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IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

Claim No. ARB 017/2020

BETWEEN

(1) LATEEF
(2) LUKMAN
(acting via its Attorney, Lateef)

Claimants

and

(1) LIELA

First Defendant

LIYANI

Proposed Second Defendant

Claim No. ARB 021/2021

AND BEWEEN:

(1) LATEEF
(2) LUKMAN
(acting via its Attorney, Lateef)

Claimants

and

(1) LAAMIH
(2) LABIB
(3) LAEEK

Defendants

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ORDER WITH REASONS OF JUSTICE WAYNE MARTIN

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UPON the Claimants filling Claim No. ARB-017-2020 by way of claim form dated 20 July 2020 seeking recognition of the Arbitration Award issued in ICC Arbitration Case No. 123 and entry of judgment upon that Award (the “Award Application”)

AND UPON the application of Liela (“LIELA”), the Defendant in ARB-017-2020, dated 3 August 2020 to set aside the judgment entered on the Award Application (the "Set-Aside Application")

AND UPON an application by the Defendants in ARB-021-2021 to set aside the Second Worldwide Freezing Order (the “Second WFO”) issued against the Defendants in those proceedings

AND UPON and an application by the Claimants for orders requiring that the two individual defendants in ARB-021-2021 and LIELA, by its Chairman Ludik, and Laeek Representation of Companies LLC (“Laeek”) by its Chairman Lahiq , attend for Cross-Examination on the disclosure which they made with respect to assets under the terms of the Second WFO issued in ARB-021-2021 (the “Cross-Examination Application”)

IT IS HEREBY ORDERED THAT:

1. The Defendants’ application to set aside the Second WFO is dismissed.

2. The Second WFO shall continue on the same terms until further order.

3. Each of Ludik, Lais, LIELA (by Ludik) and Laeek (by Lahiq) shall attend before the DIFC Court to be cross-examined on their asset disclosure on a date to be fixed by the Registry, on the basis of a hearing estimate of two days.

4. The Claimants must not use any of the evidence given on the cross-examination otherwise than for the purpose of these proceedings (and in particular not for the purpose of any application to commit the Respondents for contempt of court) without the permission of the Court.

5. The Defendants are ordered to pay the Claimants’ costs of the application to set aside the Recognition Order, the application to set aside the Second WFO, and the costs occasioned by their opposition to the cross-examination order to be assessed by the Court on the usual basis if not agreed by the parties within 28 days of the date of this order.

6. The Defendants are to make an interim payment on account of those costs in the sum of USD50,000 which is to be paid by the Defendants within 28 days of the date of this order.

Issued by:
Amna Al Owais
Chief Registrar
Date of issue: 13 December 2021
Time: 2PM

SCHEDULE OF REASONS

Summary

1. There were three applications before the Court in these related proceedings. The first was an application made on 3 August 2020 by Liela PJSC (“LIELA”), the Defendant in ARB-017-2020, to set aside an order made on 23 July 2020 recognising the arbitral award made against LIELA in an arbitration commenced by the Second Claimant in those proceedings, Lukman (“Lukman”). In the application it was asserted that recognition of the award by the DIFC Court would be contrary to UAE public policy and/or an abuse of process. The application was followed by the commencement of proceedings in the onshore Dubai Courts by LIELA on 25 August 2020, followed by an application to the Joint Judicial Committee (“JJC”) on 30 August 2020 alleging a conflict of jurisdiction between the proceedings in this Court and the proceedings in the onshore Courts of Dubai. The JJC later ruled that the DIFC Courts had jurisdiction to recognise the award and a stay of proceedings which had been granted pending the determination of the JJC was lifted on 1 August 2021.

2. On the hearing of the application Senior Counsel for LIELA accepted that there was no longer any basis for the application to set aside the order recognising the arbitral award, following the decision of the JJC. Having regard to the provisions of Article 42 of the DIFC Arbitration Law,¹ which reflect and embody the provisions of the New York Convention to which the UAE is a party, that concession was properly made. Having reviewed the grounds of the application I am satisfied that there is no credible basis for a contention to the effect that recognition of the arbitral award was contrary to public policy of the UAE and the application must be dismissed.

3. There is no reason why costs should not follow the event, and the Defendant in ARB-017-2020 is ordered to pay the Claimants’ costs of the application to set aside the order recognising the arbitral award to be assessed by the Court on the normal basis unless agreed by the parties. I note that the Claimants seek an order that those costs are to be assessed on an indemnity basis, but I do not consider that the grounds for such an order have been made out. There was a credible basis for the application until the JJC ruled in favour of the Claimants, and no significant costs are likely to have been incurred since then.

4. The other two applications before the Court are each in ARB-021-2021. The first is an application by the Defendants in those proceedings to set aside the Second WFO issued against the Defendants shortly after the proceedings were commenced. Although various grounds were advanced in support of that application when it was made, in a skeleton argument filed three days before the hearing, the ground of the application was confined to the proposition that the Court lacked and continues to lack jurisdiction to make the order.

5. The other application before the Court is an application by the Claimants in ARB-021-2021 for orders requiring that the two individual Defendants in those proceedings and LIELA by its Chairman Ludikand LaeekRepresentation of Companies LLC to attend for cross-examination on the disclosure; which they made with respect to assets under the terms of the Second WFO. Senior Counsel representing the prospective cross-examinees confirmed that the only ground of opposition to the application was the assertion that the Court lacked jurisdiction to make the Second WFO upon which the application for cross-examination is based.

6. So, in the result, the only two applications which remained contentious turned upon a single issue – namely, whether the Court had jurisdiction to issue the Second WFO in matter ARB-021-2021.

7. For the reasons which follow, I am satisfied that the Court had jurisdiction to make that order. It follows that the application to set aside the Second WFO must be dismissed, and the application for cross-examination should be allowed.

Background to the Applications

8. The issue relating to the jurisdiction of this Court to make the Second WFO is set in a complex procedural context.

9. The procedural history starts with the commencement of a New York seated arbitration by the Second Claimant against LIELA claiming that LIELA was liable as guarantor under three aircraft leasing arrangements made between the Second Claimant and the UAE company, Lamee. In an award issued on 26 October 2015 the claim was upheld in the amount of USD43,201,971.10, with ongoing interest. The benefit of that award was assigned to the First Claimant by an assignment dated 25 October 2019.

10. LIELA is a company incorporated in Abu Dhabi owned by interests associated with the Lahiq family. The two individual Defendants in ARB-021-2021 are, together with their brother, Lahiq , the only directors of LIELA. The three brothers and their two sisters are shareholders of LIELA.

