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Claim No. CFI 028/2023

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

GLOBE INVESTMENT HOLDINGS LIMITED

Applicant/Claimant

and

(1) COMMERCIAL BANK OF DUBAI
(2) HORTIN HOLDING LIMITED
(3) LODGE HILL LIMITED
(4) WESTDENE INVESTMENT LIMITED
(5) VS 1897 (CAYMAN) LIMITED

Respondents/Defendants

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REASONS OF JUSTICE MICHAEL BLACK FOR THE ORDER DATED 19 JUNE 2023

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SCHEDULE OF REASONS

INTRODUCTION

1. The Applicant/Claimant (“Globe”) seeks the continuation of a worldwide freezing order (”WFO”) granted on 3 May 2023 without-notice against the Second Respondent, Hortin Holding Limited (“Hortin”), the Third Respondent, Lodge Hill Limited (“Lodge Hill”), the Fourth Respondent, Westdene Investment Limited (“Westdene”), and the Fifth Respondent, VS 1897 (Cayman) Limited (“VS 1897”), and extended at a with-notice hearing on 19 May 2023 until the Return Date on 16 June 2023.

2. It was a condition of the order on 19 May 2023 that Globe would commence enforcement proceedings (initially represented to be in the Cayman Islands) against the Respondents by 30 May 2023, otherwise the WFO would be automatically discharged.

3. Globe had initially commenced proceedings in this Court against the Second, Third, Fourth and Fifth Respondents as Defendants together with Commercial Bank of Dubai (“CBD” or “the Bank”). It was however recognised at the without-notice stage that a WFO could not be sustained against CBD although CBD remains a party to these proceedings.

BACKGROUND

4. What follows is a highly condensed summary of the factual background which was evidenced by some 3,750 pages of the documentary record.

The Parties

5. Globe is a Jebel Ali Free Zone (“JAFZA”) incorporated company and the judgment creditor under a final judgment of the Sharjah Federal Court of Appeal given on 6 April 2021 in the sum of AED 582,652,815 (approximately USD 158.6 million) (plus interest, costs and court fees) against three BVI companies, Hortin, Lodge Hill and Westdene (collectively “the BVI Companies”).

6. The BVI Companies are each 100% subsidiaries of the Fifth Defendant, VS 1897, and VS 1897 is itself a 100% subsidiary of the First Defendant, CBD. VS 1897 is, as its name suggests, a Cayman company. CBD is a UAE bank but it is not registered in the DIFC. CBD is the indirect 100% owner (through VS 1897) of a company called CBD Digital Lab Limited (“CBD Digital Lab”) set up in the DIFC to interact with peers and start-ups in the digital and fintech industry. It is a Centre Establishment but it does not carry out any activities that fall within the regulatory jurisdiction of the DFSA.

7. Globe’s own ownership structure is also relevant. It has a sister JAFZA incorporated company called MAS Capital Holdings Limited (“MAS”). It and MAS are both 100% owned by a BVI company called MENA Investment Holdings Limited (“MENA”). A director of Globe and deponent of all of Globe’s evidence in this matter is Hamad Saif Hamad Abdulla Almheiri (“Mr Almheiri”).

The Bridge Properties

8. The BVI Companies own commercial and residential properties in London (the “Bridge Properties”) although Lodge Hill may have sold its interests in 2020.

The CBD Sharjah Judgment

9. At front and centre of the factual background is the Al Sari family: brothers Majid and Mohamed, and their father, Abdalla.

10. CBD also holds a Sharjah judgment dated 29 March 2016 against the father and sons and against 2 of their companies, FAL Oil LLC and Investment Group Private Limited (“IGPL”) – in the sum of AED 472,676,345.71 (approximately USD 128.7 million). There appears to be some (immaterial) confusion as to the precise sum. I take that figure from the English translation of the judgment which corresponds to the original Arabic, but the second witness statement of Carlo Fedrigoli filed on behalf of the Respondents refers to AED 433,831,166.811.

Execution over the BVI Companies

11. The Al Sari brothers were beneficial owners of the Bridge Properties through their 100% interest in the BVI Companies. On 29 June 2017, CBD commenced enforcement proceedings in the BVI. On 19 February 2019, having overcome some difficulties of service on the Al Sari brothers, CBD obtained a Charging Order from the BVI courts over the shares in the BVI companies, which, after much procedural manoeuvring, resulted in the Receiver appointed under the Charging Order on 6 April 2021 selling the shares in the BVI Companies to VS 1897 as the bank’s nominee and CBD giving credit for the value of the Bridge Properties against the Al Sari’s judgment debt. It then therefore remained for the CBD to take possession of the Bridge Properties and realise its partial recovery.

