May 04, 2023 COURT OF APPEAL - JUDGMENTS
Claim No: CA 015/2022
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: H.E. JUSTICE SHAMLAN AL SAWALEHI, JUSTICE LORD ANGUS GLENNIE, JUSTICE ROBERT FRENCH
HORIZON ENERGY LLC
AL BUHAIRA NATIONAL INSURANCE COMPANY
|30 January 2023
|Ms Zoe O’Sullivan KC with Mr Gregor Hogan instructed by Holman Fenwick Willian Middle East LLP for the Claimant/Appellant
Mr Nicolas Craig KC instructed by Clyde & Co for the Defendants/Respondents
|19 April 2023
AMENDED JUDGMENT OF THE COURT OF APPEAL
UPON the First Defendant’s Application No. CFI-098-2021/1 dated 27 December 2021 contesting jurisdiction (the “Jurisdiction Application”)
AND UPON the Order with Reasons of Justice Roger Giles dated 27 April 2022 dismissing the Jurisdiction Application (the “Order”)
AND UPON the First Defendant’s Appeal Notice dated 18 May 2022 seeking permission to appeal against the Order (the “First PTA”)
AND UPON the Order of Chief Justice Zaki Azmi dated 5 August 2022 dismissing the First PTA
AND UPON the First Defendant’s Second Appeal Notice dated 26 August 2022 seeking permission to appeal the Order (the “Second PTA”)
AND UPON the Order of H.E. Deputy Chief Justice Ali Al Madhani dated 25 November 2022 granting the Second PTA
AND UPON hearing counsel for the Appellant and counsel for the Respondent on 30 January 2023
AND UPON reading the submissions and evidence filed and recorded on the Court file
IT IS HEREBY ORDERED THAT:
1. The appeal is dismissed.
2. The Appellant shall pay the Respondent’s costs, to be assessed by the Registrar if not agreed.
Date of issue: 19 April 2023
Date of re-issue: 4 May 2023
SCHEDULE OF REASONS
1. This appeal concerns the jurisdiction of the Court of First Instance (“CFI”) of the Dubai International Financial Centre (“DIFC”) to entertain an action by an insurer for a declaration that an insurance policy has been avoided. The Appellant contended, unsuccessfully at first instance, that Federal Law No 6 of 2007 (“Insurance Law”) requires resort to a UAE Court other than the DIFC CFI. In this case the relevant insurance policies contained a jurisdiction clause which subjected the parties to “the exclusive jurisdiction of the Courts of the United Arab Emirates”. The Appellant argued for a preclusive effect of Article 110 of the Insurance Law, which provides an administrative dispute resolution process using administrative committees to whom insured parties may make complaints and whose decisions are subject to challenge in courts of “competent jurisdiction”.
2. As appears below, this Court does not accept that the asymmetric dispute resolution mechanism provided by Article 110 operates to deprive the DIFC Courts of jurisdiction to entertain claims by an insurer against the insured, including a negative declaration to the effect that the relevant policy has been avoided.
3. A threshold argument advanced by the Respondent that the appeal should not be entertained for failure by the Appellant to comply with procedural requirements was not accepted by the Court.
4. The following factual background is taken from the Reasons of the trial judge, Justice Roger Giles, delivered on 27 April 2022 (“CFI Judgment”).
5. In June 2015, the Respondent, which is based in Sharjah, insured the Appellant and its subsidiaries and affiliates under a Marine Hull and Machinery Policy and a Marine Hull War Policy (the “Policies”). The Policies covered a number of vessels including a 55,909 GT tanker, the “BETA”, owned by a Liberian incorporated subsidiary of the Appellant. The insured value was USD 70 million. The claim giving rise to these proceedings was based upon the disappearance of the vessel.
6. It was common ground that from around May 2019 the vessel was in the service of the Iranian Navy under the name “MAKRAN”.
7. The first written notification of a loss to the Respondent was given on 18 November 2020. It contained a statement that the vessel had disappeared and requested the Respondent to “take the required and immediate procedures for compensating the insured and beneficiary of the insurance contract …”. The Respondent answered on 30 December 2020 that the subject was under consideration. It sought further details on 6 January 2021 and sent a number of specific questions on 6 April 2021 relating to the location of the vessel and the circumstances of its disappearance. A response was provided on 9 June 2021. A number of meetings followed between representatives of the Appellant and the Respondent.
8. The Respondent’s lawyers wrote to the Appellant on 21 September 2021 stating that the Respondent had not been provided with the necessary information “to confirm their coverage position”. On 25 October 2021, the Appellant gave formal notice of a claim for the loss and sought written confirmation within seven days that the claim was covered under the War Policy. It reserved its right to claim under the Hull and Machinery Policy.1 The Respondent acknowledged receipt of the claim on 2 November 2021 and said it would revert in due course. However, on 7 November 2021 the Appellant and its affiliate made a complaint to the Insurance Authority (the “Authority”) purportedly pursuant to Article 110 of the Insurance Law. It asserted, inter alia, that the vessel had been “exposed to embezzlement, detention and/or arrest or confiscation by persons not related to the Iranian Government, and/or Iranian Marine”. It said that the Respondent had not replied to the notification of 25 October 2021 and that “to date, the [Appellant] did not receive any clear reply from the [Respondent] in respect of the insurance cover.” It sought an order from the committee that the Respondent “execute its obligation as per the insurance policy conditions” and pay USD 70 million plus interest2.