11. Laeekis a company which was owned by LIELA until about December 2019, at which time the shares held by LIELA were transferred to individual members of the Lahiq family. The Claimants assert that Laeek has been used as a vehicle by LIELA and members of the Lahiq family to dissipate their assets in breach of orders made by this Court. Mr Lahiq is the Chairman of Laeek.

12. LIELA launched a number of appeals and challenges to the arbitral award in New York, all of which were unsuccessful. The deadline for any appeal to the US Supreme Court has expired. LIELA also unsuccessfully challenged the award in the Courts of Abu Dhabi, and proceedings which LIELA brought in the Dubai Courts for declarations that the underlying guarantees were invalid have also been dismissed.

13. The Claimants assert that as soon as it became apparent to the members of the Lahiq family that the various challenges to the award in New York were going to be unsuccessful, the members of the family embarked upon a campaign of stripping out the assets of LIELA and transferring them to themselves. The Claimants assert that the asset stripping mainly took place between January and July 2020, but has continued, in part using Laeekas a vehicle. The Defendants vigorously deny these assertions. Although it appears to be clear that real estate in onshore Dubai that is said to be worth approximately USD187 million has been transferred to the Lahiq siblings, they assert that the transfers took place in accordance with the Sharia Law notion of “Heba”, under which family assets held by a corporate entity can be returned to the members of the family.

14. During July 2020 the Claimants sought recognition and enforcement of the New York arbitral award in the DIFC Courts. The application, which was made without notice, was successful and on 23 July 2020 an order recognising the award and entering judgement on the award was made. By that time, the sum due under the award had risen, with interest, to USD88,596,077. At the same time, in reliance upon the evidence of disposition of assets to which I have referred, a Worldwide Freezing Order was made against LIELA (the "First WFO”).

15. After those orders were made, LIELA commenced the proceedings in the onshore Courts of Dubai and the JJC to which I have referred.

16. The Claimants issued proceedings in New York in February 2021 seeking to enforce the award against the three Lahiq brothers on the basis that each of them is an alter ego of LIELA and seeking to set aside various transfers of assets as fraudulent conveyances (the “Alter Ego Proceedings”). Those proceedings are ongoing and an application to amend the proceedings so as to join Laeekas a Defendant has been made but not yet determined.

17. The Claimants have made further allegations in relation to dissipation of assets based on information received since the First WFO was made. Based on that information, in July 2021 the Claimants commenced ARB-021-2021 against Ludik and Lais and Laeek and sought the Second WFO, which was issued on 29 July 2021. The Second WFO was made in support of the Alter Ego Proceedings in New York in reliance upon the jurisdiction sometimes described as the “Wintercap” jurisdiction, referring to the decision of H.E Justice Shamlan Al Sawalehi in SEC v Wintercap,² in which a freezing order was granted in support of foreign proceedings. The existence of that jurisdiction is put in issue by the Defendants in these proceedings, who submit that the case was wrongly decided and should not be followed.

18. The Second WFO required the Defendants to disclose their assets worldwide with an excess in value of AED50,000 within 72 hours of service of the order, and to confirm that information by affidavit within five working days. The Claimants assert that those obligations were not complied with, and have commenced contempt proceedings against the Defendants in ARB-021-2021. The Claimants have also commenced contempt proceedings against LIELA in respect of its alleged dissipation of assets, and against a bank which is said to have been knowingly involved in the dissipation of assets by LIELA. The contempt applications have been listed for hearing in January 2022.

19. On 21 October 2020, the English High Court made a Worldwide Freezing Order (“WFO”) against Lahiq in support of the Alter Ego Proceedings in New York.

Jurisdiction to Make the Second WFO – The Competing Contentions

20. The Defendants observe, correctly, that the Second WFO has not been issued in support of the recognition or enforcement of the arbitral award – that was the justification for the First WFO. The Defendants do not now challenge the Court’s jurisdiction to make that WFO, as it was based on a judgment which had then been entered in the exercise of the Court’s jurisdiction to recognise arbitral awards, wherever made.

21. Rather, the Second WFO is brought in aid of foreign proceedings, in the form of the Alter Ego Proceedings in New York. The Defendants contend that, contrary to the decision in Wintercap, the Court has no jurisdiction to issue injunctive orders in support of incomplete foreign proceedings unless the Court is invested with jurisdiction through one or other of the gateways to jurisdiction specified in Article 5(A) of the Judicial Authority Law (the “JAL”).³

22. This contention, and the fact that it is the only contention advanced in support of the Defendants’ application to set aside the Second WFO and in opposition to the orders for cross-examination sought by the Claimants did not emerge clearly until skeleton arguments were simultaneously exchanged by the parties three days prior to the hearing.

23. In their first skeleton argument the Defendants contend that Wintercap was wrongly decided because neither the DIFC Court Law nor the Rules of the DIFC Courts (the “RDC”) provide any power to issue injunctions in aid of foreign proceedings.⁴ The Defendants contend that the present position under DIFC Law is analogous to the position under English law prior to the coming into force of s 25 of the Civil Jurisdiction and Judgments Act 1982, as set out by the House of Lords in The Siskina.⁵

24. The Defendants contend that the proper approach is evident in the decision of H.E. Deputy Chief Justice Omar Al Mheiri (“Deputy Chief Justice Al Mheiri”) in Childescu v Gheorghiu & Ors.⁶ In that case Deputy Chief Justice Al Mheiri observed that the orders in Wintercap had apparently been made in reliance upon the jurisdictional gateway provided by Article 5(A)(1)(e) of the JAL combined with Article 32(b) of the Court Law⁷ and RDC 25.1.6(a) and (b), 25.1.7 and 25.24. Deputy Chief Justice Al Mheiri expressed the view that the provisions of the Court Law and the RDC which confer general powers upon the Courts with respect to the issue of injunctions and freezing orders are not themselves a source of jurisdiction for the purposes of Article 5(A)(1)(e) of the JAL.

25. Deputy Chief Justice Al Mheiri distinguished the reliance placed by the Court of Appeal upon RDC 20.7⁸ as a source of jurisdiction for the purposes of Article 5(A)(1)(e) of the JAL in Nest Investment⁹ on the ground that the Court in that case observed that RDC 20.7 would be largely redundant if otherwise. Deputy Chief Justice Al Mheiri observed that the same could not be said of Article 32(b) of the Court Law and RDC Part 25.

26. Deputy Chief Justice Al Mheiri also noted that in a private case Justice Sir Richard Field relied both upon a substantive gateway to jurisdiction pursuant to Article 5(A)(1)(a) of the JAL, and the gateway provided by Article5(A)(1)(e) read with RDC Part 25.

