July 04, 2023 court of first instance - Orders
Claim No. CFI 028/2023
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
GLOBE INVESTMENT HOLDINGS LIMITED
(1) COMMERCIAL BANK OF DUBAI
(2) HORTIN HOLDING LIMITED
(3) LODGE HILL LIMITED
(4) WESTDENE INVESTMENT LIMITED
(5) VS 1897 (CAYMAN) LIMITED
REASONS OF JUSTICE MICHAEL BLACK FOR THE ORDER DATED 19 JUNE 2023
SCHEDULE OF REASONS
1. The Applicant/Claimant (“Globe”) seeks the continuation of a worldwide freezing order (”WFO”) granted on 3 May 2023 without-notice against the Second Respondent, Hortin Holding Limited (“Hortin”), the Third Respondent, Lodge Hill Limited (“Lodge Hill”), the Fourth Respondent, Westdene Investment Limited (“Westdene”), and the Fifth Respondent, VS 1897 (Cayman) Limited (“VS 1897”), and extended at a with-notice hearing on 19 May 2023 until the Return Date on 16 June 2023.
2. It was a condition of the order on 19 May 2023 that Globe would commence enforcement proceedings (initially represented to be in the Cayman Islands) against the Respondents by 30 May 2023, otherwise the WFO would be automatically discharged.
3. Globe had initially commenced proceedings in this Court against the Second, Third, Fourth and Fifth Respondents as Defendants together with Commercial Bank of Dubai (“CBD” or “the Bank”). It was however recognised at the without-notice stage that a WFO could not be sustained against CBD although CBD remains a party to these proceedings.
4. What follows is a highly condensed summary of the factual background which was evidenced by some 3,750 pages of the documentary record.
5. Globe is a Jebel Ali Free Zone (“JAFZA”) incorporated company and the judgment creditor under a final judgment of the Sharjah Federal Court of Appeal given on 6 April 2021 in the sum of AED 582,652,815 (approximately USD 158.6 million) (plus interest, costs and court fees) against three BVI companies, Hortin, Lodge Hill and Westdene (collectively “the BVI Companies”).
6. The BVI Companies are each 100% subsidiaries of the Fifth Defendant, VS 1897, and VS 1897 is itself a 100% subsidiary of the First Defendant, CBD. VS 1897 is, as its name suggests, a Cayman company. CBD is a UAE bank but it is not registered in the DIFC. CBD is the indirect 100% owner (through VS 1897) of a company called CBD Digital Lab Limited (“CBD Digital Lab”) set up in the DIFC to interact with peers and start-ups in the digital and fintech industry. It is a Centre Establishment but it does not carry out any activities that fall within the regulatory jurisdiction of the DFSA.
7. Globe’s own ownership structure is also relevant. It has a sister JAFZA incorporated company called MAS Capital Holdings Limited (“MAS”). It and MAS are both 100% owned by a BVI company called MENA Investment Holdings Limited (“MENA”). A director of Globe and deponent of all of Globe’s evidence in this matter is Hamad Saif Hamad Abdulla Almheiri (“Mr Almheiri”).
The Bridge Properties
8. The BVI Companies own commercial and residential properties in London (the “Bridge Properties”) although Lodge Hill may have sold its interests in 2020.
The CBD Sharjah Judgment
9. At front and centre of the factual background is the Al Sari family: brothers Majid and Mohamed, and their father, Abdalla.
10. CBD also holds a Sharjah judgment dated 29 March 2016 against the father and sons and against 2 of their companies, FAL Oil LLC and Investment Group Private Limited (“IGPL”) – in the sum of AED 472,676,345.71 (approximately USD 128.7 million). There appears to be some (immaterial) confusion as to the precise sum. I take that figure from the English translation of the judgment which corresponds to the original Arabic, but the second witness statement of Carlo Fedrigoli filed on behalf of the Respondents refers to AED 433,831,166.811.
Execution over the BVI Companies
11. The Al Sari brothers were beneficial owners of the Bridge Properties through their 100% interest in the BVI Companies. On 29 June 2017, CBD commenced enforcement proceedings in the BVI. On 19 February 2019, having overcome some difficulties of service on the Al Sari brothers, CBD obtained a Charging Order from the BVI courts over the shares in the BVI companies, which, after much procedural manoeuvring, resulted in the Receiver appointed under the Charging Order on 6 April 2021 selling the shares in the BVI Companies to VS 1897 as the bank’s nominee and CBD giving credit for the value of the Bridge Properties against the Al Sari’s judgment debt. It then therefore remained for the CBD to take possession of the Bridge Properties and realise its partial recovery.
The Globe Sharjah Judgment
12. Meanwhile, 2 days before CBD finally obtained the Charging Order (17 February 2019), Globe commenced proceedings against the BVI Companies in the Sharjah Courts. The basis of the claim (the truth of which is challenged by the Defendants/Respondents) was as follows:
(a) On 13 April 2014, Globe, MAS, the Al Sari brothers and the BVI Companies entered into an MOU (the “Globe MOU”) whereby indebtedness of the Al Sari brothers to various banks (not including CBD) amounting to AED 651,803,603 (approximately USD 177.5 million) would be repaid by MAS and the Al Sari brothers would repay AED 550,000,000 (approximately USD 150 million) to MAS. MAS assigned the debt to Globe and the Al Sari brothers transferred their liability to Globe to the BVI Companies;
(b) On 14 April 2014, Globe entered into a loan agreement with the BVI companies in the amount of AED 550 million (the “Globe Loan Agreement”);
(c) The BVI Companies defaulted under the Globe Loan Agreement and on 1 November 2018 Globe entered into a settlement agreement with the BVI Companies (the “Globe Settlement Agreement”) under which the sum due under the Globe Loan Agreement was crystallised at AED 582,652,815 payable by instalments between January 2019 and April 2021;
(d) The Sharjah proceedings were commenced in February 2019. It is unclear to me why proceedings were commenced in the Sharjah Courts as none of the parties appears to have any connection with Sharjah;
(e) On 17 March 2020, the Sharjah Federal Court of First Instance dismissed Globe's claim;
(f) On 6 April 2021, Globe appealed the judgment to the Sharjah Federal Court of Appeal (“COA”) which overturned the decision at first instance and found that the Settlement Sum was payable by the BVI Companies (the “Globe Appeal Judgment”);
(g) On 3 June 2021, the BVI Companies appealed the Globe Appeal Judgment to the UAE Union Supreme Court (Commercial Cassation Division) (the “USC”);
(h) On 25 July 2021, the BVI Companies and the Bank, as a non-party, filed a petition for reconsideration in the Sharjah COA against the Globe Appeal Judgment, which was rejected on 5 October 2021;
(i) On 8 November 2021, the BVI Companies and the Bank filed an appeal against that ruling (i.e. to reject the petition) to the USC;
(j) On 14 December 2021, the USC rejected the BVI Companies' appeal on account of a procedural issue with the BVI Companies' power of attorney (“POA”);
(k) On 28 December 2021, the USC allowed the Bank's and BVI Companies’ appeal and quashed the decision of the Sharjah COA (i.e. the decision rejecting the petition to reconsider the substantive appeal judgment) ordering that a different set of judges in the same court reconsider the Globe Appeal Judgment;
(l) On 30 March 2022, the Sharjah COA upheld the Globe Appeal Judgment;
(m) It is understood that the BVI Companies have corrected the defects in their POA and have renewed their application to the USC.
13. All of the Globe documents were signed by Abdulla Al Sari under a POA granted by his sons (the “Al Sari POA”).
The IGPL GT Proceedings
14. As this was going on in Sharjah, Majid Al Sari’s former BVI attorneys wrote to the Receiver on 27 June 2019 claiming that the Bridge Properties were subject to tenancy agreements dated 16 January and 4 March 2013 between the BVI Companies as landlords and various members of the Al Sari family and another of their companies, IGPL General Trading LLC (“IGPL GT”), as tenants (“the Tenancy Agreement”). I note that Mr Almheiri was General Manager of IGPL GT from 2013 to 2016.
