Claim No: ARB 002/2015
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 DAVID STEEL
EDWARD DUBAI LLC
EEVI REAL ESTATE PARTNERS LIMITED
Hearing: 6-7 December 2015
Counsel: Sean Brannigan QC instructed by Clyde & Co for the Claimant
Paul McGrath QC instructed by Curtis, Mallet-Prevost for the Defendant
Judgment: 8 December 2015
JUDGMENT OF JUSTICE SIR DAVID STEEL
Transcribed from the oral judgment handed down on 8 December 2015, revised and approved by the Judge.
1. In these applications, the Court is concerned with a dispute arising out of a DIAC arbitration award dated 19 July 2015. The award is in favour of the Claimant Edward Dubai LLC, whom I will call ”Edward”. It is a substantial award amounting to in the region of US$264 million. The Defendant, Eevi Real Estate Partners Limited, whom I will call “Eevi” has failed to pay any part of that award. On 13 August this year, the Claimant issued an arbitration claim form seeking its recognition and enforcement.
2. The relevant contract was executed on 23 July 2008. The subject of the contract was a building known as the Tower within the DIFC. On 27 January 2010, Eevi gave notice of termination of Edward’s employment on the ground that Edward had failed to proceed with the works regularly and diligently.
3. The contract contained an arbitration clause and on 16 September 2012 Edward filed a request for arbitration in which Eevi’s entitlement to terminate the contract was disputed and various substantial sums said to be outstanding were claimed. The request was issued under the auspices of the Dubai International Arbitration Centre (“DIAC”) and its rules.
4. The arbitration clause in the contract provided so far as material:
“Any dispute in respect of which (a) the decision if any of the engineer has not become final and binding pursuant to sub-clause 67(1) and (b) amicable settlement has not been reached within the period stated in sub-clause 67(2) shall be finally settled under the Rules of Arbitration and Conciliation of the Dubai Chamber of Commerce and Industry by one or more arbitrators appointed under such rules…”
5. The governing law of the contract was set out in Clause 73 and required construction of that contract to be in accordance with the laws of Dubai and the UAE.
6. Eevi’s response to the request for arbitration was issued on 6 November 2012 and raised a challenge to the jurisdiction of DIAC or any reference pursuant to the DIAC Rules. Nevertheless, the arbitrators and the chairman were appointed by the Executive Committee of DIAC in March 2013 and there then ensued an exchange of written submissions on the jurisdiction issue. Terms of reference in regard to that issue were drawn up in October 2013 and the Tribunal published a ruling on jurisdiction on 23 October 2013 in which it dismissed the objections to jurisdiction.
7. In due course, the merits of the claim were the subject of a two-week hearing and on 19 July 2015 the Tribunal published its award, which was served on the parties on 26 July. Three days later, on 29 July, Eevi commenced proceedings in Dubai seeking to annul the award. The memorandum of Eevi in support of that application for annulment was dated 5 August 2015. This asserted as its primary basis for annulling the award that the arbitration clause was invalid because the chosen rules – and I think it was suggested the entity that made them – no longer existed at the time of the contract.
8. The initial challenge went on to reserve what was said to be the right to provide other grounds, especially, as intimated in the memorandum, the potential complaint that “the equality principle” had been violated. This was based on the complaint that Eevi’s experts had been barred by the Tribunal from attending the hearing during the course of the factual witness evidence and that, despite that bar, the Claimant’s experts had been provided with transcripts of the hearing. There was also a tentative complaint that there had not been compliance with what was said to be a pre-arbitration requirement for reference of the dispute to a decision by the engineer in accordance with Clause 67(1).
9. These complaints were referred to in a first affidavit of Ms N which was filed on behalf of Edward on 2 September in the run-up to an ex parte application by Edward for a freezing order. It explained in some detail by reference to the transcript of the hearing the position as regards the experts and the oral factual evidence. In addition it identified the finding by the tribunal that Eevi had acted in bad faith in that the grounds for dismissal were not based on a complaint about performance by Edward but, given its parlous financial position, to enable Eevi to draw down on two substantial performance bonds.
