Claim No: CFI 013/2016

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai

 

IN THE COURT OF FIRST INSTANCE

BEFORE JUSTICE SIR RICHARD FIELD

BETWEEN

OGER DUBAI LLC 

                                                                                                                            Claimant

and 

DAMAN REAL ESTATE CAPITAL PARTNERS LIMITED

Defendant

Hearing: 6 July 2016

Counsel: Sean Brannigan QC for the Claimant

David Allison QC for the Defendant

Judgment: 6 July 2016

Issue date: 28 July 2016


JUDGMENT OF JUSTICE SIR RICHARD FIELD


JUDGMENT

1.The Defendant submits that any order of this Court requiring it to cease trading is unfair and runs contrary to the intention of Decree 19 of 2016 and the Order of the Acting Chief Justice of the UAE Court of Cassation, who is the President of the judicial body established by that decree. I will call that order (the “ACJ’s Order”).

2. The order that this Court made on 16 June 2016 was premised on the basis that there no longer existed an annulment ground in the Dubai Courts that had a real prospect of success. The Dubai Court of Appeal had rejected the Defendant’s appeal from the decision of the Court of First Instance.  There was a debate between this Court and Counsel for the Defendant at the hearing of the petition to wind up as to what the consequence would be if the Court of Appeal dismissed the Defendant’s appeal. Counsel for the Defendant very properly and frankly accepted that that would produce a situation of which this Court (the winding-up court) would have to take careful account.  I raised the question of an appeal to the Court of Cassation, but no submissions were made as to whether an appeal to that Court lay or what the grounds of such an appeal would be.

3. Accordingly, come 16 June 2016, this Court concluded that the decision of the Dubai Court of Appeal meant that there was now no outstanding case for annulment of sufficient arguability to stand in the way of a winding-up order.  The Court then gave its reasons for concluding that the Claimant was entitled to a winding-up order as distinct from some other form of execution of the judgment enforcing the Award.  The Court expressed concern about how certain matters had proceeded and expressed the view that the sooner a liquidator, who would be an officer of the court, took control of the management of the Defendant, the better.

4. It was in the light of those observations that the Court made its supplementary order that the Defendant should cease trading.

5. A seven-day stay of the winding-up order was granted allowing for an application to the DIFC Court of Appeal to extend the stay pending an appeal. Given that seven-day stay, the Court concluded that justice required that there be a cessation of trading so that the position was held, enabling a winding-up of the company to proceed after the seven-day period with the same outcome as if the winding-up order had been of immediate effect.

6. The cessation of trading order was accordingly a subsidiary order of the court, designed to ensure that, when the Court’s judgment came to be enforced, justice would be secured.

7. I decline to accept the Defendant’s submission that the cessation of trading order is inconsistent with the Decree 19 of 2016 and the ACJ’s Order. In my judgment, the suspension of proceedings contemplated by the Decree and the ACJ’s Order does not require this Court to discharge subsidiary orders so designed that, upon the ultimate enforcement of a final judgment, justice will be done.

8. The cessation of trading order and the prior freezing injunction were designed to hold the ring so that, if a final enforcement order came into effect, it would secure justice for the Claimant. I cannot accept that the ACJ’s Order and the effect of the Decree is to require the DIFC Court to rescind orders that are not final enforcement orders, but a subsidiary in nature designed, on the material before the Court, to do justice.

9. The Defendant has made an application, without prejudice to its principal submission as to the effect of the Decree, for the amendment of the cessation of trading order to ensure its continued viability whilst the question of which court has jurisdiction is pending before the Committee established under the Decree. The Court will order an amendment of the cessation of trading order to allow for the payment of salaries and staff expenses for the period henceforward to 11 August 2016, which marks the end of the 30 working days period in which the Committee must make its determination as to jurisdiction.  The precise sum to be allowed under this amendment is to be agreed between the parties, with liberty to apply if there is any disagreement.

10. The Court is also minded in principle to amend the cessation of trading order to allow for the payment of general and administrative expenses, but declines to do so at the moment because further information is required before there can be a final determination as to the amount to be allowed.

11. The Defendant will have liberty to provide in writing the further information that has been identified by the Court that it requires, the same to be served on the Claimant and the Court; the Defendant will also be permitted to make a short submission in writing. If so advised, the Claimant may serve short reply submissions, and the whole matter will be dealt with on the papers with a written ruling. I should add that the further information the Court requires must be verified by a witness statement, signed by a proper officer of the Defendant company.

12. I have considered the other matters that were put before the Court in support of the application for further amendments to the cessation of trading order. I am not satisfied that these matters show that the viability of the Defendant is in serious doubt for the period that remains unexpired of the 30-working day period for the decision of the Committee.  But the liberty to apply on notice which was granted after the hearing last Wednesday will continue so that if anything arises, which urgently puts in doubt the viability of the company over the period in question, the Defendant may apply on notice to the Claimant and to the Court.

13. I turn now to the question as to whether the Claimants should be required to give a cross-undertaking in respect of the amended cessation of trading order.

14. I explained at the last hearing that, given the issuance of the Decree and the service of the ACJ’s Order, the resulting situation did not require simply the maintenance of the status quo as represented by the orders made on 16 June 2016. Under those orders, there was to be a cessation of trading for seven days.  The relevant stay period is now considerably longer and the Court must recognise that there is a possibility that an order will be made by the Committee in respect of jurisdiction that could ultimately lead to the annulment of the award.

15. The Defendant’s argument for annulment is a highly technical one. I agree with Justice Steel’s characterisation of the point as being one of technicality and wholly at variance with commercial commonsense or commercial merit, but nonetheless the point is there.  If – as seems possible – the point may yet come to be argued, it is plainly a possibility that the point might prevail.

16.In those circumstances, I judge that the Claimants should provide a cross-undertaking in damages in the same terms as the cross-undertaking given in respect of the freezing injunction. The order will run until about 11 August 2016.  Once the Committee has made its decision as to jurisdiction, the whole question as to the applicability of the subsidiary orders that the Court has made and perhaps the final enforcement order for the Defendant to be wound up, will have to be revisited.

 

Issued by:

Natasha Bakirci

Assistant Registrar

Date of issue: 28 July 2016

At: 5pm