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Claim No. CFI 031/2019

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

MR EBRAHIM AL-JASSIM

Claimant

and

(1) SOCII SYNERGY INVESTMENT LLC

(2) TRACY-LEE REVINGTON

(3) REED SMITH LLP

Defendants

ORDER WITH REASONS OF H.E. JUSTICE SHAMLAN AL SAWALEHI

UPON reviewing the Claimant’s claim form dated 11 July 2019 seeking declarations as to the validity of a purported shareholders’ resolution (CFI-031-2019) (the “Claim Form”)

AND UPON reviewing First Defendant’s application dated 14 August 2019 seeking for the Claimant’s Claim Form to be set aside and for the Claimant to pay its costs (CFI-031-2019/2) (the “Set-Aside Application”)

AND UPON reviewing the Third Defendant’s application dated 14 August 2019 seeking to be removed from the proceedings or an order dismissing these proceedings or for the Court not to exercise any jurisdiction it has (CFI-031-2019/3) (the “Third Defendant’s Removal Application”)

AND UPON reviewing the Second Defendant’s application dated 29 August 2019 seeking to be removed from the proceedings or an order dismissing these proceedings or for the Court not to exercise any jurisdiction it has (CFI-031-2019/4) (together with the Third Defendant’s Removal Application, the “Removal Applications”)

AND UPON reviewing the First Defendant’s application dated 6 November 2019 seeking for the proceedings to be stayed and for the Claimant to pay its costs (CFI-031-2019/5) (the “First Defendant’s Stay Application”)

AND UPON reviewing the Claimant’s application dated 10 November 2019 seeking for the proceedings to be stayed and for liberty to apply and for costs to be reserved (CFI-031-2019/6) (the “Claimant’s Stay Application”)

AND UPON hearing counsel for the parties at the hearing on 10 December 2019

IT IS HEREBY ORDERED THAT:

1. The First Defendant’s Set-Aside Application is dismissed.

2. The Removal Applications are dismissed.

3. The First Defendant’s Stay Application is dismissed.

4. The Claimant’s Stay Application is dismissed.

5. These proceedings are stayed.

6. The First Defendant is to pay 50 percent of the Claimant’s costs of these proceedings.

7. The Claimant is to pay 11 percent of the Second Defendant’s costs of these proceedings.

8. The Claimant is to pay 14 percent of the Third Defendant’s costs of these proceedings.

9. The parties are to otherwise bare their own costs.

Issued by:

Nour Hineidi

Deputy Registrar

Date of issue: 5 March 2020

Time: 12pm

SCHDEULE OF REASONS

INTRODUCTION

1. Usually the costs of a case are awarded without difficulty. The general rule, as stated in RDC 38.7(1), is that an unsuccessful party will be ordered to pay the costs of the successful party, and in most cases this general rule can be applied and without any controversy. Occasionally the Court will decide to make a different order about costs. RDC 38.10 contains an illustrative list of the types of portioning that may be ordered, having regard to the types of circumstances set out at RDC 38.8, including the conduct of the parties (RDC 38.8(1)), the manner in which a party has pursued his case (RDC 38.8(3)) and so on. While more prone to contention than orders in accordance with the general rule, these types of orders are also usually uncontroversial. The instant case is an unfortunate exception to these two categories. The substance of Ebrahim Al-Jassim v Socii Synergy Investment LLC and others (CFI-031-2019) has left this Court – having been referred by consent to arbitration – and it will not return; indeed, the matter has now been finally decided in those arbitral proceedings. But the issue of costs was left behind and has taken on a life of its own. The parties take uncompromising positions on who should be regarded as the successful party or parties in these proceedings, whether the proceedings should now be stayed or dismissed and whether, more fundamentally, they were properly commenced in the first place. On 10 December 2019, the parties argued their cases before me in this Court. This is my decision.

BACKGROUND

2. The Claimant, Mr Ebrahim Al-Jassim (the “Claimant” or “Mr Al-Jassim”), is the founder of “Hungerstation,” the largest online and mobile application-based platform for food delivery services in the Kingdom of Saudi Arabia. Hungerstation’s Saudi operating company, Hungerstation LLC (KSA) (“Hungerstation KSA”) is wholly owned by a DIFC company, Hungerstation SPC Limited (“Hungerstation DIFC”; together with Hungerstation KSA “Hungerstation”). The Claimant is the 37% shareholder in, and a director of, Hungerstation DIFC and until April 2019 he was the CEO of Hungerstation KSA. The remaining 63% shareholding in Hungerstation DIFC is legally owned by the First Defendant, Socii Synergy Investment LLC (the “First Defendant” or “Socii”), which is the designated nominee of Food Delivery Holding 12 S.a.r.l (“FDH”), a Luxembourg Special Purpose Vehicle. As of April 2019, and following a takeover, the parent company of FDH is Delivery Hero SE (“Delivery Hero”), a German based multinational.

