December 24, 2024 Arbitration - Orders
Claim No: ARB 004/2024
IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURT
IN THE COURT OF FIRST INSTANCE
BETWEEN
NAQID
Claimant
and
NAJAM
Defendant
ORDER WITH REASONS OF JUSTICE RENE LE MIERE
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 Anti-suit Injunction Application is dismissed.
2. There shall be no order as to costs.
Issued by:
Delvin Sumo
Assistant Registrar
Date: 24 December 2024
At: 2pm
SCHEDULE OF REASONS – Anti-suit Injunction Application
Summary
1. The Claimant, Naqid (" Naqid") is incorporated under the Indian Companies Act. Naqid provides various oil and gas services, which include project management, procurement, manufacturing, and commissioning. Its registered address is located in Mumbai, India.
2. The Defendant, Najam ("Najam"), is a company incorporated under Liberian law. Najam operates in the offshore oil and gas industry, primarily in the Arabian Gulf and the Indian subcontinent. The company is registered in Liberia, and also has a branch office in the UAE.
3. Naqid has received an award in India that requires Najam to pay a substantial amount (the “Award”).
4. Naqid obtained orders from this Court recognizing and enforcing the Award (the “Enforcement Order”) and a worldwide freezing order that restrains Najam from transferring assets out of the DIFC up to the amount of the Award. This order also prevents Najam from disposing of or diminishing the value of any assets, whether located in or outside the DIFC, up to the same amount (the “Freezing Order”).
5. Najam applied to this Court to set aside the Enforcement Order and to discharge the Freezing Order.
6. Najam initiated proceedings in the onshore Dubai Courts to annul the Award and to order that this Court lacks jurisdiction to enforce it (the “Annulment Proceedings”).
7. Naqid has applied to this Court for an anti-suit injunction to prevent Najam from continuing the Annulment Proceedings in the onshore Dubai Courts (the “Anti-suit Injunction Application”).
8. The onshore Dubai Courts have dismissed the Annulment Proceedings.
9. Naqid seeks an order that Najam pay Naqid’s costs of the Anti-suit Injunction Application. Najam opposes the proposed order.
10. For the reasons that follow, the Court will order:
(1) The Anti-suit Injunction Application will be dismissed.
(2) There will be no order as to costs.
The underlying dispute
11. Najam entered a turnkey contract for the Pipeline Replacement Project off the coast of India. On 26 September 2019, Naqid and Najam entered into a subcontract for Naqid to perform modifications to the platform topside.
12. However, payment delays from Najam to Naqid resulted in disputes. The subcontract specifies that any unresolved disputes must be referred to arbitration in Mumbai under the Arbitration Act of India.
13. Naqid issued a Notice of Arbitration on 11 May 2022.
14. On 2 November 2023, the arbitral tribunal issued its award, dated 1 November 2023. The tribunal ordered Najam to pay Naqid Cr 38,58,54,542 and USD 3,156,658, along with 18% annual interest from 11 May 2022. Additionally, Najam was required to pay Cr1,06,29,316 in costs.
Enforcement order
15. On 11 March 2024, Naqid filed a without notice application under the DIFC Arbitration Law of 2008 and RDC rules, seeking recognition and enforcement of the Award.
16. On 3 May 2024, H.E. Justice Shamlan Al Sawalehi ordered the recognition and enforcement of the Award under the Arbitration Law. The Defendant has 14 days to apply to set aside the Order. If no application is made, the Award can be enforced like a court judgment (“the Enforcement Order”).
Freezing Order
17. On 3 May 2024 without notice to Najam, H.E. Justice Shamlan Al Sawalehi made the Freezing Order.
18. The key terms of the Freezing Order are:
“1. Asset Restrictions: Najam cannot remove, dispose of, or diminish assets up to Cr 39,50,12,697 and USD 3,156,658 until the Return Date or further court order.
2. Scope Applies to all Najam’s assets, including those not in its name or jointly owned, and any assets Najam can control.
3. Specific Assets: Includes vessels (Nola, Niya), Nariyah assets, shareholdings in Najam entities, and accounts with the National Bank of Fujairah and Abu Dhabi Islamic Bank. Najam has no assets within the DIFC. Its principal assets, the vessels, are in Abu Dhabi.”
19. On 13 May 2024 Naqid filed applications that Najam and named individuals (the “Individual Respondents”) be committed for contempt of court (the “First Committal Application”) and Naqid have permission to issue a writ of sequestration against the assets of Najam and the Individual Respondents (the “First Sequestration Application”) for failing to comply with the Freezing Order.
20. On 17 May 2024 Najam applied to this court to set aside the Enforcement Order because it had not been given proper notice of the appointment of the arbitrator in the arbitral proceedings pursuant to which the Enforcement Order was issued, and the Award has not yet become binding on the parties (“Set aside Application”).
21. On 23 May 2024, Najam applied to strike out the First Committal Application, arguing it lacked reasonable grounds, was an abuse of process, and did not comply with the rules (“Strike Out Application”).