The Globe Sharjah Judgment

12. Meanwhile, 2 days before CBD finally obtained the Charging Order (17 February 2019), Globe commenced proceedings against the BVI Companies in the Sharjah Courts. The basis of the claim (the truth of which is challenged by the Defendants/Respondents) was as follows:

13. All of the Globe documents were signed by Abdulla Al Sari under a POA granted by his sons (the “Al Sari POA”).

The IGPL GT Proceedings

14. As this was going on in Sharjah, Majid Al Sari’s former BVI attorneys wrote to the Receiver on 27 June 2019 claiming that the Bridge Properties were subject to tenancy agreements dated 16 January and 4 March 2013 between the BVI Companies as landlords and various members of the Al Sari family and another of their companies, IGPL General Trading LLC (“IGPL GT”), as tenants (“the Tenancy Agreement”). I note that Mr Almheiri was General Manager of IGPL GT from 2013 to 2016.

15. On 28 January 2021 IGPL GT applied to this Court without notice to restrain the BVI Companies (then under the control of the Receiver appointed by the BVI courts) from taking any steps in breach of the Tenancy Agreement – in other words preventing the Receiver from selling the Bridge Properties with vacant possession. The injunction was granted by Justice Roger Giles on 31 January 2021.

16. On 14 February 2021 IGPL GT issued a claim in the DIFC against the BVI Companies and the Receiver for specific performance of the Tenancy Agreements. Immediate judgment dismissing the claim and discharging the injunction was given by Justice Giles on 22 August 2021. The basis of his decision was that the Al Sari POA (also used to enable Abdulla Al Sari to sign the Tenancy Agreements on behalf of all parties, both landlords and tenants) did not authorise Abdulla to sign on behalf of the BVI Companies.

17. IGPL GT appealed and achieved reinstatement of the injunction. On 23 March 2022 the appeal was dismissed and injunction was again discharged. IGPL GT then went to the Sharjah Courts and sought a declaration that the Tenancy Agreements were enforceable. The Sharjah Courts declined jurisdiction at both First Instance and then on appeal on 13 October 2022.

The English Proceedings

18. On 8 February 2022 CBD, the BVI Companies and VS 1897 issued proceedings in England:

19. I have been provided with a considerable amount of evidence concerning the progress of the English proceedings but it is only necessary for present purposes that I highlight a few episodes:

20. Three residential units forming part of the Bridge Properties have apparently been occupied by an individual claiming to be the Al Saris’ housekeeper (the “Housekeeper”) and employed by yet another Al Sari company, Hurlingham Management Limited (“Hurlingham”). On 4 April 2022 Horton and Westdene, as registered proprietors, commenced possession proceedings against the Housekeeper and Hurlingham in the Central London Country Court. On 6 June 2022 Hurlingham confirmed that it would not object to a possession order but the same day IGPL GT applied to be joined on the basis of the Tenancy Agreements notwithstanding that 2 weeks earlier the DIFC COA had upheld Justice Giles’s judgment that the Tenancy Agreements were ineffective.

21. Permission for joinder was granted at a hearing on 14 December 2022. On 28 April 2023 HHJ Johns KC made a possession order and found that the Tenancy Agreement(s) was/were fabricated. The Possession Order was served on the Housekeeper on 3 May 2023. Coincidentally that was the day that Globe succeed in obtaining the without-notice WFO from me. The Housekeeper seemed remarkably well-informed about events in Dubai as on 4 May 2023 (the day before the Respondent/Defendants in this case were served with the order) he refused to hand over possession of the residential units on the basis that he might thereby breach the WFO. Apparently, he still remains in possession of the properties.

22. The Housekeeper’s position is extraordinary: it is not for an employee of the Al Saris to police compliance with an injunction made at the behest of a party with whom they claim to have no connection.

THESE PROCEEDINGS

First Without-Notice Hearing – 18 April 2023

23. On 11 April 2023 Globe issued a Claim Form against CBD, the BVI Companies and VS 1897. The “Brief Details of Claim” section stated “Please see skeleton argument. The claim is in relation to enforcement of a court judgment”.

24. The skeleton argument dated 13 April 2023 identified the Globe Sharjah Judgment and stated that the BVI Companies have no assets in the UAE and that it was intended to pursue execution in the Cayman Islands. The skeleton argument did refer to the English proceedings under the rubric “attempts to prevent Globe enforcing the Judgment Debt”. It was said that the BVI Companies owned “shares in” the Bridge Properties which were now under the ownership and control of the Bank and VS 1897. It was asserted that “The Bank has taken steps to put [the Bridge Properties] out of Globe’s reach in order to prevent it enforcing the Judgment Debt.” The principal submission was that granting a WFO would hold the balance while the parties argue any substantive matters relating to enforcement of the Judgment Debt before the courts of the Cayman Islands and possibly before the English Courts, if jurisdiction is established in proceedings brought by the Bank.

25. The application was supported by the First Affidavit of Mr Almheiri sworn 11 April 2023. He said that Globe intended to commence proceedings in the Cayman Islands as soon as possible. In the discharge of his duty of full and frank disclosure Mr Almheiri described the English proceedings and that it was CBD’s case that that Globe conspired with the Al Sari Brothers to perpetrate a fraudulent transaction by a series of documents under which a very substantial debt was imposed on the BVI Companies, the purpose of which was to make Globe a creditor of the BVI Companies, and thereby to frustrate the CBD's attempts to realise the value of the Bridge Properties. He characterised CBD’s actions as seeking to prevent Globe from enforcing a valid judgment on the basis of unsubstantiated allegations of fraud.