15. On 28 January 2021 IGPL GT applied to this Court without notice to restrain the BVI Companies (then under the control of the Receiver appointed by the BVI courts) from taking any steps in breach of the Tenancy Agreement – in other words preventing the Receiver from selling the Bridge Properties with vacant possession. The injunction was granted by Justice Roger Giles on 31 January 2021.
16. On 14 February 2021 IGPL GT issued a claim in the DIFC against the BVI Companies and the Receiver for specific performance of the Tenancy Agreements. Immediate judgment dismissing the claim and discharging the injunction was given by Justice Giles on 22 August 2021. The basis of his decision was that the Al Sari POA (also used to enable Abdulla Al Sari to sign the Tenancy Agreements on behalf of all parties, both landlords and tenants) did not authorise Abdulla to sign on behalf of the BVI Companies.
17. IGPL GT appealed and achieved reinstatement of the injunction. On 23 March 2022 the appeal was dismissed and injunction was again discharged. IGPL GT then went to the Sharjah Courts and sought a declaration that the Tenancy Agreements were enforceable. The Sharjah Courts declined jurisdiction at both First Instance and then on appeal on 13 October 2022.
The English Proceedings
18. On 8 February 2022 CBD, the BVI Companies and VS 1897 issued proceedings in England:
(a) Against the judgment debtors under the CBD Sharjah Judgment (the “English Enforcement Claim”); and
(b) Against the Al Saris, IGPL GT, Globe, MAS and MENA for unlawfully seeking to frustrate enforcement of the CBD Sharjah Judgment and execution against the Bridge Properties on various bases. In particular they seek a permanent injunction to restrain Globe from enforcing the Globe Sharjah Judgment on the grounds that it was obtained by fraud. On 18 February 2022 the English Commercial Court granted a worldwide freezing order (the "English WFO") and other injunctive and ancillary relief against each Defendant (the “Frustration Claim”).
19. I have been provided with a considerable amount of evidence concerning the progress of the English proceedings but it is only necessary for present purposes that I highlight a few episodes:
(a) I have been provided with at least some of the evidence and submissions in the Frustration Claim on which the CBD relies to assert that Mr Almheiri was a long-time associate of the Al Saris and that the Globe documents were fabricated by Mr Almheiri and the Al Saris. It is of course categorically denied by Mr Almheiri and Globe who say that the issue was considered and determined in Globe’s favour by the Sharjah Courts. Notwithstanding, at the return date hearing of the English WFO on 11 March 2022 Globe, MAS and MENA sought an adjournment on the basis that they had only become aware of the proceedings the preceding day, but in rejecting that contention, Calver J held that “there is good reason to believe that those companies are owned and controlled by the Al Saris”;
(b) On 19 April 2022 Globe, MAS and MENA served Acknowledgments of Service indicating an intention to challenge the jurisdiction of the English Courts. They were meanwhile in breach of the asset disclosure orders under the English WFO. On 27 April 2022 they filed an application for relief from sanctions and extensions of time to serve their Acknowledgements of Service and applications to challenge the jurisdiction of the English Court. They stated that they would comply with their asset disclosure obligations within two working weeks. They eventually did so about a month later;
(c) On 21 October 2022 the application for relief from sanctions and extensions of time to serve their Acknowledgements of Service was heard by Butcher J. While he granted the application he held that there was a good arguable case that Globe, MAS and MENA were controlled by the Al Saris but he was unable on the evidence before him to take a view on the degree of control;
(d) Globe’s jurisdiction challenge in the Frustration Claim was apparently heard during week-commencing 12 June 2023 but the outcome is unknown;
(e) The claimants in the Frustration Claim have applied for sanctions including committal for the failure of all defendants to comply with their disclosure obligations under the English WFO which application against Globe, MAS and MENA is due to be heard on 6-7 December 2023;
(f) In the meantime, the Bank applied for summary judgment in the English Enforcement Claim. The other (Al Sari) defendants have failed to engage with the sanctions application in the Frustration Claim or the summary judgment application in the English Enforcement Claim. Judgment was entered on the summary judgment application on 27 April 2023 and the sanctions application against the Al Saris and IGPL GT was listed for hearing on 3 October 2023.
20. Three residential units forming part of the Bridge Properties have apparently been occupied by an individual claiming to be the Al Saris’ housekeeper (the “Housekeeper”) and employed by yet another Al Sari company, Hurlingham Management Limited (“Hurlingham”). On 4 April 2022 Horton and Westdene, as registered proprietors, commenced possession proceedings against the Housekeeper and Hurlingham in the Central London Country Court. On 6 June 2022 Hurlingham confirmed that it would not object to a possession order but the same day IGPL GT applied to be joined on the basis of the Tenancy Agreements notwithstanding that 2 weeks earlier the DIFC COA had upheld Justice Giles’s judgment that the Tenancy Agreements were ineffective.
21. Permission for joinder was granted at a hearing on 14 December 2022. On 28 April 2023 HHJ Johns KC made a possession order and found that the Tenancy Agreement(s) was/were fabricated. The Possession Order was served on the Housekeeper on 3 May 2023. Coincidentally that was the day that Globe succeed in obtaining the without-notice WFO from me. The Housekeeper seemed remarkably well-informed about events in Dubai as on 4 May 2023 (the day before the Respondent/Defendants in this case were served with the order) he refused to hand over possession of the residential units on the basis that he might thereby breach the WFO. Apparently, he still remains in possession of the properties.
22. The Housekeeper’s position is extraordinary: it is not for an employee of the Al Saris to police compliance with an injunction made at the behest of a party with whom they claim to have no connection.
First Without-Notice Hearing – 18 April 2023
23. On 11 April 2023 Globe issued a Claim Form against CBD, the BVI Companies and VS 1897. The “Brief Details of Claim” section stated “Please see skeleton argument. The claim is in relation to enforcement of a court judgment”.
24. The skeleton argument dated 13 April 2023 identified the Globe Sharjah Judgment and stated that the BVI Companies have no assets in the UAE and that it was intended to pursue execution in the Cayman Islands. The skeleton argument did refer to the English proceedings under the rubric “attempts to prevent Globe enforcing the Judgment Debt”. It was said that the BVI Companies owned “shares in” the Bridge Properties which were now under the ownership and control of the Bank and VS 1897. It was asserted that “The Bank has taken steps to put [the Bridge Properties] out of Globe’s reach in order to prevent it enforcing the Judgment Debt.” The principal submission was that granting a WFO would hold the balance while the parties argue any substantive matters relating to enforcement of the Judgment Debt before the courts of the Cayman Islands and possibly before the English Courts, if jurisdiction is established in proceedings brought by the Bank.
25. The application was supported by the First Affidavit of Mr Almheiri sworn 11 April 2023. He said that Globe intended to commence proceedings in the Cayman Islands as soon as possible. In the discharge of his duty of full and frank disclosure Mr Almheiri described the English proceedings and that it was CBD’s case that that Globe conspired with the Al Sari Brothers to perpetrate a fraudulent transaction by a series of documents under which a very substantial debt was imposed on the BVI Companies, the purpose of which was to make Globe a creditor of the BVI Companies, and thereby to frustrate the CBD's attempts to realise the value of the Bridge Properties. He characterised CBD’s actions as seeking to prevent Globe from enforcing a valid judgment on the basis of unsubstantiated allegations of fraud.
26. The application came on before me on 18 April 2023. I was unhappy with the application:
(a) I could not understand what was meant by “shares” in real property. It was initially suggested (incorrectly as it turned out) that the BVI Companies no longer owned the Bridge Properties and they were now owned by VS 1897. This was corrected after a brief adjournment;
(b) I was concerned that Globe was not asserting a proprietary interest in the Bridge Properties and therefore was merely in competition with another unsecured judgment creditor, CBD, to enforce its judgment debt;
(c) I was concerned to know more about the English proceedings. It appeared likely that a WFO had been granted against Globe and this turned out to be the case (but had not been disclosed by Mr Almheiri) and it included restraining Globe from enforcing the Globe Sharjah Judgment. I did not want to make any order that would clash with any order in the English proceedings;
(d) It had been claimed that Globe had difficulties in instructing lawyers in London and yet it emerged that solicitors had been representing Globe in the London proceedings;
(e) It was revealed that CBD was not in control of the Bridge Properties as the Al Saris were still in occupation.
