April 26, 2021 Court of Appeal - Judgments
Claim No: CA 002/2021
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
In the Name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai
IN THE COURT OF APPEAL
BEFORE CHIEF JUSTICE ZAKI AZMI, H.E JUSTICE SHAMLAN AL SAWALEHI AND JUSTICE ROBERT FRENCH
(1) ASHOK KUMAR GOEL
(2) SUDHIR GOYEL
(3) MANAN GOEL
(4) PRERIT GOEL
CREDIT SUISSE (SWITZERLAND) LIMITED
|Hearing :||14 February 2021|
|Counsel :||Vernon Flynn QC instructed by Emirates Legal for the Appellant.
Michael Black QC instructed by Clyde and Co for the Respondent.
|Judgment :||26 April 2021|
UPON hearing Counsel for the Appellants and Counsel for the Respondent
AND UPON reading the submissions filed and recorded on the Court file:
IT IS HEREBY ORDERED THAT:
1. The appeal is dismissed.
2. The Court will deliver a separate ruling on the question of costs.
Date of Issue: 26 April 2021
CHIEF JUSTICE ZAKI AZMI, H.E JUSTICE SHAMLAN AL SAWALEHI AND JUSTICE ROBERT FRENCH IN AGREEMENT:
1. This is an appeal against an Order of Justice Wayne Martin made on 1 October 2020 in which His Honour dismissed the Appellants’ application for a declaration that the Dubai International Financial Centre Courts (“DIFC Courts”) do not have jurisdiction in proceedings brought against them by the Respondent.
2. The proceedings were brought pursuant to guarantees which the Appellants entered into, guaranteeing the performance of various borrowers under a Credit Facility Agreement with Credit Suisse AG. That company, it was common ground, was a “DIFC Establishment” within the meaning of the Judicial Authority Law (“JAL”). The guarantees were dated 31 May 2016. In September 2016, written agreements were entered into between Credit Suisse AG and each of the Appellants substituting the Respondent for Credit Suisse AG, as the party to whom the Guarantors owed obligations under the Guarantee Agreements. The Respondent is not a DIFC Establishment.
3. The Guarantee Agreements provided in clauses 16 and 17 as follows:
“16. Governing Law
This Guarantee, and all rights, obligations and liabilities arising hereunder, shall be governed by, and construed in accordance with the laws of the Emirate of Dubai and the applicable Federal Laws of the United Arab Emirates.
17.1 The Guarantor hereby agrees, for the benefit of the Lender, that the Courts of Dubai shall have jurisdiction over all disputes arising under this Guarantee.
17.2 Notwithstanding clause 17.1, the Lender shall be entitled to initiate legal proceedings before any other competent court. ”
4. Under each of the Guarantee Transfer Agreements the Appellants agreed to be bound and to perform their obligations under their respective guarantees as if the Respondent had been a party to the original Guarantee.
5. Clause 7 of the Guarantee Transfer Agreements provided:
“7. Applicable law and jurisdiction
This Agreement (including, without limitation, any contractual or non-contractual obligations) arising from or connected with it are governed by, and will be construed in accordance with, the Laws of the Emirate of Dubai, and the applicable Federal Laws of the United Arab Emirates. Any dispute or claim (including any non-contractual dispute or claim) arising out of or in connection with this Agreement which relates to any provision of the Guarantee (as transferred and amended) shall be subject to the same enforcement provisions as referenced in the Guarantee.”
6. The Respondent applied to the Court of First Instance (“CFI”) for a world-wide freezing order (“WFO”) restraining the Appellants from dealing with or disposing of their assets pending determination of the Respondent’s claim. That application was heard without notice to the Appellants. The CFI held that the Court lacked jurisdiction to make the order sought and dismissed it. In the course of making that ruling however, the Court held that if it had jurisdiction the WFO would have been made as the Respondent had made out all the grounds necessary for the making of such an order.
7. The Respondent appealed ex parte to the Court of Appeal (“CA”) against that decision. The CA allowed the appeal on the ground that the Judge at first instance should have held that there was a good arguable case to the effect that the Court had jurisdiction and, on that basis, should have made the order sought, leaving it open to the Appellants to challenge the jurisdiction of the Court after having been served with the order. In the event, the WFO was made on 13 September 2020.
8. After the Appellants received notice of the WFO they informed the Court that they wished to challenge its jurisdiction to make that order. The jurisdictional challenge was made by way of an application for a declaration that the Court lacked jurisdiction to entertain the Respondent’s claim for a WFO and for dismissal of the proceedings on that basis.
9. Justice Martin was assigned to hear that application.
10. After hearing the application, he ruled that the Court had jurisdiction to consider and determine the Respondent’s claim against the Appellants and therefore had jurisdiction to entertain the Respondent’s claim for a WFO against them.
11. The formal orders that were made by Justice Martin were as follows:
“1. The Application is dismissed. It is determined that the Court has jurisdiction to hear and determine these proceedings.
2. The deadline for the provision of information and affidavits relating to the Respondents’ assets shall be 4pm on Wednesday, 7 October 2020.
3.The claimant shall institute the substantive proceedings by 4pm on Sunday, 4 October 2020.
4.The Defendants shall pay the Claimant’s costs of this Application, within 14 days from the date of this Order, to be assessed by a Registrar on the standard basis if not agreed.”
12. His Honour published his Reasons for decision on 4 October 2020.
13. Pursuant to the Order of this Court on 13 September 2020, His Excellency, Justice Ali Al Madhani, made a WFO and provision of information order on the same day. Justice Martin continued the WFO by a further order on 17 September 2020.
14. On 13 January 2021 he granted the Appellants permission to appeal against his decision on their application in relation to jurisdiction.
Statutory Framework — The Judicial Authority Law, Dubai Law No 12 of 2004
15. The jurisdiction of the CFI is set out in Article 5 of the JAL of the DIFC, Law No 12 of 2004. It provides:
“Article 5 Jurisdiction
(A) The Court of First Instance:
(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;
(b) Civil or commercial claims and actions arising out of or relating to a contract or promised contract, whether partly or wholly concluded, finalised or performed within DIFC or will be performed or is supposed to be performed within DIFC pursuant to express or implied terms stipulated in the contract;
(c) Civil or commercial claims and actions arising out of or relating to any incident or transaction which has been wholly or partly performed within DIFC and is related to DIFC activities;
(d) Appeals against decisions or procedures made by the DIFC Bodies where DIFC Laws and DIFC Regulations permit such appeals;
(e) Any claim or action over which the Courts have jurisdiction in accordance with DIFC Laws and DIFC Regulations.
(2) The Court of First Instance may hear and determine any civil or commercial claims or actions where the parties agree in writing to file such claim or action with it whether before or after the dispute arises, provided that such agreement is made pursuant to specific, clear and express provisions.
(3) The Court of First Instance may hear and determine any civil or commercial claims or actions falling within its jurisdiction if the parties agree in writing to submit to the jurisdiction of another court over the claim or action but such court dismisses such claim or action for lack of jurisdiction.
(4) Notwithstanding Clause (2) of Paragraph (A) of this Article, the Court of First Instance may not hear or determine any civil or commercial claim or action in respect of which a final judgment is rendered by another court.”
16. Article 2 of the JAL contains the following definitions relevant to Article 5:
“DIFC Bodies: The bodies established pursuant to Article (3) of the aforementioned Law No (9) of 2004 and any other body established pursuant to the DIFC Laws or pursuant to approval of the President.”
The “aforementioned Law No (9) of 2004” is a reference to the Law of that number concerning Dubai International Financial Centre and its amendments.
