Claim No: ENF 269/2023

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

OAKLEN

Claimant/Judgment Creditor

OBADIAH

Defendant/Judgment Debtor

(1) OZIAS
(2) ORI
(3) OCTAVIO

Appellants/Respondents/Judgment Debtor’s Officers

ORDER WITH REASONS OF H.E. DEPUTY CHIEF JUSTICE ALI AL MADHANI

UPON the Claimant’s Arbitration Claim Form dated 17 August 2023 in Case No. ARB-016-2023 (the “Arbitration Claim”) for a Recognition and Enforcement Order for the DIFC-LCIA Partial Award dated 10 March 2023 (as corrected) and Final Award dated 21 June 2023 (together the “Award”) issued in the Dubai International Financial Centre by a Tribunal

AND UPON the Amended Order of H.E. Justice Shamlan Al Sawalehi in Claim No. ARB-016-2023 dated 6 September 2023 and re-issued on 27 September 2023 recognising the Award as binding and ordering that the Award shall be enforced in the same manner as a judgment of the DIFC Courts (the “Amended Order”)

AND UPON the application of the Judgment Creditor dated 14 October 2024 under Rule 50.2 of the Rules of the DIFC Courts (the “RDC”) (the “Part 50 Examination Application”)

AND UPON the Order of H.E. Justice Nassir Al Nasser dated 21 October 2024 (the “Amended Examination Order”) granting the Part 50 Examination Application and ordering among other matters that the Respondents be required to produce documents and attend Court for questioning about the assets of the Judgment Debtor at a hearing at 11am (GST) on 6 November 2024 (the “Examination Hearing”)

AND UPON the application of the Second and Third Respondents dated 1 November 2024 to vacate the Examination Hearing and stay the Amended Examination Order (the “Stay Application”)

AND UPON the application of the First Respondent and the application of the Second and Third Respondents dated 1 November 2024 to set aside the Amended Examination Order (the “Set Aside Applications”)

AND UPON the Consent Order dated 6 November 2024 vacating the Examination Hearing and staying the Amended Examination Order pending the determination of the Set-Aside Applications

AND UPON the Order of H.E. Justice Nassir Al Nasser dated 31 January 2025 dismissing the Stay Applications

AND UPON the Respondents filing a Second Set-Aside Application dated 6 February 2025 (the “Second Set-Aside Application”)

AND UPON the Order of H.E. Justice Nassir Al Nasser dated 13 February 2025 dismissing the Second Set-Aside Application

AND UPON the First Appellant’s and Second and Third Appellants’ Stay Applications to the Court of Appeal dated 14 February 2025 (the “CA Stay Applications”)

AND UPON the First Appellant’s and Second and Third Appellants’ Appellant’s Notices dated 21 February 2025, which contained an application for Permission to Appeal (the “PTA Applications”)

AND UPON the First Appellant’s and Second and Third Appellants’ Stay Applications dated 21 February 2025, which were filed with and are ancillary to the PTA Application (the “Stay Applications”)

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

IT IS HEREBY ORDERED THAT:

1. The PTA Applications are rejected.

2. The Stay Applications are rejected.

3. Costs of the PTA Applications and the Stay Applications shall be paid on the standard basis and parties are invited to file their costs submissions within three working days of the date of issue of this Order, and are not to be longer than three pages.

Issued by:
Delvin Sumo
Assistant Registrar
Date of issue: 29 April 2025
At: 1pm

1. AND UPON

2. As the Court is familiar with the facts of the case and its procedural history, I shall dispense with a reiteration of the background. Omission of facts or submissions henceforth is to be inferred as a dismissal without being treat as the crux for the rejection or acceptance of any submissions made within the grounds of appeal.

Rules

3. Two rules will be referred to in this Order that will govern my considerations:

The PTA Applications

4. While the PTA Applications were made simultaneously, each Appellant filed their submissions separately, and so they will be addressed as such.