I therefore adjourned the application so that Globe could serve further and better evidence.
Second Without-Notice Hearing – 2 May 2023
27. The application came back before me on 2 May 2023. In the interim Globe had filed an affidavit from Khaled Khatoun, a partner in Quinn Emanuel Urquhart & Sullivan UK LLP who had conduct of the Frustration Claim on behalf of Globe, MAS and MENA. I was satisfied that Mr Khatoun’s affidavit was a full and frank account of the English proceedings in which he was instructed.
28. I observed that MAS bore a similar name to a company called MAS Investments LLC which was a company owned or controlled by Mohamed Al Sari and figured in other proceedings before the Court (CFI-080-2022, 5 April 2023). In response, Globe’s solicitors sent a Certificate of Incumbency to the Court showing that MENA had been incorporated in the BVI on 10 January 2014 and Mr Almheiri and a Mr Alshehhi were the directors and shareholders. It showed nothing about MAS and I said I was “very uncomfortable” about the “MAS issue” and that I should like to have the issue argued inter partes before coming to any decision on Globe’s bona fides.
29. It was submitted to me:
“I have been asked to highlight - and this is a significant point - that the bank does have a history of making quick sales to subsidiaries that are wholly owned by it and the reason for doing this is it has taken various steps of this nature including in relation to the transfer of sales in the proceedings before the BVI. It has a history of doing this and it is clear that the intention is to put the properties out of Globe's reach. It is seeking, very openly, to disregard any findings that have been made by the Sharjah Court in relation to any connection between the parties' allegations of fraud et cetera and is seeking still to have the property put out of Globe's reach.”
30. Mr Anthony Peto KC, who represented the Defendants/Respondents at the final hearing, very properly disavowed any suggestion that counsel was consciously seeking to mislead the court but rather focussed on her underlying instructions when making a case for material non-disclosure. It is clear from her prefatory remarks that counsel was acting on specific instructions. It is also quite clear to me now that the five years it took from obtaining the CBD Sharjah Judgment to the transfer of the shares in the BVI Companies to VS 1897 could not, by any stretch of the imagination, be described as a quick sale to a wholly owned subsidiary.
31. I was clearly influenced by the submission as I observed:
“if you are right and your instructions are right that the bank has a track record for the transfer of assets in order to protect its execution of its debt, then it need not sell the properties at all. I guess it could transfer the shareholdings in the BVI companies to an entity over which I do not have jurisdiction ... I am not at all sure that I have jurisdiction over the bank.”
32. On jurisdiction I noted that VS 1897 held 100% of the shares CBD Digital Lab and observed that it could be argued that there was jurisdiction over VS 1897 because it carried on business in the DIFC through CBD Digital Lab. I thought that it was not necessary to make any order against CBD itself even if it were the controller of VS 1897 as any instruction would have to be executed by VS 1987. I therefore granted the interim without-notice injunction with a return date on 16 May 2023.
First Return Date – 16 May 2023
33. The hearing on 16 May 2023 was largely procedural. I made directions leading to a final hearing on 16 June 2023. Counsel for the Respondents noted that Globe had been somewhat elusive as to when it might commence enforcement proceedings. He pressed for an order that Globe give an undertaking to serve its substantive proceedings by 19 May 2023. While I was sympathetic to the submission I felt that that was rather too short a timescale and that a more direct approach than ordering Globe to give an undertaking could be adopted: I therefore ordered that Globe should commence enforcement proceedings against the Respondents by 30 May 2023, otherwise the Freezing Order would be automatically discharged.
BVI Enforcement Proceedings
34. When the injunction proceedings were first launched it was Globe’s position that VS 1897 was the entity that held title to the Bridge Properties. That turned out to be inaccurate and it is the BVI Companies. Thus, while it was originally stated that Globe intended to commence enforcement proceedings in the Cayman Islands, it was (correctly) advised that BVI was the appropriate forum.
35. On 26 May 2023 the enforcement proceedings were served by hand at the registered office of the BVI Companies.
36. It is perhaps surprising that Globe did not seek a WFO from the BVI Court in the intervening 3 weeks between the service of the enforcement proceedings and the hearing on 16 June 2023. No explanation has been provided for this failure.
The 16 June 2023 Hearing
37. One of my questions to Andrew Spink KC representing Globe was as to why it was any longer necessary to apply to the DIFC Court for a WFO when the BVI Court, being the jurisdiction in which the enforcement proceedings were now pending, appeared the more natural and appropriate forum. He was realistic enough to recognise that this was a problem for him and, while he maintained the application for an injunction until completion of the enforcement proceedings, he sought as a secondary case an injunction until the BVI Court granted the same relief.
38. Mr Spink KC also accepted that the appropriate order in which to address the application was that identified by the Respondents, namely:
(b) Arguable case;
(c) Risk of dissipation; and
(d) Material non-disclosure.
39. I agreed. Jurisdiction is a threshold issue and has to be determined in advance and irrespective of the other issues.
40. In addition the court will only grant a WFO if it is just and expedient to do so, taking into account the following discretionary factors:
(a) whether the making of the order will interfere with the management of the case in the primary court, e.g. where the order is inconsistent with an order in the primary court or overlaps with it;
(b) whether it is the policy in the primary jurisdiction not itself to make worldwide freezing/disclosure orders;
(c) whether there is a danger that the orders made will give rise to disharmony or confusion and/or risk of conflicting, inconsistent or overlapping orders in other jurisdictions, in particular the courts of the state where the person enjoined resides or where the assets affected are located;
(d) whether at the time the order is sought there is likely to be a potential conflict as to jurisdiction rendering it inappropriate and inexpedient to make a worldwide order;
(e) whether, in a case where jurisdiction is resisted and disobedience to be expected the court will be making an order which it cannot enforce.
(Arcelormittal USA LLC v Essar Steel Limited & Others  EWCH 724 (Comm) )
41. Globe seeks to bring itself within the jurisdiction of the DIFC Courts in two ways:
(a) Under Article 5(A)(1)(a) of the Judicial Authority Law No.12 of 2004 (as amended) (the “JAL”) on the basis that VS 1897 controls, through its 100% shareholding, a Centre Establishment (CBD Digital Lab) whereby the Bank carries on business in the DIFC; and
(b) Under Article 5(A)(1)(e) of the JAL pursuant to this Court’s wide jurisdiction to grant WFOs in aid of the enforcement of foreign judgments in line with the “Enforcement Principle” and its powers to join necessary parties.
42. Article 5(A)(1)(a) provides that the Court of First Instance shall have exclusive jurisdiction to hear and determine civil or commercial claims and actions to which the DIFC or any DIFC Body, DIFC Establishment or Licensed DIFC Establishment is a party. Globe’s submissions were somewhat confused in referring to CBD Digital Lab as a “Licensed DIFC Establishment”. “Licensed DIFC Establishment” is defined as “Any entity or enterprise licensed, registered or authorised by the Dubai Financial Services Authority to provide financial services, or conduct any other activities in accordance with the DIFC Laws”. CBD Digital Lab is not licensed by the DFSA to conduct any services. It does however fall within the definition of “DIFC Establishment”, namely “Any entity or enterprise established, licensed, registered or authorised to carry on business or conduct any activity within the DIFC pursuant to DIFC Laws”. The difference between a licensed and non-licensed establishment is therefore immaterial for present purposes although it precludes any suggestion that the situation may be analogous to that First Abu Dhabi Bank PJSC v LARMAG Holdings BV  DIFC CA 010 (23 March 2020) where the bank itself was held to be a Licensed DIFC Establishment because it was permitted by the DFSA to trade in its own name on NASDAQ Dubai.
43. The essence of Globe’s submission is that the Court should look through the separate corporate personality of CBD Digital Lab and find that VS 1897 is the true establishment.
44. The Respondents accepted that in an appropriate case it may be possible to disregard corporate personality in accordance with well-recognised principles, for example, where there is sham or the company is a vehicle for fraud or illegal purposes, but no such suggestion is made in this case.