3. Pursuant to a shareholders’ agreement dated 26 October 2015 (as amended by an amendment agreement dated 19 June 2016) (the “Shareholders’ Agreement”), the Claimant, FDH and Hungerstation DIFC agreed various rights and obligations with respect to the operation and management of Hungerstation. This included, under Article 9 of the Shareholders’ Agreement, the requirements that the Board of Directors be composed of five directors – one to be appointed by the Claimant, one to be appointed by FDH and three to be appointed by a third-party corporate services provider (“CSP”) operating under the relevant DIFC regulations (the “CSP Directors”). Pursuant to this requirement, the Claimant appointed himself a director of Hungerstation DIFC and the Second Defendant, Ms Tracy-Lee Revington (the “Second Defendant” or “Ms Revington”), was FDH’s nominated director. The CSP Directors were appointed by Intertrust (Dubai) Limited (“Intertrust”) which was the appointed CSP.

4. FDH alleges that on 27 March 2019, a former employee of Hungerstation KSA provided information to FDH which showed that the Claimant, together with certain other current and former employees of Hungerstation KSA, were acting in concert to perpetrate a dishonest scheme to misuse the assets of Hungerstation KSA in order to further a competing business in the Kingdom of Saudi Arabia. FDH allegedly concluded that Mr Al-Jassim wrongfully sought to exploit Hungerstation KSA’s proprietary software and resources. Mr Al-Jassim, by contrast, alleges that these allegations have been used by FDH as a pretext for FDH’s parent company, Delivery Hero, to remove him as CEO of Hungerstation KSA, seize de facto control of Hungerstation and to expropriate for itself the Hungerstation app.

5. In the circumstances, on 30 April, the three CSP Directors resigned and Intertrust ceased to act as CSP with immediate effect. The First Defendant says the CSP Directors resigned because the Claimant embarked on a campaign of threats of personal liability against the members of the Board when his alleged dishonest scheme was brought to the attention of the Board. The CPS Directors’ letters of resignation, however, cite a “lack of information” being provided – both historically and regarding the dispute that had arisen – as the reason for their resignations. Nothing was said of alleged threats by the Claimant. Following the cessation of services by Intertrust and the resignation of the CSP Directors, Socii says that FDH and its advisers contacted several other CSPs, requesting that they consider replacing Intertrust and then appoint three of their employees as CSP Directors, but that all of them refused to accept any such mandate.

6. On 9 May 2019, Mr Al-Jassim commenced arbitration under the DIFC-LCIA Rules pursuant to an arbitration agreement in the Share Holders’ Agreement (the “Arbitration Agreement”), claiming relief for, amongst other things, unfair prejudice under Article 149 of DIFC Law No.5 of 2018, being the Companies Law (the “Companies Law”), with FDH and Hungerstation DIFC joined (the “Arbitration”). Under the Rules of the DIFC-LCIA, Hungerstation DIFC and FDH were required to submit by 6 June 2019 a response to the Request for Arbitration, setting out their defences to the claims, their counterclaims and their position on the appointment of arbitrators. (A tribunal consisting of Judith Gill QC, Rupert Reed QC and Gary Born was appointed by the LCIA Court on 1 August 2019 (the “Tribunal”).)

7. On 27 May 2019, Ms Revington purported to sign and pass a written shareholders’ resolution with the approval of Socii (the “Resolution”). The Resolution purported to enable Socii, as a simple 63% shareholder, to exercise certain powers in relation to Hungerstation DIFC through granting Ms Revington powers to act in the name on Hungerstation DIFC and it purported, too, to appoint Reed Smith LLP (“Reed Smith”) to act in the name of Hungerstation DIFC.

8. Following receipt of the Resolution, Addleshaw Goddard (Middle East) LLP (“Addleshaw Goddard”), on behalf of Mr Al- Jassim, wrote to Socii, Ms Revington and Reed Smith by letters dated 3 and 11 June 2019 claiming that the Resolution was invalid and that Ms Revington and Reed Smith were not validly authorised to act on behalf of the company. Winston & Strawn responded by letter dated 9 June 2019 insisting that the Resolution was valid. Reed Smith maintained by letter dated 13 June 2019 that it was authorised to act.

9. On 24 June 2019, Reed Smith, on behalf of Hungerstation DIFC and acting pursuant to the Resolution, filed a response to the Request for Arbitration. In this document, Hungerstation DIFC set out defences to the claims made by the Claimant, a counterclaim against the Claimant and appointed an arbitrator jointly with FDH. Shortly after the filing of Hungerstation DIFC’s Response to the Request for Arbitration, on 30 June 2019, the Claimant wrote to the DIFC-LCIA, amongst other things, alleging the invalidity of the Resolution and disputing the appointment of the Second and Third Defendants to act for Hungerstation DIFC in the Arbitration.

10. It was Mr Al-Jassim’s position that, as a matter of DIFC law, the Resolution was not permitted by Article 92 of the Companies Law and was invalid and a nullity on the basis of three alleged threshold and discrete legal issues which are, in brief, as follows. Firstly, any passing of a written resolution would be restricted by Article 92 of the Companies Law in that Hungerstation DIFC’s Articles do contain restrictions on the ability to pass written resolutions which were not complied with. Secondly, in any event, the Articles of Hungerstation DIFC do not provide for the shareholders to have implied reserve powers allowing them to take over the management of the company in the absence of the necessary CSP directors, and so the content of the Resolution was therefore not something that could be done by a shareholder resolution. Thirdly, even if the Articles of Hungerstation DIFC were found to provide certain implied reserve powers to the shareholders, those powers would never extend to passing the content of the actual Resolution in this case.