The First Appellant

5. The first appellant (“A1”) submits three grounds of appeal on the basis that the Judge erred in:

6. On the first ground, A1 submits that the judgement debtor is a separate legal entity and should not be equated with its officers as the officers have not submitted to the DIFC jurisdiction. Therefore, to the extent that RDC 50.2 empowers the Court to make an order against an “officer” who is not a party to the proceedings a grant of jurisdiction under Article 5(1)(e) of the JAL must exist, or else the rule would have an uncontrolled power in its operation with respect to foreign “officers”. On this point, A1 rejects that the DIFC Courts have such power using the principles explored below.

7. A1 engages in an attempt to incorporate foreign provisions in parallel rules to establish a new interpretation and application of RDC Part 50, without relying on a DIFC precedent in support of his application. Instead, A1 relies on a general provision extracted from Gate Mena DMCC v Tabarak Investment Capital [2023] DIFC CA 002 to legitimise reliance on foreign jurisdictional practices to determine the intention behind and the development henceforth of Part 50.

8. Part 71 of the English Civil Procedure Rules (the “CPR”) was unanimously interpreted in Masri v Consolidated Contractors (No. 4) [2010] 1 AC 90 to not apply to officers outside of the UK, which A1 submits to apply “equally” to RDC 50 – therefore, the Amended Examination Order contradicts UK precedent. Strangely, A1 also relies on the DIFC Court of Appeal decision in Carmon v Cuenda [2024] DIFC CA 003, to say that “ordinarily, [the RDC is] not likely to confer jurisdiction…jurisdiction may be conferred by rule where, in its absence, the rule would have a lacuna in its operation.”

9. The ADGM Rule 253 – the counterpart to RDC 50 – was interpreted in line with Masri in Rosewood Hotel Abu Dhabi LLC v Skelmore Hospitality Group LTD [2020] ADGMCFI 002 so that jurisdiction for such summons only extends to officers within the UAE and is not supported by any power of committal. A1 goes on to admit that Rosewood did not need to decide on the point of whether ADGM jurisdiction need extend beyond the UAE under Rule 253, so, in my view, there is no reason to submit this precedent as an authority on Part 50 as the facts of the case are materially different.

10. To advance his position, A1 describes the procedure of Part 50 as extremely informal, which is indicative of its intention to be a domestically focussed rule. Further, parties (and by proxy, the Court) does not have the right to summon “ordinary witnesses” (of which A1 submits he is akin) from abroad to enforce a judgment that protects private rights.

11. In the alternative, for the second ground, A1 submits that even if RDC 50 grants jurisdiction that jurisdiction should only be exercised where the “officer” is the judgment debtor’s “alter ego” or otherwise has a sufficiently close connection to justify a foreign summons. This position is in line with the Masri precedent.

12. By way of authority, A1 relies on the approach in Singapore, whereby extra territorial power is exercised sparingly, and the duty to establish the close connection is on the judgment creditor, which is has failed to do. However, A1 failed to show how this affects the interpretation and application of a DIFC procedural rule beyond a blanket “the common law authorities are unanimous” in saying that further justification is needed to exercise jurisdiction to a foreign officer, and so the DIFC Courts should apply the principle.

13. In the further alternative under the third ground, A1 maintains that the categories of disclosure and information required to be produced by the Amended Examination Order go beyond the information necessary to enforce the judgment debt against Obadiah; the information constitutes a wide-ranging enquiry into financial transactions rather than to glean what A1 may know as categories 15-17 of the information sought relate to assets held by third parties. The error highlighted is that the Amended Examination Order failed to give reasons for A1’s participation and why it would be necessary to enforce the judgment, contrary to the two-limb test in Oskar. Therefore, if grounds 1 and 2 fail, permission to appeal should be granted on the basis that the two-limb test was not satisfied.

14. Overall, I find these submissions ridiculous at best, none of which appropriately apply to the circumstances at hand. All authority submitted that actually acts in favour of A1’s position has been foreign precedent, which has no basis for interpreting a DIFC Rule with a long established and unambiguous meaning.