27. In Childescu, Deputy Chief Justice Al Mheiri was satisfied that the Court’s jurisdiction was enlivened through the substantive gateways to jurisdiction provided by Articles 5A(1)(b) and (c) of the JAL. Accordingly, it was not necessary for him to determine whether the Court also had jurisdiction under Article 5(A)(1)(e) read with the Court Law and the RDC.

28. The Defendants contend that there is no alternative gateway to jurisdiction in this case other than Article 5(A)(1)(e), and Deputy Chief Justice Al Mheiri was correct to observe that the provisions of the Court Law and the RDC relating to the grant of injunctions are not, in themselves, sufficient to confer a wide ranging and unconstrained jurisdiction upon the Court.

29. In their first skeleton, the Defendants submitted in the alternative, that if the Court had jurisdiction in this case, it should not be exercised in support of the exorbitant jurisdiction claimed by the New York Court. The Defendants submitted that the affairs of LIELA are regulated under the law of the UAE by the Commercial Companies Law and, in the context of insolvency, by the Bankruptcy Law. The Claimants have not sought to invoke those laws in the UAE, as they should, but rather seek to circumvent that obligation by seeking interim relief in support of foreign proceedings which have not yet concluded.¹⁰ The Defendants submitted that the public policy of the UAE requires that disputes relating to the affairs of UAE companies and their conduct within the UAE should be dealt with in accordance with the laws of the UAE and not under the laws of a foreign jurisdiction.¹¹

30. In their first skeleton, the Defendants further submitted that the determination of the application for cross-examination should be deferred until the hearing of the contempt application because any cross-examination prior to that time would lack utility because of privilege against self-incrimination. As will be seen, the Defendants later adopted the position that the only ground they wished to agitate in relation to the setting aside of the Second WFO, and in opposition to the cross-examination application is the jurisdictional ground.

31. As the Claimants were not aware of the emphasis which was to be placed upon the jurisdictional issue in the Defendants’ skeleton at the time they prepared their own skeleton argument, that skeleton deals with the issue briefly, essentially relying upon the decision in Wintercap. Reliance is also placed upon Childescu, although as I have observed, that decision does not provide support for the existence of the Wintercap jurisdiction, given the Deputy Chief Justice Al Mheiri’s conclusion that there were other substantive gateways to jurisdiction available.

32. The same observation may be made with respect to the Claimants’ reliance upon my decision in Credit Europe Bank (Dubai) Ltd v Shetty¹² in which I ordered a WFO because in that case also there was a substantive gateway to jurisdiction other than Article 5(A)(1)(e).

33. In their first skeleton, the Claimants also relied upon the decision of the Court of Appeal in Nest Investment for the proposition that Articles 22 and 32 of the Court Law were “apt to confer jurisdiction” for the purposes of Article 5(A)(1)(e). Article 22 of the Court Law specifically empowers the Court of First Instance to order an injunction restraining a person from engaging in conduct.

34. After seeing the Defendants’ first skeleton, the Claimants filed a supplemental skeleton argument the day before the hearing. In that skeleton, they advanced the further proposition that by failing to make any application for a declaration or an order that the Court has no jurisdiction within 14 days of filing their Acknowledgment of Service, the Defendants have submitted to the jurisdiction.¹³ The Claimants further submit that an acknowledgement by the Defendants’ lawyer that the failure to challenge jurisdiction within the specified time was the fault of her firm provides no excuse, because the firm must bear responsibility. However, the Claimants conceded that the mere fact of submission to the jurisdiction does not, of itself, confer jurisdiction on the Court.¹⁴

35. In their supplemental skeleton, the Claimants accepted that it is common ground that the jurisdiction of the DIFC Courts is exclusively statutory and that therefore the jurisdiction upon which they rely must have a statutory source.

36. The Claimants reiterated their reliance upon Wintercap and Nest Investment. They also relied upon the recent decision of the Privy Council in Broad Idea v Convoy Collateral Ltd¹⁵ in which the majority observed that the idea that an injunction can only be granted if it is ancillary to substantive proceedings before the Court is outdated and fails to reflect the purpose of a freezing order. The Claimants submit that this decision should be taken to have superseded and overridden the observations to contrary effect in The Siskina.

37. The Claimants placed particular reliance upon RDC 25.24 which is headed “Application For An Interim Remedy Where There Is No Related Claim”. It provides:

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

38. The Claimants submit that the wording of this provision makes it clear beyond any doubt that the power to make a freezing order and asset disclosure order conferred on the DIFC Courts by Articles 22 and 32 of the Court Law and RDC 25.1 extend to a case in which the substantive proceedings are taking place or may in future take place in another jurisdiction.¹⁶

39. The Claimants submitted in the alternative, that the Second WFO is within the Court’s jurisdiction pursuant to Article 5(A)(1)(c) of the JAL on the basis that the application for the Second WFO is “a claim or action” arising out of an incident which has been wholly or partly performed within the DIFC, namely, the making of the First WFO by the DIFC Court.¹⁷

40. The Claimants submitted that the observations made by Deputy Chief Justice Al Mheiri in Childescu were clearly obiter and that Justice Shamlan Al Sawalehi and Justice Sir Richard Field have expressed contrary views in Wintercap and the private case to which Deputy Chief Justice Al Mheiri referred in Childescu.

41. The Claimants placed particular reliance upon the reasoning in Broad Idea, which affirmed the dissenting judgment of Lord Nicholls in Mercedes Benz AG v Leiduck¹⁸ in which his Lordship enunciated the doctrinal basis of the freezing injunction in terms of assistance to the prospective enforcement of a money judgment prior to that judgment being obtained. The Claimants relied on Lord Nicholls’ observation in Mercedes Benz to the effect that it would be pointless to limit the remedy to cases where the judgment is being sought in the territorial jurisdiction where the injunction is needed to preserve assets against which the judgment can be enforced. They relied also upon observations in Broad Idea to the effect that if freezing orders cannot be granted in support of foreign proceedings, regimes for the reciprocal enforcement of judgments and arbitral awards would be undermined.¹⁹

42. In this context, the Claimants submitted that they are entitled to take advantage of the conduit enforcement mechanism with respect to assets outside the DIFC but in the Emirate of Dubai. They also drew attention to the connection between the Second WFO and the First WFO made by the DIFC Court, in that the basis for the grant of the Second WFO was evidence that parties had interfered with the earlier WFO made by the DIFC Court.

43. The Claimants also pointed out that the DIFC Courts have entered into a Memorandum of Guidance with the United States District Court for the Southern District of New York for the mutual recognition of judgments, which provides an alternative ground for the view that the DIFC Court is an appropriate forum for the enforcement of any judgment obtained in the Alter Ego Proceedings, and the Second WFO is an appropriate interim remedy in order to protect the Court’s capacity to enforce any such judgment.