“DIFC Establishments: Any entity or enterprise established, licensed, registered or authorised to carry on business or conduct any activity within the DIFC pursuant to DIFC Laws, including Licensed DIFC Establishments.”
“Licensed DIFC Any entity or enterprise licensed,
Establishments: registered or authorised by the Dubai Financial Services Authority to provide financial services, or conduct any other activities in accordance with the DIFC Laws.”
“DIFC Laws: Any laws issued by the Ruler in relation to DIFC.”
“Courts: The Court of First Instance and the Court of Appeal established pursuant to this Law, and any tribunals established by the Chief Justice of the Courts pursuant to the DIFC Laws.”
17. It is noteworthy that Article 6 of the JAL deals with the applicable Governing Law in matters before the DIFC Courts and provides:
“The Courts shall apply the Centre’s Laws and Regulations, except where parties to the dispute have explicitly agreed that another law shall govern such dispute, provided that such law does not conflict with the public policy and public morals.”
This Article makes it clear that parties can, as they have in this case, make a choice of applicable law other than DIFC Laws and Regulations and that such choice will not place their dispute beyond the jurisdiction of the DIFC Courts. The choice of law in the Guarantees in this case is “the laws of the Emirate of Dubai and the applicable Federal Law of the United Arab Emirates'”.
Statutory Framework — The Original Form of Article 5(A) and the 2011 Amendment
18. Article 5(A) of the JAL incorporates an amendment to the JAL effected by Dubai Law No 16 of 2011. In its original form Article 5(A)(1) provided as follows:
“(A) The Court of First Instance:
(1) Without prejudice to paragraph 2 of this Article, the Court of First Instance shall have the exclusive jurisdiction over:
(a) Civil or commercial cases and disputes involving the Centre or any of the Centre’s Bodies or any of the Centre’s Establishments.
(b) Civil or commercial cases and disputes arising from or related to a contract that has been executed or a transaction that has been concluded, in whole or in part, in the Centre or an incident that has occurred in the Centre.
(c) Objections filed against decisions made by the Centre’s Bodies which are subject to objection in accordance with the Centre’s laws and regulations.
(d) Any application over which the Courts have jurisdiction in accordance with the Centre’s laws and regulations.
(2) Parties may agree to submit to the jurisdiction of any other court in respect of the matters listed under paragraphs (a), (b) and (d) of this Article.”
Article 2 of the JAL did not contain the definitions “DIFC Establishments” and “DIFC Laws” which appear in the current version of the JAL. However, the following definitions appeared:
“The Centre: Dubai International Financial Centre”
“Licensed Centre Any entity licensed, registered or
Establishments: otherwise authorised to carry on financial or banking business including those activities and businesses referred to in Article 9 of the Centre Law.”
“Centre Establishments: Any entity or business duly established or carrying on business in the Centre, including any Licensed Centre Establishments.”
19. While there is considerable overlap between the subject matter areas of jurisdiction conferred by Article 5(A)(1)(a) to (e) as it presently stands and the original heads of jurisdiction in Article 5(A)(1)(a) to (d), the provisions of Article 5(A)(2) in the two versions of the JAL are significantly different. In the original version Article 5(A)(2) was an “opt out” provision under which parties could agree to submit to the jurisdiction of any other court in respect of the matters listed under paragraphs (a), (b) and (d) of the original Article 5(A)(1). Article 5(A)(2) is an “opt in” provision. The original “opt out” provision of Article 5(A)(2) is not reflected in the current version of Article 5(A).
Statutory Framework — The DIFC Court Law
20. The DIFC Court Law, DIFC Law No 10 of 2004 also provides for the jurisdiction of the CFI in clause 19:
(1) The DIFC Court of First Instance has original jurisdiction pursuant to Article 5(A) of the Judicial Authority Law to hear any of the following:
(a) civil or commercial cases and disputes involving the Centre or any of the Centre’s Bodies or any of the Centre’s Establishments;
(b) civil or commercial cases and disputes arising from or related to a contract concluded or a transaction concluded by any of the Centre’s Establishments or the Centre’s Bodies;
(c) civil or commercial cases and disputes arising from or related to a contract that has been executed or a transaction that has been concluded, in whole or in part, in the Centre or an incident that has occurred in the Centre; and
(d) any application over which the DIFC Court has jurisdiction in accordance with DIFC Laws and Regulations;
(2) The jurisdiction of the Court of First Instance shall be exercised by a single Judge sitting in open court or in chambers.”
It is not necessary for present purposes to refer to sub-clauses (3) to (5).
21. Clause 20 deals with powers of the Court and relevantly provides:
“20. Making of Orders and issuing of Writs
(1) The Court of First Instance has the power, in matters over which it has jurisdiction to make any orders, including interlocutory orders, and to issue or direct the issue of any writs it considers appropriate.”
22. The jurisdiction defined by Article 5 of the JAL is not entirely congruent with the jurisdiction conferred by Article 19 of the Court Law. That difference is picked up by Article 5(A)(1)(e) which allows for jurisdiction over claims or actions to be further defined by DIFC Laws and DIFC Regulations. The parties, however, seem to be agreed that it was not applicable to the present case — notwithstanding that clause 19(b) might have been thought to apply to the facts of this case to the extent that the contract out of which the litigation was brought, was a contract entered into by a DIFC Establishment even though that party is no longer a party to the contract. The question of the relationship between Article 5(A) of the JAL and clause 19 of the DIFC Courts Law may fall for consideration in another case.
Grounds of Appeal
23. The grounds of appeal are stated at some length in the Appeal Notice and are essentially in the form of short submissions. In brief, they are:
(1) The Learned Judge erred as a matter of law by deciding the issue of jurisdiction of the DIFC Courts without any regard for the type of order that the Respondent seeks to obtain from the Court. Even if the Court has primary jurisdiction it must decline its jurisdiction to grant the type of relief sought for by the Respondent as the same relief could not have been obtained in the Dubai courts. The enforcement of such an order would violate the public policy of the UAE because the order sought could not have been obtained from the Dubai courts.
(2) The Learned Judge erred in holding that “facts relevant to the issue of jurisdiction are not contentious.” Reference was made to witness statements before His Honour said to show that the Appellants never intended the DIFC Courts to have jurisdiction.
(3) The Learned Judge erred in holding that the statutory gateway requirements of Article 5(A)(2) of the JAL are satisfied by an objective characterisation of the jurisdictional agreement. The authorities relied upon by His Honour were all cases in which one of the parties was a DIFC Establishment and one of the parties wanted to opt out of the jurisdiction of the DIFC Courts, where those courts otherwise had jurisdiction. The only scope of inquiry in this case is if there is jurisdiction under Article 5(A)(2).
(4) The Learned Judge erred in law and fact in relying upon the consideration that the original agreement was signed with a DIFC Establishment.
(5) The express requirements of the statute, namely Article 5(A)(2) cannot be substituted by an objective or subjective criterion where the Court does not have jurisdiction under Article 5(A)(1) as in this instant case.
(6) The Learned Judge erred in law in holding that to determine jurisdiction under Article 5(A)(2) he was required to look into the joint intention of the parties. He ignored the wording of Article 265(1) of the UAE Civil Code (paragraph 28) that “if the wording of a contract is clear, it may not be departed from by way of interpretation to ascertain the intention of the parties”. As the agreement did not specifically mention the jurisdiction of the DIFC Courts and they do not otherwise have jurisdiction under Article 5(A)(1), the Court must not engage in such fact finding as this would violate Article 265 of the UAE Civil Code.
