January 10, 2023 ARBITRATION - ORDERS
Claim No: ARB 025/2021
IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
MUWARN
Claimant
and
(1) MIHAD
(2) MURNI
(3) MIWA
Defendants
ORDER OF H.E. JUSTICE SHAMLAN AL SAWALEHI
UPON reviewing the Claimant’s Application No. ARB-025-2021/4 dated 16 November 2022 for de novo review of the Order of the Judicial Officer Maitha Al Shehhi granting the extension of time dated 11 November 2022 and the decision of the Registry in relation to payment of the claim’s filing fee made on 10 November 2022 (the “Request”)
AND UPON reviewing all documents recorded in the Court file
IT IS HEREBY ORDERED THAT:
1. The Request is dismissed.
2. There shall be no order as to costs.
Issued by:
Delvin Sumo
Assistant Registrar
Date of issue: 10 January 2023
At: 10:15am
SCHEDULE OF REASONS
Introduction
1. By an application made on 15 November 2022, the Claimant requests (the “Request”), under Practice Direction No. 3 of 2015, ‘Review of DIFC Courts Officer and Registrar Decisions’ (“PD3 of 2015”), de novo review of (i) the order of Judicial Officer Maitha Alshehhi dated 11 November 2022 (the “Extension of Time Order”) and (ii) a decision of the Registry in relation to payment of the claim’s filing fee made a day earlier on 10 November 2022 (the “Fee Decision”). The Request has not been responded to by the Defendants.
Background
2. On 17 August 2021, the Claimant issued these proceedings (the “Claim”), seeking recognition and enforcement of an arbitral award made on 23 August 2019 (the “Award”).
3. On 15 September 2021, the Claimant served the Claim on the Defendants by hand and email.
4. The same day, the Second Defendant contacted the Claimant. He stated that he was waiting for his UAE visa to be processed and that he was unable to do any banking transactions until his passport included the renewed visa. He asked the Claimant to in the meantime “please refrain from any legal processes as it will be wholly unnecessary.”
5. On 16 September 2021, the Third Defendant contacted the Claimant, stating, “why am I involved in this case as i no longer work for the organisation, please clear my name respectively. Thank you and a reply would be appreciated.”
6. On 25 and 26 October 2021, the Second Defendant made payments to the Claimant totalling AED 421,000. These were partial payments under the Award as, the Claimant submits, on 26 October 2021, the Defendants jointly and severally owed the Claimant AED 1,133,432.05.
7. On 21 June 2022, the Claimant filed an application for the recognition and enforcement of the Award (the “R&E Application”). The monetary amount the Claimant sought had been reduced to reflect the payments that the Second Defendant had made in October 2021. It is not entirely clear to me why the Claimant made the R&E Application in circumstances were the remedies sought in it were the same as those sought in the Claim, with the aforementioned reduction.
8. On 8 August 2022, the Claimant applied for permission to serve the R&E Application upon the Defendants by way of an alternative method of service. By order dated 1 September 2022, I gave the Claimant permission.
9. On 18 October 2022, I determined the Claim and recognised and enforced the Award (the “R&E Order”). Paragraph 6 provided as follows:
The Defendants have the right to apply to set this Order aside within 14 days of being served with the Order. The Award may not be enforced until after the end of that 14-day period or, if the Defendants make an application within that period, after the application has been finally disposed of.
In other words, the Defendants had until the 1 November 2022 to apply to aside the R&E Order.
10. On 27 October 2022, acknowledgments of service were filed on behalf of all of the Defendants by the Second Defendant and the Third Defendant. It was noted in the acknowledgments of service that “The Defendant intends to defend all of this claim.”
11. The following day, the Second Defendant filed an application on behalf of the Defendants requesting 30 days to “engage a counsel and subsequently file my replies and defend myself against this frivolous lawsuit” (the “Extension of Time Application”). The Second Defendant filed a certificate of service in respect of the application later that day.
12. On 28 October 2022, the Registry directed the Claimant to file its response to the Extension of Time Application by 4 pm on 31 October 2022. It should be noted that 29 and 30 October fell on the weekend. The Claimant asked for a further two days to respond to the application, but this request was rejected.