44. The Defendants also filed a supplemental skeleton shortly before the hearing, in which they reiterated the points made in their initial skeleton.

45. During the hearing, the Defendants submitted that the fact that there may be a foreign judgment at some time in the future does not confer power on the DIFC Court to grant injunctions in the meantime.²⁰ They submitted that the approach taken by the Privy Council and the more recent English authorities is not available in the DIFC because there are no statutory provisions enabling that approach.²¹

46. The Defendants submitted that Article 20(1) of the Court Law cannot be a source of jurisdiction because the power to make interlocutory orders conferred in that Article is only conferred upon the Court “in matters over which it has jurisdiction”.²² The Defendants further submitted that the power to grant injunctions conferred by Article 22(2) of the Court Law cannot be construed as conferring a power on the Court to grant any injunction it wants, without restriction or qualification. Rather, it is a power to grant injunctions in matters in which it has jurisdiction through another source.²³ They submitted that it is not sufficient that there might be jurisdiction at some time in the future – there must be jurisdiction at the time the injunction is granted.²⁴

47. The Defendants made the same submission in relation to Article 32 of the Court Law – namely, the powers thereby conferred upon the Court should be construed as being powers capable of exercise in matters over which the Court has jurisdiction independently of Article 32.²⁵

48. The Defendants further submitted that although they should have filed Acknowledgments of Service some time ago, in fact they were only filed the day before the hearing, by which time an objection to jurisdiction had been lodged. Accordingly, they submitted that their objection to jurisdiction was not out of time.²⁶

49. The Defendants also submitted that Nest Investments is distinguishable because RDC 20.7 relating to the joinder of additional parties depends upon the Court having substantive jurisdiction to deal with the proceedings to which those parties are joined. Put another way, the joinder rule has a connection with the exercise of the Court’s substantive jurisdiction, and there is no such connection in the present case.²⁷

50. The Defendants also referred to the decision in Akhmedova v Akhmedov.²⁸ In that case the claimant had obtained a judgment against the Defendant, her husband, in England. It was discovered that a large pleasure yacht acquired by the husband was in the UAE for maintenance work, although the yacht had been assigned by the husband to a series of entities, the last of which was Straight. A freezing order was granted restraining the removal of the yacht from Dubai. Straight applied unsuccessfully for the removal of the injunction on the ground that the Court had no jurisdiction to grant injunctive relief against an entity which was not a party to the foreign judgment.

51. The Judge at first instance dismissed that contention on the basis that the jurisdiction conferred upon the Court by Article 5(A)(1)(e) and Article 7(6) of the JAL, augmented by Article 24(1) of the Court Law gave the Court power to grant injunctive relief in aid of the enforcement of foreign judgments.

52. The Court of Appeal upheld the appeal and dismissed the injunctive relief against Straight on the ground that the jurisdiction of the Court in relation to the enforcement of foreign judgments only extended to enforcement against parties to those judgments. However, the Court deferred lifting the injunction until such time as the Claimant had been given the opportunity to amend her case to bring a claim directly against Straight.

53. The Defendants submitted that if the provisions of the Court Law confer an unqualified power to grant injunctive relief against any person, the decision of the Court of Appeal in Akhmedova would have been different.

54. I digress to observe that the decision in Akhmedova was concerned with an issue which doesn’t arise in the present case, because the parties against whom the Second WFO has been issued are all parties to the Alter Ego Proceedings in New York²⁹ and, if judgment is entered in those proceedings, will potentially be parties to the judgment. The issue in the present case is whether the power to grant injunctive relief in aid of the enforcement of foreign judgments can be exercised before those judgments are granted. That is not a question which arose in Akhmedova, as judgment had been entered.

55. The Defendants also submitted that the Wintercap jurisdiction has the capacity to disrupt the arrangements for the distribution of judicial power in the Emirate of Dubai. The jurisdiction conferred upon the DIFC Courts by Article 5(A)(1)(e) is exclusive. It follows that if the conferral of a general power to grant injunctive relief upon the DIFC Courts confers jurisdiction under that Article, the DIFC Courts have the capacity to dramatically restrict the jurisdiction of the onshore Dubai Courts.³⁰

56. The Defendants also submitted that in this case enforcement of any judgment in the Alter Ego Proceedings in New York would not be undertaken pursuant to Article 7(6) of the JAL but would take the form of first instance proceedings based upon a cause of action created by the foreign judgment.³¹

57. The Defendants also submitted that jurisdiction to make the Second WFO cannot arise from the First WFO, because if there has been a breach of the First WFO, the appropriate remedy is by way of enforcement proceedings in that action, not the commencement of a separate action and the grant of a Second WFO.³²

58. The Defendants also submitted that RDC 25.24 is not a rule which confers jurisdiction upon the Court – it is simply a rule of procedure.³³

59. During the hearing Senior Counsel for the Defendants confirmed that questions of discretion were not pressed in support of the application to set aside the Second WFO but if raised, would be raised in the context of the enforcement of the Second WFO, and also confirmed that the sole ground of opposition to the cross-examination order was the assertion that the Court lacked jurisdiction to make the Second WFO.³⁴

60. During oral submissions at the hearing, the Claimants reiterated their submission that the jurisdiction to grant the Second WFO is an incident of the Court’s jurisdiction to enforce foreign judgments, without disavowing any reliance upon the more general Wintercap jurisdiction pursuant to Article 5(A)(1)(e).³⁵ In relation to the Wintercap jurisdiction, reliance was placed upon Articles 19, 22, 24 and 32 of the Court Law as laws conferring jurisdiction to grant the Second WFO upon the DIFC Courts.³⁶ Reliance was also placed on RDC 25.24(1) which explicitly recognises the power of the Court to grant interim relief in respect of proceedings taking place, or which will take place, outside the DIFC.³⁷

61. The Claimants also relied upon the following passage in the judgment of Justice Sir Richard Field in VIH Dubai Palm Jumeirah v Assas Opco:³⁸

“… I think that the situation of the DIFC Courts stands to be equiparated with an English Superior Court of Record. Although the in personam jurisdiction of the court is limited to the subject matter gateways contained in Article 5(A)(1) of the … JAL, the court’s very wide jurisdiction to grant interlocutory injunctions under s 32(b) and (c) of the DIFC Court Law and to deal with contempts of court under Articles 32(e) and 43 of the DIFC Court Law, is no less wide than the jurisdiction of the English High Court in these matters.”

