Claim No: CFI 079/2023

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

(1) THAMER ABDULAZIZ ALBULAIHID
(2) MOUSTAFA EL SAYED ABDULGHANI EL SHAFAEI

Claimants

and

(1) NASSER SHEHATA
(2) HEALTH INSIGHTS FZ-LLC
(3) HEALTH INSIGHTS ASIA (L) BHD

Defendants

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ORDER WITH REASONS OF H.E. JUSTICE RENE LE MIERE

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UPON the Third Defendant’s Application No. CFI-079-2023/3 dated 25 July 2024 seeking to contest the jurisdiction to hear the Claim against the Third Defendant (the “Jurisdiction Application”)

AND UPON the Order of H.E. Justice Rene Le Miere dated 10 October 2024 (the “October Order”)

AND UPON a hearing having been held on 15 April 2025 before H.E. Justice Rene Le Miere

AND PURSUANT TO the Rules of the DIFC Courts (the “RDC”)

IT IS HEREBY ORDERED THAT:

1. The Jurisdiction Application is dismissed.

2. Any party may file a minute of proposed orders regarding costs within 14 days, along with any witness statements and an outline of submissions not exceeding five pages.

3. If any party files a minute of proposed orders as to costs, the Court will decide the question of costs on the papers.

4. If no party files a minute of proposed costs orders, the Third Defendant shall pay the Claimants' costs on the standard basis, which will be assessed if not agreed upon.

5. The case will be listed for directions.

Issued by:
Delvin Sumo
Assistant Registrar
Date of issue: 30 April 2025
At: 12pm

SCHEDULE OF REASONS

Summary

1. The Second Defendant, Health Insights FZ-LLC ("HI Dubai"), is a company incorporated in the Dubai Internet City Free Zone ("DIC"), regulated by the Dubai Development Authority ("DDA"), and subject to the Dubai Creative Clusters Private Companies Regulations 2016 ("Regulations").

2. Since July 2007, the Claimants and the First Defendant, Nasser Shehata, have been directors and shareholders of HI Dubai, with Mr. Shehata acting as the general manager until May 16, 2023.

3. The Third Defendant, Health Insights Asia (L) BHD ("HI Asia"), is a Malaysian company with Mr. Shehata as the sole shareholder and managing director.

4. On 16 May 2023, HI Dubai's board of directors passed resolutions removing Mr. Shehata as general manager and appointing the Second Claimant, Moustafa El Sayed Abdulghani El Shafaei, in his place.

5. Mr. Shehata disputed the validity of these resolutions, and the DDA declined to register the change of general manager without Mr. Shehata's consent.

6. The Claimants initiated proceedings against Mr. Shehata and HI Dubai using the Part 8 procedure, seeking a declaration of the validity of the resolutions and an order to set aside an agreement by which HI Dubai assigned to HI Asia the intellectual property rights for Medica CloudCare (“MCC”), a cloud-based hospital management information system, for a consideration of USD 500,000 (the "Assignment Agreement")

7. On 1 March 2024, the Court ordered that HI Asia be joined as a party.

8. The Claimants filed and served an Amended Claim Form reflecting HI Asia's joinder.

9. On 15 May 2024, the Court declared that the resolutions appointing Mr. El Shafaei as general manager in place of Mr. Shehata had been validly passed in accordance with the Regulations and directed the remainder of the claim to proceed under Part 7.

10. The Claimants filed amended particulars of claim (PoC), asserting that the Assignment Agreement and a Purchase Order between HI Dubai and HI Asia are void or should be set aside.

11. On 10 July 2024, HI Asia filed an Acknowledgment of Service stating its intention to contest jurisdiction.

12. On 25 July 2024, HI Asia applied for an order that the Court does not have jurisdiction to hear the claim against it (the "Jurisdiction Application")

13. On 7 August 2024, Mr. Shehata filed a Defence and Counterclaim, seeking orders for the Claimants to account for profits and gains, an injunction against writing off debts owed to HI Dubai by companies associated with the Claimants, and declarations of unfair prejudice.

14. The Jurisdiction Application was heard on 1 October 2024, along with the Set-aside Application, and was adjourned for further argument.

15. For the reasons below:

Background

The Resolutions

16. On 16 May 2023, HI Dubai's board of directors passed resolutions removing Mr Shehata as general manager and appointing Mr El Shafaei, in his place.

