October 28, 2025 court of first instance - Orders
Claim No: CFI 045/2025
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
STELIAN GHEORGHE
Claimant
and
(1) BSA AHMAD BIN HEZEEM & ASSOCIATES LLP
(2) JIMMY HAOULA
Defendants
ORDER WITH REASONS OF H.E. JUSTICE SAPNA JHANGIANI
UPON the Claimant’s claim dated 1 May 2025 (the “Claim”)
AND UPON Defendants’ Application No. CFI-045-2025/1 and CFI-045-2025/2 XX dated 12 June 2025 seeking inter alia an order that these proceedings be dismissed or stayed on the grounds that the dispute in these proceedings (the “Dispute”) is subject to a binding arbitration agreement and the DIFC Courts lack jurisdiction to entertain the Claimant’s claim (the “Applications”)
AND UPON considering the documents and submissions filed by both parties and recorded on the case file
AND UPON reviewing the parties’ skeleton arguments
AND UPON hearing Counsel for the Defendants at the hearing on 22 October 2025 held before H.E. Justice Sapna Jhangiani (the “Hearing”)
AND UPON reviewing the Rules of the DIFC Courts (“RDC”)
IT IS HEREBY ORDERED AND DECLARED THAT:
1. These proceedings are stayed pursuant to Article 13(1) of the DIFC Arbitration Law, pending reference of the dispute to arbitration in accordance with Clause 15 of the Escrow Agreement dated 14 October 2020.
2. The Defendants are entitled to their costs of these proceedings and of the Applications, to be immediately assessed on the standard basis. Each Defendant must file an updated schedule of costs which complies with RDC 38.34 and 38.35 by no later than 4pm on Monday, 3 November 2025. The parties may then file short submissions of no more than 3 pages on the costs to be awarded to each Defendant based on its updated schedule of costs as follows:
(a) Claimant to file its submissions by no later than 4pm on Monday, 10 November 2025.
(b) Defendants to file reply submissions by no later than 4pm on Monday, 17 November 2025.
Issued by:
Delvin Sumo
Assistant Registrar
Date of issue: 28 October 2025
At: 10am
SCHEDULE OF REASONS
Introduction
1. The Claimant’s Dispute before this Court arises from an escrow agreement dated 14 October 2020 between the Claimant, the First Defendant, and a company incorporated in Abu Dhabi Global Markets named Holding 5 Limited (the “Escrow Agreement”). The Escrow Agreement provides that, pursuant to a settlement agreement entered into between the Claimant and Holding 5 Limited, the First Defendant (as “Escrow Agent”), shall hold funds transferred to it by Holding 5 Limited (the “Escrow Amount”) in escrow for the Claimant.
2. It is not disputed that the Second Defendant signed the Escrow Agreement. The Claimant contends that the Second Defendant is liable to the Claimant in the Dispute because of his (i) signature of the Escrow Agreement; (ii) involvement in client communications for the transaction; (iii) facilitating receipt of the Escrow Funds; and (iv) title as “Managing Partner” of the First Defendant.
3. Clause 15 of the Escrow Agreement is entitled “Governing Law and Dispute Resolution” (“Clause 15”) and provides as follows:
“15.1 This Escrow Agreement shall be subject to and governed by the laws of the DIFC and the UAE.
15.2 In the event of any dispute or difference arising between the Parties out of or relating to this Escrow Agreement or to the breach thereof, the Parties shall use their best endeavors to settle such dispute or differences. If the Parties cannot resolve any dispute between them, then any Party may refer such dispute to arbitration in accordance with the arbitration rules of the DIFC/LCIA Arbitration Centre ("Rules"), which Rules are deemed to be incorporated by reference into this Clause. For the purposes of any arbitration proceedings commenced pursuant to this Clause:
(a) the number of arbitrators shall be one appointed in accordance with the Rules;
(b) the seat of the arbitration shall be the DIFC;
(c) the arbitration hearings shall take place in Dubai, UAE;
(d) the language to be used in the arbitration proceedings shall be English; and
(e) the award of the arbitrators shall be final and binding on the Parties.
15.3 Each of the Parties hereby agrees that:
(a) it will not challenge any arbitral award made pursuant to arbitration proceedings conducted in accordance with Clause 15.2 in any court; and
(b) it will not object to or challenge any application to enforce any arbitral award made pursuant to arbitration proceedings conducted in accordance with Clause 15.2 in any court and it will submit to the jurisdiction of that court for the purposes of those enforcement proceedings.”
4. In the Claim Form dated 1 May 2025, the Claimant asserts that the law giving rise to the jurisdiction of the DIFC Courts is “Article 5(A)(1)(a)”. This appears to be a reference to DIFC Law No. 12 of 2004 (the “Judicial Authority Law”). Further, that:
“[t]he Claim and jurisdiction of the DIFC Court cannot be in dispute pursuant to the Escrow Agreement which was signed under an “opt in” Clause clearly denoting the DIFC Law and the DIFC Courts holding jurisdiction in the event of any dispute”.