45. Mr Spink KC suggested that there was no DIFC authority on the point. I differed with him and pointed to Corinth Pipeworks SA v Barclays Bank PLC  DIFC CA 002 (22 January 2011) in which the Court of Appeal dealt with the converse situation. It held that “once it is established that an unincorporated DIFC branch of a foreign bank cannot be regarded as an independent entity for purposes of qualifying as a "Centre Establishment", it follows that this term can only be interpreted to mean the Respondent and its various branches, wherever located. Accordingly, the DIFC Courts do have jurisdiction over the conduct of the Respondent's Dubai branch, as it would have over any other branch of the Respondent, wherever located” (per Michael Hwang CJ ). The Chief Justice went on to observe [68(a)]:
“(a) It is entirely within the control of banks and other enterprises carrying on business in the DIFC and the wider Emirate of Dubai as to whether they choose to subject their business within the wider Emirate to the jurisdiction of the DIFC Courts — if they do not wish to do so, they can either trade through separate corporate vehicles in the DIFC and the wider Emirate or (even more simply) include jurisdiction clauses in their contracts choosing where they allocate jurisdiction over any disputes”
46. CBD did exactly what the Chief Justice contemplated, it chose to trade through a separate corporate vehicle in the DIFC. Thus, the DIFC will not (save where justified in accordance with established principles) disregard the separate corporate personality of an incorporated vehicle carrying on regulated or unregulated activities in the DIFC so as to extend the jurisdiction of the DIFC Courts to its shareholders, absent other grounds personal to the shareholders.
47. Globe’s claim that the DIFC Court has jurisdiction over VS 1897 under Article 5(A)(1)(a) of the JAL must therefore fail but it makes a second, more substantial argument, based on Article 5(A)(1)(e) and the Court’s wide jurisdiction to grant WFOs to give effect to the “Enforcement Principle”.
48. Article 5(A)(1)(e) provides that the Court of First Instance shall have exclusive jurisdiction to hear and determine any claim or action over which the Courts have jurisdiction in accordance with DIFC Laws and DIFC Regulations.
49. Globe’s argument begins with the decision of the Court of Appeal in Nest Investment Holding Lebanon SAL & Others v Deloitte & Touche (ME)  DIFC CA 011 (13 March 2019) where it was held that the RDC constitute “DIFC Regulations” within the meaning of Article 5(A)(1)(e) and accordingly may confer jurisdiction of the Court.
50. Globe then identifies two Rules on which it relies:
(a) “RDC 25.1:
The Court may grant the following interim remedies:
(6) an order (referred to as a ‘freezing order’):
(a) restraining a party from removing from the jurisdiction assets located there; or
(b) restraining a party from dealing with any assets whether located within the jurisdiction or not;” [emphasis added]
(b) “RDC 25.24:
Where a party wishes to apply for an interim remedy but:
(1) the remedy is sought in relation to proceedings which are taking place, or will take place, outside the DIFC …
any application must be made in accordance with Part 8.” [emphasis added]
51. Globe submits that that the emphasized words mean that the jurisdiction to grant a freezing order extends to assets located outside the DIFC the subject of pending or contemplated proceedings outside the DIFC. I agree with that submission.
52. Globe refers to Articles 22(2) and 32 of the DIFC Court Law
(a) Article 22(2):
The Court of First Instance may order an injunction restraining a person from engaging in conduct or requiring a person to do an act or thing or other order the Court considers appropriate.
The DIFC Court has the power to make orders and give directions as to the conduct of any proceedings before the DIFC Court that it considers appropriate, including:
(b) injunctions, including requiring an act to be done;
(d) orders made without notice to any other party and the circumstances in which such orders are appropriate;”
Globe suggests that the absence of any reference in these provisions to jurisdiction means that the Court is conferred with jurisdiction to grant an injunction without the need for a “gateway”. I do not agree for two reasons. First, while I accept that Article 22 falls within a section of the Court Law addressing the jurisdiction of the Court of First Instance it is preceded by Article 19 which makes express reference to the provisions of Article 5(A) of the JAL making it clear that the JAL (which is a Dubai law) is the source of the Courts’ jurisdiction. It is therefore clear that Article 22 is not purporting to confer a jurisdiction on the Court that it does not possess under the JAL, rather it is describing the powers of the Court in the exercise of that jurisdiction. This is also clear from the fact that Article 22 is in permissive terms. Secondly, Article 32 is under the section of Practice and Procedure and is expressly a power-conferring provision. Consequently, I do not accept that either Article 22 or 32 of the Court law advances Globe’s argument.
53. At this point it is necessary to examine the “Enforcement Principle”. It derives from the case of Convoy Collateral Ltd v Broad Idea International Limited  UKPC 24, a decision of a seven-person bench of the United Kingdom Privy Council on appeal from the Court of Appeal of the BVI.
54. The appellant, a Hong Kong company, suspected that one of its former directors, C, a Hong Kong resident, had caused it to make improper investments. In anticipation of bringing proceedings against C in Hong Kong, the appellant applied in the British Virgin Islands for a freezing injunction against B Ltd, a British Virgin Islands company whose assets the appellant alleged were beneficially owned by C, and a freezing injunction against C. The court made orders granting both freezing injunctions and giving permission to serve C out of the jurisdiction. Subsequently both orders were set aside. The order against C was set aside on the ground that EC CPR r 7.3(2)(b) did not empower the courts of the British Virgin Islands to authorise service outside the jurisdiction where the only relief sought was a freezing injunction. The order against B Ltd was set aside on the grounds that, under common law, a domestic court had no power to grant a freezing injunction against a party over which it had personal jurisdiction when no substantive claim had been made in domestic proceedings against that party and that, in any event, there was insufficient evidence to establish that B Ltd’s assets were beneficially owned by C.
55. The order against C is not relevant to the DIFC as the DIFC has a different service and jurisdiction regime to that in both the BVI and England. I will return to the point below.
56. The appeal against the setting aside of the freezing against B Limited is relevant. The Privy Council dismissed the appeal but held by a majority, obiter, that a court with jurisdiction to grant injunctions where it is just and convenient to do so has power to grant a freezing injunction against a respondent over whom the court has personal jurisdiction provided that: (i) the applicant has already been granted, or has a good arguable case for being granted, a judgment or order, whether or not through the domestic courts or directly against the respondent, for the payment of a sum of money that is or will be enforceable through the process of the domestic courts; (ii) the respondent holds assets, or is liable to take steps other than in the ordinary course of business which will reduce the value of assets, against which such a judgment could be enforced; and (iii) there is a real risk that unless the freezing injunction is granted the respondent will deal with the assets, or take steps which make them less valuable, other than in the ordinary course of business with the result that the availability or value of the assets is impaired and the judgment is left unsatisfied .
57. In relation to the Enforcement Principle Lord Leggatt (speaking for the majority) said:
“86. In JSC BTA Bank v Ablyazov (No 10) … Lord Clarke of Stone-cum-Ebony (with whom the other Justices agreed) referred to this rationale as “the enforcement principle”, adopting terminology which had been used in the Court of Appeal in that case by Beatson LJ, who said:
“The first and primary principle is that the purpose of a freezing order is to stop the injuncted defendant dissipating or disposing of property which could be the subject of enforcement if the claimant goes on to win the case it has brought …”
87. The relevance of the enforcement principle in Ablyazov (No 10) was that it assisted in determining what assets were intended to be covered by the standard form of freezing order issued by the Commercial Court in England and Wales: ..
“The test must be whether the assets will be available on execution of a judgment and if they are they can be the subject of the order, as its purpose is to aid the court’s process. It would otherwise be illogical to include them in the order.”