17. Mr Shehata disputed the validity of these resolutions and the DDA declined to register the change of general manager without Mr Shehata’s consent.

Issuing of Proceedings

18. On 23 October 2023, the Claimants initiated these proceedings against Mr. Shehata and HI Dubai using the Part 8 procedure, seeking a declaration regarding the validity of the resolutions and an order to set aside the Assignment Agreement.

First Hearing on 1 March 2024

19. The first hearing was held on 1 March 2024, where Mr Shehata's request for an adjournment was granted.

20. The Court ordered that HI Asia be joined as a party and gave permission to serve documents by email.

Service of Proceedings

21. The Claimants filed an Amended Claim Form on 1 March 2024, reflecting HI Asia's joinder.

22. The amended claim form and accompanying documents were served on the Defendants by email on 4 March 2024.

23. On 19 March 2024, Mr Shehata and HI Dubai filed an Acknowledgment of Service stating that the Defendants:

Second Hearing on 15 April 2024

24. At the second hearing on 15 April 2024, the Defendants objected to the Part 8 procedure, arguing for a Part 7 procedure due to complex factual disputes.

25. The Defendants contested the factual basis of the Claimants' claims. The Defendants alleged the Claimants had diverted revenue from HI Dubai to Al Khaleej and other companies owned and controlled by the Claimants.

The Declaration

26. On 15 May 2024, the Court declared the resolutions appointing Mr El Shafaei as general manager in place of Mr Shehata to have been validly passed in accordance with the Regulations.

27. The Court directed the remainder of the claim to proceed under Part 7.

Amended PoC

28. On 26 June 2024, the Claimants filed amended PoC by which they pleaded, amongst other things:

Enforcement Order

29. After the declaration, Mr Shehata, by his legal representatives, continued to assert his position as general manager.

30. The Claimants issued a Part 45 application to enforce the order, which was granted on 10 July 2024 (the “Enforcement Order”).

HI Asia’s applications

31. On 10 July 2024, HI Asia filed an Acknowledgement of Service stating that it intends to contest jurisdiction.

32. On 25 July 2024, HI Asia filed its Jurisdiction Application.

33. On 16 August 2024, Mr Shehata filed an application to set aside, stay, or vary the Enforcement Order (the “Set-aside Application”).

Mr Shehata’s defence and counterclaim

34. On 7 August 2024, Mr Shehata filed a Defence and Counterclaim. By his counterclaim, Mr Shehata seeks orders, amongst others:

35. On 18 September 2024, the Claimants filed a reply and defence to Mr Shehata’s counterclaim.

36. On 15 October 2024, Mr Shehata filed a reply to the Claimants’ defence to his counterclaim.

Third Hearing on 1 October 2024

37. The Jurisdiction Application was heard on 1 October 2024 together with the First Defendant’s Set-aside Application and was adjourned for further argument on the Set-aside Application.

38. On 16 January 2025, the parties consented to orders vacating the further hearing and varying the Enforcement Order.

Steps after Third Hearing

39. The parties have requested documents to be produced. The Court heard applications for document production orders and made orders on 21 April 2025.

Trial

40. The claims and counterclaims are scheduled for trial commencing on 22 September 2025.

Jurisdiction and joinder

41. By application CFI-079-2023/3, the Jurisdiction Application, HI Asia has applied for an order that the Court does not have jurisdiction to hear the claim against it because the Claim Form and PoC do not demonstrate that the Court has jurisdiction pursuant to Article 5A of the Judicial Authority Law ("JAL").

42. HI Asia submits the Court does not have jurisdiction to hear the claim against it for three broad reasons.

43. On 10 March 2025 the JAL was superseded by the DIFC Courts Law No (2) of 2025 (“Courts Law”). Courts Law Article 14A(7) Is relevantly in the same terms as JAL Article 5A(1)(e).

Application of Article 14A(7) and RDC Rule 20.7

44. Courts Law Article 14A(7) confers jurisdiction on the Court to hear and determine any claim or action over which the Courts have jurisdiction in accordance with DIFC Regulations. RDC Rule 20.7 is a DIFC Regulation for the purposes of ) Article 14A(7): Nest Investments Holding Lebanon SAL v Deloitte and Touche (ME) [2018] DIFC CA-011 (13 March 2019), concerning JAL Article 5A(1)(e).