5. By way of its Application dated 12 June 2025, the First Defendant applies for the Claimant’s Claim to be dismissed or stayed, and for the Dispute to be referred to arbitration, based on Clause 15, and Article 13(1) of the DIFC Arbitration Law, DIFC Law No. 1 of 2008 (the “Arbitration Law”).
6. By way of its Application also dated 12 June 2025, the Second Defendant applies for an order on the same basis as the First Defendant. In addition, the Second Defendant seeks an order that the Claim against him be set aside or struck out in its entirety, on the basis that the claim is legally unsustainable. The Second Defendant avers that he is not a party to the Escrow Agreement and has no personal liability under it.
7. This Order is issued following the Hearing of the Defendants’ Applications. The Claimant attended the beginning of the remote Hearing for a short period, without participating, and then left the Hearing. The Claimant had indicated by an email sent to the Registry before the Hearing that his lawyers were unable to attend the Hearing and he hoped that the Court would accept the written submissions placed before the Court (implying that he would not be making oral submissions at the Hearing). The commencement of the Hearing was delayed by one hour to give the Claimant an opportunity to join, and the Registry made several attempts to contact the Claimant by telephone and email to inform him of this. However, the Claimant did not rejoin the Hearing and it continued in his absence. In the Claimant’s absence, the Defendants’ Counsel indicated he would comply with a duty to bring to the Court’s attention material adverse to the Defendants’ case.
8. Following the Hearing, the Claimant wrote to the Court Registry as follows:
“Kindly be advised that today I was to appear in from of the court along with my layer Shaun Gregory Morgan.
Due to unforeseen circumstances involving my lawyer, he is unable to appear before the court and I logged in to try to represent myself.
I have access the link sent by the lawyer but no one joined the meeting.
Please advise and assist”.
9. I find that the Claimant was afforded a full opportunity to attend and participate in the Hearing.
10. The Court notes that the individual and law firm purporting to act for the Claimant upon the issue of his claim, as well as the individual and law firm purporting to act for the Claimant when responding to the Applications, are not on the DIFC Courts Register of Legal Practitioners. The Claimant appears on the record for these proceedings as a litigant in person. It bears highlighting that the witness statement filed by Mr Robert Kravitz, said to be the Claimant’s lawyer when responding to the Applications, contains a number of serious errors, including non-existent authorities and wrongly cited authorities. The Defendants contend that that evidence, along with the Claimant’s claim form, may have been at least partly generated by artificial intelligence. The errors contained in the claim form and Mr Kravitz’s evidence are not relevant to the issues the Court has to determine (save that they do not advance the Claimant’s case in any way), and the Court does not address them further save to observe that errors of law have no place in witness evidence filed by lawyers before this Court.
11. I have decided both Applications in favour of the Defendants, and order a stay of these proceedings in favour of arbitration pursuant to Clause 15 of the Escrow Agreement. My reasons are set out below.
12. Whether or not the Claimant’s Dispute under the Escrow Agreement is legally sustainable against the Second Defendant is not a matter to be determined by this Court, and may be determined in due course, if required, by any arbitral tribunal appointed pursuant to Clause 15.
Parties’ Positions
13. The Claimant’s Claim Form and arguments are not easy to follow, but in a nutshell, the Claimant’s position appears to be that:
(a) as the First Defendant is a DIFC-registered limited liability partnership regulated by the DFSA, the DIFC Courts have jurisdiction over any dispute arising under the Escrow Agreement.
(b) the Dispute is not solely contractual and involves professional negligence, breach of fiduciary duty, misrepresentation, and potential fraud; all these claims are within the exclusive competence of the DIFC Courts under “public interest and regulatory enforcement doctrines”. The Claimant relies on DNB Bank ASA v Gulf Eyadah [2015] DIFC CA 007 for the proposition that arbitration clauses must not be used to shield regulatory or financial misconduct, and on the UK House of Lords case Fiona Trust & Holding Corp v Privalov [2007] UKHL 40 for the proposition that arbitration agreements “are construed narrowly in matters involving breach of trust or fraud”.
(c) Clause 15 requires the parties to attempt to amicably resolve disputes prior to arbitration being commenced, and the Defendants did not respond to the Claimant’s attempts to contact them. Clause 15 is therefore inoperative.
(d) Clause 15 is unenforceable because an ordinary business account was used to receive the Escrow Funds, contrary to DFSA and DIFC licensing requirements. Further, the DIFC regulatory framework does not allow legal consultants to offer or administer escrow services. The transaction is therefore tainted with illegality, and the Court should not enforce an arbitration clause to shield such conduct. Clause 15 is null, void and inoperative in the circumstances.
(e) The First Defendant committed fiduciary breaches, and in DIFC CFI-027-2021, the Court held that fiduciary breaches committed by a regulated DIFC firm must be heard before the Court regardless of arbitration clauses. The Claimant separately submits that the Court may refuse a stay in favour of arbitration where fiduciary duties over client monies, accounting and potential breaches by a regulated firm are in issue.
(f) Clause 15 is incapable of being performed because it refers to the DIFC-LCIA arbitration centre.