10. The hearing for the freezing order took place on 9 September before the Deputy Chief Justice, Sir John Chadwick, and he gave an extempore judgment. The issue as regards the expert evidence is covered by paragraphs 14 and 15 of the judgment as follows, and I quote:
“14. As can be seen from that paragraph, the point which Eevi seeks to take in the annulment proceedings is that the Arbitral Tribunal deprived Eevi of the opportunity and its appointed expert in attendance at the sessions in which Eevi’s witnesses of fact gave their evidence and, further, that Edward provided its expert with transcripts of the evidence of the witnesses of fact but Eevi were not permitted to do so and that like treatment was not accorded to Eevi. But it can be seen from the transcripts of the proceedings before the Tribunal that that is not what happened. The point has been taken in the annulment based on a misrepresentation of the facts as they appear from the transcripts of the proceedings before the Tribunal. What actually happened in those proceedings appears in a ruling on day five, 5 March, and is transcribed at pages 174 and 175 of the transcript. The parties agreed that the experts would not be present in the tribunal room while witnesses of fact gave evidence. That was a non-binding agreement made between the parties through their legal representatives. The Arbitral Tribunal made no order as to whether expert witnesses should or should not be present when the witnesses of fact gave evidence.
11. The question of whether or not transcripts of the evidence given by the witnesses of fact should be provided to the parties’ expert witnesses was raised at the end of day five, which was a Thursday. The Arbitral Tribunal made it clear that it was a matter for the parties. The Tribunal made no ruling that transcripts should not be provided to the experts. When the matter resumed on the Sunday at the beginning of the following week, the Tribunal inquired whether Eevi’s expert had been shown transcripts of the evidence of fact. The response from counsel for Eevi – recorded in the transcript for day six at page 12, lines 2 to 6 – was this: ‘There was a question as to whether our experts had been shown the transcripts and, after consultation with our client, it was decided not to show them the transcripts. They have not seen them.’ There was no explanation as to why Eevi had decided not to show its appointed expert the transcripts of the evidence of witnesses of fact, but it is clear beyond doubt that if Eevi’s expert did not see those transcripts, the reason why it did not do so was a consequence of a decision taken by Eevi; it was not a consequence of any decision from Edward or any ruling by the Tribunal. That is a topic to which I will have to return in due course.”
12. The judge duly granted the freezing order sought by Edward for all the reasons outlined in his judgment. The order included on the application of Edward a fairly elaborate requirement for details of Eevi’s asset position. This hearing also constitutes the return day for that injunction for which Edward seeks renewal.
13. In the wake of that hearing for a freezing order and Ms N’s first affidavit, the Defendant amended its memorandum in the Dubai proceedings relating to the grounds upon which it sought to annul the award. That amendment is dated 28 September 2015. From this memorandum, five grounds for challenging the award can be identified.
14. The first, perhaps rather surprisingly put in prime position, was the contention that the signatory, Mr G, had no authority to execute the contract. Secondly, there was no jurisdiction by reason of the points relating to DIAC and the DIAC Rules. Thirdly, a complaint with regard to the expert evidence, but not in regard to any order that the experts should not be present during the evidence, nor any complaint that Eevi’s experts were deprived of an opportunity to read the transcripts. The new complaint was that they were not given the same amount of time to read the transcripts as Edward’s experts. Fourthly, the allegation that the prior requirement for a decision by the engineer had not been complied with, which was put as a condition precedent to the institution of any arbitration proceedings at all. Fifthly, although not clear as to why it would lead to an annulment of the award, the Tribunal had no jurisdiction as regards the order for costs.
15. The following day, 29 September, Mr G filed an affidavit in response to that part of the freezing order which called for further information in regard to the assets of Eevi. Notably, his first paragraph describes himself as “chairman” of the respondent and also a “director” of the respondent.
16. Just over a week later, Ms N filed a second affidavit in which she sought to deal with each ground for annulment that had been put forward in the revised memorandum, which I will refer to and add observations of my own.
17. First, the authority of Mr G. It is somewhat startling that this allegation was put at the forefront of this memorandum in support of annulment of the award. It is startling because, firstly, it was the first time this point had ever been taken, despite the fact that the contract was dated five years earlier or more, the arbitration had started three years earlier or more and so on.
18. Secondly, Mr G had signed the agreement and he described himself in his latest affidavit as the “chairman”. That of itself might raise some eyebrows, it would be thought, as to whether it could seriously be said he had no authority even to sign an arbitration agreement.
19. In passing, I should note that his signature on the contract was actually witnessed by counsel for Eevi in the arbitration, saying that the signature had taken place in his presence. It follows that it is equally astonishing that no point as to his authority was raised at that stage.
20. Thirdly, there is, it would appear, an acceptance that there was a valid agreement to arbitrate, albeit a dispute as to whether it would involve DIAC and the DIAC Rules or whether it necessitated going to the Court to get arbitrators appointed.