11. To proceed, on 1 July 2019, the Registrar of the DIFC-LCIA sent an email to the parties to the Arbitration acknowledging receipt of AED 75,000 from the Second Respondent in the Arbitration, being Hungerstation DIFC, on account of arbitration costs. In the email, the Registrar queried whether the payment was made on behalf of both the Second Respondent and the First Respondent, that is, on behalf of both Hungerstation DIFC and FDH. And on 10 July 2019, Reed Smith responded to the Registrar, confirming that the said payment was made on behalf of both the First and Second Respondents.

PROCEDURAL HISTORY

12. On 11 July 2019, Mr Al-Jassim commenced these DIFC Court Proceedings against Socii, Ms Revington and Reed Smith (together the “Defendants”) seeking urgent declaratory relief on an expedited basis under a Part 8 claim. In particular, the Claimant sought declarations that the Resolution was invalid and / or improper, and was null and void, that Ms Revington was not validly authorised to act on behalf of Hungerstation DIFC pursuant to the Resolution and that Reed Smith was not validly authorised to act on behalf of Hungerstation DIFC pursuant to the Resolution (the “Claim”).

13. Socii responded to that application on the same day, making clear its position that it was inappropriate to order expedition and that there was a jurisdictional issue which would need to be resolved before consideration could be given to the substantive claim.

14. By email dated 14 July 2019, the Claimant claimed that Socii “[appeared] intent on raising unjustified obstacles so as to delay judicial scrutiny of its actions.” He denied that there was any jurisdictional issue and maintained his application for expedition, asserting that “it is imperative that the Part 8 Claim is now determined by the DIFC Court on an expedited basis.” On 15 July 2019, the Registry advised that the Deputy Registrar would issue directions with respect to timetabling by no later than 16 July 2019. The same day, Socii wrote to the Registry to set out its detailed reasons for opposing expedition. These included the following grounds: the DIFC Court did not have jurisdiction as there was an arbitration agreement between Socii and the Claimant; there was no urgency; and the claim was not properly the subject of the Part 8 procedure, there being several substantial issues of fact to be considered. Reed Smith also objected to the application for expedition. On 16 July 2019, the Deputy Registrar directed that the claim should proceed in accordance with the usual timeframes under Part 8, insufficient cause having been shown for expedition, and that the Claimant should set out his reasons for filing the case as a Part 8 claim.

15. On 18 July 2019, the Claimant set out his reasons for using the Part 8 procedure and on the same day, the Court directed that the Defendants respond to these reasons by 22 July 2019. Socii and Reed Smith did so by separate letters dated 22 July 2019. By email dated 23 July 2019, the Registry advised that “no further directions have been issued as yet. On that basis, the case is to proceed as a Part 8 case until further direction from the Registry (if any).”

16. On 25 July 2019, Socii filed its Acknowledgement of Service, indicating in this document that it intended to contest jurisdiction and that it objected to the use of the Part 8 procedure.

17. On 8 August 2019, Socii filed an application under Part 12 of the Rules of the DIFC Courts to dismiss or alternatively to stay the claim on the grounds that the Court did not have jurisdiction. The grounds for Socii’s application were, in short, again, that the dispute fell within the scope of the Arbitration Agreement in the Shareholders’ Agreement; that the Claimant had already, by his letter of 30 June 2019, referred the dispute to the DIFC-LCIA Tribunal for its consideration; and given that Socii is an onshore Dubai company and neither the Second nor Third Defendants are natural or proper parties, the Court has no jurisdiction in any event under Article 5(A)(1) of Dubai Law No. 12 of 2004, being the judicial authority law (the “JAL”). In the same application, Socii set out its grounds for contending that the Part 8 procedure was inappropriate.

18. In response to the application, the Claimant contended by letter dated 14 August 2019 that there could be “no proper dispute that the DIFC Court has jurisdiction to determine the Part 8 claim… Indeed the DIFC Court has jurisdiction on multiple bases.” He went on to state that “on condition that Socii consents to now be joined as a party to the current Arbitration and that Reed Smith and Ms Revington agree to be bound by the Tribunal’s determination, our client is prepared to agree (without prejudice to its position) that the DIFC Court proceedings be stayed…” On 27 August 2019, Socii reverted to this making clear that it was prepared to be joined to the Arbitration for the limited purpose of allowing the issues in these court proceedings to be determined by the Tribunal and on condition that these proceedings be withdrawn and that the Claimant pay Socii’s costs of these proceedings. In response, the Claimant refused to agree to such a joinder on the terms proposed.

19. On 28 August 2019, the Claimant filed another statement in relation to the challenge to jurisdiction made by the First and Third Defendants. He maintained that the Court did have jurisdiction and contended that Socii was not a party to the Arbitration Agreement.

20. The next day, on 29 August 2019, the Claimant wrote to the Registry, asking it to proceed to list a two day hearing in September 2019 for the purposes of determining Socii, the Second and Third Defendants’ applications under Part 12 and the substantive merits of the Part 8 Claim. The Second and Third Defendants then sought, on 3 September 2019, directions as to the service of evidence on the jurisdiction applications and Socii sought the same from the Court. This was opposed by the Claimant who wrote to the Court on the same day maintaining his position that the Part 12 applications and the substantive claim should be heard together as soon as possible in September or early October and, in any event, that the Part 12 applications should be heard as a matter of urgency and the Defendants should be ordered to file their reply evidence in a shortened timeframe.

