Claim No: CFI 030/2025

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

ALARABI INVESTMENTS LIMITED

Claimant

and

CRON AI LTD

Defendant

ORDER WITH REASONS OF H.E. JUSTICE MARK PELLING

UPON the Claimant’s Part 7 Claim Form dated 13 March 2025 (the “Claim”)

AND UPON the Default Judgment entered on the Claim on 14 May 2025 pursuant to Part 13 of the Rules of the DIFC Courts (“RDC”) (the “Default Judgment”)

UPON the Defendant’s Application Notice sealed on 27 March 2026 for an Order setting aside the Default Judgment pursuant to RDC 14 (the “Set Aside Application”)

AND UPON the Notice of Discontinuance dated 2 June 2026 filed by the Defendant in respect of the Set Aside Application (the “Notice of Discontinuance”) and the Court’s provisional determination dated 5 June 2026 that the Notice of Discontinuance was of no effect

AND UPON the Defendant’s application by a letter to the Registry from its legal representatives, Trowers & Hamlins LLP, dated 9 June 2026 for a declaration that the Notice of Discontinuance is valid and effective (the “Declaration Application”)

AND UPON the Defendant’s Application No. CFI-030-2025/3 dated 16 June 2026 for an order that, if the Notice of Discontinuance is ineffective, it should nevertheless be permitted to withdraw the Set Aside Application (the “Withdrawal Application”)

AND UPON the Defendant’s indication that it wishes to file a further application to set aside the Default Judgment (the “Renewed Application”)

AND UPON hearing counsel for the Claimant and counsel for the Defendant at the hearing held before H.E. Justice Mark Pelling on 22 June 2026 (the “Hearing”)

IT IS HEREBY ORDERED AND DECLARED THAT:

1. The Notice of Discontinuance is of no effect.

2. The Declaration Application is dismissed.

3. Subject to the conditions set out at paragraphs 4 and 5 below, the Withdrawal Application is granted.

4. Unless the Defendant files and serves its Renewed Application by no later than 4pm (GST) on Monday 29 June 2026, it shall be automatically debarred from pursuing any such application, without the need for any further order.

5. Unless the Defendant pays the Claimant’s costs in accordance with paragraph 7, below, by no later than 4pm (GST) on Monday 6 July 2026, it shall be automatically debarred from pursuing any Renewed Application (to the extent that it has not already been so debarred pursuant to paragraph 3, above) without the need for any further order.

6. The Defendant has liberty to apply for an extension of time to make payment in accordance with paragraph 4, above, provided that any such application is filed by no later than 4pm (GST) on Monday 6 July 2026.

7. If the Defendant files a Renewed Application and pays the Claimant’s costs, in accordance with paragraphs 3 and 4 above, then:

8. The Defendant shall pay the Claimant’s costs of and occasioned by the Set-Aside Application, the Declaration Application and the Withdrawal Application on the indemnity basis, summarily assessed in the sum of USD 40,497.54, by no later than 4pm GST on Monday 6 July 2026.

Issued by:
Delvin Sumo
Assistant Registrar
Date of issue: 26 June 2026
At: 9am

SCHEDULE OF REASONS

Set out below are the reasons that I gave in an ex tempore oral judgment for making the orders set out above.

1. This is the Hearing of three applications being:

2. I have come to the conclusion that the Declaration Application should be refused and that the Withdrawal Application should succeed but on terms, and that therefore it is unnecessary for me to determine the Set-Aside Application. My reasons for reaching that conclusion are as follows.

3. It is necessary to start with a brief procedural summary. Procedurally, the relevant events commenced on 14 May 2025, when the Default Judgment was entered against the Defendant in the sum of USD 217,059.32 plus interest. On 19 September 2025, the Claimant issued its application to enforce the Default Judgment by separate enforcement proceedings and on 24 September 2025, this Court, by its enforcement judge, declared the Default Judgment to be final and executory, pursuant to Part 45 of the Rules of the DIFC Courts (the “RDC”), which is, as both parties accepted, the first step to seeking to enforce the relevant Judgment. Proceedings were then commenced in England to enforce the Judgment, but those have not gone further than the issue of those proceedings. No steps have been taken in Dubai to enforce the relevant Judgment.