21. Lastly, counsel for Eevi, who had witnessed Mr G’s signature, had also signed the terms of reference for the arbitration. Again, it would be no less than astonishing if questions of authority were not raised at that stage.
22. Ms N described the assertion of want of authority as, I quote, “opportunistic and without merit”; in my view, a gross understatement, but perhaps not the worst point taken in this matter.
23. Second, the DIAC jurisdiction issue. It appeared to be Eevi’s contention that the arbitration clause was void. This allegation was dealt with at length in the Tribunal’s interim award on jurisdiction and the arguments in the memorandum was simply a rerun of all the earlier arguments that had been raised before the Tribunal. Not only was the point rejected by three respected and experienced arbitrators, Ms N described it as “purely technical and without commercial merit” and that the only justification for raising it was the hope of creating delay and expense. I agree and, indeed, as the Deputy Chief Justice said, it is entirely consistent with a general policy to frustrate the enforcement of the award by any means.
24. Inequality of arms. As I have already indicated, the complaint about an order by the Tribunal that the experts should not be present at the hearing of the factual witnesses has simply disappeared for the very good reason, as Eevi well knew, that no such order had been made. It was the parties who had made the agreement, so the point was entirely dishonest.
25. But a new point was taken that there was disparity in the time available to absorb the transcripts. Ms N dealt with that as follows. Firstly, the Claimant’s experts had actually only read themselves into days one and two of the transcripts by the time the dispute arose on day five. Secondly, in making the complaint, it was explained by counsel for Eevi that its experts would be able to catch up if they were allowed to. Thirdly, the Tribunal held that there was no breach of any order or ruling in providing the transcripts to the experts and, indeed, Eevi’s experts could use the weekend to catch up. As I have already noted, Eevi’s decided not to show the transcripts to its experts, quote, “after consultation with the client”, and, as Ms N put it, it follows that any prejudice – as, indeed, the Deputy Chief Justice found – was entirely of the Defendant’s own making.
26. The complaint about a failure to complete a prerequisite to the arbitration in the form of a reference to the engineer, again, was a point that was never raised during the course of the arbitration. In fact, as Ms N explains in her affidavit, the process of obtaining the engineer’s decision was in fact duly completed. There had been a request to the engineer on 9 May 2010 and a response on 2 August 2010. Notice of an intention to request arbitration was then served on 7 October 2010, years before the actual arbitration was started. But, as Ms N pointed out, the requirement for the engineer’s decision to be made was not in any sense a prerequisite to the commencement of the arbitration because the relevant clause provided, and I quote:
“Arbitration may be commenced on or after the 56th day after notice of the intention to arbitrate, even if no attempt at amicable settlement had been made.”
27. The contrary suggestion, namely that there was no entitlement to arbitrate absent an attempt to reach an amicable settlement, as made in the memorandum, was simply untrue.
28. Costs: again, as I have indicated already, this would not appear to be a ground for challenging the award as a whole but, notably, the terms of reference actually dealt with the allocation of costs “pending allocation by the Tribunal”. Such was in accord with both federal law and the DIAC Rules and, indeed, rather wholly inconsistent with its position, Eevi had also claimed its costs.
29. Not content with the second formulation of its memorandum, on 14 October 2015 Eevi served a further memorandum in the Dubai proceedings repeating all the grounds for invalidating the award as previously relied on but introducing some new points: (1) that it was not demonstrated that Mr G had signed the contract, (2) that it was not shown that he was the chairman and (3) that the document relating to the engineer’s decision was only a photocopy.
30. These are extraordinary assertions from a company which purports to contend that it conducts its affairs in accordance with ordinary and good business practice. As I have already said, the signature of Mr G was actually witnessed by Mr B in his presence. How it came to be asserted that it was not demonstrated that Mr G had signed the contract in a document produced by the Defendant in these proceedings defies understanding.
31. Secondly, only a fortnight earlier, Mr G had sworn an affidavit that he was the chairman and yet here was Eevi saying in its latest memorandum that it was not shown that he was the chairman. It is difficult to see what more Mr G could say and difficult to see how Mr G can effectively adopt a stance, contending on the one hand that he is the chairman and, on the other hand, contending that it is not shown that he is the chairman. These are not just bad points; they are disgraceful points.
32. Thirdly, no explanation was forthcoming – and nor is it now furnished to the Court – of the relevance or, indeed, the nature of the point that is being made with regard to the fact that the documents exchanged with the experts had only been produced in photocopy form. In this day of word-processors, photocopying is not a concept that is really understood. In any event, whatever may be the position, quite what this has to do with the potential for annulling the award remains wholly obscure.