15. The DIFC is its own jurisdiction with its own rules. The only determinative factor as to whether RDC 50.2(2) applies to a named officer, is whether that named officer falls within the definition of “officer”. This is explored in Oskar, which states that:

“By reason of his/her position in the company or corporation or relationship to it, past or present, it appears to the Court, on the facts of the particular case, may be in possession or control of information about the judgment debtor’s means”

16. This was stated clearly at paragraph 23 of the Amended Examination Order, and was determined to apply as A1 “is the current director of the Judgment Debtor”. A1 has failed to provide any evidence that he is not an “officer” as per the Oskar definition, nor that he does not have access to or awareness of the Judgement Debtor’s means.

17. Part 50 is a clear and unambiguous provision. The threshold to satisfy Part 50 in order to be summoned is a low, discretionary threshold. It is clear to me that A1 is an officer pursuant to Part 50.2(2), and that there is no restriction – either in statute or other authority – on the DIFC Court’s right to extend its jurisdiction beyond the UAE for the purpose of summoning witnesses for these means. There is also no additional requirement of a “close connection” to justify the extra territorial reach, irrespective of what foreign common law jurisdictions – including ADGM - practice.

18. The rule only requires that, in the event a judgment debtor is a company or other corporation, an officer is to attend Court to provide relevant information about the judgment debtor. This is a clearly logical approach, since a corporate entity requires sufficiently senior persons to expose the assets belonging to it, and the lack of restriction to persons within the DIFC is equally as logical in circumstances where the most senior officers may be outside of the UAE. This does not encroach on private rights, as it is not the private means of the officers that are being requested.

19. On the error alleged in the third ground; as mentioned at [15] of the Amended Examination Order, the judgment creditors seek answers in relation to an outstanding AED 73 million as owed, for which A1 is a necessary source of information as he would reasonably have access to information regarding the Project units. Without his participation, there would be no one to answer. Therefore, for all intents and purposes, A1’s participation is necessary to extract the relevant information regarding the missing funds, even if that information relates to a third party. I have not seen any proof that would convince this Court, or the next, that A1 would be engaged in onerous activity beyond necessity that would take him away from what he would already reasonably know about the judgment debtor’s assets. The two limb test is therefore satisfied, and no legitimate error identified.

20. All grounds submitted, therefore, are rejected, as no errors in the Amended Examination Order have been shown that would give an alternative ruling, nor has any compelling reason been submitted that would be sufficient to grant permission to appeal. A1’s permission to appeal application is rejected. A1 is still obligated to attend Court to give evidence on the Judgment Debtor’s assets as per RDC 50.2.

The Second and Third Appellants

21. The appeal grounds for the Second and Third Appellants (“A2” and “A3” respectively) are joined in one document and so will be addressed simultaneously.

22. The basis for the appeal runs in a materially similar thread to A1; it is submitted that the intention behind RDC 50.2 is not accurately reflected in the Amended Examination Order as it conflicts with the rest of the common law jurisprudence on expansion of jurisdiction to foreign officers. However, the main contention is that which forms the first ground of appeal, on a balance of probabilities, neither A2 or A3 are likely enough to hold information on the judgment debtor’s assets to justify summoning them under RDC 50.2, and so the error that that threshold applied in the Amended Examination Order is too low.

23. A2 and A3 object to the alleged application of Oskar precedent being that an officer is anyone who “may” have or control information necessary to enforce the judgment debt, making the threshold just to have a “mere possibility” of holding information; this is submitted to be the incorrect test. H.E. Justice Nasser was satisfied that A2 was an officer as he was a shareholder up until 2022, and so “may” be aware of the Judgment Debtor’s means, despite the fact that the Arbitral Award was granted six months later and so the claim relates to a period of time when A2 was not an active shareholder of the Judgment Debtor.

24. In Oskar, one out of the two persons of interest was determined not to be an officer as the Court was not convinced that he may have access to relevant information or enough control (as a stakeholder) to obtain it. The use of “may” in the Court of Appeal judgment is submitted to not have meant “mere possibility”, but instead a realistic prospect, and so the test applied was at a higher threshold contrary to the Amended Examination Order.