21. On 12 September 2019, Socii filed a further witness statement, being its evidence in response to that of the Claimant in respect of its jurisdiction challenge. In this statement, Socii made clear, among other things, that it would consent to be joined to the Arbitration and that FDH would be making an application to join Socii pursuant to Article 22(viii) of the DIFC-LCIA Rules.

22. While this was going on, the Claimant, Hungerstation and FDH had been corresponding with each other and with the Tribunal with respect to the determination of the validity of the Resolution. On 18 September 2019, FDH applied to join Socii to the Arbitration so as to allow the substance of the Claimant’s Part 8 claim to be decided in the Arbitration. This application was accompanied by a written Statement of Consent to Joinder signed by a duly authorised representative of Socii (the “Statement of Consent”), by which Socii gave its express consent to be joined to the Arbitration and contended that it had been a party to the Arbitration Agreement in the Shareholders’ Agreement at all relevant times. FDH’s application to join Socii to the Arbitration and the contents of Socii’s Statement of Consent were unopposed by the Claimant, and on 1 October 2019, the Tribunal ordered that it be joined to the Arbitration.

23. By email dated 29 September 2019, the Claimant attached a draft order for consideration by the Defendants. The Order provided that “all further proceedings in this action be stayed” and that costs be reserved.

24. On 16 October 2019, Socii reverted to the Claimant, saying, amongst other things, as follows: “We are in agreement with the proposed draft order save for the proposed direction that costs are to be reserved. We consider that your client should pay our client’s costs which at present total USD 135,852.” Accordingly, Socii proposed that the draft order be amended so as to replace the costs reserved provision with an order that the Claimant pay Socii’s costs in the sum of USD 135,852 within 14 days.

25. By letter dated 22 October 2019, the Claimant rejected the suggestion that it should pay Socii’s costs rather than costs being reserved. On the same day, he wrote to the Registry, advising that “[by] agreement, the issue of the Validity of the Purported Resolution has now been referred to the arbitral tribunal… in the ongoing arbitration between Mr Al-Jassim, [FDH] and [Hungerstation]… for determination, with [Socii] joined to that Arbitration…”.

26. By letter dated 24 October 2019, Socii replied to the Claimant, making clear its position that, firstly, where the parties had agreed that the Tribunal should determine the issues raised in the court proceedings, the DIFC Court is never going to consider them and, secondly, the consequence of its acceptance that the proceedings be stayed was that the proceedings were at an end and costs should not be reserved in such circumstances. It discouraged a yet further application by the Claimant and suggested, instead, that the draft order be submitted to the DIFC Courts with alternative proposals on costs in square brackets, for example, “[Costs reserved] and [The Claimant is to pay the First Respondents’ costs, immediately assessed in the sum of USD 135,852 within 14 days],” along with a letter being sent to the DIFC Courts attaching the order and stating that the parties were not in agreement on the appropriate costs order and that the parties would make written submissions on costs within fourteen days, and, moreover, requesting that the DIFC Courts resolve the issue on paper and without an oral hearing.

27. The Claimant did not respond to this proposal and instead issued an application for a stay on 10 November 2019, supported by a further statement: his main point in connection with costs was that any order should await the Tribunal’s determination of the validity of the Resolution. On 5 November 2019, Socii filed a statement in support of its contention that the Claimant pay its costs of these proceedings. On 6 November 2019, in an email to the Registry, the Claimant complained about the approach of Socii and insisted that his application be “heard in person before the Court.” On 21 November 2019, the Registry advised the parties of the listing of this application.

28. On 26 and 27 November 2019, after having exchanged written evidentiary memorials, the Claimant, Socii and FDH made oral submissions to the arbitral Tribunal on a number of preliminary issues, including the validity of the Resolution. The Claimant asked that the arbitral Tribunal decide the costs of these proceedings and deliver its determination on the substantive issue before the hearing before the Court of 10 December 2019. The Tribunal did not comply with either request: it made clear that the issue as to the costs of these proceedings is a matter for this Court and that it would not issue its decision before this hearing.

29. The Tribunal issued its Partial Award dated 11 February 2020 (the “Award”). In the Award, the Tribunal determined issued of the validity of the Resolution as follows:

“The purported written ordinary shareholders’ resolution of [Hungerstation DIFC] dated 27 May 2019 is invalid as not having been passed in accordance with the Article of Association of the Second Respondent and the applicable Companies Law. Accordingly, the purported appointments of Ms Revington and Reed Smith LLP pursuant to that written ordinary resolution were similarly invalid.”

DISCUSSION

30. I will deal with the applications and submissions made by the parties to these proceedings by first posing and then discussing a series of questions.

Was Socii a party to the Arbitration Agreement?

