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DIFC Court issues freezing injunction in support of onshore Dubai Court proceedings

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10 October 2022

The DIFC Court of First Instance determined it had jurisdiction to grant injunctive relief in support of an ongoing dispute in onshore Dubai.

CFI 043/2022 (1) William Allan Jones (2) Coffee Planet LLC (3) Coffee Planet Roastery FZE v Robert Anthony Jones1

Summary

The DIFC Court of First Instance determined it had jurisdiction to grant injunctive relief in support of an ongoing dispute in onshore Dubai.

This judgment is significant because the vast majority of the assets in question were located outside of the DIFC, neither party had any connection to the DIFC, and judgment had not yet been issued in the onshore proceedings. This case demonstrates that the DIFC Court has a very broad jurisdiction to grant injunctive relief.

Background to dispute

The Claimants sought a worldwide freezing order in relation to proceedings in the onshore Dubai Courts. The onshore proceedings concerned alleged misconduct by the Defendant in relation to dealings with various luxury goods and property.

The DIFC Court of First Instance imposed an injunction and freezing order on 29 June 2022 (the Freezing Order) the terms of which restricted the Defendant from disposing of, dealing with or diminishing the value of certain assets. The order carried the following restrictions:2

  • a specific restriction over assets listed in the order, which included a luxury villa on the Palm and several vehicles including a Lamborghini Huracan; and
  • a general restriction over all of the Defendant’s other assets in Dubai, with the effect that the Defendant may only deal with his assets to the extent that the total value of his unencumbered assets in Dubai remains over AED 3,000,000.

None of the assets in dispute were located in the DIFC, save for shares in a DIFC registered company.

On 8 September 2022, the DIFC Court decided to uphold the Freezing Order on the condition that the Claimants apply to the onshore Dubai Court seeking provisional attachment of the Defendant’s assets within onshore Dubai.

Decision on jurisdiction

The central issue was whether the DIFC Courts had jurisdiction to grant an injunction where (1) the assets in question are located outside the DIFC; (2) neither party is otherwise connected to the DIFC; and (3) judgment had yet to be given in the primary proceedings.

The Defendant challenged the DIFC Court’s jurisdiction on the basis that none of the ‘gateways’ set out in Article 5(1) of the Judicial Authority Law, Law no 12 of 2004 (the JAL) gave the DIFC Court jurisdiction to grant an injunction in support of proceedings outside of the DIFC before judgment in such proceedings had been issued.

The DIFC Court rejected the Defendant’s arguments for the following reasons:

(a) The DIFC Court referred to Article 22(2) of Law no 10 of 2004 (the Courts Law). Article 22(2) of the Courts Law confers the following power on the DIFC Courts:

“The Court of First Instance may order an injunction restraining a person from engaging in conduct or requiring a person to do an act or thing or other order the Court considers appropriate.”

Similarly Article 32(2) of the Courts Law provide the following:

“The DIFC Court has the power to make orders and give directions as to the conduct of any proceedings before the DIFC Court that it considers appropriate, including:

interim or interlocutory orders;”

The DIFC Court noted that the above provisions contained neither any qualification on the exercise of these powers, nor any jurisdictional requirement.3

(b) The DIFC Court referred to RDC Rules 25.1 and 25.24. Rule 25.24 provides the following:

“Application For An Interim Remedy Where There Is No Related Claim

Where a party wishes to apply for an interim remedy but:

(1) the remedy is sought in relation to proceedings which are taking place, or will take place, outside the DIFC; or

(2) the application is made for an order for production of documents or inspection of property before a claim is made;

any application must be made in accordance with Part 8.

The DIFC Court noted the reference to “proceedings which are taking place or will take place”, and said it was difficult to see how this Rule could have any application if the DIFC Court could only grant an interim remedy once judgment had already been issued by a foreign court or the onshore Dubai Court.4

(c) Finally the DIFC Court cited the first instance decision of Lateef v Liela [2020] ARB 0175 which held the following:

“So, when regard is had to the relevant legislative provisions and the RDC, there is every reason to conclude that the DIFC Courts have ample jurisdiction to exercise their unqualified injunctive powers in accordance with the enforcement principle which underpins the grant of freezing orders as an incident of the Court’s jurisdiction to enforce judgments, whether domestic or foreign, and whether the judgment has been granted or is prospective. That jurisdiction does not depend upon the existence of a cause of action which can be maintained against the defendants in the DIFC Courts, or upon the existence of assets within the DIFC which might be available in execution of the relevant judgment.” [Emphasis added]6

In light of the above, the DIFC Court concluded it had jurisdiction to issue an injunction in support of proceedings taking place abroad or in the onshore Dubai Court.7

The second question which the DIFC Court addressed was whether it should exercise its jurisdiction and allow the injunction to continue. The DIFC Court held the Claimants were justified in seeking a freezing order in the DIFC Courts as seeking provisional attachment orders in the onshore Dubai Courts would have been “more complex, more prolonged and more uncertain in outcome and effect”.

However, as the purpose of the jurisdiction to grant injunctive relief is to assist the Dubai Court, and given the vast majority of the relevant assets lie within the jurisdiction of the Dubai Court, the DIFC Court held the injunction should continue only until the Dubai Court is able to make its own decision as to the appropriateness of provisional attachments over assets in onshore Dubai. The injunction was therefore upheld on the condition that the Claimants apply to the onshore Dubai Courts for provisional attachment orders over the assets located in onshore Dubai.

Key points

This case is significant as it:

(a) reaffirms the DIFC Courts’ broad jurisdiction to impose interim injunctive relief, even in circumstances where (1) the assets in question are located outside the DIFC; (2) neither party is otherwise connected to the DIFC; and (3) judgment has yet to be given in the primary proceedings; and

(b) indicates that, where the relevant assets are located in onshore UAE, the DIFC Court will only grant injunctive relief to cover the period until the claimant can make an application for equivalent or alternative interim relief from the relevant onshore UAE Court.

Footnotes

1. https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0432022-1-william-allan-jones-2-coffee-planet-llc-3-coffee-planet-roastery-fze-v-robert-anthony-jones-3 

2. CFI-043-2022, 29 June 2022 https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-043-2022-1-william-allan-jones-2-coffee-planet-llc-3-coffee-planet-roastery-fze-v-robert-anthony-jones 

3. Paragraph 7

4. Paragraph 9

5. https://www.difccourts.ae/rules-decisions/judgments-orders/arbitration/arb-017-2020-1-lateef-2-lukman-acting-its-attorney-lateef-v-1-liela-2-liyani-arb-0212021-1-lateef-2-lukman-acting-its-attorney-l 

6. Lateef, paragraph 127

7. Paragraph 21