9. The Respondent received the complaint on the day it was filed and advised the Authority that a reply to the claim would be prepared within 10 days.
10. On 10 November 2021, the Respondent’s lawyers wrote to the Appellant referring to the claim served that day and saying that the purpose of the letter was to formally notify of the Respondent’s decision to avoid the Policies.
11. On 11 November 2021, the Respondent commenced proceedings in the CFI claiming declarations that the Appellant’s Policies were avoided on the grounds of misrepresentation and that it was not liable to the Appellant for that reason. In the alternative, declarations were sought that the Appellant’s claim for its loss did not fall within the cover provided by the Policies. The Authority was informed on 16 November 2021.
12. The Appellant applied to the CFI to have the claim form and its service set aside on jurisdictional grounds and, in the alternative, to have the Respondent’s claims struck out as an abuse of process. On 27 April 2022, Justice Giles found that the CFI had jurisdiction over the Respondent’s claim under Article (5)(A)(2) of the Judicial Authority Law, on the basis that the DIFC Courts is one of the courts of the United Arab Emirates within the meaning of the jurisdiction clause in the Policies. He also held that the Respondent’s claim was not an abuse of process.
13. On 13 June 2022, the Authority held that it had no jurisdiction over the Appellant’s complaint because there was an arbitration clause in the Policies. It is common ground that there is in fact no such arbitration clause.3
14. On 7 July 2022, the Appellant instituted proceedings in the Courts of Sharjah, on the basis that those courts are the “competent court of first instance” under Article 110(4) of the Insurance Law, which is set out below. The Appellant sought to challenge the decision of the Authority that it had no jurisdiction. It sought to have the Authority’s decision annulled and the complaint remitted to it for reconsideration or for indemnification under the Policies.
15. On 5 August 2022, Chief Justice Azmi refused the Appellant’s application for permission to appeal against the decision of Justice Giles on 27 April 2022.
16. On 6 September 2022, H.E. Deputy Chief Justice Ali Al Madhani refused the Respondent’s application for an interim anti-suit injunction restraining the Appellant from pursuing its proceedings in the Sharjah Courts.
17. On 9 November 2022, H.E. Deputy Chief Justice Ali Al Madhani refused the Respondent’s application for a final anti-suit injunction. On 19 January 2023, His Excellency granted the Respondent’s application for permission to appeal and for an interim anti-suit injunction pending the determination of the appeal. That appeal was still pending at the date of hearing this appeal.
18. On 25 August 2022, a second application for permission to appeal against the judgment of Justice Giles on the jurisdictional question was made, this time to the Court of Appeal under RDC 44.29. On 25 November 2022, His Excellency Deputy Chief Justice Ali Al Madhani granted the application on two out of the five grounds of appeal, only one of which is now pursued. He also referred a question of the construction of RDC 44 for consideration by the Court of Appeal.
The contractual jurisdictional provision
19. Each of the Policies contained a provision in the following terms:
“This contract shall be governed by and construed in accordance with the English law and each party agrees to subject to the exclusive jurisdiction of the courts of the United Arab Emirates. The arbitration contract shall also be subject to the law and jurisdiction of the United Arab Emirates.”
20. It was common ground that the parties had not entered into an arbitration agreement in or in relation to the Policies.
The jurisdiction of the CFI
21. The Respondent invoked the jurisdiction of the DIFC CFI conferred by Article 5(A)(2) of Federal Law No 12 of 2002 (Judicial Authority Law), which relevantly provides:
“(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.”
The Constitutional Framework
22. The Constitution of the United Arab Emirates sets out in Article 120, 19 matters on which the Union shall have exclusive legislative and executive jurisdiction. Article 121 provides:
“Without prejudice to the provisions of the preceding Article, the Union shall have exclusive legislative jurisdiction in the following matters:
- Insurance of all kinds
- Major legislation relating to the penal, civil, and commercial transactions and company law, procedures before the civil and criminal courts;
- Organising the Free Zone areas, determining the method of creation of such zones and the scope of its exception from the implementation of Federal Laws.”
The last paragraph was added by Constitutional Amendment (No 1) made 10 January 2004.
Federal Law No 8 of 2004 Concerning Financial Free Zones
23. Article 2 of Federal Law No 8 of 2004 provides that:
“A Financial Free Zone shall be established by a Federal Decree. It shall have a body corporate and shall be duly represented by the President of its board. It and no one else shall be responsible for the obligations arising out of the conduct of its activities. The Cabinet will prescribe is area and location.”
24. Article 4 provides, inter alia:
“The Financial Free Zones shall abide by the following:
(4) The carrying out of insurance in the State shall be restricted to reinsurance.”
Federal Decree No 35 of 2004 To Establish Financial Free Zone in Dubai
25. Federal Decree No 35 of 2004 created the DIFC as a Financial Free Zone in Dubai. The Federal Cabinet by Cabinet Resolution set out the geographic boundaries of the DIFC.
Federal Law No 6 of 2007 (Insurance Law)
26. The Insurance Law is described in its long title as “Federal Law No.6 of 2007 on the Establishment of the Insurance Authority & Organization of its Operations”.
27. Article 1 contains definitions of terms used in the law including:
|Any insurance company incorporated in the State or foreign company licensed to carry out insurance operations in the State according to the provisions of the Law herein.
|The person who has concluded an insurance contract with the company.
|Insurance Policy (Insurance Contract) :
|The insurance document (policy) concluded by the insurer and insured containing the terms and conditions of the contract between the two parties, their obligations, and rights or the rights of beneficiary of the insurance or any endorsements therein.”