88. The enforcement principle also explains the basis and scope of the jurisdiction to grant a freezing injunction against a third party against whom no claim for substantive relief lies (i.e. a “non-cause of action defendant”). The ordinary prerequisite for granting such an injunction (before taking account of discretionary factors) is that the third party is in possession or control of an asset against which a judgment could be executed. That test may be satisfied because there is good reason to suppose that the asset is beneficially owned by a defendant against whom the claimant has obtained or has a right to obtain a judgment, as in the Chabra case. But it may also be satisfied in other ways: for example, where the defendant would have a right of indemnity against the third party which could be enforced by a receiver …
In each case the key question is whether the assets are or would be available to satisfy a judgment through some process of enforcement …
89. Although it is unnecessary to make the enforcement principle dependent on the identification of a legal or equitable right, there is no harm in expressing the interest of the applicant which a freezing injunction seeks to protect in these terms, provided it is understood to be different, and different in character, from the right on which a cause of action for substantive relief is based. The interest protected by a freezing injunction is the (usually prospective) right to enforce through the court’s process a judgment or order for the payment of a sum of money. A freezing injunction protects this right to the extent that it is possible to do so without giving the claimant security for its claim or interfering with the respondent’s right to use its assets for ordinary business purposes. The purpose of the injunction is to prevent the right of enforcement from being rendered ineffective by the dissipation of assets against which the judgment could otherwise be enforced.
No requirement of a cause of action
90. Once it is appreciated that the essential purpose of a freezing injunction is to facilitate the enforcement of a judgment or other order to pay a sum of money, it is apparent that there is no reason in principle to link the grant of such an injunction to the existence of a cause of action…
92. In applying for a freezing injunction, the relevance of a cause of action, where there is one, is evidential: in showing that there is a sufficient basis for anticipating that a judgment will be obtained to justify the exercise of the court’s power to freeze assets against which such a judgment, when obtained, can be enforced. That is the rationale for requiring the applicant to show a good arguable case; but there is no reason why the good arguable case need be that the applicant is entitled to substantive relief from the court which is asked to grant a freezing injunction. What in principle matters is that the applicant has a good arguable case for being granted substantive relief in the form of a judgment that will be enforceable by the court from which a freezing injunction is sought.”
58. In concluding the section of his judgment on current practice Lord Leggatt noted :
“Although other factors are potentially relevant to the exercise of the discretion whether to grant a freezing injunction, there are no other relevant restrictions on the availability in principle of the remedy. In particular:
(i) There is no requirement that the judgment should be a judgment of the domestic court - the principle applies equally to a foreign judgment or other award capable of enforcement in the same way as a judgment of the domestic court using the court’s enforcement powers.
(ii) Although it is the usual situation, there is no requirement that the judgment should be a judgment against the respondent.
(iii) There is no requirement that proceedings in which the judgment is sought should yet have been commenced nor that a right to bring such proceedings should yet have arisen: it is enough that the court can be satisfied with a sufficient degree of certainty that a right to bring proceedings will arise and that proceedings will be brought (whether in the domestic court or before another court or tribunal).”
59. Broad Idea was followed in two subsequent DIFC cases on which Globe relies. In Lateef & Another v Liela & Others [ARB-017-2021] (13 December 2021) Justice Wayne Martin was asked to set aside a WFO made in support of New York “alter ego” proceedings claiming that certain individuals were the alter egos of an award debtor under a New York arbitral award. The award debtor and individuals were based in the UAE outside the DIFC. In conclusion Justice Martin confirmed that the DIFC Court undoubtedly has jurisdiction to enforce foreign judgments. He accepted that in order to obtain injunctive relief pursuant to the Enforcement Principle, the applicant need only establish a good arguable case to the effect that there may be a judgment capable of enforcement by the Court. He identified the critical question for his determination namely, whether the provisions of the Court Law and the RDC must be read subject to some qualification, such that the powers conferred or recognised by their terms cannot be exercised in accordance with the Enforcement Principle unless and until there is at least a foreign judgment and, perhaps, proceedings have been commenced for the enforcement of that foreign judgment in the DIFC Courts. He found that the answer to that question lay in the decision in Broad Idea.
60. Justice Martin concluded  that pursuant to the Enforcement Principle a freezing order will be granted in appropriate circumstances in support of a prospective judgment whether foreign or domestic and to restrict the grant to cases where judgment had already been entered be contrary to principle, undermine the efficacy of freezing orders and the judicial process and undermine the reciprocal enforcement of judgments.
61. At  he stated:
“So, when regard is had to the relevant legislative provisions and the RDC, there is every reason to conclude that the DIFC Courts have ample jurisdiction to exercise their unqualified injunctive powers in accordance with the enforcement principle which underpins the grant of freezing orders as an incident of the Court’s jurisdiction to enforce judgments, whether domestic or foreign, and whether the judgment has been granted or is prospective. That jurisdiction does not depend upon the existence of a cause of action which can be maintained against the defendants in the DIFC Courts, or upon the existence of assets within the DIFC which might be available in execution of the relevant judgment.” [Globe’s emphasis]
62. I respectfully agree with Justice Martin’s conclusions on the statutory jurisdiction of the Court to grant WFOs in aid of foreign proceedings. I have no problem with Globe’s argument up to that point, but Mr Spink KC went to submit that:
(a) On a proper construction of the powers that relate to jurisdiction in relation to injunctions - not substantive proceedings against a particular defendant that are not injunctive proceedings - the court has jurisdiction, subject to discretion, in relation to any defendant anywhere, to make the order;
(b) It does not need to have personal jurisdiction in the sense that the English courts have or the common-law courts have. If the defendant is before the court and an injunction is sought of the kind under discussion and it is appropriate to make that injunction, then the court has jurisdiction to make it.
63. In support of his submission he relied on the following passages of Justice Martin’s judgment:
“125. There are no qualifications or constraints, express or to be implied from any provision in the legislation relating to the jurisdiction of the court, upon the breadth or exercise of the court’s powers to grant injunctive relief. Of course, those powers must be exercised within the jurisdiction of the court, but it is common ground and beyond doubt that the Court has jurisdiction to enforce foreign judgments. Broad Idea authoritatively establishes that the grant of freezing orders pursuant to the enforcement principle is an incident of that jurisdiction.
128. As I have noted, the enforcement principle enunciated in Broad Idea was expressed by reference to the Court having a personal jurisdiction over the defendant against whom the freezing order is made. In common law courts that jurisdiction is generally regarded as depending upon the efficacy of service upon the relevant defendant. Where the defendant is within the geographic jurisdiction of the Court, no difficulty arises. However, where the defendant is outside that jurisdiction, issues with respect to the grant of leave to serve outside the jurisdiction assume importance, as they did in respect of the first question addressed in Broad Idea.
129. However, as I have already observed, the efficacy of service of this Court’s process does not depend upon the geographic location of the defendant, except to the extent that the procedure adopted must accord with the law in force in the place at which service is affected. However, “Given the international nature of the DIFC”, provided service is affected in accordance with the rules in force in the place in which service takes place no permission is required from the court to serve process out of the DIFC. It follows that every defendant is within the prospective in personam jurisdiction of the court, subject to effective service.
130. In this case the Defendants have been effectively served and are therefore within the in personam jurisdiction of the Court. In any event, if a contrary view were taken, in this case I am satisfied that the Defendants have submitted to the jurisdiction of the Court. Even though they failed to file acknowledgements of service, they participated in proceedings before the Court before bringing any challenge to the jurisdiction of the Court. They should not be permitted to rely upon their own failure to file an Acknowledgement of Service within the time required by the rules of the Court in order to avoid the conclusion that they have submitted to the jurisdiction.”
64. I do not read those passages as supporting Mr Spink KC’s contention that this Court has jurisdiction to make a WFO in relation to any defendant anywhere. Justice Martin cannot have been saying that simply because a party has been effectively served there is in personam jurisdiction over that person. That would be inconsistent with the comparison he makes between DIFC procedure and that in common law courts where jurisdiction does depend on the efficacy of service. It would also disregard his use of the phrase “the prospective in personam jurisdiction of the court”.
65. The procedure in the DIFC is that any defendant anywhere may be served without the permission of the Court. Mere service does not establish jurisdiction. Once served a defendant may either submit, or be deemed to submit, to the jurisdiction or, if not, challenge the jurisdiction in accordance with RDC Part 12. The Court will then determine whether there is jurisdiction. In this sense unless and until service is set aside a validly served party will be subject to the prospective in personam jurisdiction of the Court. I do not understand Justice Martin to have been saying that just because the defendants in Lateef were validly served there was jurisdiction over them, but rather that they had failed once validly served to dispute the jurisdiction of the Court in accordance with the RDC.