45. RDC 20.7 provides that the Court may order a person to be added as a new party if:

46. Therefore, the Court has jurisdiction to add a person as a party if the elements of RDC 20.7 are satisfied, even if the Court does not have jurisdiction to add the person as a party under any other jurisdiction gateways in Court Law Article 14A(7).

47. HI Asia has a direct interest in the MCC Rights, which are the subject of the dispute. If the Assignment Agreement or Purchase Order is voided or set aside, HI Asia's rights and interests will be directly affected.

48. Without HI Asia's involvement, the Court may be unable to provide complete relief to the existing parties. HI Asia's absence could impair its ability to protect its interest in the MCC Rights.

49. If HI Asia is not joined, there is a risk of inconsistent judgments. For example, if another court later rules on HI Asia's rights without considering the current case, it could lead to conflicting obligations for HI Dubai or HI Asia.

50. HI Asia is a necessary party because its absence would prevent the Court from fully resolving the dispute.

51. HI Asia is also a proper party because its presence would help the Court to adjudicate the matters more effectively and completely.

52. Therefore, it is desirable to add HI Asia as a party to the proceedings so that the Court can resolve all the matters in dispute.

Jurisdiction and procedural requirements for joinder of parties

53. HI Asia submits that “the necessary and proper party jurisdiction”, that is the jurisdiction conferred by Courts Law Article 14(7) and RDC 20.7, cannot be invoked where the Claimants have not adhered to the normal process for joining a party in accordance with the RDC, that is by making an application on notice at which the affected party was heard, and where it has subsequently sought to impermissibly increase the scope of their claims without the Court’s permission by taking it upon itself to file and serve amended statements of case

54. There are two answers to that argument.

55. First, the Court added HI Asia as a party on the grounds that it was proper to join HI Asia because its rights are affected by the relief sought by the Claimants. Although it was not expressly stated, this must have been understood as referring to joinder under RDC 20.7. This was on notice to HI Asia because its sole director and shareholder, Mr. Shehata, was present at the hearing.

56. If the order was made without notice, this would provide a basis for HI Asia to apply to set the joinder aside and for the Court to reconsider its joinder, which it is currently doing. However, this does not remove the Court’s jurisdiction to add HI Asia as a party.

57. Secondly, an application to add a party is not necessary for RDC 20.7 to establish a basis for jurisdiction in the Court. If a claim is brought against several parties, one of which is connected to the proceedings, the Court can determine that it has jurisdiction under RDC 20.7, even if that party is not an additional party and despite having no other basis for jurisdiction over it. The Court may find that RDC 20.7 serves as a basis for jurisdiction, even though HI Asia is already a party to the proceedings.

58. This issue was considered by H.E. Deputy Chief Justice Ali Al Madhani in Kaamil v Kaawa and ors in DIFC CFI 032/2020 (December 22, 2021), where His Excellency the Deputy Chief Justice held that RDC 20.7 is capable of conferring jurisdiction upon the Court in relation to existing parties.

59. His Excellency referred to a then-recent decision of the Court handed down in a private case on 3 November 2021 (“CFI-041-2021”), where Justice Wayne Martin (as he then was) said:

“The existence of jurisdiction identified through this process of reasoning was confirmed by the decision of the Court of Appeal in Nest Investment Holdings Lebanon SAL & Ors v Deloitte & Touche (ME) & Fardi. The principle was enunciated in that case in which there was an application for the joinder of a party before the Court, and the written submissions of the Defendants in this case included an argument to the effect that such an application was an essential prerequisite to the existence of the jurisdiction. However, during the course of oral argument, that component of the Defendants’ submissions was expressly abandoned by Senior Counsel for the Defendants. So, it is accepted that the Court has jurisdiction in relation to claims against parties who would have been liable to have been joined pursuant to RDC r.20.7, notwithstanding that those parties may already have been joined to the proceedings. (emphasis added)” [132].

60. Justice Martin did not explain the reasons for that decision. This was not necessary because senior counsel had abandoned the contrary argument.