28. Article 2 sets out the application of the Law:
“1. The provisions of the law herein shall apply to the insurance companies incorporated in the State and the foreign companies licensed to perform the activity in the State including the companies engaged in the operations of cooperative insurance and takaful insurance or the operations of reinsurance provided for in the law herein and the insurance professions related thereto.
2. The provisions of the law herein shall not apply to the companies operating in the free zones in the State unless specifically provided for in the law herein.”
29. Article 3(1) defines an insurance contract thus:
“1. An insurance is a contract pursuant thereto the insurer shall be obliged to pay the insured or the beneficiary whose in his favour the insurance has been concluded a sum of money, regular proceeds or other monetary indemnity in case the insured accident or risk occurred, in return of installments or any other monetary sums paid by the insured thereto.” (sic)
30. Article 3(2) gives statutory force to the insurer’s obligations under the insurance contract:
“2. The insurer shall pay the indemnity provided for in the insurance contract to the insured or the beneficiary, as the case might be, as soon as the insured accident or risk occurred and thereupon the insurer shall legally subrogate the insured or the beneficiary in respect of the rights or obligations of each one of them.”
31. The Authority is established by Article 6 as an administrative body, as appears from Article 6(1):
“An authority to be called The Insurance Authority, entertaining the status of a legal person with financial and administrative independence shall be established, and shall have an independent budget subjoined to the State’s budget. In such capacity, the Authority shall perform all operations and actions enabling it to achieve the objectives and duties assigned thereto pursuant to the provisions of the law and shall be an annexed (sic) to the Minister.”
32. The purposes of the Authority are set out in Article 7 and include:
“… organizing and overseeing the insurance sector in a way that would ensure suitable environment to develop it and enhance the role of the insurance industry to secure lives, properties, and liabilities against risks in order to protect the national economy; collect, develop, and invest the national savings to sustain the economic development of the State; encourage fair and effective competition; provide the best insurance services in competitive premiums and coverage, and Emiratize the insurance markets jobs and for the cause the Authority shall carry out the following duties:
1. Protecting the rights of the insured and the beneficiaries of the insurance operations and monitoring solvency of the companies to avail satisfactory insurance coverage in order to protect these rights.”
33. The composition of the Authority is set out in Article 9 and constitutional provisions relating to its Board in following Articles. One of the functions of the Board under Article 12(3) is:
“Issuing the necessary directives to implement the provisions of the law herein, and the regulations, and rules, issued pursuant thereto.”
34. Under Article 15, the Director General is required, among other things, to:
“4. Prepare draft laws, regulations, rules, directives and decisions issued in conformity with the provisions of the law herein related to insurance operations and refer the same to the Board.
7. Issue the necessary decisions as may be authorized pursuant to the provisions of the law herein.”
35. Article 68 provides:
“Insurance companies licensed to operate in the free zones shall not carry on any activity outside these zones other than the activity of re-insurance.”
36. Chapter 5 is entitled “General Provisions”. Article 110, initially in a short form, was replaced by virtue of Article 1 of Federal Law No. 3 of 2018 dated 25/04/2018 and now provides as follows:
“1. The insurance company shall process the insurance claims according to the legislations in force and the provisions of the insurance policies based on the following procedures:
(a) Decisions shall be issued concerning any insurance claim according to instructions of the profession rules and ethics.
(b) In the event the claim is fully or partially rejected, the Company shall explain the reasons for its decision in writing.
(c) Should a dispute arise concerning any claim, the concerned party shall have the right to submit a written complaint to the Authority which shall also have the right to ask the Company to provide clarifications.
(d) The complainant in case of objection to the clarifications provided by the Company, may request that the dispute be referred to the Committee formed by virtue of Article (110).
2. One or more committees shall be formed in the Authority to be in charge of settling the disputes arising from the insurance policies, activities and services. This committee shall have the power to request any instruments or documents, have recourse to experts, hear witnesses or adopt any other alternatives to settle the disputes brought before it.
3. Claims related to the disputes arising from the insurance policies, activities and services may be only accepted after bringing these disputes before the committees formed according to the provisions of Clause 2 hereof.
4. The concerned party shall have the right to challenge the decisions of the committees before the competent court of first instance within 30 days as of the date of their notification of said decision; otherwise, the decision shall be deemed final and enforceable.
5. The Board shall issue the necessary decisions concerning the formation of the committees according to the provisions of Clause 2 hereof, their competencies, powers, work system, remuneration of their members, experts to which these committees shall have recourse, insurance types and branches concerning which insurance disputes and all other related matters may be resolved before these committees.”
Insurance Authority Board Resolution No 33 of 2019
37. An Insurance Authority Resolution, No. 33 of 2019, provided for the formation of committees which were to report administratively and financially to the Authority (Article (2)1). A committee was required to hear insurance disputes filed before it neutrally and objectively, taking into account the legal provisions related to the subject matter of the dispute, regulations, instructions and resolutions issued thereunder and the generally accepted insurance principles (Article (2)3). The Authority was empowered to assign the chairmanship of the committees to a delegated judge in coordination with the competent authorities (Article (3)2). The competencies of the committees were set out in Article (4):
“The Committees shall be competent to settle and resolve Insurance Disputes of all types and classes of insurance arising from the complaints of the Insured, Beneficiaries and the injured parties who have an interest, against the Company exclusively, of any value whatsoever, whether estimated or not.”
