144. What is sufficient to identify each alleged act of contempt depends on the order and the alleged breach. For example, if an order requires the defendant to vacate identified premises by a specified date, a notice alleging that the defendant failed to vacate the premises by that date is sufficient.

145. Where an order prohibits a defendant from doing something, a notice stating that the defendant breached the order will generally be insufficient. It is usually necessary to specify the acts of the defendant that are said to have breached the order.

146. Where a defendant is alleged to have breached an order to provide information about their assets by a specified date, it will generally be sufficient to give notice that the defendant provided no information by that date.

147. However, where the defendant provided some information about their assets, but it is alleged they failed to disclose all of their assets or provide sufficient information about their assets, the claimant must specify the assets that the defendant allegedly failed to disclose or the information he was required to but failed to provide.

148. The Second Committal Application Notice alleges that Najam provided incomplete disclosure of its assets, specifically, it failed to disclose:

149. The Second Committal Application Notice also alleges that Najam failed to provide a properly furnished affidavit of one of its employees.

The vessels

150. The Freezing Order did not specify what details Najam should provide about the vessels, apart from value.

151. The purpose of an information or asset disclosure order is to identify the defendant’s assets and their location. By knowing what assets exist and where they are, the claimant can ensure these assets are not disposed of or hidden, maintaining the status quo.

152. A freezing order does not give the claimant any security over the defendant’s assets or priority to other creditors of the defendant. An asset disclosure order should not require information beyond information necessary to police the freezing order. An asset disclosure order helps identify the assets that are subject to the freezing order so that the claimant knows what assets are being frozen and can monitor them effectively. By requiring the defendant to disclose their assets, the court aims to prevent the defendant from hiding or dissipating those assets, which could undermine the effectiveness of the freezing order.

153. The Asset Disclosure Letter and the Asset Disclosure Affidavit provided substantial information about the Niya vessel including:

154. Similar information was provided about the other vessels.

155. What details are necessary to comply with an asset disclosure order depends on the terms of the order and the nature of the assets. Cash, precious metals, gems, and offshore bank accounts are relatively easy to hide and move. Large things like the Niya and the other two vessels are difficult to hide and relatively hard to move. The principal information that should be provided in compliance with an asset disclosure order is the location of the vessel and sufficient information to identify it.

156. Najam provided sufficient information about the vessels to enable Naqid to monitor compliance with the Freezing Order.

157. Naqid complains that the Asset Disclosure Letter and the Asset Disclosure Affidavit do not disclose the market value of the vessels.

158. In cross-examination, Mr Nevis said he did not state the market value of the vessels because:

159. Mr Nevis subsequently received a court order which stated that the value of the Niya vessel was USD 60 million stated in an expert’s report, but he did not have that order or report when he swore his affidavit in compliance with the Freezing Order. Najam did not have a surveyor’s valuation or other evidence of the vessels’ market value.

160. In his closing submissions, Mr. Page emphasized several key points regarding the challenges of estimating the value of vessels, particularly the Niya.

161. First, valuing vessels is a highly technical task that requires expertise and detailed assessments by qualified professionals.

162. Second, the commercial value of vessels is contingent on whether they are “in class,” meaning they meet specific standards and certifications necessary for operational use in the construction industry. If a vessel is not in class, its value will be significantly diminished by the costs associated with bringing it up to standard.

163. Third, if the vessels cannot be used commercially because they are not in class, their value would be based on their scrap value. This evaluation involves understanding the materials the vessel is constructed from, the cost of transporting it to a dry dock, and the expenses involved in dismantling it.

164. Fourth, witnesses Mr. Nixon and Mr. Nevis both agreed that valuing these ships is a complex and technical process. They acknowledged the difficulty in providing accurate valuations without a proper survey.

165. Fifth, the valuations for the Niya varied widely, ranging from an offer of USD 27 million to an expert valuation of USD 60 million. This significant disparity illustrates the challenges of determining a value without a detailed technical assessment.

166. Lastly, it is important to note that no comprehensive valuation of the vessels was available, and any estimates provided lacked a thorough or technical evaluation.

167. The Freezing Order required Najam to provide the information “immediately or within 72 hours of service of this order, and to the best of its ability”. Najam sought Naqid’s agreement for additional time to provide the information, but Naqid did not agree.