(7) Where the Court otherwise has jurisdiction and looks into the intention of the parties and if it finds that it has jurisdiction, its fact finding mission is not based merely on Article 5(A)(2) but on its exclusive jurisdiction under Article 5(A)(1). It is then investigating the limited issue whether it must decline its jurisdiction in favour of any other court that the parties may have agreed on. This is essentially a case of opting out of jurisdiction. The opting in must meet the statutory requirements of Article 5(A)(2).
(8) The overall effect of the judgment would be to read into Article 5(A)(2) of the JAL something not provided for by the statute.
(9) The Learned Judge erred in not observing that there is a requirement of an express written consent of the parties seeking to invoke the jurisdiction of the DIFC Courts under Article 5(A)(2).
24. The appeal as argued was more narrowly and appropriately focussed than the grounds of appeal in the Notice.
Reasons for decision of the CFI
25. The first question addressed by Justice Martin was whether the CFI should continue the WFO on the basis of the CA’s decision that there was a good arguable case to the effect that the Court had jurisdiction or whether the Court should go further and substantively determine the jurisdictional issue. His Honour quoted Tatiana Mikhailovna Akhmedova v (1) Farkhad Teimur Ogly Akhmedov (2) Straight Establishment1:
“The adoption of a good arguable test when deciding whether there is jurisdiction under a jurisdiction gateway is a reflection of the fact that: (i) often the question is one of mixed fact and law; and (ii) an interlocutory hearing is generally not suitable for a final determination of the issue. However, where the question is solely one of law and the court has the necessary background evidence to determine it, the normal approach is for the court to get on and determine the question.”2
26. Justice Martin’s reasons were directed only to the issue whether the Court has jurisdiction to entertain the Respondent’s claim against the Appellants and consequently to entertain the Respondent’s claim for WFO in support of its substantive claim. It was therefore only necessary to refer to facts relevant to that issue in His Honour’s reasons.
27. He described the parties. The Respondent Bank is a wholly owned subsidiary of Credit Suisse Group, a company registered in Switzerland. The Guarantors are all Indian nationals, holding Indian passports who have been residents of the UAE, but who have recently returned to India. All are associated with the GP Group of companies which is headquartered in Sharjah in the UAE, although it has subsidiary companies and offices all over the world. Its parent company is GP FZC. The Appellants are the only four shareholders and also the only directors of GP FZC.
28. GP FZC and other members of the GP Group, including companies incorporated in Dubai, entered into a Credit Facility Agreement with Credit Suisse AG which, like the Respondent, is a wholly owned subsidiary of Credit Suisse Group.
29. Under the Credit Facility Agreement, credit was extended to each of the nominated borrowers within the GP Group.
30. By the Guarantees, which are written instruments dated 31 May 2016, each of the Appellants guaranteed the performance of the various borrowers under the Credit Facility Agreement. Each guarantee was in identical terms. Each Guarantor undertook to pay to Credit Suisse AG any amounts requested by that company in connection with the Credit Facility Agreement as if the guarantor himself was the principal obligor up to a maximum of US$100 million.
31. Clause 14.3 of the Guarantees provided that the Lender, Credit Suisse AG, could assign or transfer all or any part of its rights under the Guarantee in accordance with the Credit Facility Agreement.
32. At the time that the Credit Facility Agreement and the Guarantees were executed, Credit Suisse AG was a recognised Foreign Company within the DIFC and was therefore at all material times a “DIFC Establishment” within the meaning of the JAL. On the other hand, the Respondent is not and never has been a DIFC Establishment.
33. Justice Martin observed that the resolution of the jurisdictional question turned critically upon whether the Respondent could establish that its claims against the Appellants passed through one or other of the “gateways” to the jurisdiction of the CFI specified in Article 5 of the JAL.
34. He accepted that the Respondent is not a DIFC Establishment, and that none of the Guarantors are DIFC Bodies. Senior Counsel appearing on behalf of the Respondent had abandoned a proposition that the Court had jurisdiction under Article 5(A)(1)(a) because Credit Suisse AG was a DIFC Establishment at the time the Guarantees were entered into. It did not provide an available “gateway” for the Respondent’s claims against the Appellants.
35. Justice Martin nevertheless held it to be relevant that Credit Suisse AG was a DIFC Establishment at the time that each Guarantee was entered into. He observed that none of the categories of exclusive jurisdiction in Article 5(A)(1) had any application to the circumstances of this case. The only available “gateway” was Article 5(A)(2). The ambulatory jurisdiction conferred on the CFI by Article 5(A)(1)(e) which can be read with Article 19 of the DIFC Court Law was not considered.
36. He then focussed upon Article 5(A)(2). The Respondent submitted, and the Appellants denied, that clause 17.1 and, in the alternative, clause 17.2 of the Guarantee comprised an agreement in writing within Article 5(A)(2) thereby conferring jurisdiction on the Court to entertain and determine the Respondent’s claims against the Appellants.
37. The question, as Justice Martin characterised it, turned upon the proper construction of the Guarantees. The laws of the Emirate of Dubai and the applicable Federal Laws of the United Arab Emirates which governed each Guarantee by virtue of clause 16 of the Guarantee, were the laws applicable to the construction of clause 17. His Honour then turned to the relevant principles of those Laws. He cited Articles 258 and 265 of the UAE Civil Code:
(1) The criterion in (the construction of) contracts is intentions and meanings and not words and form.
(2) The basic principle (presumption) is that words have their true meaning and a word may not be construed figuratively unless it is impossible to give its true meaning.”
(1) If the wording of a contract is clear, it may not be departed from by way of interpretation to ascertain the intention of the parties.
(2) If there is scope for interpretation of the contract, an enquiry shall be made into the mutual intentions of the parties without stopping at the literal meaning of the words, and guidance may be sought in so doing from the nature of the transaction, and the trust and confidence which should exist between the parties in accordance with the custom current in dealings.”
38. The Judge also referred to a commentary on the UAE Civil Code, authorised by the UAE Ministry of Justice in which it is observed “[t]he interpretation of a contract means deducing the joint intention of the parties.” That joint intention is what the common law would call “an objective intention” and what Islamic scholars might describe as “overt” rather than “covert” intention. He noted that under both UAE legal system and the common law, the task of the Court is to ascertain the joint intention of the parties. That is to be derived by construing the words which they have used to record their agreement objectively, as they would be understood by a reasonable business person having knowledge of the circumstances known to the parties at the time they entered into their contract.
39. Justice Martin referred to witness statements which had been provided by each of the Appellants in which they set out their understanding of clause 17 in the Guarantee Agreement which they signed. He regarded that evidence as irrelevant. Subjective understanding or lack of understanding of a guarantor at the time of execution of the relevant guarantee had no bearing upon the objective interpretation of clause 17 of the Guarantee by reference to the meaning which a reasonable business person with knowledge of all the relevant circumstances would have given to the words used in that clause. With respect, that conclusion is correct.
40. He referred to three prior decisions of this Court said to support that general proposition namely Sunteck Lifestyles Ltd v Al Tamimi and Company Limited & Anor3, a judgment delivered by Justice Sir Jeremy Cooke; Taaleem PJSC v National Bonds Corporation PJSC & Anor4, a decision of Justice Sir John Chadwick, and Investment Group Private Limited v Standard Chartered Bank5 in which the CA stated that:
“… the test to be applied was the ordinary and natural meaning of the words of the jurisdiction agreement as they would have been mutually understood by the parties having regard to the background circumstances and the nature of the agreement and the context in which the words are used.”6
In particular the, CA rejected the proposition that the expression “Dubai Courts” encompassed only non-DIFC Dubai Courts.7 Justice Martin quoted a passage from that judgment.