Under Article (5) the Committees are not competent to deal with Insurance Disputes that are subject to an arbitration clause.
The Primary Judge’s Reasons
38. The Primary Judge cited recent authority of this Court on the question of the sufficiency of jurisdictional provisions in contracts to confer jurisdiction on the DIFC CFI. In particular, His Honour referred to Goel v Credit Suisse (Switzerland) Ltd  DIFC CA 002; Laabika v Ladu  DIFC CA 008 and IGPL v Standard Chartered Bank  DIFC CA 004. His Honour concluded, after those references:
“12. In short, the agreements in the Policies on the jurisdiction of the courts of the United Arab Emirates (the “UAE”) in their ordinary meaning confer jurisdiction on the DIFC Courts, as courts of the UAE, and are specific, clear and express provisions in that respect, unless there is reason from their text or the surrounding circumstances to give them a different construction.”
39. The Appellant submitted before His Honour that the jurisdictional provisions in the Policies should be given a different construction. They should be understood as agreements to submit disputes under the Policies to the Sharjah courts and, alternatively, to the onshore courts of the UAE excluding both the DIFC Courts and the courts of the AGDM.
40. The Appellant submitted that where the term “Courts of Dubai” or like phrases had been held sufficient to engage the jurisdiction of the DIFC Courts, there had in fact been “a material and sufficient link between the parties/facts of the case and the DIFC”.
41. The Primary Judge attached reduced significance to the location of the insurer in Sharjah. This was “marine insurance of peripatetic vessels, under the Policies covered in various but extensive trading areas”.4 The connection with Sharjah was not a strong argument for confining the phrase “the courts of the United Arab Emirates”, which appeared in the contract, to Sharjah courts or the onshore courts of the UAE.
42. The Appellant also submitted that the Respondent’s insurance activities in the Emirates were subject to the Insurance Law and to the dispute resolution procedure for which Article 110 provided. That dispute resolution procedure involved a first decision by the Authority which could be challenged in the competent court. The courts which would receive the challenge were the onshore courts. Against that background the parties would have intended that the onshore courts would deal with their disputes.
43. The Primary Judge pointed out that the dispute resolution procedure deals only with an insured taking a complaint to the Authority and even in the event that such a complaint is made, provides for a challenge to go to (in translation) “the competent court of first instance”. The Primary Judge held that this was not limited to the onshore courts. It was open to the parties to choose their court or courts of competent jurisdiction. His Honour was unable to see that the restriction on the conduct of insurance business in or from the DIFC had any bearing on the ability of the DIFC Courts to hear insurance disputes.
44. The Primary Judge then considered other matters bearing upon the construction of the agreements in the Policies. They were in English and the governing law was English law. They incorporated a number of standard London marine market clauses. The Primary Judge acknowledged the conferral of jurisdiction on the “courts of the United Arab Emirates” meant that it was shared with the other courts of the UAE, which have a civil system and operate in Arabic. The governing law and language supported a common intention that parties should be able, if they wished, to submit their dispute to the DIFC Courts, as a court operating in English and likely to have greater familiarity with the validity, interpretation and application of the Policies.5 His Honour found no reason to depart from the ordinary and natural meaning of the conferring of jurisdiction on “the courts of the United Arab Emirates” as including the DIFC Courts.
45. The Primary Judge then turned to the Appellant’s abuse of process argument. That argument invoked Article 110 of the Insurance Law. It was put in two ways:
(1) It was an abuse of process for the Respondent to “seek to sidestep and evade the application of the dispute resolution regime imposed by the Insurance Law”.
(2) It was an abuse of process because, prior to the commencement of the proceedings, the dispute had been submitted to that dispute resolution regime and the Respondent had brought the DIFC proceedings “to frustrate a bona fide claim made by [the Appellant] under [that regime] in circumstances where [the Respondent] had never before disputed the applicability of the onshore regime set out in the Insurance Law”.6
46. The Primary Judge observed that the dispute resolution regime under Article 110 regulates only complaints by an insured against an insurer. If the restriction in cl 3 of the Article, on accepting claims before they have been brought before a committee, precludes a court from accepting a claim, it can apply only to claims against the insurer. It followed that the Respondent was not acting contrary to the dispute resolution procedure in Article 110 in bringing its proceedings against the Appellant claiming declaratory relief. The Primary Judge nevertheless asked the further question whether the dispute resolution regime established by the Insurance Law, was intended to cover the field so that the only way an insurance dispute could be settled was by a complaint by the insured. That is to say, whether it was not open to an insurer to initiate any form of resolution procedure, including bringing proceedings in a court with relevant jurisdiction. The Primary Judge held that nothing in the Insurance Law so provided. The regime set up in the Insurance Law did not “cover the field”. That was supported by the provision in Article 6 of the Authority Decision that the committee should not be competent in relation to “Insurance Disputes that are subject to an arbitration clause”. The parties to the insurance contract were left free to agree upon other means of resolving disputes between them. In the present case, the Primary Judge held that they had done so by agreement upon jurisdictions, including the DIFC, which permitted claims by insurers for negative declarations.