66. Accordingly I cannot derive from Lateef support for the propositions that, even where a defendant challenges jurisdiction within the Rules, either that mere valid service is an answer to that challenge, or that there is a special rule applicable only to WFOs that relief may be granted irrespective of whether an independent ground for in personam jurisdiction exists. I understand Globe’s point that the respondent to a WFO may be a non-cause of action defendant who may have no assets within the jurisdiction of the DIFC, but that does not exclude the possibility (if it be a requirement) that the respondent should be amenable to the jurisdiction of the Court. Lateef does not, in my judgment, answer that question one way or the other.
67. Globe also relies on Jones & Others v Jones [CFI-043-2022] (12 September 2022) (“Coffee Planet”) in which Justice Sir Jeremy Cooke continued an injunction and freezing order originally granted by Justice Robert French on 29 June 2022 in aid of proceedings before the Dubai Courts.
68. Justice Cooke described the issue before him:
“3. The primary dispute between the Parties which I was asked to determine was whether or not the DIFC Court had jurisdiction to grant an injunction in such circumstances where Article 5 (A)(1)(a)-(d) of the Judicial Authority Law, Law No.12 of 2004 (the ‘‘JAL”) did not provide any “gateway”. The only relevant provision of the JAL relied on was Article 5 (A)(1)(e) which provides that the Court of First Instance (the “CFI”) shall have exclusive jurisdiction to hear and determine “any claim or action over which the Courts have jurisdiction in accordance with DIFC Laws and DIFC Regulations”. The Defendant’s Counsel, Mr Richard Hill QC, submitted that there was no relevant DIFC law or DIFC regulation which gave the DIFC Court jurisdiction to grant a freezing order/preservation of property order in support of proceedings elsewhere than in the DIFC before any judgement in such proceedings had been issued and was recognised (or at least capable of recognition) by the DIFC Court.
5. It was also accepted by Counsel for the Defendant that it was settled law that the judgement of any foreign court could be ratified regardless of the absence of any “gateway” under Article 5 A(i) (a)-(d). It was also agreed that there was no need for the presence of any assets in the jurisdiction for any such foreign judgement to be ratified in accordance with Article 7(6). None of this, he submitted, had or could have any application to the situation where no judgement of a foreign court or the Dubai Court had yet been obtained.”
69. Unsurprisingly Justice Cooke had no difficulty in rejecting the underlined submission. His reasoning in so doing does give some support Globe’s arguments:
“7.1. Article 20 (1) [of the Court Law] refers to the need for some sort of jurisdictional requirement, whereas Article 22 (2) contains no such reference and merely provides that the court can grant an injunction or make an order that the Court considers appropriate. This is similar in effect to section 37 of the Supreme Court Act in England and Wales since the word “appropriate” has no different content and the words “just and convenient”.
12. … the position is, to my mind impacted by the decision of the Court of Appeal in Next, to which he was referred and by the later first instance decision of Justice Wayne Martin in Lateef v Liela  ARB 017, by reference to the decision of the Privy Council referred to below.
13. I am fortified in the conclusion that I would otherwise have reached in any event, on the basis of the provisions in the JAL, Court Law and RDC to which I have referred, in the light of Nest, by the decision in Lateef, which draws heavily on the notion of the “Enforcement Principle”, as enunciated by Lord Leggatt in the Privy Council decision in Broad Idea v Convoy Collateral Limited  UKPC 24. The Claimants submitted that Justice Wayne Martin found that there was an unfettered freestanding jurisdiction to grant injunctions, without reference to any of the gateways or alternatively that he found that the Enforcement Principle meant that injunctions ancillary to the enforcement of projected foreign judgements or judgements of the Dubai Court fell within the ambit of the Court’s jurisdiction.
17. The learned Justice then construed the Courts Law as conferring broad and unqualified injunctive powers, analogous to those enjoyed historically by Courts of Chancery in common law jurisdictions. He noted that there were no qualifications or constraints, express or to be implied from any provision in the legislation relating to the jurisdiction of the court in relation to interim injunctions and focused on the jurisdiction of the court to enforce foreign judgements, relying on the Privy Council decision as authoritatively establishing that the grant of freezing orders pursuant to the enforcement principle was an incident of that jurisdiction. He arrived at the same conclusion by reference to the RDC. At paragraph 127 he concluded ….
18. I, like Justice Martin, see no difficulty in adopting this principle without reference to the gateways provided by Article 5A(1)(a)-(d) in the light of Article 5 A(1)(e) and the terms of Article 7 of the JAL, Article 24 of the Courts Law and the terms of the RDC. This is not an arbitrary exercise of jurisdiction (which will in any event depend upon effective service which is not now in issue here, although it once was). The jurisdiction of the Court to grant interim injunctions in such situations as the present is, by reason of the wide wording of the provisions to which I have referred, without any limitation of the kind that the Defendants would like to impose and by reason of the “Enforcement Principle” a necessary adjunct to the powers given in relation to enforcement of judgements of foreign courts and the Dubai Court. I do not see the need myself to describe this as a freestanding power and it is not arbitrary, since its exercise will be limited by the other principles referable to the grant of interim injunctions of this kind and interim injunctions generally.
20. In my judgement, all the public policy issues militate in favour of the grant of assistance to a foreign court or the Dubai Court in circumstances where it cannot achieve with the same facility a result which this Court can. Contrary to the submissions of the Defendant, this Court does not seek to usurp the powers of the Dubai Court, nor to compete with it, but to assist it by freezing assets against which its judgements might be enforced and which might otherwise be dissipated with the result of rendering the judgement ineffective. The substantive jurisdiction rests with the Dubai Court.”
70. Justice Cooke was not dealing with a case of ratification of a foreign judgment such as the present. Leading Counsel before him conceded that foreign judgments may be ratified without the necessity of recourse to a “gateway” under Article 5(A)(1)(a)-(d). Article 24 of the Court Law and Article 7(6) of the JAL expressly state that the Court of First Instance has jurisdiction to ratify any foreign or UAE judgment. Such a claim clearly qualifies as a claim over which the Courts have jurisdiction in accordance with DIFC Laws within the meaning of Article 5(A)(1)(e).
71. Like Justice Cooke I have some hesitation in finding a freestanding power to grant a so-called “Broad Idea Injunction”. I prefer to base any judgment on the Court’s undoubted power to grant injunctions in aid of its enforcement of foreign judgments, as appears to be the underlying rationale of both Lateef and Coffee Planet.
72. Further, I consider that the guidance in Broad Idea must be treated with some care in the DIFC for the reasons highlighted by Justice Martin. In the present case the Respondents have highlighted the references to “in personam jurisdiction” in Broad Idea and the authorities to which it referred (Channel Tunnel Group Ltd v Balfour Beaty Construction Ltd  AC 334; VTB Capital plc v Universal Telecom Management  2 CILR 94), but it must be borne in mind that in England and those jurisdictions that derive their civil procedure from England, in personam jurisdiction depends upon service, and permission to serve out of the jurisdiction will only be given if the claim falls with a jurisdictional gateway. There will be jurisdictions like the BVI where there is no power to authorise service on a defendant outside the jurisdiction of a claim form in which a freezing injunction is the only relief sought. It was in that context that the Privy Council emphasised the need for jurisdiction. In the DIFC, as already explained, the position is different – there is no need to demonstrate jurisdiction as a prerequisite for service. There is jurisdiction to serve a claim form in which a freezing injunction is the only relief sought in pursuit of the Court’s jurisdiction to enforce a potential judgment in a foreign court against a defendant against whom there is no cause of action in the DIFC and has no assets in the DIFC.