(g) The Claimant relied upon the Escrow Agreement in the claim form to found his claim against both Defendants. However, he argued in his skeleton argument for the Hearing that the Escrow Agreement was not valid (whilst accepting that he signed it). The Claimant submits that Clause 15 is therefore invalid.
14. The Defendant’s position, in summary, is that:
(a) the DIFC Court has consistently upheld the principle that a valid arbitration clause ousts its jurisdiction in favour of the agreed arbitral forum (Narciso v Nash (ARB 009/2024) and Neal v Nadir (DIFC CA 001)).
(b) Clause 15 is broadly worded and provides for arbitration to apply “in the event of any dispute or difference arising between the Parties out of or relating to this Escrow Agreement or to the breach thereof”. All of the Claimant’s claims in the Claim Form (and as added to in his skeleton argument) fall within the scope of the arbitration clause at Clause 15, including his purported claims for misrepresentation and in tort.
(c) Fiona Trust & Holding Corp v Privalov [2007] UKHL 40 stands for the contrary proposition to that relied on by the Claimant, as it held that there is a presumption that parties intend for all disputes to be resolved in a single forum.
(d) Dubai Decree No. 34 of 2021 Concerning the Dubai International Arbitration Centre (“Decree 34”) abolished the DIFC-LCIA arbitration centre, but upheld the validity of arbitration clauses referring to that centre, holding that they should be treated as referring to the Dubai International Arbitration Centre (DIAC). As held in Narciso v Nash (ARB 009/2024), the Decree is part of the law of the DIFC, and the DIFC Courts will recognise and give effect to the Decree by interpreting arbitration clauses referring to the DIFC-LCIA as referring to DIAC.
Court’s Decision
15. The jurisdiction of this Court is governed by DIFC Law No. 2 of 2005 (the “Courts Law”) and not the Judicial Authority Law, as contended by the Claimant. Article 14 of the Courts Law sets out the gateways to jurisdiction of the DIFC Courts.
16. However, where parties have included an arbitration agreement in their contract, then Article 13(1) of the Arbitration Law is applicable:
“If an action is brought before the DIFC Court in a matter which is the subject of an Arbitration Agreement, the DIFC Court shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, dismiss or stay such action unless it find that the Arbitration Agreement is null and void, inoperative or incapable of being performed.”
17. Article 10 of the Arbitration Law further provides:
“In matters governed by this Law, no DIFC Court shall intervene except to the extent so provided in this Law.”
18. The terms of Article 13(1) of the Arbitration Law are clear. This Court shall dismiss or stay any proceedings brought before the Court which are the subject of an arbitration agreement, unless that agreement is null and void, inoperative or incapable of being performed.
19. I find that:
(a) there is no doubt that all aspects of the Dispute pursued against both Defendants in these proceedings arise out of or relate to the Escrow Agreement or a breach of that agreement, including the claims raised for misrepresentation and tort (although the precise nature of those claims is not clear). All aspects of the Dispute therefore fall within the scope of the arbitration clause at Clause 15.
(b) in relation to the allegation that the Escrow Agreement is illegal, whether or not this allegation is made out falls to be determined by an arbitral tribunal duly appointed pursuant to Clause 15. The allegation does not render Clause 15 unenforceable.
(c) in relation to the Claimant’s allegations of regulatory breaches against the Defendants, the vagueness of the allegations makes it difficult to ascertain what private cause of action against the Defendants is engaged (if any). To the extent that the claims do not fall within the scope of Clause 15, the Claimant may raise his claims to the appropriate regulatory body or bodies.
(d) The Claimant’s reliance on DNB Bank ASA v Gulf Eyadah [2015] DIFC CA 007 and Fiona Trust & Holding Corp v Privalov [2007] UKHL 40 is misplaced, as the propositions relied upon by the Claimant are not to be found in these cases. As argued by the Defendants, Fiona Trust & Holding Corp v Privalov is authority for the presumption that parties intend for all disputes to be resolved in a single forum, and therefore undermines the Claimant’s case on the Applications
(e) Likewise, it is not the case, as argued by the Claimant, that the Court may or must refuse a stay where fiduciary duties over client monies, accounting and potential breaches by a regulated firm are in issue. This Court is bound by Articles 10 and 13(1) of the Arbitration Law, which have been strictly applied in caselaw.
(f) Any argument that the preconditions to arbitration in Clause 15 were not complied with does not prevent this Court staying these proceedings in favour of arbitration, and does not render Clause 15 null, void, or incapable of being performed. An arbitral tribunal duly appointed to decide the Dispute may determine whether the preconditions to arbitration were complied with, and what consequences may follow.
(g) As found in the decision of Justice Michael Black in Narciso v Nash, Dubai Decree 34 is part of the law of the DIFC, and the DIFC Courts will recognise and give effect to the Decree by interpreting arbitration clauses referring to the DIFC-LCIA as referring to DIAC. The reference to the DIFC-LCIA arbitration centre in Clause 15 shall be interpreted as a reference to the DIAC, and the reference to the DIFC-LCIA arbitration centre does not render Clause 15 null, void or incapable of being performed