13. On 1 November 2022, the Claimant responded to the Extension of Time Application.
14. On 11 November 2022, the Extension of Time Order was made. Paragraph [2] of the order provided as follows: “The Second Defendant shall file its response to the Claim by no later than 4pm on Friday, 25 November 2022.”
15. On 16 November, the Claimant filed the Request. As noted above, the Request has not been responded to by the Defendants.
16. Instead, on 28 November 2022, a document entitled “Response to the Claim Under Rule 43.70 on Behalf of the Defendants” was filed by the Second Defendant.
PD3 of 2015
17. PD3 of 2015 provides, as material, as follows:
1. Judicial officers, case progression officers and staff (“hereinafter Court officers”), alongside Registrars of the DIFC Courts, may in the course of their functions, examine and issue decisions which are judicial in nature in respect of applications lodged before the Courts
2. Where a Court officer or Registrar of the Courts has delivered a judicial decision in accordance with paragraph 1 above, a party to the application may request that the matter be reconsidered de novo by a judge of the DIFC Courts.
3. … It is open to the judge to either: (i) confirm; or (ii) quash and replace the decision against which a de novo review has been sought…
5. .. Unless the Court orders otherwise, … a request should be filed and served within 3 working days after the Court Officer or Registrar decision sought to be reviewed has been issued, accompanied by brief reasons for the application. Any reply to the request should be filed within a further 3 working days, following which the Court shall endeavour to issue a decision within 5 working days.
18. The Extension of Time Order was made by Ms Alshehhi, is a judicial officer. The Fee Decision was conveyed if not made by a case progression officer and if the former it was conveyed on behalf of a member of staff of the Court and most likely a registrar. As such, both the Extension of Time Order and the Fee Decision were made by personnel of the Court whose decisions are amenable to de novo review.
19. “Judicial decision” is not defined in PD3 of 2015 beyond a statement, at footnote 4, that “this shall include case progression decisions taken in the course of the Registry’s functioning which are judicial in nature.” I am satisfied that both the Extension of Time Order and the Fee Decision were judicial decisions for the purposes of PD3 of 2015. And so both the Extension of Time Order and the Fee Decision are decisions amenable to de novo review.
20. PD3 of 2015 is engaged.
21. Pursuant to paragraph 5 of PD3 of 2015, absent the Court’s order to the contrary, a request for de novo review should be filed within three working days of issue of the decision sought to be reviewed. The Request was made within three working days of both the Extension of Time Order and the Fee Decision.
22. Pursuant to paragraphs 2 and 3 of PD3 of 2015, it is open to me to reconsider the matters underpinning the Extension of Time Order and the Fee Decision and confirm or quash the decisions.
The Extension of Time Order
23. The crux of the Request insofar as it relates to the Extension of Time Order is as follows. The Claimant says that, when the R&E Order was issued, the Court “passed its final order in the main Claim” and that “it is clear that the final order in the matter … and the proceedings had been determined before the Defendant entered appearance and/or filed its Acknowledgment of Service.” (original emphases) The Claimant makes the following assertions and objections:
i. “the [Extension of Time Order] in effect serves to re-open the proceedings and therefore renders the [R&E Order] null, void and ineffective”;
ii. “the RDC … provides for strict timelines for filing appearance / acknowledgment of service in such matters and where the question of extension does not arise”;
iii. “the RDC … provides for a specific procedure once an Enforcement Order has been passed under Part 43 of the Rules and which do not envisage a procedure for either extension or even for filing belated replies at this stage”;
iv. “the [Extension of Time Order] neither gives reasons or any indication of … the basis [on] which it was passed”; and
v. “the … Claimant has not been given a reasonable opportunity to reply to the Defendant’s Application for Extension of Time … If such time has been afforded to it, the Claimant would have … pointed out that while the Defendants’ Application for Extension of Time is based on “grave injustice” (since it alleges that the [R&E Order] does not take into account payments made by the Defendants), the Enforcement Application does indeed take into account such payments made by the Defendants.”