73. It is however necessary that the defendant be an actual or potential judgment or award debtor or non-cause of action defendant. In the present case VS 1897 is not a judgment debtor under the Globe Sharjah Judgment, nor is it a party to the BVI Enforcement Proceeding and cannot be a potential judgment debtor in those proceedings, nor is it alleged that it is a non-cause of action defendant as described by Lord Leggatt at  of Broad Idea. It must therefore follow that this Court does not have judication over VS 1897 and the proceedings against it (as with CBD itself for the same reason) must fail and be dismissed.
74. Conversely, the BVI Companies are both judgment debtors under the under the Globe Sharjah Judgment and parties to the BVI Enforcement Proceedings. This court therefore does have jurisdiction to make the orders sought against them.
75. I can address this issue relatively briefly notwithstanding the considerable volume of evidence deployed in support of their case by the Respondents that the Globe Sharjah Judgment was obtained by fraud.
76. Globe must demonstrate it has already been granted or has a good arguable case for being granted a judgment or order for the payment of a sum of money that is or will be enforceable through the process of the court: Broad Idea [101(i)].
77. Globe says that it is entitled to a WFO because it has a final judgment from the Sharjah Courts which is ripe for enforcement. The BVI Companies say that the Globe Sharjah Judgment was obtained by fraud. Globe responds that the Sharjah Courts have considered and dismissed the allegations of fraud which are in any event speculation based on inference.
78. Globe has referred me to the Sharjah Judgments. As is often the case when reading complex judgments in translation they are somewhat hard to follow without access to the case memoranda filed by counsel and the reports of the court experts. Without a clear understanding of the submissions made to the court and the findings of the experts the holdings can sometimes appear somewhat enigmatic – a difficulty frequently compounded by the translation. I was taken to the judgment of the Sharjah Federal Court of Appeal of 30 March 2022. It is clear that the court had before it a substantial documentary record including the BVI receivership proceedings, the IGPL GT DIFC proceedings and (possibly) the English proceedings. Part of the judgment also appears to be a verbatim account of the submissions made to the court. If so, it appears that it was being suggested to the court that:
“On 1/11/2018 MAS Company assigned its rights to Globe Investment in the aforesaid amount, after that Globe Investment Company and the three said companies entered into a memorandum of understanding dated 13/4/2014 between MAS Capital and Al Sari family represented in Abdullah, Majed and Mohammed Al Sari and the three companies, which is the subject of the judgment the subject of the Petition. Q. what is the fraud and collusion on which the Petition was based? A. The fraud and collusion are represented in Abdullah Al Sari signing the understanding agreement which is the subject of the judgment the subject of the Petition despite knowing that there is a provisional attachment, the order in execution and the receiver on the said three companies who is authorized to manage them, without the receiver's knowledge.”
79. The Court held:
“as declared by the attorney for it in the interrogation as stated earlier, in that the fraud and collusion are represented in Abdullah Al Sari signing the understanding agreement which is the subject of the Petition judgment despite knowing there is a provisional attachment, an order in execution and a receiver on the said three companies and that he is authorized to manage them, without the receiver's knowledge. It is established as stated earlier that the memorandum of understanding was signed on 13/4/2014 while the order of provisional attachment on the properties of Lodge Hill Limited Hortin Holdings Limited- Westene Investment Limited was issued on 18/ 11/2014 which means that the memorandum of understanding was before issuing the provisional attachment order and that the meaning of placing provisional attachment is that the owner of the items placed under attachment does not dispose of them by sale to cause damage to the attachment applicant, accordingly there is no evidence of fraud on part of the signatory on the understanding agreement dated 13/4/2014.”
80. It does appear that the court was considering the suggestion that the MOU was a sham document executed later than its apparent date. The reasoning of the court or of the expert panel it appointed is not readily apparent from the judgment. It is clear that it will in due course be necessary to understand what evidence was and was not before the Sharjah Courts if a decision is to be reached that their judgment was procured by fraud.
81. On the other hand, the English Commercial Court has held on more than one occasion that there is a good arguable case that the Globe Sharjah Judgment was procured by fraud.
82. In Alternative Investment Solutions (General) Ltd v Valle De Uco Resort & Spa SA  EWHC 333  Cranston J held:
“The principles governing the grant of a freezing order under section 37 of Senior Courts Act 1981 and CPR 25.1(f) are well known. It is a discretionary remedy that the court may grant where it is just and convenient to do so. First, there must be a good arguable case on the merits of the substantive claim, in other words, “a case which is more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50 per cent chance of success”: Lakatamia Shipping Company Limited v Nobu SU Limited  EWCA Civ 1195 , per Longmore LJ at  and -; Ninemia Maritime Corporation v Trave Schiffahrtgesellschaft MBH und Co KG (The Niedersachsen)  2 Lloyd's Rep 600 , per Mustill J, at 603, 605;  2 Lloyd's Rep 600, 613–614. When applying this test, the court should not attempt to try the issues but takes into account the apparent strength or weakness of the respective cases to decide whether the claimant's case, on the merits, is sufficiently strong to reach the threshold. That includes assessing the apparent plausibility of statements in the affidavits: Steven Gee QC, Commercial Injunctions (5th ed. 2004), at paragraphs 12.023 and 12.024.”
83. Given that a good arguable case is one that a judge need not necessarily regard as having a better than 50% chance of success, it appears to me that there is no logical contradiction in finding that both parties have good arguable cases. This may well be the case where parties make substantial allegations against each other requiring prolonged examination of evidence, in particular in the light of the admonition against attempting to try the issues.
84. This was the situation in which Justice Cooke found himself in Coffee Planet:
“29. Moreover, the voluminous evidence adduced by the Parties gave rise to a considerable range of disputed issues of fact relating to the ownership of the various pieces of property which have been frozen by the freezing injunction and which could be the subject of provisional attachment in on-shore Dubai. Each individual party points to inconsistencies in the evidence given by the other, in one jurisdiction or the other, or in both, and the unlikely and implausible explanations which are provided …
30. … Large volumes of evidence were adduced on fact issues which cannot be determined … I concluded that all that could be said was that each party had a good arguable case… “
85. I find myself in the same position. I accept that the existence of the Globe Sharjah Judgment provides a good arguable basis for the enforcement proceedings in the BVI. That is not to say that I do not accept that the BVI Companies do not have a good arguable case that the judgment was obtained by fraudulent means. I respectfully agree with the findings of the English judges based on the evidence adduced before them and nothing I say in this judgment should be taken as expressing any view inconsistent with theirs.
86. I conclude that both Globe and the Respondents have good arguable cases.
RISK OF DISSIPATION
87. It is likely that if the BVI Companies were free to so, they would sell the Bridge Properties and remit the proceeds to CBD to reimburse the Bank the credit given to the Al Sari judgment debtors against the CBD Sharjah Judgment. In that sense there is a real risk that the BVI Companies will dissipate their assets and those assets will no longer be available for execution of the Globe Sharjah Judgment.
88. A risk of dissipation is not enough to ground the grant of a WFO. Lord Leggat described the requirement in the following terms (Broad Idea [101(iii)]:
“there is a real risk that, unless the injunction is granted, the respondent will deal with such assets (or take steps which make them less valuable) other than in the ordinary course of business with the result that the availability or value of the assets is impaired and the judgment is left unsatisfied.”
89. The assets must be dealt with other than in the ordinary course of business. Mr Peto KC made a colourful submission that the BVI Companies are acting in the normal course of business:
“The thing about dissipation, as your Honour said, this is ordinary course of business. What can be a more ordinary course of business than a bank seeking to enforce a security, a judgment against guarantors against the guarantors' property, and getting blessed by the courts in doing it at every single stage. It is not as if they turned up with a couple of thugs and broke the door down and got [the Housekeeper] out. They have been doing this through the course of ages. If this is not ordinary course of business what is, really. This is what courts are for, and they are saying that using courts is not ordinary.”
90. Mr Spink KC asserted that the point was simply that Globe does not accept that it is in the ordinary course of business for the Bank through VS 1897 to dispose of the properties having obtained the order it did from the BVI Court on the basis that other creditor claims exist against the entities that will be ignored by selling the properties. He accepted that it was not straightforward to determine whether disposing of the properties against this background can be regarded as in the ordinary course of business despite it being asserted by to be so on behalf of the Respondents.
