DIFC: injunctive relief for foreign proceedings only where DIFC Court has jurisdiction over respondent

In Sandra Holdings v Saleh CA 003/2023, the DIFC Court of Appeal overturned Sir Jeremy Cooke J’s judgment in Jones v Jones CFI 043/2022, ruling that injunctive relief may only be granted in support of foreign proceedings if the claimant establishes that the DIFC Courts have jurisdiction over the respondent under a statutory gateway. If that is established, relief should be granted on established discretionary principles.

Background

The underlying dispute relates to the sale of shares in Cayman Island registered companies. The claimants commenced proceedings against the defendants in France, the US and Kuwait. In support of the proceedings in Kuwait and France, the claimants also made an application to the DIFC Courts for a worldwide freezing order (WFO) to prevent the dissipation of the defendants’ assets. The defendants’ had no connection with, nor assets within, the DIFC.

The WFO was granted on 10 November 2021. The defendants failed to comply with various asset disclosure orders, and (belatedly) applied for the WFO to be set aside. At first instance, Cooke J refused to set aside the WFO. Further, he found the defendants in contempt and sanctioned them accordingly. The defendants appealed to the Court of Appeal, primarily on the grounds that the Court had no jurisdiction to make the WFO in the circumstances.

The DIFC Courts’ jurisdiction

The award of the WFO, and the refusal to set it aside, was rooted in Article 5A of the Judicial Authority Law (JAL) and rule 25.24 of the Rules of the DIFC Court (RDC).

Article 5A of the JAL sets out the jurisdiction of the DIFC Courts:

5(A) The Court of First Instance:

(1) The Court of First Instance shall have exclusive jurisdiction to hear and determine:

(a) Civil or commercial claims and actions to which the DIFC or any DIFC Body, DIFC Establishment or Licensed DIFC Establishment is a party;

(b) Civil or commercial claims and actions arising out of or relating to a contract or promised contract, whether partly or wholly concluded, finalised or performed within DIFC or will be performed or is supposed to be performed within DIFC pursuant to express or implied terms stipulated in the contract;

(c) Civil or commercial claims and actions arising out of or relating to any incident or transaction which has been wholly or partly performed within DIFC and is related to DIFC activities;

(d) Appeals against decisions or procedures made by the DIFC Bodies where DIFC Laws and DIFC Regulations permit such appeals;

(e) Any claim or action over which the Courts have jurisdiction in accordance with DIFC Laws and DIFC Regulations. [emphasis added]

RDC 25.24:

25.24 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.…

At first instance, Cooke J applied previous judgments in Nest Investments v Deloitte & Touche [2018] CA 011 and Jones v Jones [2022] CFI 043, leading the court to conclude that RDC 25.24 was a “DIFC Regulation” for the purposes of Article 5A(1)(e). As such, when read together, RDC 25.24 and Article 5A(1)(e) conferred jurisdiction on the DIFC Court to grant an injunction against a party to litigation, notwithstanding that the party had no connection to the DIFC and none of the statutory gateways in the JAL were satisfied.

The Court of Appeal Decision

The decision was appealed by the defendants on the basis that the DIFC Court had mistakenly conflated the statutory jurisdiction of the DIFC Court and other common law courts.

It was argued that, owing to the DIFC Courts not having inherent or wider jurisdiction (unlike, for example, the English courts), any expansion of the DIFC Court’s jurisdiction to grant extraterritorial relief orders in favour of foreign proceedings must be done by way of statute and not common law. As such, one of the statutory gateways contained in Article 5A must still be made out before the DIFC Court can grant such relief orders.

The Court of Appeal held that, whilst the Court’s jurisdiction can be expanded by the RDC under Article 5A(1)(e), this must be done through “clear and expressive words to confer such powers’. There are no such ‘clear and expressive words’ in RDC 25.24 permitting the DIFC Courts to act outside of the gateways in Article 5A(1)(a)-(d). RDC 25.24 is procedural in the sense that it deals with how applications for relief are to be made and does not expand the Court’s jurisdiction. Accordingly, “RDC 25.24 should not be read on its own, but rather in parallel and consistent with the gateways of Article 5”. The DIFC Court’s powers are limited to those circumstances outlined in Article 5.

The DIFC Court stressed that this does not preclude their ability to enforce judgments that have been issued, merely their ability to issue injunctions in aid of “anticipatory” foreign judgments.

Takeaways

1. Overturning the ruling in Jones v Jones, the Court of Appeal confirmed that RDC 25.24 simply refers to general procedural matters and cannot be read in isolation to confer additional jurisdiction. It must be read in parallel with the jurisdictional gateways under Article 5A JAL.
2. At present, there is no DIFC equivalent to s.25 of the Civil Jurisdiction and Judgments Act 1982 which provides the English Courts with power to grant injunctions in support of foreign proceedings. The DIFC Courts do not have inherent jurisdiction and any expansion of its remit needs to be achieved via statue and not through decisions of the Court.
3. The defendants failed to dispute the jurisdiction of the DIFC Courts within the 14 day time limit in RDC 12.4. The claimant argued that, under RDC 12.5, this gave the DIFC Court jurisdiction over the defendants. This judgment confirms that RDC 12.5 does not confer jurisdiction, but only applies where the DIFC Court has prima facie jurisdiction on other grounds.

With thanks to Mark Lightbown for his assistance in preparing this post