July 28, 2025 court of first instance - Orders
Claim No: CFI 032/2025
THE COURTS OF DUBAI INTERNATIONAL FINANCIAL CENTRE
IN THE COURT OF FIRST INSTANCE
BETWEEN
LABEL LABS FZ LLE
Claimant
and
FIVE INTERNATIONAL HOTEL MANAGEMENT LLC
ORDER WITH REASONS OF H.E. JUSTICE ROGER STEWART
UPON the Part 8 Claim Form dated 18 March 2025 and amended on 30 May 2025
AND UPON the Claimant’s Application No. CFI-032-2025/1 dated 11 April 2025 seeking an application for immediate judgment (the “Application”)
AND UPON the Acknowledgement of Service dated 17 April 2025 contending that the Part 8 procedure is inappropriate for this Claim
AND UPON the Defendant’s Witness Statement dated 23 June 2025
AND UPON the Claimant’s Witness Statement dated 1 July 2025
IT IS HEREBY ORDERED THAT:
1. If Five International pay the sum of AED 1,081,452.79 into Court within 21 days of this order:
(a) The proceedings shall be treated as if commenced by Part 7;
(b) The Application is dismissed;
(c) Five International has leave to serve a Defence and Counterclaim within 28 days of the date of this order;
(d) Label Labs has leave to serve a Reply and Defence to Counterclaim within 49 days of the date of this order;
(e) Five International has leave to serve a Reply to Defence to Counterclaim within 63 days of the date of this order;
2. If Five International does not pay the sum of AED 1,081,452.79 into Court within 21 days of this order, there shall be judgment for Label Labs in the sum of AED 1,081,452,79 plus interest and costs to be assessed if not agreed;
3. Five International is to pay 3/4 of the costs of the application which will be summarily assessed on the basis:
(a) Label Labs provides a schedule of its costs of the application within 7 days of this order; and
(b) Five International responds to the same within 14 days of this order; and
(c) Label Labs replies, if so advised, within 21 days of this order.
Issued by:
Hayley Norton
Assistant Registrar
Date of Issue: 28 July 2025
At: 2pm
SCHEDULE OF REASONS
1. This is an application by the Claimant (“Label Labs”) for immediate judgment under Part 24 of the DIFC Rules in the amount of AED 1,081,452.79 plus interest on the grounds that the Defendant (“Five International”) has no real prospect of successfully defending the claim and there is no other compelling reason why the claim should be disposed of at a trial.
The Facts
2. The claim is brought pursuant to a services agreement dated 25April 2023 under which Label Labs supplied Project Management, Product Sourcing and Product Development services to Five International.
3. There were express terms of the Agreement:
(a) By clause 7 of the agreement, Five International was required to pay Fees and Expenses with the fees being set out in Schedule 3 being:
(i) A monthly fee of USD 4,000 for project management and product sourcing services;
(ii) Fees for product units beyond 4,000 units per year at USD 12 per unit; and
(iii) Fees of USD 1,000 to 2,000 per style for product development services;
(b) By clause 10.5 all outstanding invoices became immediately due and payable on termination;
(c) Clause 18 contained an English choice of law clause;
(d) Clause 19 contained mandatory provisions requiring a dispute notice followed by a high level meeting, then mediation and then gave jurisdiction to the DIFC Courts;
4. The material history is as follows:
(a) On 25 October 2023, Five International served a termination notice with a termination date of 25 January 2024 in respect of the agreement;
(b) The claim is based upon:
(i) 3 invoices, numbers 1422, 1446 and 1453 totalling AED 1,264.8 unpaid at 25 October 2023;
(ii) 1 invoice, number 1497 being issued for 3,912.29 on 7 December 2023;
(iii) 3 invoices totalling AED 511,934.4 and being numbered 162, 163 and 164 being issued on 18 January 2024;
(iv) Invoice 1551 for AED 142,903.85 being issued on 3 June 2024 and invoice number 166 being issued for AED 486,465 on 24 June 2024 with a credit for AED 65,032.62 against the last invoice;
(c) Various attempts were made to seek payment as exhibited to the expert report referred to below and a final demand notice was issued on 31 July 2024 in accordance with the contractual provisions;
(d) On 15 November 2024, Label Labs filed for mediation in accordance with clauses 19.1.3 and 19.1.4 but Five International failed to participate;
(e) An expert report was prepared by Maithi Salem Al Zaabi on 13 February 2025 which substantially set out the history including requests for payments and invoices;