168. In a case where the information requested is detailed information about physical assets, bank accounts, contracts, and financial and other complex transactions, some of which are not current, it is not realistic to expect that any officer or employee of the defendant will hold these details in his head or will be able to provide more information than he can by making reasonable inquiries within the short time permitted: see JSC Mezhdunarodniy Promyshlenniy Bank and another v Pugachev [2016] EWHC 192 (Ch).

169. Najam had ceased trading. It had no employees. Its records were in disarray. About the company’s knowledge of receivables deposited by Nariyah with the High Court in Bombay Mr Nevis said:

170. I am not satisfied beyond a reasonable doubt, or on the balance of probabilities, that within the limited time allowed, Najam was able to provide the market value of the vessels.

171. Naqid has not proved beyond a reasonable doubt, or on the balance of probabilities, that Najam breached the Freezing Order by failing to provide information on the vessels' value or other details to the best of its ability.

Location of the Nerys vessel

172. Naqid alleges that on 14 May 2024 when Mr Nevis swore the Asset Disclosure Affidavit, the Nerys vessel was in Indonesia and not, as, Mr Nevis swore in Abu Dhabi.

173. There is no allegation in the Second Committal Application Notice that the Nerys was in Indonesia rather than in Abu Dhabi as stated by Najam. The Court could not find Najam in contempt on that ground.

174. In any event, the evidence does not establish that the Nerys was in Indonesia.

175. Naqid relied upon a screenshot of a page on a website, named Nane, as evidence that the vessel was in Indonesia at the time Mr Nevis swore the Asset Disclosure Affidavit.

176. There is no evidence of when, how, and by whom the information on the Marine Traffic website about the location of the Nerys has been verified. In the absence of such evidence, a screenshot of a page on the website is of little if any probative value. Mr. Nixon 's evidence that it is a reputable site is mere ipse dixit, it is not evidence of the reliability of the information on the site.

177. In cross-examination Mr Nevis maintained that the Nerys was in Abu Dhabi at the time he swore his affidavit and when he gave his evidence at the Hearing. He said he regularly drove past and had seen the vessel in Abu Dhabi.

178. A photograph with metadata dated 5 June 20024 shows the vessel in Abu Dhabi.

179. Mr Page submitted that the means used by the Nance website to track vessels is potentially unreliable. There is no evidence of the reliability or unreliability of information on the website about the location of the vessel.

180. I accept Mr Nevis’s evidence.

181. Naqid has not proved that Najam had failed to disclose the location of the Nerys vessel.

Failure to provide information about the unencumbered value of assets

182. Naqid alleges that Najam breached the Freezing Order by failing to provide in the Asset Disclosure Letter and the Asset Disclosure Affidavit information about the encumbrances on Najam ’s assets or their unencumbered value.

183. The Freezing Order did not require Najam to provide information about the encumbrances on its assets or their unencumbered value.

184. In ADM International Sarl v. Grain House International SA and another [2024] 1 W.L.R. 3262, Popplewell LJ determined that, based on a proper interpretation of paragraph 1(c) of the standard asset disclosure order, the term “value” refers to the market value of an asset rather than its value after considering any encumbrances. Specifically, he noted that (i) in common language, a reference to the “value” of real property is typically understood to mean its market value, (ii) the asset disclosure order should be interpreted strictly, and (iii) interpreting “value” as market value would fulfil the purpose of the asset disclosure order more effectively. This is because knowing the market value of an asset is more beneficial for the claimant, as it highlights all significant assets that may ultimately be available for enforcement, while any encumbrances or beneficial interests can be analysed and monitored later.

185. Naqid has not proved beyond a reasonable doubt, or on the balance of probabilities, that Najam is in contempt by breaching the Freezing Order by failing to disclose the encumbrances on its assets or their unencumbered value.

Nefertiti transaction

186. Paragraph 9 of the Freezing Order required Najam to inform the Applicant’s legal representatives of details of the deal with Nefertiti concerning the offer to acquire Najam, including the closing date and the actual date of transfer of monies from Nefertiti.

187. Mr Nevis referred to the company as Nefertiti, which appears to be the name of the company referred to in paragraph 9 of the Freezing Order. I will do the same.

188. In paragraph 25 of the Asset Disclosure Affidavit, Mr Nevis provided details of the deal with Nefertiti Holding concerning the offer to acquire Najam as follows:

189. Naqid alleged that Najam had failed to make complete and correct disclosures of its transaction with Nefertiti concerning the sale of its assets and the lease of its office facility.