31. The first question for me to address is whether or not Socii was a party to the Arbitration Agreement. I must say from the outset that I believe this to be a question that ordinarily a arbitral tribunal should determine. With that said, engaging the question will be helpful in the deciding the present matter. To proceed, without ambiguity, Mr Al-Jassim is party to the Arbitration Agreement along with Hungerstation DIFC and FDH. Socii claims that it, via its beneficial owner, FDH, is also party to that agreement. The Claimant disputes this. A useful place to begin is with the Arbitration Agreement itself. As is material, it provides:

“In the event that the Parties are unable to resolve [a] Dispute by good faith consultation and negotiation within one (1) month from the date the Dispute has arisen, the Dispute shall be referred to and finally settles [sic] by arbitration under the DIFC/LCIA Arbitration Rules (which rules are deemed incorporated by reference in this Agreement), by one or more arbitrators appointed in compliance with the rules.”

This Arbitration Agreement is found at clause 17 of the Shareholders’ Agreement. The Shareholders’ Agreement is signed by Mr Al-Jassim – on behalf of Hungerstation and of himself – and on behalf of FDH. On the face of it, this suggests that the parties to the Arbitration Agreement are Mr Al-Jassim, Hungerstation DIFC and FDH, as Mr Al-Jassim argues is the case. However, on page three of the Shareholders’ Agreement – which lists the parties to that agreement – a reference to FDH’s “designated nominee” makes the position less clear. FDH’s entry on that page reads:

FDH’s designated nominee is of course Socii. It follows, I think, that references in the Shareholders’ Agreement to “Food Delivery Holding” were intended to include Socii. (Whether Socii would be bound by such an intention is of course another matter and which will be addressed below.) In my view, the Arbitration Agreement in the Shareholders’ Agreement was also intended to include Socii: the reference in that agreement to “the Parties” – which had previously been defined, on page three of the Shareholders’ Agreement, as including Mr Al-Jassim, Hungerstation DIFC and FDH, with the latter, in turn, defined as including its designated nominee, Socii – demonstrates quite clearly that it was intended that Socii be a party to the Arbitration Agreement.

32. However, an intention on the part of those who enter into an agreement will not, of course, bind other parties by itself; the Luxembourg managers who signed the Shareholders’ Agreement on behalf of FDH will not necessarily have had authorisation to conclude an arbitration agreement on Socii’s behalf. This raises the question of whether Socii was bound by the Arbitration Agreement which FDH had entered into apparently on Socii’s behalf. No evidence has been presented to the Court that shows that the Luxembourg managers had authorisation to take this step on Socii’s behalf and, more importantly, the Claimant had submitted that he had not and has not been shown any such evidence either. For me, this alone renders any doubt that the Claimant may have had that Socii was bound by the Arbitration Agreement legitimate.

33. It is noteworthy, too, that in contrast to the Shareholders’ Agreement, Socii was unambiguously a party to Hungerstation DIFC’s Articles, which specifically identified that they were signed by “Stuart Curtis (as Authorised Signatory) On behalf of Socii Synergy Commercial Broker LLC.” Moreover, Socii’s submission that it was always a party to the Shareholders’ Agreement appears contrary to a position put forward previously by Socii itself in the Resolution itself: in the recital to the Resolution, Socii identified the parties to the Shareholders’ Agreement as follows:

“… the Company entered into a shareholders’ agreement dated as of 26 October 2015 with Food Delivery Holding 12 S.A.R.L (‘FDH’) and Mr. Ebrahim Jamal Al Jassim (‘EJ’), as amended pursuant to an amendment agreement, dated as of 19 June 2016 (as so amended, the ‘Shareholders’ Agreement’)”

And on page three of the Resolution, Socii went on to identify itself as only “a shareholder of the Company holding 63% of the shares in the Company.” Further still, prior to commencing the DIFC Courts proceedings on 10 July 2019, Mr Al- Jassim requested that Socii confirm whether it was bound by the Shareholders’ Agreement by letters dated 3 and 11 June 2019. However, Socii’s legal representative failed to provide Mr Al-Jassim with a response to this question.

34. For me, these considerations are sufficient to justify not only doubt that Socii was bound by the Arbitration Agreement, but even a positive conclusion that Socii itself did not consider itself to be bound. The Resolution gave a relatively strong impression that Socii did not consider itself to be party to the Shareholders’ Agreement and, in turn, to the Arbitration Agreement contained within it, and Socii went on to forego two opportunities to clarify any correct position to the contrary. Moreover, I think it is noteworthy that in its first communication with the Courts’ Registry in relation to these proceedings, in an email dated 11 July 2019, Socii did not take that opportunity to say that it was party to the Arbitration Agreement. And in its subsequent email to the Registry – containing a detailed four page letter – the First Defendant described itself therein as “the majority shareholder of the [Company] and… FDH’s nominee under the [Shareholders’ Agreement],” that is, and not as a party to that agreement nor indeed, crucially, the Arbitration Agreement. In the same latter, the First Defendant stated, “the Claimant’s claim to invalidate the shareholder resolution at issue in this case is fully with the scope of the arbitration clause in the [Shareholders’ Agreement]. As such, it should be referred to arbitration, not to a DIFC Court.” Again, nothing was said regarding Socii being party to the Arbitration Agreement; all that was said was that the issue fell within the that agreement’s scope. A subsequent letter to the Registry dated 15 July 2019 similarly did not confirm that Socii was a party to the Arbitration Agreement (contrary to a written submission of Socii for the 10 December 2019 hearing in which it claimed that this letter stated “there was an arbitration agreement between Socii and the Claimant.”) Indeed, I am unaware of a conclusive statement expressing Socii’s position that it was party to the Arbitration Agreement before its Statement of Consent dated 12 September 2019 in which it said “Socii has been at all relevant times a party to the Shareholders’ Agreement. FDH was authorized to represent Socii when FDH executed the Shareholders’ Agreement both for itself and on behalf of Socii.” This statement came two months after the DIFC Courts proceedings had begun.