26. The application came on before me on 18 April 2023. I was unhappy with the application:

I therefore adjourned the application so that Globe could serve further and better evidence.

Second Without-Notice Hearing – 2 May 2023

27. The application came back before me on 2 May 2023. In the interim Globe had filed an affidavit from Khaled Khatoun, a partner in Quinn Emanuel Urquhart & Sullivan UK LLP who had conduct of the Frustration Claim on behalf of Globe, MAS and MENA. I was satisfied that Mr Khatoun’s affidavit was a full and frank account of the English proceedings in which he was instructed.

28. I observed that MAS bore a similar name to a company called MAS Investments LLC which was a company owned or controlled by Mohamed Al Sari and figured in other proceedings before the Court (CFI-080-2022, 5 April 2023). In response, Globe’s solicitors sent a Certificate of Incumbency to the Court showing that MENA had been incorporated in the BVI on 10 January 2014 and Mr Almheiri and a Mr Alshehhi were the directors and shareholders. It showed nothing about MAS and I said I was “very uncomfortable” about the “MAS issue” and that I should like to have the issue argued inter partes before coming to any decision on Globe’s bona fides.

29. It was submitted to me:

“I have been asked to highlight - and this is a significant point - that the bank does have a history of making quick sales to subsidiaries that are wholly owned by it and the reason for doing this is it has taken various steps of this nature including in relation to the transfer of sales in the proceedings before the BVI. It has a history of doing this and it is clear that the intention is to put the properties out of Globe's reach. It is seeking, very openly, to disregard any findings that have been made by the Sharjah Court in relation to any connection between the parties' allegations of fraud et cetera and is seeking still to have the property put out of Globe's reach.”

30. Mr Anthony Peto KC, who represented the Defendants/Respondents at the final hearing, very properly disavowed any suggestion that counsel was consciously seeking to mislead the court but rather focussed on her underlying instructions when making a case for material non-disclosure. It is clear from her prefatory remarks that counsel was acting on specific instructions. It is also quite clear to me now that the five years it took from obtaining the CBD Sharjah Judgment to the transfer of the shares in the BVI Companies to VS 1897 could not, by any stretch of the imagination, be described as a quick sale to a wholly owned subsidiary.

31. I was clearly influenced by the submission as I observed:

“if you are right and your instructions are right that the bank has a track record for the transfer of assets in order to protect its execution of its debt, then it need not sell the properties at all. I guess it could transfer the shareholdings in the BVI companies to an entity over which I do not have jurisdiction ... I am not at all sure that I have jurisdiction over the bank.”

32. On jurisdiction I noted that VS 1897 held 100% of the shares CBD Digital Lab and observed that it could be argued that there was jurisdiction over VS 1897 because it carried on business in the DIFC through CBD Digital Lab. I thought that it was not necessary to make any order against CBD itself even if it were the controller of VS 1897 as any instruction would have to be executed by VS 1987. I therefore granted the interim without-notice injunction with a return date on 16 May 2023.

First Return Date – 16 May 2023

33. The hearing on 16 May 2023 was largely procedural. I made directions leading to a final hearing on 16 June 2023. Counsel for the Respondents noted that Globe had been somewhat elusive as to when it might commence enforcement proceedings. He pressed for an order that Globe give an undertaking to serve its substantive proceedings by 19 May 2023. While I was sympathetic to the submission I felt that that was rather too short a timescale and that a more direct approach than ordering Globe to give an undertaking could be adopted: I therefore ordered that Globe should commence enforcement proceedings against the Respondents by 30 May 2023, otherwise the Freezing Order would be automatically discharged.

BVI Enforcement Proceedings

34. When the injunction proceedings were first launched it was Globe’s position that VS 1897 was the entity that held title to the Bridge Properties. That turned out to be inaccurate and it is the BVI Companies. Thus, while it was originally stated that Globe intended to commence enforcement proceedings in the Cayman Islands, it was (correctly) advised that BVI was the appropriate forum.

35. On 26 May 2023 the enforcement proceedings were served by hand at the registered office of the BVI Companies.

36. It is perhaps surprising that Globe did not seek a WFO from the BVI Court in the intervening 3 weeks between the service of the enforcement proceedings and the hearing on 16 June 2023. No explanation has been provided for this failure.

The 16 June 2023 Hearing

37. One of my questions to Andrew Spink KC representing Globe was as to why it was any longer necessary to apply to the DIFC Court for a WFO when the BVI Court, being the jurisdiction in which the enforcement proceedings were now pending, appeared the more natural and appropriate forum. He was realistic enough to recognise that this was a problem for him and, while he maintained the application for an injunction until completion of the enforcement proceedings, he sought as a secondary case an injunction until the BVI Court granted the same relief.

38. Mr Spink KC also accepted that the appropriate order in which to address the application was that identified by the Respondents, namely:

39. I agreed. Jurisdiction is a threshold issue and has to be determined in advance and irrespective of the other issues.