47. The second way in which the Appellant contended for an abuse of process, involved reliance upon the doctrine of lis alibi pendens. The Respondent argued that the doctrine had no application where the parties had agreed to confer jurisdiction on the court in which it had brought its proceedings. The Primary Judge, however, held that invoking the agreed jurisdiction could bring the doctrine into play. The question arose whether the dispute resolution procedure under Article 110 enlivened the doctrine.7
48. The Primary Judge held that a complaint to the Authority and a decision of the committee may be a mandatory first step where an insured disputes the full or partial rejection of a claim or raises some other dispute but not where the insurer brings proceedings. The dispute resolution process is not an integral part of the judicial system. The Primary Judge characterised it as “an administrative process of partial application, with the committees reporting to the Authority” and whereby the result could be challenged in a court.8
49. The Primary Judge accepted that the Appellant would need to fight on two fronts prosecuting its complaint before a committee and defending the Respondent’s proceedings. It was evident that the Respondent would not participate in the committee proceedings so that the imposition of an excessive burden on the Appellant was not clear. If there were a decision by the committee adverse to the insurer it would challenge the decision and the challenge would end up in tandem with the DIFC proceedings, so that the Appellant would have a double burden in any event and be where it is now. Even if the Respondent had engaged with the Article 110 process, it would have been entitled to challenge an adverse result in the DIFC Courts, as a court of competent jurisdiction. There was no real risk of inconsistent decisions.9
50. In the circumstances, the Primary Judge was not persuaded that there was an abuse of process by the Respondent nor that the continuation of the proceedings by the Respondent was an abuse of process. He ordered that the application be dismissed and that the Appellant pay the Respondent’s costs of the application assessed at AED 300,000.
The Grounds of Appeal
51. H.E. Deputy Chief Justice Ali Al Madhani granted permission to appeal on Grounds 2 and 5 in the Second PTA, the latter ground dealing with an argument based on the doctrine of lis alibi pendens. On 25 January 2023, the Appellant filed a supplemental written submission in the appeal in which it stated that it no longer pressed Ground 5. It relied solely on Ground 2 which provides:
“The Judge erred in finding that the DIFC Courts constituted “the competent court of first instance” within the meaning of Article 110 of Federal Law No.6 of 2007 (as amended) and/or that parties to insurance contracts governed by the Insurance Law can make a choice of the “competent court” in any event.” (emphasis in original, footnote omitted)
52. On granting permission to appeal on Ground 2, His Excellency Deputy Chief Justice Al Madhani said:
“… I am unable to say, if the DIFC Court cannot be the competent Court of First Instance under Article 110 of the Insurance Law and/or if the parties to insurance contracts governed by the Insurance Law cannot make a choice of “competent court”, that [the Appellant] does not have a real prospect of successfully establishing that “the courts of the United Arab Emirates” in the Jurisdiction Clause means the federal courts of the UAE and, more specifically, the Sharjah Court, rather than the DIFC Court. Permission to appeal on Ground 2 is granted to this extent.”10
The Appellant’s Submissions
53. The Appellant contended that the issues for determination by this Court are:
“(1) Whether the judge erred in finding that the DIFC Court was “the” or “a” competent court to determine a challenge by the parties to a ruling by the Federal Insurance Authority, and whether (if the DIFC Court was not “the” or “a” competent court) he therefore erred in concluding that the parties objectively intended the DIFC Court to have jurisdiction over their disputes.
(2) The proper construction of RDC Rules 44.29 and 44.30 relating to the time for lodging grounds of appeal and skeleton argument.”11
54. The Appellant set out the background facts, the jurisdiction clause in the Policies and the Primary Judge’s findings. Its submissions involved two parts:
“(1) as a matter of construction of the Financial Free Zones Law and the Insurance Law, and as a result of policy choices made by the UAE legislature, the Financial Free Zone courts were not intended to have jurisdiction over claims by insurers under policies issued by UAE-established or registered insurers carrying on insurance activities in the Emirates excluding the Financial Free Zones. This means that [the Respondent] has no right to initiate proceedings for a negative declaration in the DIFC Court and that the DIFC Court cannot be “the” or “a” “competent court” for the purpose of a challenge to a decision of the Insurance Authority under Article 110(4) of the Insurance Law; and
when the jurisdiction clause is construed objectively against this background, the parties cannot be taken to have agreed that the DIFC Court would have jurisdiction over their disputes under the Policies, and must have intended to confer jurisdiction only on the civil federal or local courts of the Emirates “
55. The Appellant cited the observation of Justice Martin in Credit Suisse (Switzerland) Limited v Goel DIFC CFI 66/2020 (1 October 2020) at  that, under both English law and UAE law:
“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.
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.”
56. The Appellant also referred to the judgment of the Court of Appeal in Laabika v Labu  CA 008 at  in which it referred back to its decision in Goel & Others v Credit Suisse (Switzerland) Ltd  DIFC CA 002 and identified as the “salient conclusions” set out in that judgment:
“(a) 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 content 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”.
(b) the lack of ambiguity in the circumstance of the Goel case was sufficient to treat “the Dubai 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; and
(c) 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 Goel was central to the constructional conclusion.”
57. The Appellant contended that the Primary Judge had given insufficient consideration to the existence of “content and purposes” said to point away from a choice of the DIFC Court and that he failed to take account of the important contextual limit that disputes under a primary insurance policy issued by a UAE-established or registered insurer carrying on insurance activities in the UAE are required to be resolved in accordance with the provision of the Insurance Law. In finding that the DIFC Court had jurisdiction, the Primary Judge was said to have given the insurer a right which it did not have under the Insurance Law to bring an action for declaratory relief.