33. On 22 October 2013, Ms M, who also acted for Eevi at the arbitration hearing, signed a witness statement. This attached a report from its Dubai lawyer purportedly expressing self-serving confidence in the grounds put forward for annulment, despite all the observations I have just made, but adding – and this is of some note – that Eevi proposed to pursue the challenge all the way to the Supreme Court of Dubai.
34. Ms M relied on that report to express the view that the annulment proceedings were “strong”, adding for good measure, without any support from the appointed UAE lawyer, that the award was in some state of “suspension” until ratified or set aside, again a topic to which I will return.
35. Believe it or not, yet another memorandum, some 35 pages long, was filed on 12 November and this purported to distinguish between the challenge to the preliminary award on jurisdiction and the challenge to the final award. As regards the preliminary award on jurisdiction, the following further points were made: (1) the preliminary award on that preliminary issue was “devoid of reasons” and (2) the award failed to explain why the Tribunal preferred a particular translation of article 4(a) of the DIAC code.
36. Both of these points struck me as unarguable and, indeed, they have not been. The award expresses in some detail the reasons for reaching the conclusion that the Tribunal did reach and it also explains in some detail the reason why they preferred one of the various translations that were proffered.
37. In this new memorandum, further elaborate arguments were spelled out to support the proposition that the Tribunal erred in law because of the deficiencies in the retroactive nature, as it was put, of article 4 of the Decree of 2009 dealing with the application of the DIAC Rules to cases that appeared to apply the DCCI Rules. The challenge to the award made further extensive submissions on this jurisdiction issue, on the issues relating to the time allowed for the Defendant’s expert to read the transcript and the failures to seek an amicable settlement and costs.
38. At least most of those points had been raised before, but at the end yet two new points were added: (1) that the Tribunal had failed to apply UAE law and (2) that there was some contradiction between the reasoning and the pronouncement of the award. Again, those two points are difficult to understand if not incoherent and it is perhaps not surprising that nothing more has been ever heard of them.
39. Against that background, I turn to the first issue that arises as regards the recognition of the award under article 44. Article 44 is pretty familiar to perhaps everybody in this room. It is appropriate that I should quote it, as did indeed the Deputy Chief Justice:
“(1) Recognition or enforcement of an arbitral award, irrespective of the state or jurisdiction in which it was made, may be refused by the DIFC Court only: (a) at the request of the party against whom it is invoked, if that party furnishes to the DIFC Court proof that: … (v) the award has not yet become binding on the parties or has been set aside or suspended by a court of the state or jurisdiction in which, or under the law of which, that award was made …
(2) If an application for the setting aside or suspension of an award has been made to a court referred to in paragraph (1)(a)(v) of this article, the DIFC Court may, if it considers it proper, adjourn its decision and may also, on the application of the party seeking recognition or enforcement of the award, order the other party to provide appropriate security.”
40. Despite the tentative proposition advanced by Ms M without the support of her UAE lawyer, I reject the suggestion that the award has been “suspended” by the application before the Dubai Court. No such proposition has been advanced in argument.
41. There, however, is an application within the meaning of article 44(2) to set the award aside and this, as I have indicated, affords discretion to this Court to make an order for enforcement or, alternatively, to adjourn with the added discretion to require security as a term for any such adjournment, as indeed is requested in those circumstances by Edward.
42. This discretion is not wholly unfettered. I have already made observations about the discretion in my decisions in a case called A v B (ARB 005/2014). In that judgment, I adopted with approval the approach of Gross J – as he then was – in IPCO (Nigeria) Ltd v Nigerian National Petroleum Corp  AppLR 04/27 when he said this:
“…the Act does not furnish a threshold test in respect of the grant of an adjournment and the power to order the provision of security in the exercise of the Court’s discretion under section 103(5) [which is the equivalent of article 44]. In my judgment, it would be wrong to read a fetter into this understandably wide discretion (echoing, as it does, article VI of the New York Convention). Ordinarily, a number of considerations are likely to be relevant: (i) whether the application before the court in the country of origin is brought bona fide and not simply by way of delaying tactics; (ii) whether the application before the court in the country of origin has at least a real (ie realistic) prospect of success (the test in this jurisdiction for resisting summary judgment); (iii) the extent of the delay occasioned by an adjournment and any resulting prejudice. Beyond such matters, it is probably unwise to generalise; all must depend on the circumstances of the individual case.”