41. From those three decisions Justice Martin extracted the following propositions:
“1. It is not necessary for a jurisdiction agreement to specifically refer to the “DIFC courts” or some variant of that expression to engage the gateway to jurisdiction provided by Article 5(A)(2) of the JAL.
2. The question which the Court must determine as a matter of contractual construction, is whether it was the mutual intention of the parties to confer jurisdiction upon the DIFC courts to hear and determine a dispute of the kind that has arisen.
3. That question is to be resolved by reference to the natural and ordinary meaning of the words of the jurisdiction agreement as they would have been mutually understood by the parties (objectively) having regard to the background circumstances, the nature of the agreement, and the context in which the words are used.
4. If the Court concludes that, as a matter of construction of their agreement, the parties did intend to confer jurisdiction upon the DIFC courts to hear and determine a dispute of the kind that has arisen by the words they have used in their agreement, those words will satisfy the requirement imposed by Article 5(A)(2) for “specific, clear and express provisions”.
5. The phrases “courts of Dubai” or “Dubai courts” in their natural and ordinary meaning encompass all the courts established within the Emirate of Dubai, and therefore include both the DIFC courts and the non DIFC courts.
6. If one of the parties to the jurisdiction agreement is, at the time that the agreement is signed, a DIFC Establishment, such that the parties would be taken to have known and understood that the DIFC courts would, by virtue of that fact, have exclusive jurisdiction within Dubai to determine disputes arising under that agreement, clear and express words would be required before it would be concluded that it was the mutual intention of the parties to exclude that jurisdiction.”8
42. He then undertook an analysis of clause 17.1 noting, as he did, that the decision in IGPL involved an argument to the effect that the parties had agreed to “opt out” of the jurisdiction of the DIFC Courts, whereas the issue before the Judge was whether, by clause 17.1 of each Guarantee, they had agreed to “opt in”. He held that a party seeking to establish that the parties had agreed to confer jurisdiction on a DIFC Court in Article 5(A)(2) had the burden of establishing that proposition. In practical terms that burden would be discharged by proving the terms of the relevant agreement to be construed by the Court in accordance with the principles to which he had referred. The critical question would turn on the proper construction of the relevant agreement.
43. In relation to the requirement that an agreement coming within the terms of Article 5(A)(2) must contain provisions which are specific, clear and express, was that the obligation would be taken to be satisfied if the words used by the parties, in their natural and ordinary meaning, would have been objectively understood by those parties to confer jurisdiction upon the DIFC Courts in all the circumstances of the case. Again, the critical issue was the proper construction of the words. The various decisions establishing that the natural and ordinary meaning of the words “Dubai Courts” or “Courts of Dubai” includes all the courts established in the Emirate of Dubai, including the DIFC Courts, were pertinent to the question whether the jurisdiction agreement contained provisions which were specific, clear and express.
44. Although IGPL was an '”opt out” case rather than an “opt in” case it retained significance to the resolution of the question to be determined by the Judge, the similarities being:
(a) the relevant agreements were governed by the applicable laws of the UAE;
(b) the phraseology used in the jurisdiction agreements was substantially identical; and
(c) at the time the jurisdiction agreements were entered into, one of the parties was a DIFC entity.
Justice Martin therefore considered that absent any points of significant difference, he was bound to apply the reasoning in IGPL to conclude that clause 17.1 of each Guarantee embodied the mutual intention of the parties at the time the Guarantee was signed.
45. The fact that Credit Suisse AG was a DIFC Establishment at the time each Guarantee was signed pointed very strongly towards the conclusion that it was the mutual intention of the parties that the DIFC Courts were to be included within the meaning of the expression “Courts of Dubai”. There was no indication of a mutual intention to exclude the jurisdiction of the DIFC Courts. Circumstances supporting the proposition that the words “Courts of Dubai” in clause 17.1 “…should be given their natural and ordinary meaning and include the DIFC Courts were set out:”
(a) the agreements are all in English (the DIFC Courts operate in English);
(b) Credit Suisse AG is a Foreign Company, incorporated in Switzerland;
(c) a number of the borrowers under the Credit Facility Agreement were incorporated in foreign jurisdictions;
(d) the Guarantors are all Indian nationals with Indian passports; and
(e) Clause 17.3 of each Guarantee expressly recognises the prospect of enforcement proceedings in foreign jurisdictions.
These circumstances supported the proposition that the parties should be taken to have intended to confer jurisdiction upon a court within the Emirate of Dubai which has international characteristics, as well as upon an onshore court of Dubai.
46. Justice Martin acknowledged that the Guarantee Agreements are governed by the Laws of Dubai and applicable Federal Laws and not by DIFC Laws. The governing law of the agreements had been regarded as significant in Taaleem. While the adoption of the Laws of the DIFC as the substantive law of the agreement would have provided a strong indication that the parties intended DIFC Courts to have jurisdiction, the converse proposition did not carry nearly as much weight. It was common place for the “opt in” jurisdiction of the DIFC CFI to involve the resolution of disputes governed by substantive laws other than those of the DIFC.
47. The Guarantee Transfer Agreements did not lead to any other conclusion. To the contrary, by clause 7 of each of those agreements, the enforcement provisions of the original Guarantees were expressly maintained in force. They included clause 17.1.
48. The Judge considered arguments advanced by the Appellants in their written and oral submissions. The first argument was that the Guarantee Transfer Agreements excluded the jurisdiction of the DIFC Courts because they transferred the benefit of the Guarantees to the Respondent, which is not a DIFC Establishment. That fact said nothing in relation to the proper construction of clause 17.1 of the Guarantees at the time they were executed. For the same reason the contention that it was necessary to amend clause 17.1 at the time of the transfer to expressly confer jurisdiction upon the DIFC Courts must also be rejected.
49. There was no evidence that any of the principal debtors or the Guarantors had property within the DIFC and that since the transfer neither party to the Guarantees has any connection with the DIFC. Justice Martin said it is clearly established that the existence of property owned by the putative debtor within the jurisdiction in which a WFO is sought, is not a precondition to the grant of such an order. The “opt in” jurisdiction created by Article 5(A)(2) necessarily connoted that the Court would have jurisdiction to hear and determine cases with no connection with the DIFC other than the parties’ agreement that the Court should have jurisdiction.
50. The Appellants also asserted that the onshore Dubai Courts lacked jurisdiction to issue WFOs and raised issues relating to enforcement of a WFO in Dubai outside the DIFC and in other Emirates. Justice Martin held those submissions to be irrelevant to the issues he had to determine, which related to the jurisdiction of the DIFC Courts. The Appellants’ reference to the possibility of inconsistent decisions between the DIFC Courts and the Dubai Courts did not go to the determination of the ambit of the CFI’s jurisdiction. Its jurisdiction was determined by the proper application of Article 5 of the JAL. Other arguments advanced by the Appellants had already been dealt with in his substantive reasons.
51. The Respondent had submitted in the alternative, that if clause 17.1 did not confer jurisdiction upon the Court, it followed that the DIFC CFI must be an “other court” for the purposes of clause 17.2 and that clause constituted an agreement between the parties engaging the gateway to jurisdiction in Article 5(A)(2). That was of necessity a true alternative to the Respondent’s primary submission as both submissions could not stand together. As Justice Martin had upheld the Respondent’s primary submission, it followed that it was neither necessary nor appropriate to determine a submission depending upon the hypothesis that the Respondent’s primary submission had been rejected.
The Permission Order
52. On 13 January 2021, Justice Martin made a formal order granting the Appellants’ permission to appeal against his Order of 1 October 2020.