40. In addition the court will only grant a WFO if it is just and expedient to do so, taking into account the following discretionary factors:

JURISDICTION

41. Globe seeks to bring itself within the jurisdiction of the DIFC Courts in two ways:

Article 5(A)(1)(a)

42. Article 5(A)(1)(a) provides that the Court of First Instance shall have exclusive jurisdiction to hear and determine civil or commercial claims and actions to which the DIFC or any DIFC Body, DIFC Establishment or Licensed DIFC Establishment is a party. Globe’s submissions were somewhat confused in referring to CBD Digital Lab as a “Licensed DIFC Establishment”. “Licensed DIFC Establishment” is defined as “Any entity or enterprise licensed, registered or authorised by the Dubai Financial Services Authority to provide financial services, or conduct any other activities in accordance with the DIFC Laws”. CBD Digital Lab is not licensed by the DFSA to conduct any services. It does however fall within the definition of “DIFC Establishment”, namely “Any entity or enterprise established, licensed, registered or authorised to carry on business or conduct any activity within the DIFC pursuant to DIFC Laws”. The difference between a licensed and non-licensed establishment is therefore immaterial for present purposes although it precludes any suggestion that the situation may be analogous to that First Abu Dhabi Bank PJSC v LARMAG Holdings BV [2019] DIFC CA 010 (23 March 2020) where the bank itself was held to be a Licensed DIFC Establishment because it was permitted by the DFSA to trade in its own name on NASDAQ Dubai.

43. The essence of Globe’s submission is that the Court should look through the separate corporate personality of CBD Digital Lab and find that VS 1897 is the true establishment.

44. The Respondents accepted that in an appropriate case it may be possible to disregard corporate personality in accordance with well-recognised principles, for example, where there is sham or the company is a vehicle for fraud or illegal purposes, but no such suggestion is made in this case.

45. Mr Spink KC suggested that there was no DIFC authority on the point. I differed with him and pointed to Corinth Pipeworks SA v Barclays Bank PLC [2011] DIFC CA 002 (22 January 2011) in which the Court of Appeal dealt with the converse situation. It held that “once it is established that an unincorporated DIFC branch of a foreign bank cannot be regarded as an independent entity for purposes of qualifying as a "Centre Establishment", it follows that this term can only be interpreted to mean the Respondent and its various branches, wherever located. Accordingly, the DIFC Courts do have jurisdiction over the conduct of the Respondent's Dubai branch, as it would have over any other branch of the Respondent, wherever located” (per Michael Hwang CJ [66]). The Chief Justice went on to observe [68(a)]:

“(a) It is entirely within the control of banks and other enterprises carrying on business in the DIFC and the wider Emirate of Dubai as to whether they choose to subject their business within the wider Emirate to the jurisdiction of the DIFC Courts — if they do not wish to do so, they can either trade through separate corporate vehicles in the DIFC and the wider Emirate or (even more simply) include jurisdiction clauses in their contracts choosing where they allocate jurisdiction over any disputes”

46. CBD did exactly what the Chief Justice contemplated, it chose to trade through a separate corporate vehicle in the DIFC. Thus, the DIFC will not (save where justified in accordance with established principles) disregard the separate corporate personality of an incorporated vehicle carrying on regulated or unregulated activities in the DIFC so as to extend the jurisdiction of the DIFC Courts to its shareholders, absent other grounds personal to the shareholders.

47. Globe’s claim that the DIFC Court has jurisdiction over VS 1897 under Article 5(A)(1)(a) of the JAL must therefore fail but it makes a second, more substantial argument, based on Article 5(A)(1)(e) and the Court’s wide jurisdiction to grant WFOs to give effect to the “Enforcement Principle”.

Article 5(A)(1)(e)

48. Article 5(A)(1)(e) provides that the Court of First Instance shall have exclusive jurisdiction to hear and determine any claim or action over which the Courts have jurisdiction in accordance with DIFC Laws and DIFC Regulations.

49. Globe’s argument begins with the decision of the Court of Appeal in Nest Investment Holding Lebanon SAL & Others v Deloitte & Touche (ME) [2018] DIFC CA 011 (13 March 2019) where it was held that the RDC constitute “DIFC Regulations” within the meaning of Article 5(A)(1)(e) and accordingly may confer jurisdiction of the Court.

50. Globe then identifies two Rules on which it relies:

51. Globe submits that that the emphasized words mean that the jurisdiction to grant a freezing order extends to assets located outside the DIFC the subject of pending or contemplated proceedings outside the DIFC. I agree with that submission.

52. Globe refers to Articles 22(2) and 32 of the DIFC Court Law

Globe suggests that the absence of any reference in these provisions to jurisdiction means that the Court is conferred with jurisdiction to grant an injunction without the need for a “gateway”. I do not agree for two reasons. First, while I accept that Article 22 falls within a section of the Court Law addressing the jurisdiction of the Court of First Instance it is preceded by Article 19 which makes express reference to the provisions of Article 5(A) of the JAL making it clear that the JAL (which is a Dubai law) is the source of the Courts’ jurisdiction. It is therefore clear that Article 22 is not purporting to confer a jurisdiction on the Court that it does not possess under the JAL, rather it is describing the powers of the Court in the exercise of that jurisdiction. This is also clear from the fact that Article 22 is in permissive terms. Secondly, Article 32 is under the section of Practice and Procedure and is expressly a power-conferring provision. Consequently, I do not accept that either Article 22 or 32 of the Court law advances Globe’s argument.