62. In response to the Defendants’ submission that the Wintercap jurisdiction is impossibly wide, the Claimants submitted that the exercise of the jurisdiction is constrained by discretion.³⁹ The Claimants accept that the degree of connection between the interim relief sought and the DIFC would be a relevant factor in the exercise of that discretion. In that context they submitted that the existence of assets in onshore Dubai would be relevant to the exercise of the discretion because of the conduit jurisdiction.⁴⁰ The arrangements for the reciprocal enforcement of judgments within the Courts of the Emirate of Dubai are matters properly taken into account, in the Claimants’ submission.⁴¹

63. The Claimants submitted that the connection between the Second WFO and the First WFO is relevant not only in relation to the exercise of the discretion, but also confers substantive jurisdiction upon the DIFC Courts through Article 5(A)(1)(c).

64. The Claimants also submitted that although the principles enunciated in Broad Idea depended upon the existence of in personam jurisdiction, that was in a context in which the in personam jurisdiction of the relevant courts depended upon service in the jurisdiction, or the grant of leave to serve out of the jurisdiction. The Claimants submitted that such a restriction is not apt to the DIFC Courts, because there are no constraints upon service of DIFC Courts process outside the DIFC, and leave is not required.⁴²

65. The Claimants also relied upon the decision in DNB Bank v Gulf Eyadah Corporation⁴³ for the proposition that the jurisdiction of the Court to enforce foreign judgments is not dependent upon the existence of assets within the jurisdiction of the DIFC.

66. Because the oral argument took some unexpected turns, at the conclusion of the hearing the parties requested, and I established a timetable for the exchange of further written submissions.

67. In their first post hearing submission, the Defendants submitted that Article 7(6) of the JAL is not a source of jurisdiction but a direction as to the procedure to be adopted in executing judgments of non-DIFC Courts within the DIFC. The source of jurisdiction to enforce foreign judgments is submitted to be Article 24(1)(a) of the Court Law and, as Former Chief Justice Michael Hwang (“Former Chief Justice Hwang”) recognized in DNB Bank, each of Article 7(4) and (6) of the JAL proceed on the basis that there is jurisdiction to hear claims for the recognition and enforcement of foreign judgments under the Court Law.

68. The Defendants submitted that the use of the word “ratify” in Article 24(1) is inappropriate, but accept that it has been treated as equivalent to “enforce” in the authorities and the prescribed Court forms. The Defendants also accepted that the 2011 amendments to the JAL require the reference to Article 7(4) of the JAL in Article 24(1)(a) of the Court Law to be read as including the reference to Article 7(6).⁴⁴

69. The Defendants noted that the jurisdiction conferred by Article 24 is qualified by the requirement that the relevant judgment, order, or award be “recognised”. They noted that the expression is not defined by the Court Law, although the Defendants submitted that the word must be given some meaning. They contended that it cannot be a reference to memoranda of guidance as between courts because typically those memoranda are expressed to have no legal effect.

70. The Defendants submitted that a foreign judgment is not enforceable as such at common law (unless there is a mutual recognition agreement in accordance with Article 24(2) of the Court Law) but if a money judgment, it may be the subject of a claim in the DIFC Courts based on the foreign judgment.⁴⁵ The Defendants contended that the word “recognise” might have been intended to comprehend the judicial bodies and arbitral outcomes which would be recognised as a matter of private international law.

71. The Defendants also reiterated their earlier submission to the effect that any judgment in the Alter Ego Proceedings in New York would not be enforceable in the UAE (including the DIFC) because the judgment would be contrary to public policy, by reason of the circumvention of the Courts and laws of the UAE in relation to UAE companies and company directors.

72. In their post hearing submissions, the Claimants reiterated their earlier submission to the effect that Broad Idea establishes that a freezing order is not required to be linked to any substantive cause of action. Rather, its essential purpose is to facilitate the enforcement of a judgment or other order to pay a sum of money by preventing assets against which such a judgment could be enforced from being dealt with in such a way that insufficient assets are available to meet the judgment. This was described by the Privy Council as “the enforcement principle”.

73. According to the Claimants, the enforcement principle helps to identify what assets can be covered by a freezing order in the standard form – the test being whether assets will be available on execution of a judgment. The Claimants also submitted the enforcement principle explains why a freezing order can be made against a defendant who is in possession or control of an asset against which a judgment could be executed, even though there may be no independent cause of action against that defendant.

74. The Claimants contended that the Privy Council’s decision in Broad Idea has brought the common law into line with that of Australia, as noted in paragraph 36 of the majority judgment in the Privy Council. The Claimants contended that Akhmedova would probably have been decided differently if the analysis in Broad Idea had been available at the time.

75. The Claimants submitted that the DIFC Courts should follow the analysis in Broad Idea and conclude that its powers to grant freezing orders are not confined to proceedings in which substantive relief is claimed in the DIFC Court. They contend that the DIFC Courts’ power to grant freezing orders derives from the broad statutory power conferred upon the Court to grant injunctive relief, analogous to that provided to English Courts by s 37(1) of the Senior Courts Act 1981. However, in order to overcome the decision in The Siskina, specific power to grant injunctions where the substantive proceedings were not before the English High Court was conferred by s 25 of the Civil Jurisdiction and Judgments Act 1982. The Claimants contend that such legislation is now unnecessary because of the Privy Council’s analysis in Broad Idea, which, in effect, overturns the decision in The Siskina.

76. The Claimants reiterated their submission that Articles 22 and 32 of the Court Law explicitly confer upon the DIFC Court a very broad and general jurisdiction to grant injunctive relief, and that RDC 25.24 makes it clear that the DIFC Court is intended to have and to exercise such jurisdiction in respect of proceedings in other Courts which may be continuing.

77. The Claimants also drew a distinction between the existence of jurisdiction and its exercise. They accept that discretionary factors will govern the exercise of the discretion to grant a freezing order. They accept the fact that such an order is being sought in support of foreign proceedings will be a relevant factor in the exercise of the discretion and observe that no doubt the DIFC Court will be able to develop its own jurisprudence in relation to the factors relevant to the exercise of the discretion in such a circumstance.

78. The Claimants noted that the Defendants have expressly disavowed any intention to challenge the grant of the Second WFO on discretionary grounds and therefore the contest in this case is limited entirely to the question of jurisdiction.

79. The Claimants accepted the Defendants’ contention that a New York judgment must be enforced in the DIFC Court by an action on the judgment at common law, in the absence of a treaty between the DIFC and the US entitling the judgment to automatic recognition and enforcement. However, they point out that in Broad Idea Lord Leggatt expressly observed that there is no reason in principle why the fact that an action must be brought on a foreign judgment should affect the Court’s willingness to lend its assistance where needed by granting a freezing order.⁴⁶

80. In answer to the Defendants’ contention that any New York judgment would not be enforceable in the DIFC on public policy grounds, the Claimants contended that they only need to establish that they would have a good arguable case for enforcement of the judgment if and when made. They submitted that they easily cross that threshold, given the vagueness of the Defendants’ assertions with respect to public policy. They further submitted that the trend of authority is to construe public policy narrowly in this context.⁴⁷ The Claimants reinforced this submission with the observation that the Defendants’ contention on this subject is contrary to its express disavowal of any challenge to the grant of the Second WFO on discretionary grounds.