(f) A Part 8 claim form was issued on 18 March 2025 stating that the Particulars of Claim would follow if an acknowledgement of service was filed indicating an intention to defend the claim;
(g) The claim form was served on 27 March 2025;
(h) The present application was issued on 11 April 2025 supported by Maithi Salem Al Zaabi’s expert report and exhibits;
(i) An acknowledgement of service was filed on 17 April 2025 with a contention that the Part 8 procedure should not be used and the reservation of the right to file a Defence and Counterclaim;
(j) On 23 June 2025, Five International served a witness statement from Negar Shapourian which:
(i) Contended:
1. the application was premature and brought in breach of Rule 24.4;
2. The claim had been improperly brought under Part 8;
3. The threshold under RDC 24.1 had not been met; and
4. That Five International had a realistic and substantial prospect of defending the claim and advancing a counterclaim;
(ii) Stated that the intended defence was that the sums claimed were not properly due under the agreement;
(iii) Asserted that:
1. Invoices 1422 and 1446 related to shipment sample charges but the samples were defective and gave rise to downstream quality issues;
2. Invoice 1453 was for a limited label which was never approved for separate billing and fell within the original sourcing remit;
3. Invoice 1497 purported to charge for additional costs for split delivery but there was a failure to coordinate timely delivery and disruption was caused;
4. Invoice 1551 covered a delivery of 24 polyester tops and shorts that were partially defective and incomplete as set out in an email dated 19th June 2024;
5. No charge under Invoice 0166 was due as there was no agreement on a development fee or that lower sums were due; and
6. There was no entitlement to sums for pieces above 4,000 per year;
7. It had an intended counterclaim based upon undisclosed markups which entitled it to recover sums paid and/or to losses for delays and disruptions.
(k) On 1 July 2025, Label Labs served a witness statement from Anthony Wong which:
(i) Asserted that the use of the Claim 8 procedure was appropriate as it was unlikely to involve a dispute of fact;
(ii) Relied on two emails from February and March 2024 which were said to confirm liability;
(iii) Stated that there were never any pricing or dual profit complaints prior to the witness statement of Ms Shapourian;
(iv) Relied on the history of chasing payment and, in particular, the initiation of mediation without response from Five International;
(v) Referred to the fact that the Acknowledgement of Service was filed 5 days late and only after chasing; and
(vi) Stated that there was no procedural bar to seeking immediate judgment.
Discussion
5. There are two main issues to consider:
(a) Procedural issues as to:
(i) Whether a Part 8 claim should have been used; and
(ii) Whether immediate judgment is available to Label Labs; and
(b) The substance of the dispute and whether immediate judgment should be granted or some other order made.
6. In relation to the procedural issues:
(a) Part 8 is relevantly available where a Claimant seeks the Court’s decision on a question which is unlikely to involve a substantial dispute of fact (RDC 8.1(1));
(b) In my view it is clear that this involves consideration of what is likely to occur if there is a dispute not whether or not there will be a dispute with the consequence that this is a case where the Part 7 procedure should have been used;
(c) Nonetheless:
(i) The Court can always order the claim to proceed as if commenced by Part 7;
(ii) The DIFC Courts have been flexible in relation to the application of Part 8 and permitted Defendants to file a Defence and Counterclaim – see DIFC Investments v Zia [2017] DIFC CFI 001;
(iii) Label Labs factual belief that it was unlikely that there would be a dispute appears justified given the history of the dispute prior to issue; and
(iv) The Part 8 claim form made clear what the claim was and the basis for it.
(d) Contrary to RDC 24.4, the application for immediate judgment was made prior to the acknowledgement of service being made but:
(i) Five International’s acknowledgement was late and was subsequently filed;
(ii) There is no prejudice caused to Five International by the early filing of the application;
(iii) There is accordingly no reason not to consider the substance of the application; and
(iv) The Court is expressly empowered to give immediate judgment in any type of proceedings – RDC 24.3.