Contentions of the Appellants
53. The clearest written statement of the Appellants’ case was set out in their Reply Submission in which it was said that newly instructed counsel sought to draw the strands together on the key issues. The primary Skeleton Argument itself had been somewhat discursive and addressed matters of discretion as well as matters of jurisdiction. It is convenient to focus upon the more rigorous outline in Section B of the Reply, which appeared under the title ‘Material Context and Core Submissions’. Paraphrasing the submissions they involved the following propositions:
(1) The Local Courts of the Emirate of Dubai predated the establishment of the DIFC Courts and continue in existence.
(2) The DIFC Courts were creatures of statute with a non-consensual exclusive jurisdiction, set out in Article 5(A)(1) of the JAL.
(3) The effect of the JAL is that each court’s jurisdiction should be specific, clear and express. There should be no doubt as to which court has jurisdiction over a particular dispute.
(4) There was no “opt in” provision at the establishment of the DIFC Courts. There was a limited “opt out” provision in Article 5(A)(2) which provided that “parties may agree to submit to the jurisdiction of any other court in respect of the matters listed under paragraphs (a), (b) and (d) of this Article.” That led to cases dealing with the submission that a reference to “courts of Dubai” or similar expressions amounted to an “opting out” of the DIFC Courts’ jurisdiction. The submission was accepted in Hardt v Damac9 but was said, effectively, to have been overruled in Taaleem. As appears later, Hardt was not overruled by Taaleem. The question determined in Taaleem had not been addressed in Hardt.
(5) Two important cases cited by Justice Martin following Taaleem, namely IGPL in the CA and Sunteck in the CFI were “opt out” cases. Their common proposition was that where the DIFC Court has jurisdiction under Article 5(A(1), specific, clear and express wording is required to displace that jurisdiction.
(6) In Sunteck, Justice Cooke had said it would be “nonsensical” to conclude that parties agreed to the jurisdiction of the DIFC Courts under Article 5(A)(1) but then to conclude that it was necessary to say specifically “that the courts of the DIFC” had jurisdiction. The Appellants said that that statement did not assist the Respondent. It would be equally nonsensical to conclude that “the courts of Dubai” was a specific, clear and express reference to the DIFC Courts only — so as to invoke a jurisdiction which the DIFC Courts did not otherwise have. This submission seemed to put to one side the possibility that concurrent jurisdiction can be agreed on the proper construction of “the courts of Dubai” and treated as clearly referring to the DIFC Courts as well as those onshore.
(7) In cases in which the DIFC Court has jurisdiction under Article 5(A)(1), a reference to the “courts of Dubai” is not a specific, clear or express reference to the local courts so as, in effect, to transfer jurisdiction to the local courts. A reference to the “courts of Dubai” is not a specific, clear or express reference to the DIFC Courts (so as, in effect, to transfer jurisdiction from the local courts to the DIFC Court) for the purposes of Article 5(A)(2). This was said to be the essence of the point made by Justice Al Madhani in his initial ex parte decision.
(8) The fundamental error in the approach of Justice Martin was said to be contained in paragraph 57 of his judgment in which he said:
“The fact that Credit Suisse AG was a DIFC Establishment at the time each Guarantee was signed, is a factor which points very strongly towards the conclusion that it was the mutual intention of the parties that the DIFC courts were to be included within the meaning of the expression “courts of Dubai”. In those circumstances, IGPL establishes that a very clear and express indication of a mutual intention to exclude the jurisdiction of the DIFC courts would have to be found.”
(9) The Appellants engaged with the alleged errors in that approach as follows:
(i) It is not necessary to have resort to the one time status of Credit Suisse AG to conclude that “courts of Dubai” includes both the DIFC Courts and the local courts. That is plain from the language, the context and all the case law subsequent to Hardt.
(ii) Where the DIFC Court does not have Article 5(A)(1) jurisdiction it is necessary to establish a specific, clear and express reference to the DIFC Courts in order to invoke the “opt in” jurisdiction in Article 5(A)(2). This is not achieved by a reference to the “courts of Dubai”.
(iii) There is a confusion or conflation of two issues — the first whether the “courts of Dubai” have jurisdiction (as opposed to some other court or courts outside Dubai) and the second — which of the courts within Dubai have jurisdiction. In an “opt in” case the second issue requires a specific, clear and express reference to the DIFC Courts. The necessity to go beyond the contractual language is a red flag as to the application of the specific, clear and express test. While the test does not specify particular wording, it would be a very rare case which satisfied it without explicit reference to the DIFC Court.
(10) The Appellants referred to other cases in which attempts to invoke jurisdiction under Article 5(A)(2) on the basis of similar wording had failed. The decisions referred to were CFI and Small Claims Tribunal decisions. While respect should be paid to those decisions, the decision of the CA does not depend upon a head count of cases in which attempts to invoke the jurisdiction had been unsuccessful at first instance.
(11) The Appellants then pointed to the choice of law adopted by the parties to the Guarantees, namely the laws of the Emirate of Dubai and applicable Federal Laws rather than DIFC Law. That selection was said to reflect an agreement to confer jurisdiction on the courts of the place in which that body of law would be applied. That was seen as antithetical to “a specific, clear or express reference” to the jurisdiction of the DIFC Court. The Appellants relied upon Taaleem for the proposition that the dissociation of substantive law from jurisdiction, though theoretically possible, was distinctly implausible.
(12) The Appellants noted that the Respondent had indicated that it relied upon clause 17.2 in the event that its argument for jurisdiction derived from clause 17.1 was unsuccessful. This was on the basis that the DIFC Court was an “other competent court” within the meaning of clause 17.2 of the Guarantees.
Protocol of Jurisdiction between Dubai Courts and DIFC Courts
54. On 7 December 2009, a document entitled “Protocol of Jurisdiction between DIFC Courts and Dubai Courts” was signed by Sir Anthony Evans, Chief Justice of the DIFC Courts and Dr Ahmad Bin Hazeem, General Director of the Dubai Courts. Some reference should be made to the Protocol as it was cited by the Appellants, but in the end does not determine the outcome in this case.
55. The Introduction to the Protocol declared the importance of jurisdiction and the requirement that courts identify their jurisdiction to hear and determine cases so that parties know the correct court to which their cases should be submitted. The Dubai Courts and the DIFC Courts were described as “pillars of the Dubai legal system”. The Introduction recorded that the Courts had agreed that both should have full judicial cooperation. It referred to a Memorandum of Understanding which had been signed on 16 June 2009.
56. The Purpose and Objectives of the Protocol were set out in paragraph 2. That paragraph referred to Article 5(A)(1)(b) of DIFC Law No 12 of 2004, setting out the exclusive jurisdiction of the CFI by reference to “civil or commercial cases and disputes arising from or related to a contract that has been executed or a transaction that has been concluded, in whole or in part, in the Dubai International Financial Centre … or an incident that has occurred in the Centre.” The Statement of Purposes noted that the terms “executed”, “transaction” and “incident” were not further defined nor did the Law set out legal procedures for transferring cases between the Courts. There were therefore challenges for interpretation. There was a need to create “an accurate mechanism to enable both Courts to interpret those rules and procedures in light of the applicable laws in the Emirate of Dubai”.
57. In paragraph 3 of the Protocol it was agreed that the DIFC Courts should have exclusive jurisdiction over:
“3.1 Civil or commercial cases and disputes involving the Centre or any of the Centre’s Bodies or any of the Centre’s companies, and branches of companies and establishments that are established or licensed to operate in the DIFC;
3.2 Civil or commercial cases and disputes arising from or related to a contract that is to be or has been performed in whole or in part within the DIFC.