81. The Claimants reiterated their previous submission to the effect that by failing to acknowledge service and challenge the jurisdiction, the Defendants have submitted to the jurisdiction of the DIFC Courts for the purpose of making the freezing order. Although they continued their acknowledgement that such submission does not confer upon the Court a jurisdiction which it does not otherwise have, they submitted that it does remove objections which are purely personal to the party submitting.⁴⁸

82. The Claimants further submitted that the Defendants cannot rely upon their own failure to provide an Acknowledgment of Service within the time required by the RDC, and submit that under the RDC, filing an Acknowledgement of Service is a precondition to a challenge to jurisdiction.⁴⁹

83. In their post hearing submissions in reply, the Defendants contended that the Claimants’ submissions ignore the essential distinction between the jurisdiction of Courts of general jurisdiction in unitary judicial systems, and the jurisdiction of the DIFC Courts, which is exclusively statutory. They contended that this distinction was important in the decision of the Privy Council in Broad Idea.

84. The Defendants submitted that the DIFC Courts are not courts which have inherited the equitable powers of the former Court of Chancery, so that it cannot be said that they have the power to issue an injunction against any person in respect of whom the Court has in personam jurisdiction. The Defendants contended that the JAL restricts the generality of the Court’s injunctive powers by confining the jurisdiction of the Court to limited categories of case. The Defendants submitted that construed in the context of the constitutional structure of the UAE, general grants of power contained in the Court Law should not be read as conferring general and wide-ranging jurisdiction of the kind to which reference was made in Broad Idea.

85. The Defendants repeated their earlier contention that Rule 25.24 merely specifies matters of procedure and does not confer jurisdiction.

86. The Defendants also reiterated their earlier contention to the effect that any judgment in the New York proceedings would not satisfy the requirement specified in the Memorandum of Guidance between the DIFC Courts and the New York Courts. The defendants also reiterated their earlier contention to the effect that their challenge to the jurisdiction of the Court was within time because of the late filing of an Acknowledgement of Service.

Analysis and Conclusion

87. I have chronicled the submissions advanced by the parties in detail in order to demonstrate the way in which the competing contentions have emerged and evolved over time.

88. In the course of that process, some matters have emerged with clarity. They include:

89. In light of these matters a number of issues which were raised in the interchange between the parties which I have set out above can either be excluded from further consideration or quickly resolved.

90. On the Claimants’ side it was initially contended that the ambit of the Wintercap jurisdiction was so broad as to enable the DIFC Court to grant an injunction against anybody, anywhere, at any time subject only to the Court being satisfied, in its discretion, that it was appropriate to do so. That broad submission has now been replaced by the more refined submission based upon the application of the enforcement principle to which I have referred. In order to determine this case, it is neither necessary nor appropriate to determine whether the Court has the broader jurisdiction for which the Claimants initially contended.

91. The Claimants also contend that if a specific gateway to jurisdiction other than the jurisdiction to enforce foreign judgments is required, such a gateway is available in this case under Article 5(A)(1)(c) of the JAL because the Second WFO arose out of evidence to the effect that steps had been taken to thwart the operation and effect of the First WFO, which was an order made by the DIFC Court within the DIFC. I reject that contention, which is inconsistent with the Claimants’ more recent contentions with respect to the ambit of the enforcement principle. Article 5(A)(1)(c) of the JAL confers jurisdiction upon the CFI in respect of “civil or commercial claims and actions arising out of or relating to any incident … wholly or partly performed within DIFC”. However, as the Claimants have now made clear, in the proceedings in which the Second WFO was granted, they do not assert that they have a civil or commercial claim or action against the Defendants to those proceedings which they wish to have determined by the DIFC Courts. To the contrary, they place express reliance upon the principle enunciated in Broad Idea to the effect that injunctive relief can be granted in cases in which there is no claim or cause of action against the party restrained. The Claimants have also made it abundantly clear that, to the extent that they assert that they have claims or causes of action against the Defendants in the second proceedings initiated in this Court for the purpose of justifying the Second WFO, they do not wish those claims or causes of action to be heard and determined in this Court but in the proceedings which they have instituted in New York.

92. The Claimants’ attempt to rely on Article 5(A)(1)(c) of the JAL as a source of jurisdiction is fundamentally inconsistent with the position which they have adopted in the proceedings in which the Second WFO was ordered and must be rejected.

93. Turning now to the Defendants, at times they have contended that even if judgment is entered against them in the New York proceedings, that judgment will not be enforceable in this Court because:

94. Those contentions are only relevant to an assertion that even if the Court had jurisdiction to make the Second WFO, the order should not have been made because of the particular circumstances of this case. That is an assertion which has been expressly disavowed by the Defendants on a number of occasions, including in a clear and unequivocal statement to the Court by Senior Counsel for the Defendants who confirmed that the only contention which they advance is that the Court lacked and continues to lack the jurisdiction to make the Second WFO.

95. The submissions which are only relevant to a challenge to the Second WFO on discretionary grounds to which I have referred are contrary to the clear and unequivocal statement of the Defendants’ position. They should not be entertained, not least out of fairness to the Claimants who no doubt relied upon the Defendants’ statement of position when formulating oral argument.

96. Further and in any event, I accept the Claimants’ submission that in order to obtain injunctive relief pursuant to the enforcement principle, the applicant need only establish a good arguable case to the effect that there may be a judgment capable of enforcement by the Court. I am satisfied that the Claimants have made out a good arguable case to that effect. The issues raised by the Defendants will be ripe for determination if, and when a judgment is entered, and enforcement action is taken. The Defendants’ contentions with respect to those issues are not so clear that it can be safely concluded, at this stage of the proceedings, that there is no good arguable prospect that an enforceable judgment will ensue from the New York proceedings.

97. When these matters are excluded from consideration, there is only one question which remains for determination, and upon which the outcome of the contested applications before the Court turns. That question is whether, as the Claimants contend, the Court has jurisdiction to issue a freezing order in support of the potential enforcement of a judgment which may be entered in foreign proceedings which are not yet determined or whether, as the Defendants contend, the Court only has jurisdiction to make such an order if jurisdiction can be obtained through one of the gateways in Article 5(A) of the JAL, other than the so called Wintercap gateway.