25. The fact remains that A2 may be aware of, or have access to, or can advise on information relevant to the sought debt due to his time as an active employee and shareholder of the judgment debtor, which does cross over from the chronology of the original claim as per the Award. I have not been shown any convincing evidence that A2 would have no relevant knowledge, nor that it would be unconscionable to otherwise summon him, or that he – at no relevant material time – was or is an “officer” for the purpose of RDC 50.2. On A3, while he was never a formal employee or shareholder of the Judgment Debtor (except indirectly, as admitted), the Judgment Creditor’s reliance on past interactions at a high corporate level related to the Project, as well as a Power of Attorney in 2018 appointing A3 as Obadiah’s attorney, is sufficient to create enough of a link to the Judgment Debtor to satisfy the definition of an officer in Oskar. The threshold suggested by A2 and A3 is speculative only. Hence, I am not convinced that any error was made in relation to A2 or A3 in the Amended Examination Order regarding being labelled as officers, therefore the correct test and threshold was used.

26. For the second ground, it is submitted that Judge Nasser erred in holding that RDC 50.2 can be used as a vehicle to obtain wide-ranging disclosure about transactions between the Judgment Debtor and third parties, contrary to the general common-law principle. A2 and A3 rely on Australian and Hong Kong precedent to show that parallel rules to RDC Part 50 have been interpreted to confer that the means of a judgment debtor does not extend to unavailable assets and cannot be used for general enquiries into transfers of properties to third parties – it is further stated that the language of RDC Part 50 is also more restrictive than the parallel provision in Hong Kong, and so it would have been the Court of Appeal’s intention in Oskar to disallow enquiries into third parties.

27. No DIFC authority is produced to show that, within the DIFC, the logic followed by foreign jurisdictions would be applied or is compelled to be applied. On that basis, I cannot concede with this ground – as stated prior, the DIFC is its own jurisdiction with its own rules and application, and while foreign jurisprudence may sometimes be helpful, it is not binding. In my view, Oskar is sufficiently clear and there is no restriction on whether jurisdiction can extend to transactions involving third parties. Therefore, no legitimate error has been highlighted that satisfies the threshold in RDC 44.19.

28. The third ground of appeal offers an alternative to the first and second grounds; if H.E. Justice Nasser was correct in his interpretation and application of Oskar, “officer” means someone who holds current “office” or position in the judgment debtor pursuant to RDC 50.5(4)(b), which A2 and A3 do not, contrary to the Amended Examination Order. Historically holding positions is irrelevant if it will not lead to the present provision of necessary information; this is consistent with English Law precedent.

29. I cannot concur that H.E. Justice Nasser made an error on this, as the basis of the original claim in the arbitration included the material time that A2 and A3 held some sort of position that conferred being an “officer”. There is also no authority restricting the application of RDC 50.2 to current employees only. Therefore, this ground is rejected.

30. The fourth ground is advanced by A3 only – that H.E. Justice Nasser applied the wrong test as he concluded that A3 was an ‘office-holder’ by conduct and not an “officer”, and so dismissing his original appeal was incorrect.

31. I disagree. H.E. Justice Nasser recited the Oskar test at [23] of the Amended Examination Order, and applied it directly to A3, stating:

“[A3] was by way of conduct an officer of the Judgment Debtor and a decisionmaker in the judgment debtor. Therefore, I find that Mr Octavio will be aware of the means of the Judgment Debtor.”

I see no inconsistency in his reasoning, and so I cannot attribute that this ground would have a real prospect of success at appellate level. Therefore, this ground is rejected.

The Stay Applications

32. As all three PTA Applications have been rejected, it naturally follows that the Stay Applications are rejected. Reasons on merit for the rejection will not be given, as a stay cannot be granted in the absence of an appeal.

Conclusion

33. The grounds submitted to appeal the Amended Examination Order have not satisfied the threshold set by RDC 44.19 and so are rejected for the reasons stated above. Consequently, the Stay Applications are naturally rejected.

34. Costs shall be paid on the standard basis; parties are invited to file their costs submissions within three working days of the date of issue of this Order, and are not to be longer than three pages.