35. Before commencing these DIFC Courts proceedings, Mr Al-Jassim claims he needed an urgent remedy against Socii. If we assume that he genuinely regarded that the matter was indeed urgent, as I see it, he had three principal options before him. Firstly, he could have sought to have Socii joined to the arbitral proceedings which had already commended. Under Article 22 (viii) of the DIFC-LCIA Rules, in this scenario, Mr Al-Jassim would have had to obtain Socii’s consent before it could be joined. In the context of a dispute, such cooperation, I think, could not be counted on, much less at the swift pace required for determination of an urgent matter. Secondly, Mr Al-Jassim could have commenced new arbitral proceedings against Socii. In this scenario, and under Article 22 (viii) also, Mr Al-Jassim would have had to first demonstrate that Socii had consented to being a party to the arbitral proceedings by way of the Arbitration Agreement itself. As has been demonstrated above, however, it was unclear that Socii was a party to the Arbitration Agreement, and nor had Socii confirmed that it was when the question was put to it. It follows, therefore, that Socii was in a good position to dispute the jurisdiction of any arbitral tribunal over it if it so wished, and it follows, in turn, that Mr Al-Jassim could not count on a swift remedy in this scenario either. The third option was for Mr Al-Jassim to commence court proceedings. In this scenario, Socii’s consent would not be required so long as the court found it had jurisdiction over the matter; in this scenario, it was more likely for Mr Al-Jassim to quickly obtain a remedy against Socii irrespective of any resistances the latter might deploy.

36. While any convenience in pursuing court proceedings as opposed to arbitral proceedings will not justify breaching an arbitration agreement, when coupled with Socii’s representations that it was not a party to the Arbitration Agreement – despite, crucially, again, Mr Al-Jassim having asked for confirmation on more than one occasion – I think it can absolve Mr Al-Jassim of any fault in not having taken a more cautious approach by first attempting arbitration. If Socii took the position that any disputes between it and Mr Al-Jassim should be resolved in arbitration as it now says, frankly, I think, it should have said so when asked or even have volunteered that information. But it did neither.

37. I began this discussion with the question of whether Socii was a party to the Arbitration Agreement. But in fact, I think this is a case where this is not the essential question to be addressed in determining whether the court proceedings were properly issued against Socii. Instead, in my view, the more appropriate question is whether the Claimant was entitled in the circumstances to proceed on the basis that Socii was not a party to the Arbitration Agreement. For the above reasons, I think he was.

Even if Socii was a party to the Arbitration Agreement and Mr Al-Jassim knew or should have known this, were the court proceedings in any case permissible?

38. As a matter of DIFC law, a party to an arbitration agreement is not prevented from requesting from a court an interim measure before or during arbitral proceedings. Article 15 of the Arbitration Law provides:

Under the DIFC-LCIA Rules, a party is afforded a similar right. After setting out the arbitral tribunal’s interim and conservatory powers in Article 25.1 of these Rules, at Article 25.3, they go on to provide:

Of course, the Claimant began these DIFC Courts proceedings on 11 July 2019, while the Tribunal was only formed on 1 August 2019. As such, providing the court proceedings were issued in order to obtain an “interim measure of protection” or for an “interim or conservatory measure,” at the time of issuing these proceedings, the Claimant was not required by Article 25.3 to obtain authorisation from a tribunal to do so. Instead, the Claimant was only required to communicate its application promptly in writing to the Registrar of the DIFC-LCIA. If, again, the proceedings were issued in pursuit of the aforementioned remedies, I think this requirement was satisfied by the Claimant’s letter dated 11 July 2019 to the DIFC-LCIA Registrar: “the Claimant has issued an urgent Part 8 Claim in the DIFC Courts seeking (inter alia) declarations as to the validity and propriety of the Written Resolution against: (i) Socii (ii) Ms Revington and (iii) Reed Smith LLP.”

39. In his DIFC Courts claim form, Mr Al-Jassim stated:

“…the Claimant seeks the following declarations: a) The document entitled “Written Shareholders’ Ordinary Resolution of the Company dated 27 May 2019” was invalid and improper, and is null and void; b) The Second Defendant is not validly authorised to act on behalf of Hungerstation [DIFC] pursuant to the document entitled “Written Shareholders’ Ordinary Resolution of the Company dated 27 May 2019”; and c) The Third Defendant is not validly authorised to act on behalf of Hungerstation [DIFC] pursuant to the document entitled “Written Shareholders’ Ordinary Resolution of the Company dated 27 May 2019.” Together with an order that the First and Second Defendants pay the Claimant's costs of this Part 8 Claim.”