91. I cannot agree with Globe’s position. It seems to me to be a core part of a bank’s business to lend money and to be repaid, if necessary by instituting legal proceeding and executing any resulting judgment. Taking Globe’s case at face value, both the Bank and Globe (which Mr Almheiri says is in the business of providing financial services) are unsecured creditors in competition with each other to recover monies lent. Globe denies any fraud and states that its dealings with the Al Saris are all arm’s length commercial transitions (Almheiri Third Affidavit paragraph 84). It must follow that it is Globe’s position that its own pursuit of enforcement of its judgment is in the ordinary course of its business. CBD is acting no differently. Globe as an unsecured creditor of the BVI Companies has no priority over any other unsecured creditor such as the Bank. It cannot therefore be said that the execution by the Bank of its judgment debt against the Al Sari judgment debtors by taking a charging order over their assets and realising those assets was acting in any way other than in the normal course of the Bank’s business.
92. If follows that Globe cannot satisfy the criterion for the making of a WFO that there is a risk that the Respondents will dissipate their assets otherwise than in normal course of business. The application fails on that basis.
93. In the light of my finding in the preceding paragraph it is strictly speaking unnecessary for me to consider the Respondent’s’ allegation of material non-disclosure made against Globe. However, in deference to the extensive submissions made by the Respondents including a 12 page schedule entitled “Breaches of Full and Frank Disclosure, Cross Referenced with Globe’s Reply (Almheiri 3)” I will address the allegation.
94. Mr Spink KC referred me to the decision of Carr J in Tugushev v Orlov & Others  EWHC 2031 (Comm)  in which she set out the applicable principles:
“i) The duty of an applicant for a without notice injunction is to make full and accurate disclosure of all material facts and to draw the court's attention to significant factual, legal and procedural aspects of the case;
ii) It is a high duty and of the first importance to ensure the integrity of the court's process. It is the necessary corollary of the court being prepared to depart from the principle that it will hear both sides before reaching a decision, a basic principle of fairness. Derogation from that principle is an exceptional course adopted in cases of extreme urgency or the need for secrecy. The court must be able to rely on the party who appears alone to present the argument in a way which is not merely designed to promote its own interests but in a fair and even-handed manner, drawing attention to evidence and arguments which it can reasonably anticipate the absent party would wish to make;
iii) Full disclosure must be linked with fair presentation. The judge must be able to have complete confidence in the thoroughness and objectivity of those presenting the case for the applicant. Thus, for example, it is not sufficient merely to exhibit numerous documents;
iv) An applicant must make proper enquiries before making the application. He must investigate the cause of action asserted and the facts relied on before identifying and addressing any likely defences. The duty to disclose extends to matters of which the applicant would have been aware had reasonable enquiries been made. The urgency of a particular case may make it necessary for evidence to be in a less tidy or complete form than is desirable. But no amount of urgency or practical difficulty can justify a failure to identify the relevant cause of action and principal facts to be relied on;
v) Material facts are those which it is material for the judge to know in dealing with the application as made. The duty requires an applicant to make the court aware of the issues likely to arise and the possible difficulties in the claim, but need not extend to a detailed analysis of every possible point which may arise. It extends to matters of intention and for example to disclosure of related proceedings in another jurisdiction;
vi) Where facts are material in the broad sense, there will be degrees of relevance and a due sense of proportion must be kept. Sensible limits have to be drawn, particularly in more complex and heavy commercial cases where the opportunity to raise arguments about non-disclosure will be all the greater. The question is not whether the evidence in support could have been improved (or one to be approached with the benefit of hindsight). The primary question is whether in all the circumstances its effect was such as to mislead the court in any material respect;
vii) A defendant must identify clearly the alleged failures, rather than adopt a scatter gun approach. A dispute about full and frank disclosure should not be allowed to turn into a mini-trial of the merits;
viii) In general terms it is inappropriate to seek to set aside a freezing order for non-disclosure where proof of nondisclosure depends on proof of facts which are themselves in issue in the action, unless the facts are truly so plain that they can be readily and summarily established, otherwise the application to set aside the freezing order is liable to become a form of preliminary trial in which the judge is asked to make findings (albeit provisionally) on issues which should be more properly reserved for the trial itself;
ix) If material non-disclosure is established, the court will be astute to ensure that a claimant who obtains injunctive relief without full disclosure is deprived of any advantage he may thereby have derived;
x) Whether or not the non-disclosure was innocent is an important consideration, but not necessarily decisive. Immediate discharge (without renewal) is likely to be the court's starting point, at least when the failure is substantial or deliberate. It has been said on more than one occasion that it will only be in exceptional circumstances in cases of deliberate nondisclosure or misrepresentation that an order would not be discharged;
xi) The court will discharge the order even if the order would still have been made had the relevant matter(s) been brought to its attention at the without notice hearing. This is a penal approach and intentionally so, by way of deterrent to ensure that applicants in future abide by their duties;
xii) The court nevertheless has a discretion to continue the injunction (or impose a fresh injunction) despite a failure to disclose. Although the discretion should be exercised sparingly, the overriding consideration will always be the interests of justice. Such consideration will include examination of i) the importance of the facts not disclosed to the issues before the judge ii) the need to encourage proper compliance with the duty of full and frank disclosure and to deter non-compliance iii) whether or not and to what extent the failure was culpable iv) the injustice to a claimant which may occur if an order is discharged leaving a defendant free to dissipate assets, although a strong case on the merits will never be a good excuse for a failure to disclose material facts;
xiii) The interests of justice may sometimes require that a freezing order be continued and that a failure of disclosure can be marked in some other way, for example by a suitable costs order. The court thus has at its disposal a range of options in the event of non-disclosure.”
95. As I remarked in the course of argument I find many of the allegations of material non-disclosure “over-egged” (i.e. exaggerated). Many depend on proof of facts which are themselves in issue in the action (point (viii) above). Many, relating to the IGPL GT case, may legitimately have been regarded as outside the bounds of relevance (point (vii) above), as Globe was not directly involved. Many relate to matters that were apparent to me and I regard the First Affidavit of Mr Khatoun as remedying the defects in the evidence as presented at the first without-notice hearing, but in any event I declined to grant the WFO at that hearing. Many relate to absences of evidence which may be the subject of forensic criticism but do not amount to material non-disclosure.
96. Having said that, I do regard there to have been one instance of material non-disclosure and but for the fact that I have refused to grant the WFO, I would have discharged it on that basis. I regard the instructions given to junior counsel at the second without-notice hearing noted at paragraph 29 above to have been misleading. It was simply untrue that the Bank had a history of making quick sales to subsidiaries with the intention of putting the properties out of Globe's reach.
97. As I have ordered Globe to pay the Respondents/Defendants’ costs of the entire proceedings, I do not consider that any additional sanction is required.
JUST & EXPEDIENT
98. If I had had to decide whether it was just and expedient to grant the WFO I should have declined to do so.
99. Once Globe had commenced enforcement proceedings in BVI it seems to me that it was unnecessary to seek a WFO from this Court. BVI is the natural forum in which to seek to restrain the BVI companies – it is the jurisdiction within which the BVI Companies are domiciled and the forum within which the enforcement proceedings are pending. It is something of a mystery why proceedings were not commenced in BVI in the first place.
100. Mr Spink KC fell back on suggesting that I might grant an injunction for short time until Globe is able to move the BVI courts. I would not have acceded to that submission as an urgent application could be made to the BVI courts which are well used to dealing with matters “ex parte on notice” and of course both sides have already done all the preparatory work in these and the English proceedings. There would be no legitimate juridical advantage in maintaining proceedings before this Court as the BVI courts (barring immaterial questions of jurisdiction) would apply precisely the same standards for the grant of a WFO as the DIFC Courts. Further, I am not persuaded that the BVI Companies would be able to take any steps to divest themselves of the Bridge Properties in the short time before the application were heard.
101. In all the circumstances Globe’s application for a WFO is refused and Globe must pay the Defendants/Respondents’ costs of the proceedings on the standard basis to be assessed by the Registrar if not agreed.
Date of issue: 4 July 2023