24. I deal with these points in turn:
i. Regarding the assertion at paragraph [22.i] above, I disagree with the Claimant. Recognition and enforcement claims are different from ordinary claims. There is an expectation at the outset that the dispute which the award sought to be recognised and enforced has set out to resolve has been finally resolved. Hence, recognition and enforcement may be applied for and granted without notice to losing party under the award: see Rule 43.62 of the Rules of the DIFC Courts (the “RDC”). But there is an important safeguard put in place, in case there is a basis for the Court not enforcing the award. Recognition and enforcement orders are on their terms unenforceable until an opportunity for the defendant to challenge enforcement has lapsed. Paragraph [6] of the R&E Order provides, in standard terms:
The Defendants have the right to apply to set this Order aside within 14 days of being served with the Order. The Award may not be enforced until after the end of that 14-day period or, if the Defendants make an application within that period, after the application has been finally disposed of.
What is the right for a defendant to apply to set aside an order recognising and enforcing an award? It is a defendant’s right to oppose recognition and enforcement, or in other words to respond to the claim. If a defendant is given an extension of time to apply to set aside a recognition and enforcement order, I do not think it is accurate to describe that extension as a “re-opening” of the claim; instead, I think, it is better described as a decision to keep the claim open for longer. Let it be recalled that the Extension of Time Application was made before the window for the Defendants to challenge enforcement of the Award had lapsed.
ii. Regarding the assertion at paragraph [22.ii] above, while it is correct that the RDC provides for strict timelines, it is also correct that, in the words of RDC 4.2(1), “Except where these Rules provide otherwise, the Court may: (1) extend or shorten the time for compliance with any Rule, Practice Direction or Court order (even if an application for extension is made after the time for compliance has expired).” And so, as material, the Court retains a discretion to extend time for compliance with Court orders. It follows that the question of extension of time can and does, as in this case, arise.
iii. Regarding the assertion at paragraph [22.iii] above, the Claimant has cited no authority for its proposition that the RDC does not envisage a procedure for extending time for a defendant to respond oppose enforcement of an arbitral award. I think the Claimant is simply incorrect.
iv. Regarding the objection at paragraph [22.iv] above, I agree with the Claimant that the Extension of Time Order should have been supported by reasons explaining the basis upon which it was made.
v. Regarding the objection at paragraph [22.v] above, I agree with the Claimant that it was not given enough time to reply to the Extension of Time Application. It may have been decided that a response to the application should be made before the period for the Defendants to apply to have the R&E Order set aside lapsed, but if this is the case it is not clear why that conclusion was arrived at: if the Extension of Time Application was to be granted, the Defendants would be given additional time to oppose enforcement of the Award, and if it was to be dismissed, the Defendants would have until the 1 November 2022 to apply to set aside the R&E Order while it is not clear what benefit the Claimant’s response to the application on 31 October 2022 (particularly in the absence of a decision on it from the Court) would confer upon the Defendants in meeting that deadline. If the decision for the Claimant to respond to the Extension of Time Application by 31 October was made on some other basis, it is not clear what that basis is.
25. Commenting on all of this, I make the following points. First, the Registry’s decision for the Claimant’s response to the Extension of Time Application to be made by 31 October has not been challenged by the Claimant. Moreover, while it is my opinion that the Claimant should have been given more time than it was to respond to the application, still, a response was filed and the Extension of Time Order was made with the benefit of that response. I therefore leave this objection to the side. Second, while it is unfortunate that the Extension of Time Order was not supported by reasons, by virtue of Part 3 of the RDC, the Court has wide case management powers—powers exercisable at the Court’s discretion—to make such orders as the Extension of Time Order made.
26. Should the Defendants have been given an extension of time to challenge enforcement of the Award? I do not think the answer to this question is straightforward. There are points, in my view, which weighed in favour of both granting and refusing the Extension of Time Application. For example, the evidence suggests that the Defendants, or at least the Second Defendant and the Third Defendant, were aware of these proceedings from September 2022, while service was acknowledged on behalf of the Defendants and the Extension of Time Application made in late October 2022. No explanation for this apparent delay has been given, which, moreover, seems to contradict the Second Defendant’s assertion in his witness statement supporting the Extension of Time Application that “It has just recently come to my attention that I have been named a Defendant in the subject case.” Supporting granting an extension of time, on the other hand, are the following assertions from the same witness statement, which I note contains a statement of truth:
i. “I have paid all my dues that form the subject matter of the award…”;
ii. “I would need an opportunity to defend my case. At present, I do not have funds readily available to engage an attorney. I will take 20 days to receive a loan that I will utilize towards engaging an attorney in DIFC Courts and defend myself … I seek an opportunity from this Court to extend the time by 4 weeks so I can defend myself”; and
iii. “It is pertinent to mention that I had travelled to Pakistan during the COVID-19 pandemic and during my trip had become severely ill, which illness hindered my travel plans till date. In addition to the above, I have suffered substantial financial losses in the recent floods that affected Pakistan.”