It must be said from the outset, and considering the DIFC Courts proceedings in isolation for a moment, that the Claimant’s first request – for a declaration that the Resolution was invalid and improver and null and void – was not a request for an interim measure: the Resolution either was or was not valid and a determination either way would be final; such a declaration would be of a perpetual, not an interim, nature. Nor indeed are the second and third sought declarations of an interim nature for the same reason: “… [X] is not validly authorised to act… pursuant to the [Resolution],” that is, ever. With that said, however, within the wider context of the dispute, that is, when considering the arbitral as well as the DIFC Courts proceedings, the Claimant’s application to the Court can, in my view, be regarded as being of an interim nature in that it was issued in the context of already commenced proceedings, in relation to a new and ancillary issue and before any final decision on the main dispute had been awarded. The Resolution was passed after the arbitral proceedings had commended and, importantly, in order for the Second and Third Defendants to be able to act on behalf of Hungerstation DIFC in those proceedings. Socii has said in written submissions that “the sole purpose of the resolution was to ensure that Hungerstation had legal representation and could act in the Arbitration.” The Claimant, plainly, sought the declarations in question because of the effect the Resolution was having on those proceedings. He wanted Hungerstation DIFC to return to being neutral and passive in the arbitral proceedings. Moreover, it is also arguable that the measures that a party to an arbitration agreement are permitted to seek from a court under Article 15 of the Arbitration Law and Article 25.3 of the DIFC-LCIA Rules have an “interim” quality because any measures obtained from a court will not be binding on the arbitral tribunal and will be subject to the tribunal’s final decision. If this is so, the word “interim” in both provisions refers to the status of any measures obtained from a court, irrespective of any appearance of finality, and not to a category of measures which alone a party is entitled to seek; according to this analysis, it will not matter if the Claimant sought final declarations and any declarations subsequently obtained would necessarily be of an interim nature in any case.

40. There is another consideration to be had. As cited above, Article 25.3 of the DIFC-LCIA Rules provides that a party has a “right to apply to a state court or other legal authority for interim or conservatory measures to similar effect [to those powers of the arbitral tribunal mentioned in Article 25.1].” Most relevant for the Claimant’s claim, Article 25.1 (iii) provides that the arbitral tribunal has the power, subject to the conditions stated in Article 25.1:

“to order on a provisional basis, subject to a final decision in an award, any relief which the Arbitral Tribunal would have power to grant in an award, including the payment of money or the disposition of property as between any parties.”

As such, under Article 25.3, and broadly speaking, the Claimant had the right to apply to a court for an order ordering a relief similar in effect to one the arbitral tribunal would have power to grant in an award. Regarding the declarations sought by the Claimant, an arbitral tribunal can, of course, award such a relief (as the Tribunal has done in its Award). And for me it does not pose any problem that the order mentioned in Article 25.1 (iii) is required to be made on provisional basis: so long as the Article 25.3 order of the court is similar in effect to the Article 25.3 provisional order of the arbitral tribunal, it will be permitted under Article 25.3. In the instant matter, and as said above, the Resolution either was or was not valid. The consequence of a determination either way would be that the Resolution either should or should not be acted upon. A (hypothetical) provisional declaration as to the invalidity or otherwise of the Resolution would not just be similar in effect to a final declaration, it would be identical to it.

41. In conclusion, I find that even if Socii was a party to the Arbitration Agreement and even if the Claimant knew this or should have known this, still, the Claimant acted within the bounds of what was permissible under DIFC law and the DIFC-LCIA Rules when he began court proceedings seeking the declarations that he sought. It should be noted that this conclusion is provided as an additional conclusion to the one outlined above that the Claimant was entitled to proceed when issuing these proceedings on the basis that Socii was not a party to the Arbitration Agreement.

Did the DIFC Courts have jurisdiction over the matter?

42. Even if it was permissible for Mr Al-Jassim to issue court proceedings, still, he will have been required to do so in a court that had jurisdiction over the matter in question. The Defendants have asserted that the DIFC Courts never had jurisdiction in relation to the declaratory claims advanced. In my view, this is incorrect and this Court in fact had and has jurisdiction on two solid bases and potentially a third base under Article 5(A)(1) of the JAL.

43. Taking the provisions in order, firstly, the claims fall within Article 5(A)(1)(c) of the JAL which provides:

The instant matter is a dispute in relation to the validity and propriety of a shareholder resolution purportedly passed by Socii in respect of a DIFC establishment, being Hungerstation DIFC, and purportedly granting powers to the Second and Third Defendants to act in the name of that DIFC establishment. This is sufficient to bring Article 5(A)(1)(c) into play.

44. Secondly, the claims also arguably fall within Article 5(A)(1)(b) of the JAL which provides:

This gateway is likely satisfied insofar as the claims concern the implied reserve powers of shareholders under Hungerstation DIFC’s Articles, with these Articles potentially being a “contract” or “promised contract” for the purposes of Article 5(A)(1)(b).

45. Finally, the claims fall within Article 5(A)(1)(a) the JAL which provides:

Regarding this gateway, the Third Defendant, Reed Smith, which acts on behalf of Hungerstation DIFC pursuant to the Resolution, is a DIFC establishment, and so a DIFC establishment is party to the claim. Article 5(A)(1)(a) is, therefore, engaged.

46. In conclusion, I find that, separate from considerations of any arbitration agreement in existence that could preclude the jurisdiction of this Court to determine certain matters, the DIFC Courts otherwise has the jurisdiction to hear and determine disputes between the parties.