22. On the same day Najam applied to discharge the Freezing Order because the Court lacked jurisdiction to grant or continue the Freezing Order, there is no real risk that Najam will dissipate its assets, Naqid has failed to provide evidence that its undertakings in damages to the Court are valuable, and Naqid has breached its full and frank disclosure obligations (“Discharge Application”).
Proceedings before the Dubai Courts
23. On 30 May 2024, Najam commenced an appeal before the Dubai Court of Appeal, seeking to set aside the Award; and a ruling that this Court had no jurisdiction to hear this Claim (the “onshore appeal”). Naqid defended those proceedings before the Dubai Court of Appeal.
24. On August 8, 2024, the Dubai Court of Appeal dismissed the onshore appeal. The Court determined that the award was issued in India and that the UAE has no jurisdiction in the case, which should be handled by Indian courts.
25. Subsequently, around 5 September 2024, Najam filed an appeal against this decision before the Dubai Court of Cassation. Naqid also defended these proceedings.
26. On 26 September 2024, the Dubai Court of Cassation dismissed Najam’s appeal. In its decision, the Court agreed with Naqid that it lacked jurisdiction to either annul the Award, as it was a foreign award not issued in Dubai. The Court held that it did not have the authority to determine that this Court lacked jurisdiction to hear the Claim.
Second contempt and sequestration applications
27. On 24 June 2024, Naqid applied for an order against Najam and its officers for contempt of court (the “Second Committal Application”) and for permission to issue a writ of sequestration against Najams assets and the assets of the Individual Respondents (“Second Sequestration Application”) for failing to comply with the Freezing Order.
The anti-suit injunction application
28. On 9 July 2024, Naqid applied for an anti-suit injunction order to prevent Najam from participating in any legal proceedings in the UAE or elsewhere, except in Mumbai, India, concerning the Award. Specifically, the application sought to restrain Najam from continuing the annulment proceedings in the Dubai Court of Appeal and to direct Najam to cease prosecuting that appeal in the Dubai Court of Appeal ("the Anti-suit Injunction Application").
29. These reasons are my reasons for deciding the Anti-suit Injunction Application.
Consolidated Hearing
30. On 9 August 2024 the Court ordered that the First and Second Committal Applications, the Strike-out Application, the First and Second Sequestration Applications, the Set Aside Application, and the Discharge Application together with a foreshadowed application by Naqid to continue the Freezing Order and the Anti-suit Injunction Application be heard together and determined following a single hearing (the “Hearing”).
31. The Hearing was held in person at the DIFC Courts for 5 days, starting on 7 October 2024.
The issue now before the Court
32. At the Hearing, the parties did not argue the Anti-suit Injunction Application. They agreed that the dismissal of the onshore Dubai proceedings rendered it moot.
33. However, Naqid argued it should recover the costs of the application due to Najam’s abusive conduct in bringing the onshore Dubai proceedings.
34. Courts usually do not order costs without a hearing on the merits unless they can assess the likely success of the case without a full hearing or if one party's behaviour is particularly unreasonable.
35. Naqid achieved its goal with the onshore Dubai Courts dismissing the Annulment Proceedings. However, this does not mean that the Anti-Suit Injunction Application would have succeeded if it had been heard.
36. The DIFC Court may lack grounds for granting the Anti-suit Injunction Application.
37. An anti-suit injunction can be issued to safeguard court processes, prevent foreign proceedings from interfering with local cases, or to enforce a contract that prohibits litigation or upholds an exclusive jurisdiction agreement. However, it is uncertain whether the Court would restrain Najam from initiating proceedings in onshore Dubai if there is no contractual prohibition and if DIFC is not considered the appropriate jurisdiction.
38. The onshore Dubai Courts dismissed Najam’s application due to a lack of jurisdiction. In contrast, the DIFC Court considers its own jurisdiction. When both the DIFC and the onshore Dubai Courts claim jurisdiction, the Judicial Authority has the power to resolve the conflict. Anti-suit injunctions issued by the DIFC Courts to restrain proceedings in onshore Dubai Courts are rare and only occur under exceptional circumstances, as noted by Justice Sir Jeremy Cooke in Brookfield Multiplex v DIFC Investments [2016] DIFC CFI 020 (28 July 2016).
39. Najam's behaviour is no more unreasonable than Naqid 's to warrant the awarding of costs. Neither the DIFC nor the onshore Dubai Courts serve as the appropriate forum for enforcing or setting aside the Award.
40. Najam’s choice to bring proceedings in the onshore Dubai Courts instead of applying in the DIFC to set aside the Award can be criticized.
41. Naqid’s conduct can also be criticized. The DIFC Court generally does not concern itself with arbitration steps in onshore Dubai. If both DIFC and onshore Dubai Courts claim jurisdiction, the Judicial Authority resolves the conflict.
42. There is no reason to depart from the principle that costs are not awarded without a hearing on the merits.
Conclusion
43. The Anti-suit Injunction Application will be dismissed.
44. There will be no order as to costs, that is each party will bear their own costs of the Anti-suit Injunction Application whatever costs order the Court makes about the other applications heard at the Hearing.