43. The sole basis for asserting that there is a realistic prospect of success in Dubai now relied upon by Eevi in the present hearing is the jurisdiction issue. All the other issues are, in my view, properly viewed individually or collectively as fanciful. Indeed, Eevi has abandoned many of them, which is a topic to which I will return.
44. The jurisdiction issue is a very short point. The arbitration contract required disputes to be settled under the Rules of Arbitration of the Dubai Chamber of Commerce, which was established as long ago as 1975. The DIAC was established in 2004, albeit an independent entity but nonetheless attached to the DCCI which remained in existence. By virtue of the DIAC Rules established by Dubai Decree Number 11 of 2007, the rules of the DCCI were superseded. Article 4 of the 2009 DIAC Statute Rules provides – as found by the Tribunal and unchallenged save on the basis that the Tribunal failed to use its own interpreter but without any suggestion that a different translation was appropriate – as follows:
“The Arbitration Rules in force at the Centre shall apply to all disputes that are referred to the Centre, even if the parties to a dispute agree to apply the Commercial Conciliation and Arbitration Rules of the Dubai Chamber of Commerce and Industry 1994.”
45. The Defendant’s position is, as I understand it, that the parties have thereby agreed on an invalid arbitration which is referring the dispute to a non-existent institution and a non-existent set of rules. As a matter of pure construction under the Civil Code, this would be by any standards a strange conclusion as to the mutual intention of the parties. It appears to me, amongst other things, to be based upon the proposition that DIAC as an entity has replaced an earlier entity and I do not believe any such situation has been established.
46. Anyway, all that said, the Tribunal’s approach was to accept that article 4(a) confers jurisdiction on the DIAC and has retroactive effect by being necessary and so stipulated within the meaning of article 112 of the Constitution. Otherwise, it would have been necessary to retain the DCCI Rules for purposes such as the present. That conclusion, in my respectful judgment, is in accordance with business common sense and in accordance with a purposive reading of the relevant articles and rules.
47. In reaching that conclusion, this distinguished and experienced Tribunal have embarked on a detailed analysis of the issues and the arguments. The Defendant merely proposes to rerun the very same arguments.
48. Often in an application to seek enforcement of an award, there are issues at large on which the Court has to form a preliminary view of the prospects of success on the basis of limited argument but here there is a considered award which, in my judgment, merits recognition in itself. In the result, despite the fact that the Arbitral Tribunal appeared to have had some difficulty in coming to a conclusion on the topic, I regard the prospects of success in pursuing this technical and unmeritorious challenge as, at best, only just overcoming the threshold requirement of having a realistic prospect of success.
49. That said, the whole tenor of the various manifestations of the memoranda in support of the application to annul are redolent of a want of bona fides and pursuit of delay when considering the matters discussed in IPCO. It is suggested that the proceedings in Dubai – at least through the first instance stage – will only take about three months. That in my experience is improbable but, I would accept, possible. But that is perhaps by the way since in any event it is clear that the Defendant proposes to pursue the point through to the Supreme Court if it loses at any stage. The process may take many years and yet be devoid of any business purpose save to avoid paying the award.
50. All that has to be seen against the background of a host of hopeless if not dishonest grounds advanced over the last few months. To be fair, the Defendant’s legal team have now sought to distance themselves from many if not all of those points. For example, the suggestion that Mr G may not have signed the contract when it was witnessed by a member of the legal team was, as I have said, outrageous and abandoned; likewise the proposition that it had not been shown that he was chairman of the company, an equally outrageous and absurd proposition which has been abandoned.
51. If further examples are required, the whole story advanced in regard to the engineer’s certificate – ie the alleged failure to seek a certificate, the alleged failure to rely upon original documents, the alleged requirement for settlement discussion before any commencement of an arbitration, the invalid commencement of the arbitration in that sense – must have been known to be effectively false accusations. It is unfortunate – to say the least – that a substantial development company is content to raise such points and it is inevitable that an adverse conclusion is reached as to its purposes.
52. There are a whole number of other points which were abandoned and which must have been known to be hopeless – the suggestion that the award had been suspended; the suggestion that the Tribunal had ordered that experts should not attend the evidence; the suggestion that the time afforded to read the transcripts was too short and unfair when it was accepted by the experts in evidence themselves that they had had adequate time – yet other complaints have disappeared without trace and without explanation: the costs point, the wrong law point, the discrepancies in reasoning point. One could go on. But it is difficult to categorise these points as being raised other than as a device lacking in commercial reality, lacking in good faith and solely promoted to cause delay.