53. At this point it is necessary to examine the “Enforcement Principle”. It derives from the case of Convoy Collateral Ltd v Broad Idea International Limited [2021] UKPC 24, a decision of a seven-person bench of the United Kingdom Privy Council on appeal from the Court of Appeal of the BVI.

54. The appellant, a Hong Kong company, suspected that one of its former directors, C, a Hong Kong resident, had caused it to make improper investments. In anticipation of bringing proceedings against C in Hong Kong, the appellant applied in the British Virgin Islands for a freezing injunction against B Ltd, a British Virgin Islands company whose assets the appellant alleged were beneficially owned by C, and a freezing injunction against C. The court made orders granting both freezing injunctions and giving permission to serve C out of the jurisdiction. Subsequently both orders were set aside. The order against C was set aside on the ground that EC CPR r 7.3(2)(b) did not empower the courts of the British Virgin Islands to authorise service outside the jurisdiction where the only relief sought was a freezing injunction. The order against B Ltd was set aside on the grounds that, under common law, a domestic court had no power to grant a freezing injunction against a party over which it had personal jurisdiction when no substantive claim had been made in domestic proceedings against that party and that, in any event, there was insufficient evidence to establish that B Ltd’s assets were beneficially owned by C.

55. The order against C is not relevant to the DIFC as the DIFC has a different service and jurisdiction regime to that in both the BVI and England. I will return to the point below.

56. The appeal against the setting aside of the freezing against B Limited is relevant. The Privy Council dismissed the appeal but held by a majority, obiter, that a court with jurisdiction to grant injunctions where it is just and convenient to do so has power to grant a freezing injunction against a respondent over whom the court has personal jurisdiction provided that: (i) the applicant has already been granted, or has a good arguable case for being granted, a judgment or order, whether or not through the domestic courts or directly against the respondent, for the payment of a sum of money that is or will be enforceable through the process of the domestic courts; (ii) the respondent holds assets, or is liable to take steps other than in the ordinary course of business which will reduce the value of assets, against which such a judgment could be enforced; and (iii) there is a real risk that unless the freezing injunction is granted the respondent will deal with the assets, or take steps which make them less valuable, other than in the ordinary course of business with the result that the availability or value of the assets is impaired and the judgment is left unsatisfied [101].

57. In relation to the Enforcement Principle Lord Leggatt (speaking for the majority) said:

58. In concluding the section of his judgment on current practice Lord Leggatt noted [102]:

59. Broad Idea was followed in two subsequent DIFC cases on which Globe relies. In Lateef & Another v Liela & Others [ARB-017-2021] (13 December 2021) Justice Wayne Martin was asked to set aside a WFO made in support of New York “alter ego” proceedings claiming that certain individuals were the alter egos of an award debtor under a New York arbitral award. The award debtor and individuals were based in the UAE outside the DIFC. In conclusion Justice Martin confirmed that the DIFC Court undoubtedly has jurisdiction to enforce foreign judgments. He accepted 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. He identified the critical question for his determination namely, whether the provisions of the Court Law and the RDC 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. He found that the answer to that question lay in the decision in Broad Idea.

60. Justice Martin concluded [122] that pursuant to the Enforcement Principle a freezing order will be granted in appropriate circumstances in support of a prospective judgment whether foreign or domestic and to restrict the grant to cases where judgment had already been entered be contrary to principle, undermine the efficacy of freezing orders and the judicial process and undermine the reciprocal enforcement of judgments.

61. At [127] he stated:

“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.” [Globe’s emphasis]

62. I respectfully agree with Justice Martin’s conclusions on the statutory jurisdiction of the Court to grant WFOs in aid of foreign proceedings. I have no problem with Globe’s argument up to that point, but Mr Spink KC went to submit that:

63. In support of his submission he relied on the following passages of Justice Martin’s judgment:

64. I do not read those passages as supporting Mr Spink KC’s contention that this Court has jurisdiction to make a WFO in relation to any defendant anywhere. Justice Martin cannot have been saying that simply because a party has been effectively served there is in personam jurisdiction over that person. That would be inconsistent with the comparison he makes between DIFC procedure and that in common law courts where jurisdiction does depend on the efficacy of service. It would also disregard his use of the phrase “the prospective in personam jurisdiction of the court”.

65. The procedure in the DIFC is that any defendant anywhere may be served without the permission of the Court. Mere service does not establish jurisdiction. Once served a defendant may either submit, or be deemed to submit, to the jurisdiction or, if not, challenge the jurisdiction in accordance with RDC Part 12. The Court will then determine whether there is jurisdiction. In this sense unless and until service is set aside a validly served party will be subject to the prospective in personam jurisdiction of the Court. I do not understand Justice Martin to have been saying that just because the defendants in Lateef were validly served there was jurisdiction over them, but rather that they had failed once validly served to dispute the jurisdiction of the Court in accordance with the RDC.