58. The Appellant submitted that the Federal Laws of the UAE made a clear, policy-based distinction between primary insurance of risks under policies issued by insurers established in, or licensed in, the UAE and regulated by the Authority under the Insurance Law, on the one hand, and reinsurance of risks or direct insurance of risks located outside the UAE or within the DIFC by insurers established in the DIFC, who are regulated by the Dubai Financial Service Authority (“DFSA”). The Appellant referred to Article 121 of the UAE Constitution and the exclusive legislative jurisdiction conferred on the Federal Government with respect to “insurance of all kinds”, “procedures before the civil and commercial courts” and “organizing the free zone areas, determining the method of creation of such zones and the scope of its exception from the implementation of the Federal laws.” The Insurance Law was said to be a product of that conferral of exclusive legislative authority on the Federal Government.
59. The express exclusion in Article 2 of the Insurance Law of companies operating in the State free zones were said to show that the UAE legislature distinguished between “the United Arab Emirates” and the “Financial Free Zones” in the context of insurance activities notwithstanding that the Financial Free Zones are located within and are constitutionally part of the United Arab Emirates (“UAE”).
60. Reference was made to Article 68 prohibiting insurance companies licensed in the free zones from carrying out directly any activity outside the zone with the exception of reinsurance. Further, Article 4(4) of the Financial Free Zones Law provided that the carrying out of insurance in the State shall be restricted to reinsurance. The Appellant submitted that the restriction to reinsurance could only have been the result of a deliberate policy decision at federal level.
61. The Appellant referred to a Memorandum of Understanding entered into between the DFSA and the Authority on 21 April 2011 and guidance published by the DFSA on its website, which was said to suggest that the restriction to reinsurance in Article 4(4) of the Financial Free Zones Law only applied where the risk was situated in the UAE (excluding the DIFC). So, it was said, an insurer operating in or from the DIFC and licensed by the DFSA may provide direct insurance for risks situated in the DIFC and offshore of the UAE but not for risks situated in the UAE.
62. As to that, the Court is not satisfied that it is appropriate in construing the jurisdictional clause in the insurance contracts to have regard to what may appear on websites from time to time or understandings entered into between regulators. While parties to contractual provisions may be taken to enter into their contract in a contextual setting which includes the relevant legislation, it is a bridge too far to import into their imputed intention, absent evidence, memoranda of understanding and website guidance.
63. In the event, the Appellant submitted that the public policy of limiting the risks which free zone insurers were permitted to write, was likely to have been chosen in order to protect the business of UAE insurers. As a matter of comity therefore it was said that the DIFC Courts should respect that public policy choice with respect to insurance regulation and dispute resolution. These important differences were said not to have been borne in mind by the Judge in construing the jurisdiction clause.
64. The Appellant then turned to the dispute resolution procedure established for insurance disputes under the Insurance Law. The Appellant acknowledged that the rights of insureds and insurers under the regime were asymmetric. However, the insurer was not deprived of a right of access to the Court. Once the insured had made a complaint to the Authority, the insurer, it was said, can deploy all the same arguments available to it in a common law action for a declaration of non-liability.
65. The Appellant submitted that the Primary Judge ought to have concluded that the Insurance Law lays down a dispute resolution procedure binding both the insured and those insurers who are subject to that law unless there is an express statutory or regulatory exception such as that for arbitration agreements. If the law had the effect of allowing the parties to opt out of the dispute resolution procedure it prescribed, the specific exception for arbitration agreements would not have been necessary. The Primary Judge ought not to have held that it was open to the parties to by-pass the mandatory provisions of the Insurance Law, other than by the recognised exception of an agreement to arbitrate. This, it may be noted, suggests a move from an argument that the Primary Judge erred in construing the insurance contract to an argument that the construction he had adopted provided a jurisdictional option which was not open to the parties as a matter of law.
66. The Primary Judge was also said to have fallen into error in holding that the parties were able to choose a DIFC Court as a “competent court” to challenge a decision of the Authority under Article 110(4). However, the point did not arise before him as neither the Appellant nor the Respondent had ever sought to pursue such a challenge in a DIFC Court. So much may be accepted.
The Respondent’s Submissions on the Merits of the Appeal
67. The Respondent began with submissions about the Appellant’s alleged non-compliance with the requirements of RDC 44.30 in connection with the filing of its Appeal Notice. For the reasons set out later in this Judgment, that threshold objection is not sustained. It is necessary, therefore, to refer to the submissions made by the Respondent on the merits of the appeal.
68. The Respondent pointed out that the permission granted to the Appellant in relation to this appeal was permission to argue that “the competent court” referred to in Article 110 of the Insurance Law cannot be the DIFC Courts and that parties to insurance contracts governed by the Insurance Law cannot make a choice of “competent court” having the effect that the reference to “the Courts of the United Arab Emirates” in the jurisdiction clause refers only to the Federal Courts of the UAE and specifically the Sharjah Court and not the DIFC Court.