98. There is no binding authority in the Court of appeal which determines this question. As I have noted, the decision in Akhmedova turned upon the question of whether relief in support of the enforcement of a foreign judgment could be obtained against a person who was not a party to that judgment. That is not this case, because the Second WFO was made against persons who are parties to the New York proceedings⁵⁰ and who may be parties to any judgment entered in those proceedings.

99. Further, differing opinions have been expressed by Judges of the Court of First Instance in relation to the existence of the so-called Wintercap jurisdiction. The Deputy Chief Justice Al Mheiri has made obiter observations doubting the existence of the jurisdiction, whereas two other Judges have relied upon the existence of the jurisdiction for orders which they have made - albeit without enunciating their reasons for that conclusion in any detail.

100. In these circumstances it is preferable for me to approach the question which arises in this case afresh, from the perspective of legal principle. Given the position at which the Claimants ultimately arrived, the relevant body of legal principle is that which pertains to the enforcement of foreign judgments.

101. The Court of Appeal considered the principles applicable to the enforcement of foreign judgments in this Court in DNB Bank. In that case, Former Chief Justice Hwang, with whom another member of the Court agreed, observed:

“By virtue of Article 24(1)(a) of the DIFC Courts Law read with Articles 7(4)-7(6) of the JAL, the DIFC Courts has jurisdiction to hear claims for the recognition and enforcement of foreign judgments.”⁵¹

102. As I have noted, Former Chief Justice Hwang went on to observe that the appropriate procedure for the enforcement of a foreign judgment in the DIFC Courts was by way of an action based upon the cause of action created by the judgment. In that context, the Former Chief Justice Hwang observed:

103. Although not relevant to the jurisdictional issue which must be determined, I digress to observe that this passage contains express endorsement of the availability of the so-called conduit jurisdiction by which a judgment may be obtained in this Court, on the basis of the foreign judgment, and then enforced as a judgment of this Court in the onshore Courts of Dubai. Consistently with this, as I have noted, the jurisdiction of this Court with respect to the enforcement of foreign judgments does not depend upon the existence of assets within the DIFC against which enforcement action might be taken, as the Court has held on a number of occasions.

104. As I have also noted, both parties acknowledge the binding authority of DNB Bank and accept that the Court has jurisdiction to enforce foreign judgments. The question upon which the parties differ is whether the Court can make orders to protect and preserve the utility of that jurisdiction before a foreign judgment is entered or whether, as the Defendants contend, such orders can only be made if there is some gateway to jurisdiction other than the prospective foreign judgment.

105. Articles 22 and 32 of the Court Law confer power on the Court to grant injunctive relief in terms which are entirely unqualified, and which are therefore quite broad enough to authorise the grant of freezing orders in standard form. Further, RDC 25.1 confers a specific power to grant a freezing order as an interim remedy, and RDC 25.24 provides:

106. If these provisions apply without qualification so as to support the prospective exercise of the Courts’ undoubted jurisdiction with respect to the enforcement of foreign judgments, being the jurisdiction created by the combined operation of Articles 5(A)(1)(e) and 7(6) of the JAL and Article 24 of the Court Law, then Article 5(A)(1)(e) is, in itself, a statutory source of jurisdiction for the exercise of those powers, read with the provisions of the Court Law and the RDC to which I have referred.

107. So, the critical question becomes whether the provisions of the Court Law and the RDC to which I have referred must be read subject to some qualification, such that the powers conferred or recognised by their terms cannot be exercised in accordance with the enforcement principle unless and until there is at least a foreign judgment and, perhaps, proceedings have been commenced for the enforcement of that foreign judgment in the DIFC Courts.

108. I agree with the Claimants that the answer to that question is to be found in the recent decision of the Privy Council in Broad Idea to which I now turn.

109. There were two questions before the Privy Council in Broad Idea. The first concerned the proper construction of the rules of the relevant Court⁵² in relation to the question of whether the Court has power to authorise service on a defendant outside the jurisdiction of a claim in respect of which a freezing injunction is the only relief sought. The second question was whether the Court has power to grant a freezing injunction against a party over which the Court has personal jurisdiction to assist enforcement through the Court’s process of a prospective (or existing) foreign judgment. The Privy Council answered the first question in the negative, and the second question in the affirmative.

110. The first question is not germane to any issue arising in the DIFC Courts. The Courts have quite explicitly been created as international courts, and provided proper procedures are followed, service of the Court’s process can be validly effected anywhere in the world without the prior leave of the Court.

111. The leading judgment on behalf of the Privy Council was given by Lord Leggatt, with whom three other members of the Privy Council agreed. His Lordship’s judgment analyses the extensive development of practice with respect to freezing injunctions since The Siskina was decided more than 40 years ago. Those developments include the grant of freezing injunctions against persons in respect of whom the applicant for the injunction had no right to claim substantive relief – sometimes referred to as the Chabra jurisdiction after the case of TSB Private Bank International SA v Chabra.⁵³ Those developments also include the enactment of s 25 of the Civil Jurisdiction and Judgments Act 1982 conferring power upon the High Court to grant interim relief in respect of proceedings which have been or are to be commenced in a “Contracting State”. The developments also include the practice of granting Worldwide Freezing injunctions to protect and preserve assets beyond the jurisdiction of the Court granting the injunction.

112. In the course of reviewing a series of decisions in the House of Lords, Lord Leggatt referred with approval to the dissenting judgment of Lord Nicholls in Mercedes Benz⁵⁴. Lord Leggatt referred to the key point made by Lord Nicholls as:

"The essential purpose of a freezing injunction is to assist the enforcement through the Court’s process of a money judgment (which is usually prospective): the claimants underlying cause of action is relevant only insofar as it bears on the prospect that such a judgment will be obtained."⁵⁵

113. Lord Leggatt observed that this explanation of the nature of a freezing injunction has been adopted as a correct statement of principle by the High Court of Australia.^56.

114. Lord Leggatt went on to distinguish between the power of the Court to grant an injunction and the principles and practice governing the exercise of the power. As I have noted, this case is only concerned with the former question, not the latter.