4. On 27 March 2026, the Defendant issued the Set Aside Application. The Set Aside Application was served on the Claimant’s legal representatives (“HFW”) on 24 April 2026. On 7 May 2026, the Claimant filed evidence in answer to the Set Aside Application. Meanwhile, on 6 May 2026, the Defendant had approached its current solicitors, Trower & Hamlin LLP (“Trowers”), for the purposes of asking that firm to act on its behalf in these proceedings. There was an attempt to agree extensions of time for the filing of evidence in reply. Those came to nothing and on 8 May 2026, Trowers filed a RDC Part 37 Notice of Change of Legal Representative.

5. Evidence in reply from the Defendant was initially due on 14 May 2026. On 12 May 2026, Trowers sought the Claimant solicitor’s agreement for an extension of time. HFW refused that request on the same day. On 14 May 2026, the Defendant applied for an extension of time in which to file the reply evidence to 21 May and ultimately the parties were able to agree an extension until 25 May 2026. However, on 25 May 2026, Trowers wrote to HFW, inviting them to consent to the withdrawal of the Set-Aside Application on the basis that the Defendant would pay the Claimant’s reasonable costs of and occasioned by the Set-Aside Application on the basis that the Defendant would then file a fresh application to set aside that better articulated and particularised its grounds for seeking the set-aside of the judgment. That didn’t receive any response, largely I think because it was the Eid holidays at the time and on 2 June 2026, Trowers served Notice of Discontinuance on behalf of the Defendant. The Notice of Discontinuance was in standard form. The Notice of Discontinuance stated that it related to the Set Aside Application to set aside the Default Judgment and concluded, “… the defendant wishes to discontinue this application…”.

6. The Notice of Discontinuance was met with correspondence from HFW, maintaining that it was wrong in principle to seek to discontinue an interim or interlocutory application by service of a notice of discontinuance. That remains their position. That issue initially came before me on paper. I concluded, inevitably on a preliminary basis, that the notice was invalid because it did not apply to a claim or part of a claim, but nonetheless directed that this hearing take place at which, amongst other things, the validity of the Notice of Discontinuance could be finally determined. Against the possibility that I should conclude that the Notice of Discontinuance was invalid, on 16 June 2026, the Defendant issued the Withdrawal Application, by which it sought permission to withdraw the Set Aside Application and consequential directions.

7. Against that background, the first issue that arises, is whether the Notice of Discontinuance was and should be declared effective for the purpose of enabling the Defendant to discontinue the Set Aside Application.

8. Notices of discontinuance are governed by RDC Part 34, the relevant core provision of which is Rule 34.3, which provides, “(a) claimant may discontinue all or part of a claim at any time.” This language is materially identical to that used in r.38.1 of the Civil Procedure Rules that govern the conduct of civil litigation in England and Wales (the “CPR”). It follows that the authorities decided by the English Courts are likely to provide an important source of reference as to the true construction and effect of RDC 34.3 – see Paragraph 2.10.1 of the DIFC Courts Practice, 2nd Ed.

9. Other provisions within RDC Part 34 are relevant because of the dispute between the parties as to whether or not a notice of discontinuance can be served in relation to an interlocutory application as opposed to a claim or part. RDC 34.4 continues on from RDC 34.3 as follows:

The procedure for discontinuing is then set out at RDC 34.6 and following. The liability for costs that follows is dealt with at RDC 34.15, with RDC 34.12 providing that discontinuance against any defendant takes effect on the date when the notice of discontinuance is served. By RDC 34.16:

10. The Defendant submits and I accept, that RDC Part 34 is a self-contained code limited by its terms to the discontinuance of a claim or part of a claim contained in originating process issued by the court under either RDC Part 7 or RDC Part 8 or conceivably a counterclaim filed in proceedings commenced by RDC Part 7 or RDC Part 8 claim form.

11. That this analysis is the correct analysis, is obvious as a matter of construction and is supported by English authority in relation to a rule which as I have said is in materially identical terms as the relevant RDC rules. Turning first to authority, the relevant authority for present purposes is the decision of His Honour Judge Paul Matthews, sitting as a judge at the High Court in Otto and others v Inner Mongolia Happy Lamb Catering Management Company and others [2023] EWHC 2920 (Ch); [2024] costs LR 57. The principle to be derived from that authority is that the decision to withdraw an interim injunction application was not a discontinuance under the equivalent civil procedure rules to RDC Part 34, because whilst an interim injunction was not part of the final relief sought in the claim, it did not follow that it amounted to a separate claim under the rule. The judge held that a claim under CPR Part 38 was whatever was the subject of the claim form or other originating process – see paragraph 15 of the judge’s judgment.