190. Mr Bagaria submitted that an announcement on Nesbit website corroborated the deal, including the sale of two marine units to Nefertiti, and a former employee of Nesbit had confirmed that the deal with Nefertiti had not yet gone through.

191. Mr. Bagaria used this information to question the credibility of the witness testimony provided by Mr Nevis and Mr. Nils, suggesting that the details regarding the Nefertiti transaction were not fully disclosed and that the transaction appeared to be ongoing, contrary to the claims made by the witnesses.

192. The copy of the Nesbit announcement is not sufficient to negate the sworn evidence of Mr Nevis and Mr Nils on the balance of probabilities, let alone prove beyond reasonable doubt that the information about the Nefertiti deal in the Asset Disclosure Letter and the Asset Disclosure Affidavit is false.

193. Naqid has not proved that Najam is in contempt by breaching the Freezing Order by failing to the best of its ability, to inform the Applicant’s legal representatives of details of the deal with Nefertiti.

Authority to swear affidavit

194. Paragraph 10 of the Freezing Order required Najam to serve an affidavit with the stated information about the nature, location, and value of its assets within 7 working days. Najam served the Asset Disclosure Affidavit sworn by Mr Nevis to comply with that order.

195. Naqid alleges that Mr. Nevis did not have the authority to swear the affidavit on behalf of Najam and Najam breached the Freezing Order by not having the affidavit sworn by an employee of Najam.

196. This allegation is without merit. Mr. Nevis states at the outset of the affidavit that he is duly authorized by Najam to swear the affidavit on its behalf. That is prima facie evidence of his authority.

197. In his first witness statement dated 7 June 2024, Mr. Novak, the managing director of Najam, affirmed that Mr. Nevis was duly authorized to swear the affidavit on behalf of Najam.

198. In his second witness statement dated 8 July 2024, Mr. Novak confirmed that Mr. Nevis was authorized to act on behalf of Najam and added that this authorization was granted through a power of attorney from Mr. Novak.

199. Mr. Bagaria argued that the terms of the power of attorney were insufficient to authorize Mr. Nevis to swear the affidavit on behalf of Najam.

200. While the wording of the power of attorney could be clearer, it is sufficient to authorize Mr. Nevis to act on behalf of Najam. Regardless, apart from the power of attorney, I am satisfied that Mr. Nevis was authorized by Najam to swear the affidavit on its behalf.

201. Nothing in the Freezing Order requires the asset disclosure affidavit to be sworn by an employee of Najam.

202. A person who has been authorized by the company and has sufficient knowledge of the assets may swear the affidavit verifying the list of assets in the Asset Disclosure Letter.

203. A company may authorize an employee of its parent company to swear an affidavit on its behalf.

204. Mr. Nevis was responsible for the asset management and business operations of Najam. He sought information from the persons who attended to Najam 's accounts before swearing the affidavit. Mr. Novak confirmed the information he provided.

205. In summary, Mr. Nevis was authorized to swear the affidavit on behalf of Najam and was an appropriate person to do so.

206. Naqid has not proved beyond a reasonable doubt, or on the balance of probabilities, that Najam is in contempt by breaching the Freezing Order by failing to have the affidavit verifying the Asset Disclosure Letter by an employee of Najam.

Second Committal Application against Najam dismissed

207. The Second Committal Application against Najam must be dismissed for the reasons stated.

First Committal Application against Individual Respondents

208. The First Committal Application against the Individual Respondents must be dismissed because there is no evidence that any of them are guilty of contempt by disobeying the Freezing Order. Additionally, the First Contempt Application Notice does not comply with the requirements of RDC 52.9(2).

209. The First Committal Application Notice only mentions the Individual Respondents in the orders sought, alleging contempt of court.

210. The Application Notice lists alleged acts of contempt by "the Defendant" (Najam) but not the Individual Respondents.

211. The Application Notice refers to Mr Nixon’s Second Affidavit. Mr Nixon’s Second Affidavit claims three of the Individual Respondents are directors of Najam, the others hold positions within the Nesbit, and the Individual Respondents are the directing minds of Najam. The affidavit lacks evidence to support those assertions.

212. The Application Notice against the Individual Respondents fails to specify their acts of contempt, even if considered with the supporting affidavit.