61. His Excellency, the Deputy Chief Justice, stated that different routes to Justice Martin’s conclusion can be conceived. His Excellency explained:

“For example, the Court might, where required, make an order pursuant to RDC r. 4.2(14) “for the purpose of managing the case and furthering the overriding objective”—for example, “saving expenses” (RDC r. 1.6(2)) and/or “ensuring that [the case] is dealt with expeditiously” (RDC r. 1.6(4)—declaring jurisdiction in relation to a party who, but for the fact the he is already party to proceedings, would have been liable to be joined pursuant to RDC r. 20.7, thereby saving the expense and delay of an application under RDC r. 20.7. A similar order could perhaps be made under Article 20(1) of the Court Law which provides that “The Court of First Instance has the power, in matters over which it has jurisdiction to make any orders, including interlocutory orders, and to issue or direct the issue of any writs it considers appropriate”. It is arguable that Article 20(2) of the same legislation provides a further alternative route: “The Court of First Instance has jurisdiction to waive any procedural requirements if the Court of First Instance is satisfied that the applicant is unable to meet the procedural requirements”. If a defendant is already joined to proceedings, strictly speaking a claimant would be unable to meet the requirement under RDC r. 20.7 that it be “desirable to add the new party…”. In such circumstances, and where it is desirable that the concerned party be party to proceedings, arguably it would be appropriate for the Court to waive this requirement.” [224] – [225]

62. I respectfully adopt His Excellency’s explanation.

Jurisdictional challenge based on arbitration agreement

63. HI Asia challenges the jurisdiction of the Court on the grounds that the Assignment Agreement between HI Dubai and HI Asia contains an arbitration agreement.

64. Part V of the Assignment Agreement:

65. HI Asia argues that the arbitration agreement in the Assignment Agreement is an arbitration agreement as defined by Article 12 of the Arbitration Law 2008, which provides:

“An “Arbitration Agreement” is an agreement by the parties to submit to Arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An Arbitration Agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.”

66. HI Asia contends that the Court is required to dismiss or stay the claim by Article 13 of the Arbitration Law, which provides:

“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 finds that the Arbitration Agreement is null and void, inoperative or incapable of being performed.”

67. The unspoken premise of the Defendants’ argument is that the claim before this Court is brought in a matter which is the subject of the arbitration agreement in the Assignment Agreement.

68. The premise is wrong. Only a dispute between the parties to the arbitration agreement can constitute a relevant “matter” within the meaning of Article 13 of the Arbitration Law. Claims brought by persons who are not parties to the arbitration agreement do not form a “matter”, so Article 13 does not require a stay of the proceedings.

69. Claims against a party to an arbitration agreement by a non-party do not fall within an arbitration clause, and a non-party cannot be required to bring those claims or defend them in the arbitration.

70. Article 12 of the Arbitration Law defines an ‘arbitration agreement’ for the purposes of the Law as an agreement by the parties to submit to arbitration all or certain disputes that have arisen or may arise between them concerning a defined legal relationship. The provisions of the arbitration agreement in clause 6.2, in the context of the Assignment Agreement, clarify that the dispute subject to the arbitration agreement is a dispute between the parties to the Assignment Agreement. HI Dubai and HI Asia are jointly defined as the “Parties” and individually as the “Party”.

71. The “matter” within the meaning of Article 13 refers to the differences between the parties or the controversy covered by the terms of the arbitration agreement, which constitutes the body of differences capable of settlement by arbitration. In this case, the body of differences consists of the differences between the parties to the Assignment Agreement and does not include the Claimants’ claims against Mr. Shehata, HI Dubai, or HI Asia.

72. Accordingly, even though the “subject matter” of the controversies encompassing the Claimants’ relevant claims against the Defendants, that the Assignment Agreement is void or should be set aside, may be the same “subject matter” as a matter which is subject to the arbitration agreement, that is the invalidity of the Assignment Agreement, it, nevertheless, does not form part of the “matter the subject of the arbitration agreement.”

73. Therefore, Article 13 does not require the Court to dismiss or stay the case.

Forum non conveniens

74. HI Asia submits that if the Court has jurisdiction over the claims, it should decline to exercise jurisdiction on the basis that the Malaysian courts are distinctly more appropriate to adjudicate disputes concerning the vesting of property rights in a Malaysian entity, and a Purchase Order prepared by a company incorporated in Malaysia. The Malaysian courts are also the relevant jurisdiction under the Assignment Agreement.

75. As the Defendants acknowledge, a forum non conveniens claim does not challenge the court's jurisdiction; it assumes that the court has jurisdiction but argues that another forum is a more appropriate forum.

76. In the DIFC Courts, the test for forum non conveniens involves determining whether there is a more appropriate forum outside the DIFC for resolving the dispute. The test is similar to the one used in English law, as established in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460. There is a two-stage test.