12. In my judgment, Judge Matthews’ analysis and conclusion are correct and should be given effect to in this jurisdiction. Whilst it is true to say that the word “claim” is not a defined term within the RDC, any more than it is within the CPR, the relevant rule must be read in its correct procedural context and in the context of RDC Part 34 when read as a whole. The application was not a claim in the sense that word was intended to be understood. That a claim was meant to mean what it was held to mean in Otto (ibid.) is apparent from the terms of RDC 34.4, all of which can only be of any relevance in the context of the discontinuance of a claim or part of a claim contained in originating process. Similarly, that follows from RDC 34.16 when it is read as a whole together with all the other provisions within Part 34.

13. In those circumstances, I have no hesitation in concluding that the Notice of Discontinuance was not effective as a withdrawal, and therefore, if the Set Aside Application is to be withdrawn that can be achieved only by (i) consent or (ii) an application to amend it or (iii) an application for permission to withdraw it. If none of these routes are taken, the only other possibility is that the Set Aside Application is dismissed either by consent or otherwise because the Set Aside Application is not moved by the Defendant. The route that the Defendant has chosen to adopt is to issue the Withdrawal Application, which is the Application I now turn to.

14. The Withdrawal Application was resisted on a number of different grounds including the suggestion that any subsequent application to set aside the judgment would be one which would be regarded as vexatious and oppressive and therefore not one which the court should permit. As I made clear to both counsel in the course of the argument, whether a second application should fail, either on the basis of some form of estoppel or applying the principle in Henderson and Henderson (1843) 67 ER 313 or some allied principle, is not an issue that can properly be considered in the context of the Withdrawal Application. That issue will arise, if it arises at all, only if and when the Defendant issues an application to set aside the judgment subsequent to being given permission to withdraw the Set Aside Application.

15. It was next submitted by the claimant that the Withdrawal Application shouldn’t be permitted, unless it could be shown by the Defendant that there had been a material change of circumstance since the Set Aside Application was issued. It was further submitted that in any event the Court should exercise its discretion by refusing permission to withdraw the Set Aside Application because it had not been demonstrated that the Defendant has any real, as opposed to a fanciful, defence with the result that if the Defendant is permitted to issue a new set aside application that will needlessly waste time, costs and court resources.

16. Both parties contended that the principles that apply when deciding whether or not to give permission to withdraw an interlocutory application are those said to be contained in the judgment of His Honour Judge Paul Matthews in Parrott Pay Limited in liquidation v. Goddington Pierce Limited (In Provisional Liquidation) [2023] EWHC 2774 (Ch). That case concerned what was to have been a contested application to discharge the appointment of provisional liquidators to Goddington Pierce and to strike out a winding up petition which had been presented against it. The issue that arose concerned whether or not permission should be given for the withdrawal of the discharge application. The relevant points for present purposes are contained in paragraphs 8 to 10 of the judgment. Insofar as is material, the judge said the following:

17. The Claimant submits that the effect of Parrott Pay (ibid.) is that before an application to withdraw can be permitted, a material change of circumstance must be demonstrated by the applying party. In my judgment, that goes much further than the judge went in Parrot Pay (ibid.) and I reject that as a generally applicable principle. Indeed, I would go further. I’m not satisfied that, in all cases at least, it should be necessary for a party seeking permission to withdraw an application it has issued, but no longer wishes to proceed with, to show a change of circumstance before it is permitted to withdraw the application. There will be applications where it may be inappropriate to permit the withdrawal of an application or not to permit it without a change of circumstance. However, those are likely to be the exception rather than the rule. In most cases, if a party has issued an application but has had a change of mind, then subject to the payment of costs and any other procedural directions that are appropriate, there’s no reason why that party should not be permitted to withdraw the application it itself has issued. The reason why permission is required is very largely to cater for the cost consequences that follow from withdrawal and which are catered for where RDC Part 34 applies by RDC 34.15. If withdrawal were permitted without permission having to be sought, then no provision would be made in relation to costs, very often after substantial costs had been incurred by the respondent to the application the applicant wishes to withdraw. To permit such a process would be obviously procedurally unfair.