7. So far as the merits of the application are concerned:
(a) The principles applicable are well-established and set out by Justice Giles in GFH Capital Ltd v Haigh [2014] DIFC CFI 020 applying JSC VTB Bank v Skurickin [2014] EWHC 271 at [15];
(b) The essential task is to consider whether Five International has a realistic as opposed to a fanciful prospect of success;
(c) I consider the following matters to be of particular relevance to this assessment:
(i) All of the invoices which are now sued upon have been in issue since the final demand notice in July of last year although it is fair to say that two invoices with a total value of AED 629,368.85 were only issued in June some five months after the contract had come to an end;
(ii) With the exception of some trivial emails relating only to small sums, Five International did not set out any details at all of its alleged defence and counterclaim until the witness statement of Ms Shapourian;
(iii) This is despite the fact that there was a contractual obligation to participate in mediation which Five International chose to ignore; and
(iv) Ms Shapourian’s witness statement is, in itself, not detailed and does not exhibit a draft Defence and Counterclaim.
8. Had Ms Shapourian’s witness statement (or an equivalent document) been provided as it should have been in relation to the mandatory dispute resolution procedure, I would have considered that Label Labs had no prospect of a successful application for immediate judgment – and certainly not before the provision of pleadings including a Defence and Counterclaim and Reply and Defence to Counterclaim.
9. As it is, I consider that there is a very real prospect that the contents of the witness statement have only been put forward at the last minute in order to seek to stave off the current application. I have very real doubts about the bona fides of Five International.
10. In the circumstances, I consider that the proper course of action is to dismiss the application and give directions that the action proceed as a Part 7 action but on the condition that Five International pay the whole of the principal sum claimed namely AED 1,081,452.79 into Court within 21 days of the date of this order.
11. The reasons for this order are as follows:
(a) There is specific power to make it – RDC 24.11 and 24.13;
(b) Five International chose to ignore the mandatory dispute resolution procedure as set out above;
(c) The circumstances are such as to cause real doubt as to whether there is a genuine dispute. Five International have behaved in a way which suggests there may well be no genuine dispute and there is no real issue for trial;
(d) If there is a genuine dispute, Five International can set out the grounds for the same and it will be determined at a trial but only on condition that the sum at issue is paid into court;
(e) Five International has obtained something of an indulgence not least because it chose to ignore the mandatory dispute resolution procedure which required it to engage with Label Labs in a structured way;
(f) Even now the details provided of the proposed Defence and Counterclaim are very far from full as would be expected of a party in Five International’s position;
(g) Label Labs should be entitled to know that the money is available if a Defence and Counterclaim is filed and the matter goes to trial.
12. I also consider that Five International should pay 3/4 of the costs of the application which I will summarily assess on presentation of a schedule if not agreed. The reasons for this order are:
(a) That Five International is the successful party and has obtained a substantial benefit from making it; and
(b) There should be a deduction to reflect my view that the proceedings should have been commenced by Part 7 proceedings.
Resolution
13. Accordingly, I order:
(a) That if Five International pay the sum of AED 1,081,452.79 into Court within 21 days of this order:
(i) The proceedings shall be treated as if commenced by Part 7;
(ii) The application is dismissed;
(iii) Five International has leave to serve a Defence and Counterclaim within 28 days of the date of this order;
(iv) Label Labs has leave to serve a Reply and Defence to Counterclaim within 49 days of the date of this order;
(v) Five International has leave to serve a Reply to Defence to Counterclaim within 63 days of the date of this order;
(b) That if Five International does not pay the sum of AED 1,081,452.79 into Court within 21 days of this order, there shall be judgment for Label Labs in the sum of AED 1,081,452,79 plus interest and costs to be assessed if not agreed;
(c) Five International is to pay 3/4 of the costs of the application which will be summarily assessed on the basis:
(i) Label Labs provides a schedule of its costs of the application within 7 days of this order;
(ii) Five International responds to the same within 14 days of this order; and
(iii) Label Labs replies, if so advised, within 21 days of this order.