66. Accordingly I cannot derive from Lateef support for the propositions that, even where a defendant challenges jurisdiction within the Rules, either that mere valid service is an answer to that challenge, or that there is a special rule applicable only to WFOs that relief may be granted irrespective of whether an independent ground for in personam jurisdiction exists. I understand Globe’s point that the respondent to a WFO may be a non-cause of action defendant who may have no assets within the jurisdiction of the DIFC, but that does not exclude the possibility (if it be a requirement) that the respondent should be amenable to the jurisdiction of the Court. Lateef does not, in my judgment, answer that question one way or the other.

67. Globe also relies on Jones & Others v Jones [CFI-043-2022] (12 September 2022) (“Coffee Planet”) in which Justice Sir Jeremy Cooke continued an injunction and freezing order originally granted by Justice Robert French on 29 June 2022 in aid of proceedings before the Dubai Courts.

68. Justice Cooke described the issue before him:

69. Unsurprisingly Justice Cooke had no difficulty in rejecting the underlined submission. His reasoning in so doing does give some support Globe’s arguments:

70. Justice Cooke was not dealing with a case of ratification of a foreign judgment such as the present. Leading Counsel before him conceded that foreign judgments may be ratified without the necessity of recourse to a “gateway” under Article 5(A)(1)(a)-(d). Article 24 of the Court Law and Article 7(6) of the JAL expressly state that the Court of First Instance has jurisdiction to ratify any foreign or UAE judgment. Such a claim clearly qualifies as a claim over which the Courts have jurisdiction in accordance with DIFC Laws within the meaning of Article 5(A)(1)(e).

71. Like Justice Cooke I have some hesitation in finding a freestanding power to grant a so-called “Broad Idea Injunction”. I prefer to base any judgment on the Court’s undoubted power to grant injunctions in aid of its enforcement of foreign judgments, as appears to be the underlying rationale of both Lateef and Coffee Planet.

72. Further, I consider that the guidance in Broad Idea must be treated with some care in the DIFC for the reasons highlighted by Justice Martin. In the present case the Respondents have highlighted the references to “in personam jurisdiction” in Broad Idea and the authorities to which it referred (Channel Tunnel Group Ltd v Balfour Beaty Construction Ltd [1993] AC 334; VTB Capital plc v Universal Telecom Management [2013] 2 CILR 94), but it must be borne in mind that in England and those jurisdictions that derive their civil procedure from England, in personam jurisdiction depends upon service, and permission to serve out of the jurisdiction will only be given if the claim falls with a jurisdictional gateway. There will be jurisdictions like the BVI where there is no power to authorise service on a defendant outside the jurisdiction of a claim form in which a freezing injunction is the only relief sought. It was in that context that the Privy Council emphasised the need for jurisdiction. In the DIFC, as already explained, the position is different – there is no need to demonstrate jurisdiction as a prerequisite for service. There is jurisdiction to serve a claim form in which a freezing injunction is the only relief sought in pursuit of the Court’s jurisdiction to enforce a potential judgment in a foreign court against a defendant against whom there is no cause of action in the DIFC and has no assets in the DIFC.

73. It is however necessary that the defendant be an actual or potential judgment or award debtor or non-cause of action defendant. In the present case VS 1897 is not a judgment debtor under the Globe Sharjah Judgment, nor is it a party to the BVI Enforcement Proceeding and cannot be a potential judgment debtor in those proceedings, nor is it alleged that it is a non-cause of action defendant as described by Lord Leggatt at [88] of Broad Idea. It must therefore follow that this Court does not have judication over VS 1897 and the proceedings against it (as with CBD itself for the same reason) must fail and be dismissed.

74. Conversely, the BVI Companies are both judgment debtors under the under the Globe Sharjah Judgment and parties to the BVI Enforcement Proceedings. This court therefore does have jurisdiction to make the orders sought against them.

ARGUABLE CASE

75. I can address this issue relatively briefly notwithstanding the considerable volume of evidence deployed in support of their case by the Respondents that the Globe Sharjah Judgment was obtained by fraud.

76. Globe must demonstrate it has already been granted or has a good arguable case for being granted a judgment or order for the payment of a sum of money that is or will be enforceable through the process of the court: Broad Idea [101(i)].

77. Globe says that it is entitled to a WFO because it has a final judgment from the Sharjah Courts which is ripe for enforcement. The BVI Companies say that the Globe Sharjah Judgment was obtained by fraud. Globe responds that the Sharjah Courts have considered and dismissed the allegations of fraud which are in any event speculation based on inference.