18. In those circumstances, if the Defendant wishes to withdraw its Set Aside Application, in principle it is not for the Court to stand in its way, subject to the making of appropriate costs orders and giving appropriate directions. As the judge noted in Parrot Pay, an alternative to withdrawal is an application for permission to amend the existing application. However, that is not an application which has been made in this case. I conclude therefore that in principle I ought to permit the Defendant to withdraw the Set Aside Application. However, it would not be appropriate to ignore entirely the fact that the Defendant has indicated an intention to issue a further application. It is likely that the Defendant will issue such an application. The underlying reasons for this are essentially as follows. The Set Aside Application was issued in circumstances where the Defendant was acting by its director and was not legally advised in relation to the Set Aside Application, although the evidence suggests that the Defendant was being legally advised in relation to other aspects of the relationship between the Claimant and the Defendant. In consequence, the Set Aside Application and the evidence which was filed in support of it is unsatisfactory, to put it in neutral terms and the evidence which the Defendant has been advised to rely upon is set out only in the second statement of Mr. Chabra filed in these proceedings as a reply statement to the Set Aside Application. That was filed very late. There was no sensible opportunity for the Claimant to respond to it and therefore, I have not referred to it in any detail other than to note that it contains the evidence which the Defendant apparently would wish to rely upon in any further application to set aside.

19. In those circumstances, although it was submitted that I should debar the Defendant from issuing any subsequent application, in my judgment that would be a wrong exercise of discretion given that it is based on an implicit submission that I should leave out of account what is set out in Mr Chabra’s second statement. It is not any part of a Court’s duty to prevent a party from issuing any application it chooses to issue at least without reviewing its merits. If the position is, as was submitted by the Claimant, that any such application was bound to be met as a matter of law with a claim that it was vexatious or abusive, then the time to deal with that is if and when any such application is issued. Very sensibly, therefore, having taken instructions, Mr Marenbon indicated on behalf of the Claimant that the conditions which, in principle, his client would expect to be imposed as a condition of the Defendant being permitted to withdraw the Set Aside Application were firstly that any further application to set aside the Default Judgment must be issued by no later than 4pm GST, seven days from the day of the Hearing and in default, the Defendant be debarred from issuing any further application. Mr Hogan accepted on behalf of the Defendant that this was appropriate. Secondly, if an application is issued, then any evidence in answer by the Claimant was to be filed 14 days thereafter. That was agreed to by Mr Hogan. It was submitted that any evidence in reply by the Defendant should be filed seven days thereafter, which again was not in dispute between the parties. It was accepted by Mr Hogan that any new application should be listed for determination on the first available date thereafter.

20. I am satisfied those are appropriate conditions to impose. It is very important that if there is to be a further application, that it is determined within as short a timeframe as can be achieved. Seven days is appropriate in my judgment, because of the time that has been allowed to elapse since these proceedings were commenced. As I have said, the Defendant will be debarred from further applying to set aside judgment unless any new application is issued within 7 days from the date of the Hearing. That is appropriate since it will focus the mind of the Defendant on deciding if that is an application it wishes to make within a period that will not materially prejudice the Claimant.

21. The only issue that remains concerns costs. It is not, as I understand it, objected to by the Defendant that it should be a condition of being given permission to withdraw the application, that the costs of and occasioned by the Withdrawal Application must be paid by the Defendant. There is a dispute between the parties as to whether or not that should be on the indemnity or the standard basis, which I will resolve following the delivery of this judgment. In principle, however, I accept the submission made on behalf of the Claimant that any permission to withdraw must be made conditional on the Defendant paying the Claimant’s costs of and occasioned by the application it is withdrawing.

22. There was an application by the Claimant for a further condition, namely that the Defendant be required to pay the whole of the sum claimed into Court. The difficulty about that application is that the first time it was mentioned was in oral submissions. That does not give the Defendant a fair opportunity to respond to it. It is well established on the case law that orders of that sort can only be made where the making of such an order will not stifle the claim or application by reference to which the payment in is sought. In the absence of any indication that an order in those terms was going to be sought by the Claimant, plainly, the Defendant has had no opportunity to respond to that suggestion or take advice in relation to it and as a result to file any evidence in relation to it. In those circumstances, I decline to impose that condition on the Defendant.

23. In the result, therefore, I refuse the Declaration Application but grant the Withdrawal Application, subject to the conditions I have identified.

24. After further argument, I directed that the Defendant should pay the Claimant’s costs to be assessed on the indemnity basis for reasons that I gave orally and I assessed the sum payable immediately in the sum referred to in the Order, again for reasons that I gave orally.