213. The evidence does not establish any acts or omissions by the Individual Respondents that make them culpably responsible for the acts of contempt alleged in the First Committal Application.

214. Naqid seeks to overcome these shortcomings in the First Committal Application Notice and the evidence by submitting that as a matter of law a director is personally liable for an act of contempt by the company in failing to comply with an order unless they show that they took reasonable steps to comply with the order. Mr Bagaria submitted that that principle is established by legal precedent, including Attorney General for Tuvalu v Philatelic Distribution Corpn Ltd [1990] 1 WLR 926, Deutsche Bank AG v Sebastian Holdings, Inc and Vik [2022] EWHC 1599 (Comm), and Gulf Wings FZE v A and K Trading Limited DIFC CFI 004/2022 (March 14, 2022).

215. That argument fails for three reasons. First, Naqid has not established that the company, Najam, failed to comply with the Freezing Order in the ways alleged in the First Committal Application. That is sufficient to dismiss the application against the Individual Respondents.

216. Secondly, the substantive law concerning the liability of a director does not excuse a complainant from complying with the mandatory procedural requirements of RDC 52.9(2). In Masri v Consolidated Contractors International Co SAL and others [2010] EWHC 2458 (Comm) Blair J summarised the principles applicable to the committal of directors or other officers of companies:

217. The Application Notice, even read with Mr Nixon’s Second Affidavit, does not particularise the allegations against the Individual Respondents or give them notice of the case against them to give them a proper opportunity to answer them

218. Thirdly, directors are not automatically liable for a company's contempt. They are only liable if they wilfully fail to ensure compliance.

219. Lord Justice Woolf, delivering the judgment of the England and Wales Court of Appeal in Attorney-General for Tuvalu v Philatelic Distribution Corporation Ltd [1990] 1 WLR 926 at 936 stated:

 

220. In Sectorguard plc v Dienne plc [2009] EWHC 2693 (CH), Briggs J rejected a submission that breach of an undertaking by a company automatically disclosed a case to answer against all the directors. He stated the true position as follows at [42]:

221. In Dar Al Arkan v Refai [2015] 1 W.L.R. 135, the England and Wales Court of Appeal confirmed, at [33], that for a director or officer to be liable, it must be shown that they knew of and were responsible for the company's breach of the court order.

222. In ADM International Sarl v Grain House International SA and another [2024] 1 W.L.R. 3262 at [53], the England and Wales Court of Appeal reaffirmed that directors and officers can be treated as responsible as civil contemnors for breach of an order made against the corporation where they were culpably responsible for the corporation's failure to comply with the order under principles laid down in Attorney General for Tuvalu v Philatelic Distribution Corpn Ltd [1990] 1 WLR 926 and Dar Al Arkan v Refai [2015] 1 W.L.R. 135.

223. The same principle was applied by Justice Sir Jeremy Cooke in Gulf Wings FZE v A and K Trading Limited DIFC CFI 004/2022 (March 14, 2022), where Justice Sir Jeremy Cooke found two directors in contempt for allowing an aircraft, which was specifically named in a freezing order, to leave Dubai. Sir Jeremy Cooke said at [34] that to establish contempt by breach of an order, it is necessary to show that the person was in some way responsible for the breach by the company. Justice Sir Jeremy Cooke referred to the passage in Attorney General for Tuvalu v Philatelic Distribution Corp Ltd to which I have referred and at [35] referred to the statement of Briggs J in Sectorguard plc v Dienne plc at [35] that directors would be liable in contempt where being aware of the order or undertaking, they actively assisted in the breach or wilfully failed to take reasonable steps to ensure that the order or undertaking was obeyed.

224. Sir Jeremy found that the two directors were responsible for the management of the company and inferred from evidence about the departure of the aircraft that those who were responsible for running the company “made a decision to ignore the terms of the Order and, having obtained registration of the Aircraft with the FAA in the USA, deliberately decided to fly the Aircraft out of Dubai to avoid the effects of the Order”. Sir Jeremy, therefore, found that the two directors had “wilfully” disobeyed the Order.

225. Those authorities show that there is no principle that that breach of an order by a company automatically discloses a case to answer against all the directors.

226. There is no evidence that any of the Individual Respondents took steps to cause Najam not to comply with the Freezing Order or wilfully omitted to do so.

227. Therefore, the case against the Individual Respondents must be dismissed on the ground that the Claimant has failed to prove beyond reasonable doubt that any of them is guilty of contempt as alleged in the First Committal Application.