115. Lord Leggatt went on to review developments with respect to the grant of injunctions in other areas including website blocking orders and the like. He drew these observations together in the following passage:

“The developments in the practice of granting injunctions described above – including the expansion of freezing injunctions far beyond their original confines and the creation of other new types of injunction – illustrate the ability of courts with equitable powers to modify existing practice where to do so accords with principle and is necessary to provide an effective remedy. Such flexibility is essential if the law and its procedures are to keep abreast of changes in society. Recent decades have seen fundamental changes in commercial and financial practices, driven in large part by the revolution in information technology. The legal developments described above have been forged, often explicitly, in response to such changing circumstances.”⁵⁷

116. Lord Leggatt applied these principles to the circumstances before the Privy Council to conclude that where a court had personal jurisdiction over a Defendant freezing injunctions could be granted in support of a claim pursued in a foreign court even though no substantive proceedings are brought against the Defendant in the local court.⁵⁸

117. Lord Leggatt went on to reject a submission that the power of the court in question in that case⁵⁹ to grant a freezing injunction was confined to proceedings in which substantive relief is claimed by the legislation governing that court. That submission was rejected by reference to the breadth of the powers to grant interlocutory and injunctive relief conferred upon the court by the relevant statute. Lord Leggatt could see no reason for reading the statutory language restrictively.

118. Lord Leggatt went on to refer to the enforcement principle, which he succinctly expressed in the following terms:

“The first and primary principle is that the purpose of a freezing order is to stop the injuncted defendant dissipating or disposing of property which could be the subject of enforcement if the claimant goes on to win the case it has brought.”⁶⁰

119. His Lordship observed:

“The enforcement principle also explains the basis and scope of the jurisdiction to grant a freezing injunction against a third party against whom no claim for substantive relief lies.” ⁶¹

And further:

“Once it is appreciated that the essential purpose of a freezing injunction is to facilitate the enforcement of a judgment or other order to pay a sum of money, it is apparent that there is no reason in principle to link the grant of such an injunction to the existence of a cause of action.”⁶²

120. Further, as already noted, Lord Leggatt observed that there was no reason in principle to distinguish between judgments enforceable on registration and judgments enforceable by a claim based on the judgment in relation to enforcement principles. His Lordship observed:

“While the procedure of bringing an action on the judgment is more cumbersome than where a judgment is enforceable on registration, there is no reason in principle why this should affect the court’s willingness to lend its assistance where needed by granting a freezing injunction to ensure that its process of enforcement will be effective when it is engaged.”⁶³

121. It is of course highly likely that these statements of principle will be adopted by common law courts around the world. There is every reason for this Court, as an international common law court, to adopt these principles, including the enforcement principle, as the underlying jurisprudential basis for the grant of freezing orders.

122. Pursuant to this principle, a freezing order is granted, in appropriate circumstances, in support of the prospective enforcement of a judgment, whether foreign or domestic. Restricting the grant of such orders by this Court to cases in which a judgment had already been entered and, perhaps, enforcement proceedings commenced would:

123. Such a perverse outcome could only follow from clear and unequivocal requirements or constraints in the statutory provisions relating to the exercise of this Court’s jurisdiction. However, as in Broad Idea, the relevant statutory provisions conferring this Court’s jurisdiction compel the conclusion the Court’s jurisdiction is not qualified or constrained in the manner for which the Defendants contend.

124. The Defendants contend, correctly, that the jurisdiction of the DIFC Courts is exclusively statutory and that jurisdiction is not defined by reference to the jurisdiction of the English Courts such as the Courts of Chancery to which reference was made in Broad Idea⁶⁴ . However, it does not follow that the DIFC Courts have not been invested by statute with broad injunctive powers analogous to those historically enjoyed by the Courts of Chancery. To the contrary, the broad and unqualified terms of the Court Law compel the conclusion that it was the intention of the legislative authority to confer broad and unqualified injunctive powers upon the Courts, analogous to those enjoyed historically by the Courts of Chancery.

125. There are no qualifications or constraints, express or to be implied from any provision in the legislation relating to the jurisdiction of the court, upon the breadth or exercise of the court’s powers to grant injunctive relief. Of course, those powers must be exercised within the jurisdiction of the court, but it is common ground and beyond doubt that the Court has jurisdiction to enforce foreign judgments. Broad Idea authoritatively establishes that the grant of freezing orders pursuant to the enforcement principle is an incident of that jurisdiction.

126. The same conclusion is evident from the RDC. The Court is given a specific power to grant a freezing order and RDC 25.24 expressly recognises the power of the Court to grant an interim remedy in relation to proceedings which are taking place, or which might take place at some time in the future, outside the DIFC.

127. 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.

128. As I have noted, the enforcement principle enunciated in Broad Idea was expressed by reference to the Court having a personal jurisdiction over the defendant against whom the freezing order is made. In common law courts that jurisdiction is generally regarded as depending upon the efficacy of service upon the relevant defendant. Where the defendant is within the geographic jurisdiction of the Court, no difficulty arises. However, where the defendant is outside that jurisdiction, issues with respect to the grant of leave to serve outside the jurisdiction assume importance, as they did in respect of the first question addressed in Broad Idea.

129. However, as I have already observed, the efficacy of service of this Court’s process does not depend upon the geographic location of the defendant, except to the extent that the procedure adopted must accord with the law in force in the place at which service is affected. However, “Given the international nature of the DIFC”, provided service is affected in accordance with the rules in force in the place in which service takes place no permission is required from the Court to serve process out of the DIFC⁶⁵ . It follows that every defendant is within the prospective in personam jurisdiction of the Court, subject to effective service. The quia timet jurisdiction of the court is, by its nature, often exercised prior to service and ex parte, especially in relation to freezing orders, and there is no reason to depart from that established practice. The efficacy of the orders granted will depend upon effective service, which will also establish the jurisdiction of the Court with respect to the party served.

130. In this case the Defendants have been effectively served and are therefore within the in personam jurisdiction of the Court. In any event, if a contrary view were taken, in this case I am satisfied that the Defendants have submitted to the jurisdiction of the Court. Even though they failed to file acknowledgements of service, they participated in proceedings before the Court before bringing any challenge to the jurisdiction of the Court. They should not be permitted to rely upon their own failure to file an Acknowledgement of Service within the time required by the rules of the Court in order to avoid the conclusion that they have submitted to the jurisdiction.

131. For these reasons the Court had jurisdiction to make the Second WFO. The Defendants’ application to set aside that order must be dismissed. As the only ground of opposition to the cross-examination orders is the proposition that the Second WFO was made without jurisdiction, that opposition must be dismissed and there is no reason why the cross-examination orders should not be made.

Substantive Orders

132. The substantive orders properly made to give effect to these conclusions are:

Costs

133. There is no reason why costs should not follow the event and therefore the Defendants should be ordered to pay the Claimants’ costs of the application to set aside the Recognition Order, the application to set aside the Second WFO, and the costs occasioned by their opposition to the cross-examination order to be assessed by the Court on the usual basis if not agreed by the parties within 28 days of the date of this order.

134. I accept that this is an appropriate case in which to order an interim payment on account of those costs, and fix the amount of that payment in the sum of USD50,000 which is to be paid by the Defendants within 28 days of the date of this order.