77. First, the defendant must demonstrate that another forum is clearly or distinctly more appropriate for the trial of the action. This involves considering factors such as convenience and expense, governing law, connection to the forum, and the availability of relief.

78. Malaysia is not clearly more convenient. The First Claimant, Mr Albulaihid, lives in Saudi Arabia. The Second Claimant, Mr El Shafaei, and the First Defendant, Mr Shehata, live in Egypt. No party has indicated that any other witnesses will be called at the trial.

79. The Claimants state in their Claim Form that the law governing the dispute is the laws of the UAE. HI Asia says that the Assignment Agreement's governing law is Malaysia’s laws.

80. The Claimants make three broad claims in the case.

81. The first is relief to effect and facilitate Mr El Shafaei replacing Mr Shehata as general manager of HI Dubai. That dispute is likely to be governed by the DIC Regulations and UAE Federal laws.

82. The second and third claims seek orders to declare void or set aside the Purchase Order and the Assignment Agreement, as well as orders requiring Mr. Shehata to account to HI Dubai for any profit, gain, or benefit realised from the Purchase Order and the Assignment Agreement. The governing law of the Assignment Agreement is Malaysia, meaning that any disputes regarding its terms and performance would generally be resolved under Malaysian law. However, the issue of whether Mr. Shehata had the authority to execute the agreement on behalf of HI Dubai, or whether it is void or should be set aside under the Regulations, may be considered under the law of the jurisdiction where HI Dubai is incorporated, which is the DIC. It is not clear what the governing law of the Purchase Order is, but again, questions of authority and voidness or setting aside under the Regulations are subject to the law of the DIC or UAE laws. However, none of these matters have been argued, and it is not appropriate to make even a preliminary assessment of those matters at this time.

83. The law governing Mr. Shehata’s counterclaims has not been addressed in argument, but they would not appear to be governed by the laws of Malaysia.

84. The primary, and perhaps only, connection between the parties and the dispute with Malaysia is that HI Asia is incorporated in Malaysia. The claims in the case principally arise out of the affairs of HI Dubai.

85. The parties did not address whether the Malaysian courts can provide the relief sought by the Claimants, but on the face of it, the Malaysian courts could only grant relief related to part of the matters in dispute in the case.

86. In short, HI Asia has fallen well short of showing that the courts of Malaysia are a more appropriate forum, let alone clearly and distinctly more appropriate.

87. If a defendant successfully shows that another forum is more appropriate, the burden shifts to the claimant to demonstrate that justice would not be served in the alternative forum.

88. Whilst it is unnecessary to decide, on the material before the Court, justice would not be served by requiring the parties to litigate in the Malaysian courts.

89. First, the trial of this case is scheduled to commence on 22 September 2025. No proceedings have been commenced in Malaysia, and requiring the parties to litigate in Malaysia would lead to significant delays and increased costs.

90. Secondly, on the face of it, only part of the matters in issue in this case could or would be litigated in Malaysia, causing a fragmentation of the disputes.

91. Malaysia is not a clearly more convenient forum.

Other arguments

92. The Claimants presented additional arguments opposing HI Asia’s Jurisdiction Application, which include the following.

93. First, the Claimants argue that the Court has already resolved the central question of joinder by adding HI Asia to the proceedings through the order of 4 March 2024. HI Asia has not filed any application to appeal or set aside that order and cannot attempt to re-open the question of joinder through another means (that is, the Jurisdiction Application).

94. Secondly, if HI Asia could challenge jurisdiction by another means, it was required by RDC 12.4(1) to submit any jurisdiction application by 2 April 2024 (within 14 days of filing an Acknowledgment of Service). However, it did not do so, and pursuant to RDC 12.5(1), is therefore “to be treated as having accepted that the Court has jurisdiction to try the claim.” HI Asia has not submitted any application for an extension of time or relief from sanctions regarding the Jurisdiction Application. Therefore, HI Asia is out of time for challenging and has submitted to the jurisdiction of the Court.

95. In light of my findings regarding the grounds of HI Asia’s Jurisdiction Application, it is unnecessary to consider those arguments.

Costs

96. HI Asia is the unsuccessful party, and in accordance with the general rule, should pay the costs of the successful parties, the Claimants, on the standard basis to be assessed if not agreed.

97. If any party seeks a different order, they may file and serve, within 14 days, a minute of the orders they propose, together with any witness statements and an outline of submissions not to exceed 5 pages.