53. Therefore, it is in my judgment entirely appropriate to reinforce what the judge said at the earlier hearing for a freezing order solely in regard to one of the points that was raised, namely the transcript point. The judge cited part of the transcript of the submissions of counsel for Edward made at the tribunal hearing on day six:
“The other side’s decision not to show the transcripts to their experts is, of course, a decision entirely of their own making. Nevertheless, being blunt, it is clear they are manoeuvring for enforceability points, not surprising given how the evidence made out for them last week but nevertheless regrettable. That being the case, we have taken the view that subject to the Tribunal disagreeing with us we will revert back to the Tribunal’s suggestion as to how they level the playing field and not have their experts in the room even after they have given evidence.”
54. The judge went on:
“The comment that Eevi was ‘manoeuvring for enforceability points’ is evident force in the circumstances that the point now taken (on a false basis of fact) in the annulment proceedings, had Eevi shown its experts the transcript of the evidence given by Edward’s witnesses of fact, as it was free to do, it would not be in a position to take the point that there was a lack of equality. It is plain, if I may say so, that Eevi took the decision not to show their expert those transcripts with the intention that it should be able at the enforcement stage to assert inequality of treatment at the tribunal hearing. Eevi’s conduct in this respect strongly points to the conclusion that it is willing to take whatever course seems to be likely to further its own interests without regard to the ordinary considerations of commercial morality or the proper conduct of the arbitration proceedings into which it had entered ostensibly in good faith.”
55. Against that background, I turn to another passage in Gross J’s judgment in IPCO which was not cited to me but is of some assistance, in my view. Shortly after the passage which I have already cited, he said this at paragraph 15:
“As it seems to me, the right approach is that of a sliding scale, in any event embodied in the decision of the Court of Appeal in Soleh Boneh v Uganda  2 Lloyd’s Rep 208 in the context of the question of security:
‘… two important factors must be considered on such an application, although I do not mean to say that there may not be others. The first is the strength of the argument that the award is invalid, as perceived on a brief consideration by the court which is asked to enforce the award while proceedings to set it aside are pending elsewhere. If the award is manifestly invalid, there should be an adjournment and no order for security; if it is manifestly valid, there should either be an order for immediate enforcement, or else an order for substantial security. In between there will be various degrees of plausibility in the argument for invalidity; and the judge must be guided by his preliminary conclusion on the point.
The second point is that the court must consider the ease or difficulty of enforcement of the award, and whether it will be rendered more difficult … if enforcement is delayed. If that is likely to occur, the case for security is stronger; if, on the other hand, there are and always will be insufficient assets within the jurisdiction, the case for security must necessarily be weakened.'”
56. As regards that latter point, the court has received precious little assistance.
57. I have already recorded that the jurisdiction issue just gets its head above the bar of a realistic prospect of success. But I have to have regard to the overall picture. Again, in the light of the Defendant’s assurance that a decision of the Dubai Court of First Instance will be available in about three months, I have concluded that the right order is as follows: on condition that security for the award inclusive of costs is posted within 21 days, the application for enforcement will be adjourned for four months.
58. I now turn to the freezing order. Of course, if and when security is posted in the enforcement application, the need for a freezing order will fall away. But I must consider whether to continue the order meanwhile or in any event should there be a failure to post security.
59. There is no question of whether there is a good arguable case; that is common ground. The issue focuses on whether the Claimant has established that there is a real risk of dissipation. One must approach the word “dissipation” with some degree of care. It does not simply mean exhaustion of assets. It includes secretion of assets, dispersal of assets and so on.
60. The approach of the Deputy Chief Justice to this issue was by reference to two matters. He concluded there was a real risk of dissipation, firstly, because of the finding in the arbitration that the Defendant had not acted in good faith – ie, as he put it, “had form” – and, secondly, the extraordinary approach adopted by the Defendant in the annulment proceedings.
61. The starting point here must be the decision in The Nicholas M and, in order to save time, can I just include my reference: paragraphs 49, 50 and 53 of that judgment. This was cited to the judge and is set out in his judgment.
62. In the present case, the issue of discreditable conduct is not a matter for future decision by the arbitrators. The point is set out in the actual award at paragraphs 412 to 416 and it is worthwhile including most of this in this judgment, but I will not solemnly read it aloud. The important finding is at the end of paragraph 415, ie the two paragraphs at the top of page 153 of the award, which is to be found in our file 1 at page 469.