I also note that while it was undisputed that payments had been made towards satisfying the Award, as the Claimant itself informed the Court it was not clear what those payments were for precisely under the Award. This is not insignificant and will have a bearing on the amount, if any, still due to the Claimant under the Award.
27. In my judgment, the factors for granting the extension of time outweigh those against. If the Second Defendant stated in his witness statement anything which he did not believe to be true, that can be dealt with through contempt of court proceedings. Or if the Defendants’ opposition to enforcement of the Award is later found to be without merit or vexatious, such conduct can be sanctioned by ways of costs orders. But in my view unless there is good reason—and I emphasise that, in my judgment, most of the Claimant’s grounds in this application are without merit—I think there should be a bias towards allowing a defendant to be heard before a judgment against him becomes final.
28. The Extension of Time Order is upheld.
The Fee Decision
29. The crux of the Request insofar as it relates to the Fee Decision is that, by the time service was acknowledged on behalf of the Defendants “the proceedings [had] come to an end.” Article I(B)(2) of the DIFC Courts’ Fee Schedule provides that:
At the time of filing, only 50% of the above mentioned fee shall be payable. In the event that the claim is unopposed, no further fees shall be payable by the Claimant. In the event that the claim is opposed or contested, the remaining 50% will be payable by the Claimant 7 days after the Defendant/Respondent in the matter files the relevant documents to defend. (emphasis added)
The Claimant contends that the Claim cannot be opposed within the meaning of Article I(B)(2) because, first, the proceedings have been concluded by the R&E Order and, second, Article I(B)(2) is concerned with opposition to a “claim” while the “The only possible action that the defendant can take at this stage is to apply to set aside the final judgment, which is undeniably a complete separate proceeding, where the challenge is to the final judgment i.e. to the [R&E Order and not the claim.”
30. The Claimant made other objections to the Fee Decision which relate to its timing—for example that it was made before an extension of time was given to the Defendant to oppose enforcement—but, in my view, these objections have reduced in importance on account of the Extension of Time Order having been made and “Response to the Claim” having been filed on behalf of the Defendants subsequently.
31. I think the Claimant’s characterisation of the Claim upon the R&E Order being issued is incorrect. As I explained in paragraph [24.i] above, the opportunity for a defendant’s opposition to the enforcement of an award is an integral part of recognition and enforcement claims. As a matter of procedure, a defendant applies for a recognition and enforcement order to be set aside—an order which the defendant may not have known was sought by the claimant on account of RDC 43.62—but that is the way that a defendant to such a claim opposes this type of claim. If the Claimant was correct in its analysis, the Court would invariably only charge 50% of the filing fee in recognition and enforcement proceedings, even if a significant amount of the Court’s time and resources were allocated to the proceedings, for example where recognition and enforcement is opposed and complex and where the Court of First Instance’s decision is appealed to the Court of Appeal.
32. In my view, for the purposes of Article I(B)(2) of the DIFC Courts’ Fee Schedule, a claim for recognition and enforcement of an award is opposed if the order recognising and enforcing the award is sought to be set aside. There is no reason why Article I(B)(2) should be construed in such a way to render 50% of the filing fee non-payable in most recognition and enforcement proceedings even where a defendant opposes the claim by means of opposing the recognition and enforcement order.
33. Of course, if the Defendants are unsuccessful in their challenge to enforcement of the Award, the usual approach would be for the Court to order the Defendants to reimburse the Claimant for the filing fee.
34. The Fee Decision is upheld.
Conclusion
35. For the foregoing reasons, the Request is dismissed.
36. As noted above, the Defendants have not responded to the Request. As such, I make no order as to the costs of the Request.