3.3 Civil or commercial cases and disputes arising from or related to a transaction that has taken place, in whole or in part, in the Centre, and which is related to Financial Banking Activities, Financial Activities, Ancillary Activities or any Activities licensed to be performed within the DIFC;
3.4 Civil or commercial cases and disputes arising from or related to an incident that has occurred in the Centre, except Criminal Proceedings relating to any Criminal Offence according to the Penal Codes; and
3.5 Disputes about Civil remedies flowing from or related to any criminal Offence that has occurred in the Centre.”
58. Under clause 4, Dubai Courts were to have general jurisdiction except for the areas mentioned in subparagraph 3 of the Protocol.
59. Paragraph 5 observed that after a final judgment issued by either Dubai Courts or DIFC Courts to the effect that the relevant court had no jurisdiction to hear a case, the parties could submit the dispute to the other court to deal with it according to the applicable procedural rules of that Court.
60. Subparagraph 5.1 set out the procedures of the DIFC Court to be applied in the event that a DIFC Court issued a judgment that it had no jurisdiction. Subparagraph 5.2 made similar provision in relation to the procedures of the Dubai Courts in such a circumstances. Paragraph 6 set out General Conditions stating that:
“6.1 For the purposes of putting this Protocol into effect, both Courts shall cooperate to issue directions to their registries in regards to registration of cases which have no jurisdiction.
6.2 Both Courts shall include a copy of this Protocol on its websites in both Arabic and English.
6.3 Both Courts shall print and distribute information about the Jurisdiction procedures between the two Courts which may be given to the public and users of the two Courts.
6.4 The parties agree to use reasonable efforts to keep each other informed of any changes to their existing legal authority that would affect the implementation of this Protocol.”
61. Under subparagraph 7.1 the Protocol was to apply until a legislative amendment further defined the Jurisdiction between the two Courts and to identify the relevant Court to resolve any conflict of jurisdiction between the two Courts whether the conflict is positive or negative.
62. The Protocol predated the enactment of Article 5(A)(2) in its present form by Law No 16 of 2011.
63. The Protocol, as its name suggests, records a cooperative arrangement between the DIFC Courts and other Dubai Courts to avoid jurisdictional disputes and to facilitate transfer of cases from one court to another in the event that the first court holds it has no jurisdiction. Paragraphs 3 and 4 reflect the approach that the courts take to the division of jurisdiction between them. It is not to be supposed that the courts claimed a power to alter the statutory allocation of jurisdiction under the JAL.
The Appellants’ Protocol Argument
64. The Appellants argued that the Protocol remains in force. While it might have to be interpreted in the light of the “opt in” amendment to Article 5(A)(2), the substantive point remained — there should be no case in which the courts differ as to which has jurisdiction.
65. No case of conflict of jurisdiction arose on this appeal. It is sufficient to say that while the Protocol may regulate relationships between the courts it cannot determine the correct interpretation of Article 5(A)(2) of the JAL. If there be a case in which both the DIFC Courts and the onshore courts have concurrent jurisdiction, then plainly it is open to those courts to adopt a protocol and practices and procedures which will avoid any unseemly jurisdictional competition between them. It cannot overturn the statutory conferral of jurisdiction. Rather, it informs the circumstances in which the courts will accept or decline jurisdiction. The issue before this Court is not one of discretion. In this context and for completion, reference should be made to Decree No 19 of 2016.
Decree No 19 of 2016
66. On 9 June 2016, the Ruler of Dubai issued Dubai Decree No 19 of 2016 “Concerning the establishment of a Judicial Tribunal for the Dubai Courts and DIFC Courts”. The Decree set up a Judicial Committee to deal with intra-Emirati conflicts of jurisdiction between the DIFC Courts and the Dubai Courts. It comprises the President of the Dubai Court of Cassation, the Chief Justice of the DIFC Courts, the Secretary-General of the Judicial Council, the President of the Dubai Court of Appeal, a Judge of the DIFC CA, the President of the Dubai Court of First Instance and a Judge of the DIFC Court of First Instance.
67. Under Article 2 of the Decree, the Judicial Committee has the power to:
“(1) Determine the competent court to hear a claim or application in respect of which there may arise a conflict as to whether the Dubai Courts or the DIFC Courts have jurisdiction.
It is not necessary for present purposes to explore the relationship between the Decree and the provisions of the JAL. Nor is it necessary to consider the status of the Protocol in light of the Decree. It may be noted, however, that one of the functions of the Judicial Committee is to give opinions on matters relating to cooperation and coordination between the two court systems.
The Respondent’s Submissions
68. The Respondent’s submissions were set out in its skeleton argument dated 4 February 2021. Essential elements of its arguments were as follows:
(1) Whether clause 17.1 is an agreement conferring jurisdiction on the DIFC Courts depends upon the interpretation of the Guarantees and the phrase the “courts of Dubai”.
(2) The Guarantees are governed by the “laws of the Emirate of Dubai and the applicable Federal Laws of the United Arab Emirates”. The UAE Civil Code addresses how contracts are to be construed.
(3) Under Article 265 of the UAE Civil Code:
“(a) If the wording of a contract is clear, it may not be departed from by way of interpretation to ascertain the intention of the parties.
(b) If there is scope for interpretation of the contract an enquiry shall be made into the mutual intentions of the parties without stopping at the literal meaning of the words and guidance may be sought in so doing from the nature of the transaction and the trust and confidence which would exist between parties in accordance with the custom current in dealings.
(c) Subjective or “covert” intentions of the parties are not taken into account in interpreting the contract.”
(4) Justice Martin correctly summarised the approach to interpreting the Guarantees when he said:
“… the task of the Court is to ascertain the joint intention of the parties. That intention is to be derived by construing the words which they have used to record their agreement objectively, as they would be understood by a reasonable business person having knowledge of the circumstances known to the parties at the time they entered into their contract.”10
That approach has been endorsed by the CA in Taaleem.
(5) Taaleem and IGPL also establish that the expression “the courts of Dubai” in its ordinary meaning includes all the courts established in Dubai by the Emirates’ legislation including the DIFC. It is not limited to the non-DIFC Courts.
(6) The Appellants knew or are to be taken to have known that the other party to the Guarantees was a DIFC Centre Establishment and that the DIFC Courts would therefore have jurisdiction over litigation concerning the Guarantees. That is a powerful indicator that the objective intention of the parties was to confer jurisdiction on the DIFC Courts rather than only on the non-DIFC Courts of Dubai.
(7) The Guarantees must be construed at the time they were entered into. The terms of the Guarantee Transfer Agreements provided that the Guarantees would be subject to the same enforcement provisions as referenced in the Guarantees, ie clause 17. Therefore no change was made to the jurisdiction provisions when there was an opportunity to do so.
(8) Justice Martin was right to find that there was an agreement which complied with Article 5(A)(2) of the JAL.
69. The Respondent’s submissions then went on to address the various grounds in the Notice of Appeal, however the essence of its argument was set out in the propositions outlined above and it is not necessary to repeat their elaboration. The Respondent also sought to invoke clause 17.2 of the Guarantees as an alternative basis for upholding Justice Martin’s order dismissing the jurisdiction application.
70. Given the emphasis placed on the decision of Taaleem, Sunteck and IGPL it is appropriate briefly to review those cases and what they decided which may be relevant to this appeal.
71. Taaleem PJSC v (1) National Bonds Corporation PJSC and (2) Deyaar Development PJSC was a decision of Justice Sir John Chadwick, sitting as the CFI. The judgment was delivered on 21 November 2010.
72. Taaleem challenged the jurisdiction of the DIFC Court to entertain a claim by Taaleem for declarations about its liabilities under a written agreement with National Bonds Corporation (“NBC”) and a novation agreement involving NBC and Deyaar Development.