63. It was submitted by Eevi that it was inappropriate to have regard to any breach of a contractual obligation of good faith when no such obligation arose as a matter of DIFC law. But this submission is simply an attempt to disregard the discreditable nature of the activity viewed from any business point of view, bearing in mind that the issue at stake is whether the Defendant is likely to deal with its assets other than in a normal and proper business way.
64. I reject entirely the proposition advanced by Eevi that the court and the Tribunal were concerned with “a typical commercial dispute”.
65. As regards the annulment proceedings, I have already discussed them at some length. The jurisdiction issue is the only modest highlight in a sorry tale. It is just arguable but has not stopped the Defendant from advancing a whole range of unreal and dishonest points. That is conduct which started in the arbitration hearing, as set out in the passage which I have already cited from paragraphs 14, 15 and 16 of the judge’s judgment, which I think I have read.
66. The Defendant’s subsequent conduct after the hearing before the Deputy Chief Justice in promoting, abandoning, changing and pursuing a wide range of complaints, none of which had any merit and some of which were dishonest, only goes to fortify the conclusion that was reached by the learned judge.
67. I have had well in mind the caution that is urged on the court in the decision in Bouvier v Accent Delight  SGCA 45 but, like the judge, I consider this is more than sufficient to conclude that there is a real risk of dissipation not just in the sense of dispersal but also in the sense of secretion, dispersal and transfer, rendering enforcement more difficult if not impossible, such being achieved other than in the ordinary course of business.
68. Before the judge, some subsidiary points were raised – first the complicated structure of the Defendant group and the propensity – or at least the utility – for the movement of assets. In the present hearing, as before the judge, these points were treated by Edward as essentially subsidiary in the form of make-way points. Nonetheless, it is fair to say that the judge picked them up in paragraph 16 of his judgment, which again I will treat as included in the terms of this judgment.
69. Eevi challenged this conclusion, even on the present material. In the alternative, Eevi asserts that there was material nondisclosure in regard to these issues in the evidence and argument before the judge.
70. As regards the complicated and opaque structure and the alleged opportunity for transfer of assets, Edward makes various points. Firstly, the website of Eevi Investments speaks of the creation of Eevi Group for investment in the development in the DIFC. Eevi Investments is the investment manager and has raised US$200 million towards the development and the ownership structure is described as “unique”.
71. Secondly, a further investment vehicle was established in respect of at least part of the development known as W Holdings and its participation related to what is described as the prime or “branded” part of the development, including the Hotel and various important penthouses and upper-storey residences and, again, involving the creation of a fund of US$200 million.
72. Thirdly, in its affidavit relating to the asset position of Eevi, Mr G attached a list of “assets of Eevi held by third parties” as from 2007. The third parties named are individuals who are shareholders in Eevi or, alternatively, in W Holdings, including in particular Mr G. The value of some of these properties is put at 47 million dirham but none of the villas, which are the most valuable part of the portfolio, are valued. The unusual explanation for that is set out at paragraph 4 of Mr G’s affidavit where he says this:
“I refer to SG3, which is a table that presents all assets and investments of the respondent held in the name of third parties. Although these assets are recorded in the name of third parties, the respondent holds letters of undertaking over all of these assets recording that the ultimate beneficiary of each of the assets is the respondent.
I wish to note there is an ongoing legal dispute with the developer with regard to the assets as identified as Villa in exhibit SG3. These assets were purchased by the respondent through third parties in December 2007. Due to the various breaches and termination of the relevant sale and purchase agreements by the developer, the buyers on behalf of the respondent have filed a civil case before the Dubai courts which is presently ongoing. In that proceeding, the buyers are seeking specific performance without any further payments or the recovery of the purchase price which would be returned to the respondent and as such net asset value has not been ascribed to this particular asset.”
73. I confess I did not find that easy to follow.
74. Fourthly, Edward points to the affidavit of assets in the sense that it lists transfers to W Holdings made in 2012 amounting to over 350 million dirham, approved, it is said, by a board meeting on 9 May 2012. However, it is apparently accepted that given there is a caveat registered by National Bank, title is yet to be transferred to W Holdings.
75. In a letter dated 4 October 2015, not surprisingly, Edward requested further information about the arrangement in respect of assets to be held in the name of third parties. The letter also asked for details of the relationship between Eevi and W Holdings and details of the whereabouts of the funds derived from sales since April 2015, which total 419 million dirham. Various reminders were sent and on 7 October Eevi undertook to provide a response by 9 October. No such response was forthcoming.