228. For both the stated reasons, the First Committal Application against the Individual Respondents must be dismissed.

Second Committal Application against Individual Respondents

229. The Second Committal Application against the Individual Respondents must be dismissed because, as in the First Committal Application, there is no evidence that any of them are guilty of contempt by disobeying the Freezing Order and the Second Contempt Application Notice does not comply with the requirements of RDC 52.9(2).

230. The only references to the Individual Respondents in the Second Committal Application are in the orders sought.

231. The Application Notice fails to state what the Individual Respondents are alleged to have done or not done that makes them guilty of contempt. The Application Notice refers to specific paragraphs of Mr Nixon’s Third Affidavit as evidence of the allegations in the Application Notice. None of those paragraphs refer to any of the Individual Respondents.

232. The evidence does not establish any acts or omissions by the Individual Respondents that make them culpably responsible for the acts of contempt alleged in the Second Committal Application.

233. As with the First Committal Application, Naqid seeks to overcome these shortcomings by submitting that as a matter of law a director is personally liable for an act of contempt by the company in failing to comply with an order unless they show that they took reasonable steps to comply with the order.

234. Naqid’s case fails for the same three reasons that its case on the First Committal Application fails.

235. First, Naqid has not established that Najam failed to comply with the Freezing Order in the ways alleged in the Second Committal Application.

236. Secondly, the substantive law concerning the liability of a director does not excuse a complainant from complying with the mandatory procedural requirements of RDC 52.9(2).

237. Thirdly, directors are not automatically liable for a company's contempt unless they wilfully fail to ensure compliance. There is no evidence the Individual Respondents wilfully failed to ensure that Najam complied with the Freezing Order as alleged in the Second Committal Application.

238. The Second Committal Application against the Individual Respondents must be dismissed.

Strike out application

239. Najam and the Individual Respondents applied to strike out the First Committal Application. The Strike Out Application was heard at the Consolidated Hearing and subsumed within the hearing and determination of the First Committal Application.

240. I have determined that the First Committal Application should be dismissed on its merits. I have also determined that the First Committal Application does not comply with RDC 52.9(2), and it was not open to Naqidto pursue many of the allegations it raised against Najam and the Individual Respondents at the Hearing because they were not alleged in the First Committal Application Notice.

241. In those circumstances, it is unnecessary to further consider the Strike Out Application.

First sequestration application

242. By the First Sequestration Application, Naqid seeks permission to issue a writ of sequestration against the assets of Najam including, the Nola vessel and the Niya vessel and other specified assets, and permission to issue a writ of sequestration against the assets of the Individual Respondents.

243. None of the specified assets are within the DIFC. The evidence is that Najam has no assets within the DIFC. None of the Individual Respondents live within the DIFC and there is no evidence any of them have assets within the DIFC.

244. Naqid applies for permission to issue a writ of sequestration against Najam and the Individual Respondents because:

245. Grounds 2 to 7 are how Naqid alleges Najam and the Individual Respondents have failed to comply with paragraphs [4], [6(b)], [11], and [12] of the Freezing Order.

246. Those are in substance the same grounds that Naqid alleges in the First Committal Application that Najam and the Individual Respondents are guilty of contempt by failing to comply with paragraphs [4], [6(b)], [11], and [12] of the Freezing Order.

247. Naqid submits that, unlike the committal applications, the Court must decide the sequestration applications on the civil standard of proof.

248. I have considered those allegations in considering the First Committal Application. Naqidhas failed to prove on the balance of probabilities that Najam or the Individual Respondents breached the Freezing Order as alleged in the First Sequestration Application.

249. The application for permission to issue writs of sequestration against Najam and the Individual Respondents must be dismissed because it is conditioned on proving that they breached the Freezing Order in the ways alleged and it has failed to prove those allegations.

250. There is another fundamental reason for dismissing the application. The Court has no power to seize assets outside the DIFC or to issue a writ of sequestration to do so.

251. The Court would not give permission to issue a writ of sequestration against a company or an individual who has no assets within the jurisdiction.

252. The First Sequestration Application will be dismissed.

Second sequestration application

253. By the Second Sequestration Application, Naqid seeks permission to issue a writ of sequestration against the assets of Najam including, the Nola and the Niya vessel and other specified assets, and permission to issue a writ of sequestration against the assets of the Individual Respondents.