78. Globe has referred me to the Sharjah Judgments. As is often the case when reading complex judgments in translation they are somewhat hard to follow without access to the case memoranda filed by counsel and the reports of the court experts. Without a clear understanding of the submissions made to the court and the findings of the experts the holdings can sometimes appear somewhat enigmatic – a difficulty frequently compounded by the translation. I was taken to the judgment of the Sharjah Federal Court of Appeal of 30 March 2022. It is clear that the court had before it a substantial documentary record including the BVI receivership proceedings, the IGPL GT DIFC proceedings and (possibly) the English proceedings. Part of the judgment also appears to be a verbatim account of the submissions made to the court. If so, it appears that it was being suggested to the court that:

“On 1/11/2018 MAS Company assigned its rights to Globe Investment in the aforesaid amount, after that Globe Investment Company and the three said companies entered into a memorandum of understanding dated 13/4/2014 between MAS Capital and Al Sari family represented in Abdullah, Majed and Mohammed Al Sari and the three companies, which is the subject of the judgment the subject of the Petition. Q. what is the fraud and collusion on which the Petition was based? A. The fraud and collusion are represented in Abdullah Al Sari signing the understanding agreement which is the subject of the judgment the subject of the Petition despite knowing that there is a provisional attachment, the order in execution and the receiver on the said three companies who is authorized to manage them, without the receiver's knowledge.”

79. The Court held:

“as declared by the attorney for it in the interrogation as stated earlier, in that the fraud and collusion are represented in Abdullah Al Sari signing the understanding agreement which is the subject of the Petition judgment despite knowing there is a provisional attachment, an order in execution and a receiver on the said three companies and that he is authorized to manage them, without the receiver's knowledge. It is established as stated earlier that the memorandum of understanding was signed on 13/4/2014 while the order of provisional attachment on the properties of Lodge Hill Limited Hortin Holdings Limited- Westene Investment Limited was issued on 18/ 11/2014 which means that the memorandum of understanding was before issuing the provisional attachment order and that the meaning of placing provisional attachment is that the owner of the items placed under attachment does not dispose of them by sale to cause damage to the attachment applicant, accordingly there is no evidence of fraud on part of the signatory on the understanding agreement dated 13/4/2014.”

80. It does appear that the court was considering the suggestion that the MOU was a sham document executed later than its apparent date. The reasoning of the court or of the expert panel it appointed is not readily apparent from the judgment. It is clear that it will in due course be necessary to understand what evidence was and was not before the Sharjah Courts if a decision is to be reached that their judgment was procured by fraud.

81. On the other hand, the English Commercial Court has held on more than one occasion that there is a good arguable case that the Globe Sharjah Judgment was procured by fraud.

82. In Alternative Investment Solutions (General) Ltd v Valle De Uco Resort & Spa SA [2013] EWHC 333 [7] Cranston J held:

“The principles governing the grant of a freezing order under section 37 of Senior Courts Act 1981 and CPR 25.1(f) are well known. It is a discretionary remedy that the court may grant where it is just and convenient to do so. First, there must be a good arguable case on the merits of the substantive claim, in other words, “a case which is more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50 per cent chance of success”: Lakatamia Shipping Company Limited v Nobu SU Limited [2012] EWCA Civ 1195 , per Longmore LJ at [19] and [25]-[28]; Ninemia Maritime Corporation v Trave Schiffahrtgesellschaft MBH und Co KG (The Niedersachsen) [1983] 2 Lloyd's Rep 600 , per Mustill J, at 603, 605; [1983] 2 Lloyd's Rep 600, 613–614. When applying this test, the court should not attempt to try the issues but takes into account the apparent strength or weakness of the respective cases to decide whether the claimant's case, on the merits, is sufficiently strong to reach the threshold. That includes assessing the apparent plausibility of statements in the affidavits: Steven Gee QC, Commercial Injunctions (5th ed. 2004), at paragraphs 12.023 and 12.024.”

83. Given that a good arguable case is one that a judge need not necessarily regard as having a better than 50% chance of success, it appears to me that there is no logical contradiction in finding that both parties have good arguable cases. This may well be the case where parties make substantial allegations against each other requiring prolonged examination of evidence, in particular in the light of the admonition against attempting to try the issues.

84. This was the situation in which Justice Cooke found himself in Coffee Planet:

85. I find myself in the same position. I accept that the existence of the Globe Sharjah Judgment provides a good arguable basis for the enforcement proceedings in the BVI. That is not to say that I do not accept that the BVI Companies do not have a good arguable case that the judgment was obtained by fraudulent means. I respectfully agree with the findings of the English judges based on the evidence adduced before them and nothing I say in this judgment should be taken as expressing any view inconsistent with theirs.

86. I conclude that both Globe and the Respondents have good arguable cases.

RISK OF DISSIPATION

87. It is likely that if the BVI Companies were free to so, they would sell the Bridge Properties and remit the proceeds to CBD to reimburse the Bank the credit given to the Al Sari judgment debtors against the CBD Sharjah Judgment. In that sense there is a real risk that the BVI Companies will dissipate their assets and those assets will no longer be available for execution of the Globe Sharjah Judgment.

88. A risk of dissipation is not enough to ground the grant of a WFO. Lord Leggat described the requirement in the following terms (Broad Idea [101(iii)]:

“there is a real risk that, unless the injunction is granted, the respondent will deal with such assets (or take steps which make them less valuable) other than in the ordinary course of business with the result that the availability or value of the assets is impaired and the judgment is left unsatisfied.”