73. The case concerned the application of Article 5(A)(2) of the JAL as it stood before the 2011 amendment under which Article 5(A)(2) took its present term.
74. The jurisdiction provision in the principal agreement of 6 July 2008 provided:
14.1 Each of the Parties irrevocably agrees for the benefit of the Seller that the courts of Dubai, UAE shall have jurisdiction to hear and determine any suit, action or proceedings, and settle any disputes which may arise out of or in connection with this Agreement (respectively ‘Proceedings’ and ‘Disputes’) and for such purposes, irrevocably submits to the jurisdiction of such courts.”
75. The challenge to jurisdiction of the DIFC Court in this case was based upon an argument that properly construed the term the “courts of Dubai, UAE” did not encompass the DIFC courts.
76. In rejecting the application, Justice Chadwick observed that:
“The Dubai Courts and the DIFC Courts are each integral parts of the Dubai legal system: they are each “Courts of Dubai”.11
“The premise on which [the] challenge is based is that clause 14.1 of the Murabaha agreement contains an agreement between the parties, to which effect should be given pursuant to Article 5(A)(2) of the Judicial Authority Law, to submit disputes under the Murabaha agreement to the Dubai Courts rather than to the DIFC Courts. But that is to equate the phrase “the courts of Dubai, UAE” with the “Dubai Courts” to the exclusion of the “DIFC Courts”. As I have explained, on a proper understanding of the position within the Emirate of Dubai, both Dubai Courts and DIFC Courts are “courts of Dubai”. Absent come compelling context — which does not exist in the present case — there is no basis for holding that the phrase “courts of Dubai, UAE” means the Dubai Courts rather than the DIFC Courts. … The better view is that, by the use of that phrase in the Murabaha agreement, the parties have agreed to litigate disputes in Dubai, rather than somewhere else, but without choosing which between the two court systems in Dubai: that is to say, they have agreed to submit their disputes to whichever of the Dubai Courts and the DIFC Courts has jurisdiction under the laws of Dubai. Those laws include Dubai Law No 9 of 2004, and the Judicial Authority Law. And, as I have said, the question which of the Dubai Courts and the DIFC Courts has jurisdiction over the dispute under the laws of Dubai now falls to be decided with regard to the Protocol of Jurisdiction.”12
That last sentence should not be taken as embodying a suggestion that the Protocol somehow altered the statutory allocation of jurisdiction, but was rather directed to whether which court would accept and which court would decline jurisdiction. Justice Chadwick referred to an earlier decision of the CFI, Hardt v Damac (DIFC) Company Limited13. In that case, which was cited by the Appellants, Justice Sir Anthony Colman, sitting as the CFI, considered contracts which provided that:
“… the Parties agree that any legal action or proceeding with respect to this Agreement shall be subject to the exclusive jurisdiction of the Courts of Dubai, United Arab Emirates.”14
He treated the term “the Courts of Dubai” and the term “the DIFC Courts” as mutually exclusive. However, Justice Chadwick in Taaleem pointed out it was also clear that the proposition that the DIFC Courts were courts of Dubai had not been argued in Hardt. The true distinction was not between the DIFC Courts and the Courts of Dubai. The true distinction was between the DIFC Courts and the Dubai Courts in the sense defined in Article 2 of the JAL, that is to say “Courts of the Emirate established pursuant to Law (No 3) of 1992”.
77. Thus, on a proper reading of the judgment in Taaleem it did not overrule the decision in Hardt because the question in Taaleem had not been considered in Hardt.
Investment Group Private Limited
78. Investment Group Private Limited v Standard Chartered Bank15 was a decision of this Court, delivered on 18 November 2015. The appeal was brought against an order of Justice Sir David Steel, dismissing the appellant’s application for an order that the DIFC Court had no jurisdiction in the matter before him and an alternative submission that the CFI should decline jurisdiction on the ground of Forum Non Conveniens. It is sufficient to focus upon the first ground.
79. The agreements out of which the disputes arose in that case used the following terms to describe the courts which would have jurisdiction over any dispute:
(1) The Courts of the United Arab Emirates.
(2) The non-exclusive jurisdiction of the Dubai Courts.
The first term was used in a Loan Agreement, the second in a Share Pledge Agreement. The SCB commenced proceedings against IGPL in the CFI on 6 April 2014. On 15 January 2015, IGPL commenced proceedings against SCB in the Sharjah Civil Court seeking damages for alleged breaches of the agreements.
80. Applying the broad approach set out in Taaleem the CA did not accept IGPL’s submission that the phrase “Dubai Courts” in the Share Pledge Agreement referred only to non-DIFC Dubai Courts. Nor did they accept the submission that the phrase “courts of the UAE” in the Loan Agreement referred only to the UAE Federal Judicial Authority. They rejected the proposition that on a proper construction, the choice of court clauses in the agreements did not give SCB an option to commence proceedings in the DIFC Courts.
81. A key passage in the CA’s reasoning in IGPL appears at paragraph 128:
“The DIFC Courts, established under the Judicial Authority Law, is an independent judicial authority in the Emirate of Dubai. However, it is nevertheless an integral part of the Emirate’s judicial system, a fact that was recognized by the DIFC Courts in [Taaleem]. The judgments issued by the DIFC Courts are in the name of His Highness, the Ruler of Dubai. Within the Emirate of Dubai, these judgments are directly enforceable by the competent authority within Dubai Courts as if they were, for enforcement purposes, judgments of the non-DIFC Dubai Courts.”
82. The CA endorsed the decision in Hardt, but observed that it was important to appreciate the special facts in Hardt which underpinned it, facts not present in IGPL. Another case mentioned, Dhir,16 concerned an arbitration agreement and the designation of an arbitral seat by reference to the “Emirate of Dubai”. The question before the DIFC Courts in that case had been which of two alternative seats the parties intended to choose by the phrase “Emirate of Dubai”. The Court in Dhir drew a sharp distinction between the DIFC and the Emirate of Dubai. The CA considered the analysis in Dhir inapposite because the question which it had to decide in IGPL was what the parties intended the phrase “Dubai Courts” in a jurisdiction agreement to encompass. The Court observed:
“With jurisdiction agreements, and in contrast with choosing arbitral seats, parties are free to (and often do) confer jurisdiction on more than one forum. In the present case, the parties could have intended the phrase “Dubai Courts” to mean (i) only the non-DIFC Dubai Courts (as IGPL contends), (ii) only the DIFC Courts, or (iii) both (as SCB contends).”17
The Court posed to itself the constructional question:
“Was there any reason why the parties would wish to deprive themselves of the benefit of one of two closely related and complementary forums in Dubai?”18
Where the meaning of “Dubai Courts” in a jurisdiction agreement was concerned, the choice of non-DIFC Dubai Courts and the DIFC Courts were not mutually exclusive.19
83. The Court held that the ordinary meaning of the phrase “Dubai Courts” must include all the courts and judicial committees formed within the territory of Dubai and established by the Emirate’s legislation regardless of whether these courts exercise separate jurisdictions.20
84. On 15 November 2017, Justice Cooke delivered judgment in Sunteck Lifestyles Limited v (1) Al Tamimi and Company Limited (2) Grand Valley General Trading Llc.21 On 21 October 2017, he had granted an ex parte injunction against the defendants preventing the release of documents held by the first defendant pursuant to the terms of an escrow agreement made between the claimant and the second defendant on 28 June 2015. The escrow agreement was an addendum to a joint venture agreement. The second defendant in the case challenged the jurisdiction of the court to grant the injunction on the basis that the parties to the escrow agreement had agreed to the jurisdiction of the onshore Dubai court.