254. None of the specified assets are within the DIFC. The evidence is that Najam has no assets within the DIFC. None of the Individual Respondents live within the DIFC and there is no evidence any of them have assets within the DIFC.

255. Naqid applies for permission to issue a writ of sequestration against Najam and the Individual Respondents because Najam has failed to comply with [9] and [10] of the Freezing Order, specifically:

256. Those are in substance the same grounds that Naqid alleges in the Second Committal Application that Najam and the Individual Respondents are guilty of contempt by failing to comply with paragraphs [9], and [10] of the Freezing Order.

257. I have considered those allegations in considering the Second Committal Application. Naqid has failed to prove on the balance of probabilities that Najam or the Individual Respondents breached the Freezing Order as alleged in the Second Sequestration Application.

258. The application for permission to issue writs of sequestration against Najam and the Individual Respondents must be dismissed because it is conditioned on proving that they breached the Freezing Order in the ways alleged and it has failed to prove those allegations.

259. Furthermore, the application must be dismissed because the Court has no power to seize assets outside the DIFC or to issue a writ of sequestration to do so and the Court will not give permission to issue a writ of sequestration against a company or an individual who has no assets within the jurisdiction.

260. The Second Sequestration Application will be dismissed.

Penalties for late filing of evidence

261. Naqid submitted that Najam ought to be ordered to pay a penalty for its belated filings on 7 June 2024 in several applications, including the Set Aside Application, the Discharge Application and the Strike Out Application, irrespective of the outcome of the hearing and the late filing of Mr Nils’ affidavits and witness statements.

262. Najam asserted that it needed to request extensions of time because Naqid sought to deploy the DIFC’s Rules which differentiate between Ordinary Applications and Heavy Applications in an inappropriate tactical manner and failed to agree to extensions of time when they were manifestly reasonable.

263. Both parties’ criticisms of the other are at least partly justified. However, the extensions of time have been pragmatically dealt with by allowing each parry a proper opportunity to adduce evidence.

264. There is no need to deal further with the extension of time applications.

265. Having considered the circumstances, it is not appropriate to impose any penalties for failures to meet filing timeframes.

Conclusion

266. The First and Second Committal Applications and the First and Second Sequestration Applications must be dismissed.

267. The Strike-out application will be dismissed. I will make that order to dispose of the application which became subsumed within the hearing of the committal applications. In so far as it is relevant to questions of costs, I find the strike-out application was properly brought and had it been heard separately from the committal applications would have been successful at least in part.

268. When the Court decides to make an order about costs, the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party. Najam and the Individual Respondents are the successful parties.

269. An unusual feature of this application is that it was heard as part of a consolidated hearing with several other substantive applications. Naqid is the successful party in some of those applications.

270. There is no reason why Najam and the Individual Respondents should not recover the costs of the applications on which they succeeded in full on a standard basis. The costs were necessarily incurred, and to order recovery of part only of those costs is contrary to the principle that a successful party recover its costs. There is nothing that justifies a departure from that principle other than the fact that the applications were heard together, and some part of the legal costs might overlap with the costs of the unsuccessful applications. The order ought, therefore, to allow Najam and the Individual Respondents the identifiable costs of these applications. To the extent that the costs relate to items that are common to the other applications, Najam should recover a proportion of those costs. The costs of the Hearing should be apportioned.

271. For those reasons, Naqid should pay the following costs of Najam and the Individual Respondents as assessed or agreed, the costs that wholly relate to these applications, two-thirds of the costs that partly relate to these applications and partly relate to the other applications, and two-thirds of the costs of the Hearing. Those proportions are my assessment of the proportion of the Hearing devoted to these applications.

272. The costs of this application should be assessed at the same time as the other applications heard at the Hearing.

273. If any party wants to move for a different order in respect of costs, they should, within 7 days of the issue of this order, file a minute of proposed orders with an outline of submissions not to exceed 5 pages and any supporting witness statement. If any party files such a minute, the appropriate costs orders will be determined on the papers. If no party files a minute, it will be ordered that the Claimant pay the Defendant’s and Individual Respondents’ costs that wholly relate to these applications, two-thirds of their costs that partly relate to these applications and partly relate to the other applications, and two-thirds of their costs of the Hearing, on the standard basis to be assessed at the same time as the costs of the other applications heard at the Hearing, if not agreed.