89. The assets must be dealt with other than in the ordinary course of business. Mr Peto KC made a colourful submission that the BVI Companies are acting in the normal course of business:

“The thing about dissipation, as your Honour said, this is ordinary course of business. What can be a more ordinary course of business than a bank seeking to enforce a security, a judgment against guarantors against the guarantors' property, and getting blessed by the courts in doing it at every single stage. It is not as if they turned up with a couple of thugs and broke the door down and got [the Housekeeper] out. They have been doing this through the course of ages. If this is not ordinary course of business what is, really. This is what courts are for, and they are saying that using courts is not ordinary.”

90. Mr Spink KC asserted that the point was simply that Globe does not accept that it is in the ordinary course of business for the Bank through VS 1897 to dispose of the properties having obtained the order it did from the BVI Court on the basis that other creditor claims exist against the entities that will be ignored by selling the properties. He accepted that it was not straightforward to determine whether disposing of the properties against this background can be regarded as in the ordinary course of business despite it being asserted by to be so on behalf of the Respondents.

91. I cannot agree with Globe’s position. It seems to me to be a core part of a bank’s business to lend money and to be repaid, if necessary by instituting legal proceeding and executing any resulting judgment. Taking Globe’s case at face value, both the Bank and Globe (which Mr Almheiri says is in the business of providing financial services) are unsecured creditors in competition with each other to recover monies lent. Globe denies any fraud and states that its dealings with the Al Saris are all arm’s length commercial transitions (Almheiri Third Affidavit paragraph 84). It must follow that it is Globe’s position that its own pursuit of enforcement of its judgment is in the ordinary course of its business. CBD is acting no differently. Globe as an unsecured creditor of the BVI Companies has no priority over any other unsecured creditor such as the Bank. It cannot therefore be said that the execution by the Bank of its judgment debt against the Al Sari judgment debtors by taking a charging order over their assets and realising those assets was acting in any way other than in the normal course of the Bank’s business.

92. If follows that Globe cannot satisfy the criterion for the making of a WFO that there is a risk that the Respondents will dissipate their assets otherwise than in normal course of business. The application fails on that basis.

MATERIAL NON-DISCLOSURE

93. In the light of my finding in the preceding paragraph it is strictly speaking unnecessary for me to consider the Respondent’s’ allegation of material non-disclosure made against Globe. However, in deference to the extensive submissions made by the Respondents including a 12 page schedule entitled “Breaches of Full and Frank Disclosure, Cross Referenced with Globe’s Reply (Almheiri 3)” I will address the allegation.

94. Mr Spink KC referred me to the decision of Carr J in Tugushev v Orlov & Others [2019] EWHC 2031 (Comm) [7] in which she set out the applicable principles:

95. As I remarked in the course of argument I find many of the allegations of material non-disclosure “over-egged” (i.e. exaggerated). Many depend on proof of facts which are themselves in issue in the action (point (viii) above). Many, relating to the IGPL GT case, may legitimately have been regarded as outside the bounds of relevance (point (vii) above), as Globe was not directly involved. Many relate to matters that were apparent to me and I regard the First Affidavit of Mr Khatoun as remedying the defects in the evidence as presented at the first without-notice hearing, but in any event I declined to grant the WFO at that hearing. Many relate to absences of evidence which may be the subject of forensic criticism but do not amount to material non-disclosure.

96. Having said that, I do regard there to have been one instance of material non-disclosure and but for the fact that I have refused to grant the WFO, I would have discharged it on that basis. I regard the instructions given to junior counsel at the second without-notice hearing noted at paragraph 29 above to have been misleading. It was simply untrue that the Bank had a history of making quick sales to subsidiaries with the intention of putting the properties out of Globe's reach.

97. As I have ordered Globe to pay the Respondents/Defendants’ costs of the entire proceedings, I do not consider that any additional sanction is required.

JUST & EXPEDIENT

98. If I had had to decide whether it was just and expedient to grant the WFO I should have declined to do so.

99. Once Globe had commenced enforcement proceedings in BVI it seems to me that it was unnecessary to seek a WFO from this Court. BVI is the natural forum in which to seek to restrain the BVI companies – it is the jurisdiction within which the BVI Companies are domiciled and the forum within which the enforcement proceedings are pending. It is something of a mystery why proceedings were not commenced in BVI in the first place.

100. Mr Spink KC fell back on suggesting that I might grant an injunction for short time until Globe is able to move the BVI courts. I would not have acceded to that submission as an urgent application could be made to the BVI courts which are well used to dealing with matters “ex parte on notice” and of course both sides have already done all the preparatory work in these and the English proceedings. There would be no legitimate juridical advantage in maintaining proceedings before this Court as the BVI courts (barring immaterial questions of jurisdiction) would apply precisely the same standards for the grant of a WFO as the DIFC Courts. Further, I am not persuaded that the BVI Companies would be able to take any steps to divest themselves of the Bridge Properties in the short time before the application were heard.

CONCLUSIONS

101. In all the circumstances Globe’s application for a WFO is refused and Globe must pay the Defendants/Respondents’ costs of the proceedings on the standard basis to be assessed by the Registrar if not agreed.

Issued by:
Hayley Norton
Assistant Registrar
Date of issue: 4 July 2023
At: 2pm