85. Justice Cooke was dealing with the provisions of Article 5 of the JAL as amended in 2011. The relevant provision of the escrow agreement provided:
“This agreement shall be governed and construed in accordance with the law of United Arab Emirates as applied by the courts of the Emirate of Dubai. The Parties hereto irrevocably consent to the jurisdiction of the courts of Dubai for the resolution of disputes with respect to this agreement and agree to comply with all the requirements necessary to give such court jurisdiction.”
86. Justice Cooke did not regard that provision as an exclusive jurisdiction clause. The Courts of the DIFC and onshore Dubai operate in the same country. The parties must be taken to have chosen one system or another and, by so doing, conferred jurisdiction on that system in contra-distinction to the other. In the context of prior authorities dealing with the “opt out” available under former Article 5(A)(2) from the mandatory jurisdiction in Article 5(A)(1), it was necessary to show that the parties intended to confer jurisdiction in respect of the dispute in question on a court other than the DIFC Courts. The Court had to ascertain the ordinary and natural meaning of the words of the jurisdiction agreement as they would have been mutually understood by the parties having regard to the background circumstances, the nature of the agreement and the context in which the words were used. Taaleem, Corinth Pipeworks SA v Barclays Bank Plc22 and Injazat v DWS23 showed that where the form of words used referred simply to the Courts of Dubai or equivalent technology they were apt to apply to both the courts of DIFC and onshore Dubai.
87. On the facts of the case, if the parties intended the relevant documents to be held in escrow by the Al Tamimi DIFC Limited Company in the DIFC, it made the DIFC Courts the logical choice whatever the governing law of the JVA to which it was appended. The second defendant in that case had submitted that for Article 5(A)(2) to confer jurisdiction on the DIFC Courts in a civil or commercial claim “where the parties agree in writing to file such a claim, the agreement must be made pursuant to specific, clear and express provisions”. This it contended meant that the provision in question was not one which the Court would need to construe. In considering what was meant by “specific, clear and express provisions” Justice Cooke said:
“At the end of the day, it would be nonsensical to conclude that the parties had agreed to the jurisdiction of the DIFC Courts, as opposed to the onshore courts but that the words were not sufficiently “specific, clear or express” to amount to an agreement for the purposes of Article 5(A)(2) of the amended JAL, with the result that the matter would have to be determined in the onshore courts. If the purpose of the amended JAL had been to allocate all cases with Dubai choice of law agreements to the onshore courts unless the relevant agreement included the actual words “the courts of the DIFC”, “the courts of the Dubai International Financial Centre” or “DIFC” in some form, that is what the provision would have said. What it is looking for is an agreement which is specific enough and sufficiently clearly expressed to amount to a choice of the DIFC Courts.”24
88. In any event, Justice Cooke decided that the Court had jurisdiction.
89. It is a constitutional fact in the Emirate of Dubai, that the courts of Dubai are the courts created by the Laws of the Emirate. When the term “the courts of Dubai” is used in a contract the ordinary meaning, absent context and purposes pointing in a different direction, refers to all of the courts of Dubai. When, by an agreement, the parties subject themselves to the jurisdiction of “the courts of Dubai” an important contextual limit is that only those courts which have relevant jurisdiction would be covered. Where the jurisdiction of a relevant court is required by law to be enlivened by the agreement of the parties, as in Article 5(A)(2), it is still able to be embraced within the ordinary meaning of “the courts of Dubai”.
90. There are two questions to be determined in this appeal:
(1) What is the proper construction of the choice of court provision in the Guarantees read with the Transfer Agreements?
(2) If, properly construed, the choice of courts provision confers jurisdiction on the DIFC Courts, whether exclusively or on all relevant Dubai courts, is it effective to enliven the jurisdiction of the DIFC CFI pursuant to Article 5(A)(2)?
91. The cases point to a default position in which the DIFC CFI is included within the terminology “the courts of Dubai” along with the onshore courts.
92. The Guarantees were originally entered into between the Appellants and Credit Suisse AG, a “DIFC Establishment” within the meaning of the JAL. By reason of that fact, the CFI had exclusive jurisdiction by operation of Article 5(A)(1)(a) of the JAL in relation to disputes arising under the agreement. There is nothing to suggest that by the use of the term “the courts of Dubai”, used in the Guarantees at the time of their execution, the parties intended to opt out of the jurisdiction of the CFI, albeit they may be taken to have ‘opted in’ to the jurisdiction of the onshore courts as well.
93. The construction of the term “courts of Dubai” did not change by reason of the transfer. That conclusion is reinforced by the words of clause 7 of the Guarantee Transfer Agreements:
“… any dispute or claim (including any non-contractual dispute or claim) arising out of or in connection with the agreement which relates to any provision of the guarantee (as transferred and amended) shall be subject to the same enforcement provisions as referred to in the guarantee.”
94. The transfer from Credit Suisse AG to the Respondent had the effect that the Guarantees read with the Guarantee Transfer Agreements no longer enlivened the exclusive jurisdiction conferred upon the DIFC CFI by Article 5(A)(1)(a). However, to say that does not say that as a matter of construction the parties had abandoned their judicial horse. The term “courts of Dubai” in the Guarantees should still be taken to refer, as they did from the outset, to the DIFC CFI and to the other Dubai courts.
95. There is no proper basis to reinterpret the term following the Transfer Agreement as excluding the DIFC CFI courts. The question remains whether the use of the term “the courts of Dubai” is sufficient to enliven the jurisdiction conferred by Article 5(A)(2). The argument against that conclusion is that the provision in which it appears is not “specific, clear and express” as required by Article 5(A)(2).
96. Once it is accepted as a matter of contractual construction that the parties had intended to agree that the DIFC CFI should continue to be a repository of jurisdiction over their disputes, it would be a triumph of form over substance to hold that they failed because they did not use the term “DIFC Courts”.
97. This is not a case in which, as the Appellant contended, the red flag of constructional choice is raised. Initial construction of the term in the Guarantees, read in the context of Article 5(A)(1) was clear. There is nothing to suggest that it changed because another party was substituted for the DIFC Establishment.
98. There was lack of ambiguity in the terms “the courts of Dubai” in the Guarantees as originally executed — covering as it did on its proper construction, the DIFC CFI. That clarity was not lost when the parties changed. The lack of ambiguity in the circumstances of this case was sufficient to treat the term “the DIFC Courts” as a specific, clear and express reposing of the relevant jurisdiction in the DIFC Courts, albeit that it may also have covered the onshore courts. The proposition may be tested by the hypothesis that clause 17.1, contrary to the fact, had specified “the DIFC Courts and other courts of Dubai”. There would have been no room for argument in relation to specification of the DIFC Courts. When on its proper construction the term “the courts of Dubai” means the same as the hypothetical alternative, the requisites of Article 5(A)(2) are not lost.
99. It makes no difference to that conclusion that the parties specified the Laws of the United Arab Emirates as the governing laws. That did not affect the construction of “the courts of Dubai” in the Guarantees as essentially executed for the reasons already given. The choice of governing law is not determinative of the choice of jurisdiction.
100. It must be emphasised of course, that the construction of terms such as “courts of Dubai” and “the courts of the Emirate” will depend upon their particular context. The history of the transactions in issue in this case is central to the constructional conclusion. It does not answer the question of construction for every case in which the term “the courts of Dubai” is used. As the DIFC Courts Practice Direction No 1 of 2015 implies, parties wishing to provide for the jurisdiction of the DIFC Courts under Article 5(A)(2) would be well advised to use that terminology.
101. That said, on the construction of the jurisdiction provision in this case, the appeal must be dismissed.
102. On the question of costs, each party submitted a Statement of Costs. The Court will deliver a separate ruling on the issue of costs.
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