69. The Respondent referred to Article 110. It accepted that the Insurance Law regulates the Respondent’s insurance activities in the UAE. It also accepted that the carrying out of insurance business (other than reinsurance) is not permitted outside the DIFC by insurance companies which are licensed to operate there. The Respondent referred to Article 4(4) of Federal Law No 8 of 2004 concerning Financial Free Zones and Article 68 of the Insurance Law. The Respondent however adopted the Primary Judge’s finding that:
“the restriction on insurance business in or from the DIFC [does not have] any bearing on the ability of the DIFC Courts to hear insurance disputes, if the parties to the insurance contract agree that it can do so.”12
70. The Respondent submitted that the Appellant did not and could not point to any part of the Insurance Law that mandated that all insurance disputes must be determined in the onshore courts, much less in a particular court in the UAE. While there is an express prohibition in the Insurance Law against insurance companies licensed to operate in free zones carrying out directly any activity outside the free zone, there is no provision in that Law which prevents or prohibits parties from agreeing to confer jurisdiction on the DIFC Courts or, indeed, on any other jurisdiction.
71. The Respondent also pointed to the limited scope of the alternative dispute resolution procedure under Article 110. This, it was said, could not possibly be regarded as constraining parties to a particular jurisdiction or jurisdictions for the purposes of determining disputes between them.
72. The identification of a “competent court” for the purposes of Article 110 might (in the absence of a jurisdiction agreement) depend upon the location of the insured property or the domicile of the insured or insurer. Where the parties have concluded a jurisdiction agreement, the competent court was said to be the court or courts which they had agreed should have jurisdiction.
73. Article 110, as pointed out by the Respondent, regulates only claims brought by the insured against the insurer. Thus, where an insurer has a claim against an insured, e.g, for an unpaid premium or declaratory relief, Article 110 does not apply. Insurance committees have no jurisdiction to hear such a claim. Article 110 has no bearing on the proper construction of the jurisdiction agreement between insurer and insured, at least as regards potential claims to be brought by the insurer.
74. The Respondent submitted that the procedures set out in Article 110 are not mandatory for the insured but simply give the insured the right to pursue the dispute resolution process set out under it. It does not require that it do so. The insured under Article 110(1)(c) “shall have the right to submit a written complaint to the Authority” and, under Article 110(1)(d) “may request that the dispute be referred to the Committee formed by virtue of Article (110) BIS3”.
75. The ability to exercise the right under Article 110(4) to challenge a decision of an Insurance Committee “before the competent court of first instance” depended upon the process under Article 110(1) to (3) being followed. That process involved the following steps:
(1) the making of an insurance claim which is fully or partly rejected by the insurer;
(2) the filing of a written complaint by the insured with the Authority;
(3) a request by the insured that the dispute be referred to the Insurance Committee.
The Merits of the Appeal
76. Despite the careful submissions, both written and oral, made on behalf of the Appellant, the Court is of the opinion that its objection to the jurisdiction of the DIFC CFI is not well-founded and the appeal fails on its merits.
77. The provisions of the Insurance Law create a mechanism under Article 110 for the resolution of disputes between insurers and insureds in a particular set of circumstances. It has a limited application. The application of that mechanism is not expanded beyond Article 110 by general provisions of the Insurance Law in Article 2 or the general regulatory role of the Authority set out in Article 7. Nor is it affected by the power of the Board of the Authority to issue decisions.
78. Article 110 imposes a general and ambulatory obligation on insurance companies to “process … insurance claims according to legislations in force and the provisions of the insurance policies” based on procedures set out in Article 110(1)(a) to (d).
79. A disputed claim may be referred to a committee established by the Authority. Although Article 110 refers to complaints by “the concerned party”, it is clear that that term refers to an insured complainant. The Authority has the “right to ask the Company to provide clarifications” where a dispute has arisen concerning a claim. The “Company” refers to the insurer. The committees created by Insurance Authority Resolution No 33 of 2019 are, according to Article 3(4) of that Resolution, concerned with “the complaints of the insured”. Article 110 creates a dispute resolution mechanism which may be invoked by an insured person. It does not by its terms nor by any necessary implication have a preclusive effect preventing the insurer from seeking legal remedies in relation to disputes arising out of insurance contracts. A straightforward example of such a matter, plainly outside the purview of the Committee process, would be an action for the recovery of an insurance pay-out where it is alleged that the claim was fraudulent. Another possibility might be an action for the recovery of a premium due under an insurance contract. And, as in this case, declaratory relief may be sought that the policy is avoided on the grounds of misrepresentation or failure to make disclosure of a relevant risk.
80. The reference to “competent court of first instance” in Article 110(4) is specifically directed to challenges on the merits of committee decisions. Even if it be the case that the “competent court” is, properly construed, a non-DIFC Court, it has no preclusive operation affecting the jurisdiction of DIFC Courts, a fortiori, where the parties to an insurance contract have agreed that those courts are included in the class of courts having jurisdiction over their disputes. The better view is that the term “competent court” embraces a court having relevant jurisdiction to which the parties have agreed to submit their disputes.
81. The asymmetric nature of the dispute resolution mechanism under Article 110 was said to reflect a public policy choice protective of insured parties. As the present case demonstrates however, insured parties may range from individual consumers to small businesses to large and sophisticated commercial entities. The asymmetry, if anything, militates in favour of a non-preclusive construction of Article 110.
82. There is nothing in the provisions of the Insurance Law which prevents the parties to an insurance contract from agreeing to subject themselves, when in dispute, to the jurisdiction of the courts of the UAE inclusive of the DIFC Courts and without the requirement to pass through a committee process.
83. That said, there may be cases where the institution of proceedings by an insurer in one court while earlier proceedings are pending may, if not an abuse of process, warrant a stay of proceedings in the latter jurisdiction in the interests of comity and efficiency. That is not this case. It is not an abuse for an insurer party to seek declaratory relief in a DIFC Court which would not be available through an administrative committee process nor on a challenge to a decision emanating from such a process.