76. Lastly, Mr G has filed a second statement seeking to deal with some of these matters, which I have to confess is more submission than evidence, but it does at least explain that Eevi Investments owns 7.58 per cent of the Claimant through Eevi Securities and, secondly, that W Holdings was established by Eevi Investments – namely the Claimant – owns a holding of 4.5 per cent.
77. Against that background, I regard the proposition that the corporate structure was complex and that there was at least some suggestion that assets had been transferred to closely related people and entities or at least the corporate structure provides the ability to place assets beyond enforcement procedures as made out. The structure is very opaque and some of the explanations for these transfers remain entirely obscure. This is not a significant issue given the matters which are discussed above, but it is a point legitimately made.
78. Reliance was also placed on a witness statement of Mr S to support the proposition that Eevi had misused loan funds. This is spelled out in Ms N’s first affidavit where this very short point is made:
“Fourthly, there was unchallenged evidence in the arbitration in the form of a witness statement from Mr S that the Defendant had used funds which included a project development loan for the project in the sum of 500 million dirham partly to fund business other than the project. I believe that the fact the Defendant previously used funds intended for the project elsewhere is indicative that the Defendant will seek to dissipate the assets if he considers it to be in his best interests.”
79. This proposition is said to be based on a witness statement filed in the arbitration by Edward dated July 2009 in which Mr S is said to have stated:
“I understand the funds of Eevi are used in the project and elsewhere.”
80. I confess I am not sure I have seen any statement in that form but I have seen a statement from Mr S dated 30 July 2014 which explains in terms that the purposes for the loan included the repayment of outstanding loans and was not restricted to the project.
81. It seems to me that the suggestion of the misuse of funds is a point that simply should never have been made and should be wholly disregarded in the context of the risk of dissipation. Indeed, I accept the submission that reliance on the statement constituted not just an incident of nondisclosure but in effect a misrepresentation to the court, not forgetting Mr S is an employee of Edward. I will turn to the significance of that point in a moment.
82. There was also reference to the potential for winding-up of Eevi. This played no part in the discussion on the merits and I propose to disregard it.
83. Eevi asserts that the discretion to grant a freezing order, even assuming risk of dissipation, is undermined by delay and, further, that the fact of delay was not raised with the court. For this purpose, I cite from the judgment of Flaux J in Madoff Securities v Raven  EWHC 3102 (Comm) at paragraph 156 and, again, I will treat that as incorporated in my judgment.
84. In my judgment, no legitimate assertion of delay is made out. First, it is true that the allegation by Edward that there had been want of good faith has been in existence since the beginning of the arbitration if not earlier, but it was obviously realistic to await a ruling on the issue. Indeed, the advancement of the case at an interlocutory stage would have been almost unworkable and certainly unmanageable.
85. Secondly, the other limb to the application for a freezing order was the allegation regarding the contentions raised in the annulment proceedings, which by definition are recent and it is not even suggested there is any delay in that respect. In any event, I do not regard the delay as justifying refusal of the exercise of the discretion in favour of Edward.
86. As regards the hearing below, any issue of delay in the terms of this history of the allegation was patent and the judge would have needed no assistance in identifying the point, whether in the context of justifying an ex parte application or the question of the exercise of discretion. I reject the complaint.
87. Against that background, but for the element of nondisclosure, I would not hesitate to renew the injunction. But I do express some dismay at the misconceived deployment of the evidence of Mr S. On the facts of this case, I think that the proper course is nonetheless to continue the injunction. To discharge it on that ground and that ground alone and refuse a renewal is the only realistic alternative. That, in my judgment, would be to accord a wholly disproportionate significance to the point in the context of Edward having otherwise a compelling case on the merits.
88. That leaves one or two loose ends. First, Eevi contended that the scope of the order as to the provision of information in regard to assets was unduly extensive, particularly having regard to the fact that this was not a proprietary claim. The terms requested were said to be “in the usual way”, but were clearly broader than the standard form and they were spelled out in detail in the affidavit in support, which was drawn to the attention of the judge. The order was well within the margin of appreciation open to the judge in achieving what was necessary and proportionate in gathering information, not least a judge with the experience of the Deputy Chief Justice. Accordingly, I reject that complaint.
89. Secondly, it was contended that the worldwide order was inappropriate. The justification for this is said to be simply that Eevi is a DIFC entity with property in the DIFC but all its bank accounts are in Dubai. I think it is appropriate to reduce the scope of the order to the Emirate of Dubai, but other than that I make no further adjustment to the terms of the order.
Date of Issue: 13 December 2015