84. The insurer is entitled to pursue its legal remedies in the DIFC unless there is a clear statement of UAE law which denies jurisdiction in such a case to the DIFC Court. There is none.
85. The Appellant has invoked somewhat numinous concepts of context and public policy to support its case against jurisdiction in the DIFC CFI. Neither the Insurance Law nor the Resolution of the Authority establishing the committee system has that effect.
86. In our opinion the appeal fails on its merits and should be dismissed.
The Respondent’s Procedural Point
87. RDC 44 deals with appeals. RDC 44.5 requires that an appellant obtain permission to appeal. RDC 44.6 provides:
“44.6 An appellant’s application for permission to appeal must be made to the lower Court:
(1) orally at the hearing at which the decision to be appealed was made; or
(2) in an appellant’s notice.”
RDC 44.10 provides:
“44.10 The appellant must file the appellant’s notice as referred to in Rule 44.6(2):
(1) within such period as may be directed by the lower Court; or
(2) where the lower Court makes no such direction, within 21 days after the date of the decision.”
88. The Respondent read these provisions with RDC 44.29, which provides:
“44.29 Subject to Rule 44.30, an appellant’s notice must:
(1) set out the grounds of appeal relied on and
(2) include or be accompanied by a skeleton argument.”
89. Rule 44.30 provides some relief from that requirement:
“44.30 Where it is impracticable to comply with Rule 44.29, a statement of the grounds of appeal and the skeleton argument must be filed within 21 days of filing the appellant’s notice.”
90. The Respondent contended that the effect of these Rules is that an appellant’s notice which sets out the grounds of appeal and includes or is accompanied by a skeleton argument must be filed within 21 days of the decision of the CFI. It is only where the appellant can show that it is impracticable to include the grounds of appeal and/or the skeleton argument within this period that it is permissible not to do so.
91. The Respondent contended that when seeking to rely upon RDC 44.30 an appellant must not merely state that it is relying on the Rule but must also give some genuine reason to the Court as to why it is impossible or impracticable to comply with the time limit.
92. The Respondent then pointed to Rule 44.94(1) which empowers an appeal court to strike out the whole or part of an appeal notice subject to the requirement in RDC 44.95 that the court will only exercise its powers under Rule 44.94 “where there is a compelling reason to do so”. It was said that a compelling reason for striking out an appeal notice would be a failure to comply with the mandatory requirements of RDC 44.29.
93. The factual basis for this argument was that the Appellant filed its Appeal Notice on 18 May 2022, judgment having been given on 27 April 2022. However, it was not accompanied by grounds of appeal or a skeleton argument. No explanation was given by the Appellant to explain why it was entitled to rely upon RDC 44.30. No reason was provided at the time for the alleged impracticability of filing these documents on time and no application for an extension of time was made for such filing. There was contention in exchanges of correspondence between the Appellant and the Respondent about the alleged impracticability of filing grounds of appeal and a skeleton argument within time.
94. The Appellant contended that nothing in RDC 44.29 prescribes any sanction for failure to file the grounds of appeal and skeleton argument at the same time as the Appellant’s Notice unless “impractical” to do so. The Rules distinguish between the Appellant’s notice and the grounds of appeal and skeleton argument. The Appellant contended that timely service of its notice was required to enable the Respondent to know that the judgment in its favour was challenged. However, the Rules expressly allow an extended 21-day period for service of the grounds of appeal and skeleton argument. Service within that extended period was said not to be a breach of the Rules.
95. The Appellant contended that the Rules do not require it to first satisfy the Court that it is “impractical” to serve its grounds of appeal and skeleton argument with its Appellant’s Notice before it can avail itself of the extended 21-day period. Impracticability was said to set a low hurdle capable of being satisfied by a range of circumstances.
96. The question in this case is not whether there should be relief from sanctions. That assumes a sanction for failure to comply imposed by the Rule has effect unless the party in default applies for and obtains relief from the sanction. The question is whether or not there are compelling reasons for striking out the appeal by reason of non-compliance with the time for lodging a skeleton argument.
97. The Appellant offered an explanation for the impracticability of filing the grounds of appeal and skeleton argument at the same time as the Appellant’s Notice. They were:
(1) The Eid al-Fitr holiday which the Emirate of Sharjah declared to last from 30 April 2022 to 6 May 2022. The Appellant’s business is primarily conducted from Sharjah and its offices only reopened on 9 May 2022.
(2) All offices in Sharjah were directed to be shut for three days from Saturday, 14 May 2022 following the death of His Highness Sheikh Khalifa bin Zayed Al Nahyan. The Appellant only restarted working on 17 May 2022. During both periods it was unable to give instructions in relation to the skeleton argument.
(3) Mr Al Sari himself was taken ill from 25 April 2022 until the end of May 2022. He has at all times been responsible for giving instructions on the Appellant’s behalf to its lawyers.
98. This Court makes no factual determination on these contested explanations. The concept of impracticality is an evaluative one. A recourse to RDC 44.30 for reasons which do not amount to impracticability is unlikely to give rise to the compelling grounds necessary to strike out an appeal, absent evidence of deliberate or contumelious disregard of the Rules.
99. For the preceding reasons the Appeal is dismissed with costs to be assessed by the Registrar if not agreed.