Was the Claimant’s use of the Part 8 procedure appropriate?

47. The First Defendant submits that the Claimant’s DIFC Courts claim was not properly the subject of the Part 8 procedure, there being several substantial issues of fact relevant to the claim. The Claimant, conversely, says that the determination of the validity of the Resolution is a classic example of a claim that should be determined pursuant to Part 8, being a matter requiring urgent judicial scrutiny and turning on discrete points of law. RDC 8.1 provides, as material:

49. The particular facts that the First Defendant submits are relevant and are the subject of substantial dispute include its allegation that the Claimant, together with certain other current and former employees of Hungerstation KSA, were acting in concert to perpetrate a dishonest scheme to further a competing business in the Kingdom of Saudi Arabia in direct violation of, among other things, non-compete and confidentiality obligations owed by the Claimant under the terms of the Shareholders’ Agreement. The First Defendant says that when the three CSP Directors resigned from their positions on the Board and Intertrust ceased to act as the CSP, the Board was left inquorate and unable to direct the affairs of Hungerstation DIFC. The First Defendant says, further, that subsequently FDH and its advisers contacted several other CSPs, requesting that they consider replacing Intertrust and then appoint three of their employees as CSP directors as required by the Shareholders’ Agreement and Hungerstation DIFC’s Articles of Association. All of them refused to accept any such mandate, the First Defendant submits, in part as a consequence of alleged threatening correspondence which had been sent by the Claimant to the former CSP Directors. The First Defendant concludes that in circumstances where Hungerstation DIFC was without a functioning Board of Directors but had to defend claims made against it by the Claimant, Socii, as the majority shareholder in Hungerstation, issued the Resolution, appointing the Second and Third Defendants to act on behalf of Hungerstation DIFC in the Arbitration for the sole purpose of ensuring that it had legal representation and could act in the Arbitration.

49. Mr Al-Jassim’s claim form has been cited above at paragraph 36. In my opinion, it is the case that despite the number of declarations that the Claimant sought from the Court, his claim boiled down to a single question: whether or not the Resolution was valid. The other “findings” would only be logical consequences of the determination of this primary issue: if the Resolution was invalid, the Second and Third Defendants would not, as a result, be authorised to act pursuant to it. And to me, the question of the validity of a shareholders’ resolution is something to be determined with reference to laws, documents and provisions and not to the factual context within which the resolution was passed, unless the law provides that the factual context is of relevance.

50. In his claim, the Claimant submitted that the Resolution was invalid for two primary reasons. Firstly, the Claimant alleged that the Resolution was invalid under Article 92 of the DIFC Companies Law as that provision is subject to any restrictions in the Articles of a company, while the use of the Resolution in the current circumstances, he alleged, was inconsistent with the terms of the Articles which require any resolution passed in writing to be in a form approved by the Board, while no such approval was sought or granted. Secondly, the Claimant alleged that the Resolution purports to take actions which cannot be taken by an ordinary resolution in a shareholders’ meeting pursuant to the Articles and the SPC Regulations: a shareholder of the Company cannot unilaterally take over the management of a company, including its pursuit or defence of disputes and arbitration by ordinary shareholders’ resolution, the Claimant submitted. To me, these are thoroughly legal questions for which facts can be of little assistance when deciding them.

51. This position is supported by the fact that the Tribunal decided to determine the validity of the Resolution as a preliminary issue. And as the Claimant has helpfully pointed out, the hearing of the Resolution issue along with other preliminary issues took only a day and a half, suggesting the issue turned on discrete issues and not on facts which were disputed. Moreover, it is not insignificant that the First Defendant consented to the Resolution question being determined as a preliminary issue which suggest, I think, its acceptance that the issue turned on points of law and not substantive issues in dispute.

52. In my opinion, the question of the validity of the Resolution turned on, firstly, the proper construction of Hungerstation DIFC’s Articles and, secondly, the content of the Resolution as apparent on its face, and this question could, therefore, be decided without involving any dispute of fact, and much less substantial dispute of fact. It follows, in my view, that the Part 8 procedure was the appropriate procedure for the Claimant to use when issuing these proceedings.

53. Before leaving this discussion, I will say a final word about the issue of urgency. The First Defendant submits that the Claimant’s request that the issue of the validity of the Resolution be determined on an urgent basis constituted “unreasonable conduct” with this conduct ultimately causing an increase in costs which he should be liable for. For example, in written submissions, the First Defendant has stated:

“After [his] letter of 11 June 2019, the Claimant said nothing further about the Shareholders’ Resolution or its validity in correspondence. Instead, [he] waited exactly a month before springing these proceedings on Socii; and then, having waited in this way, applied directly to the Court for expedition without any notice. “

In my view, this assertion can be summarily dismissed. As was shown across paragraphs 11 and 12 above, the Claimant issued these proceedings exactly a day after it came to his attention that Hungerstation DIFC – which it must be emphasised he is a director of and shareholder in – had paid arbitration costs on behalf of FDH – which it must be emphasised was his opponent in the shareholders’ dispute and in the Arbitration. To me, this development alone justified his request for the matter to be resolved on an urgent basis, even if the Court went on to take a different position.

Is the Claimant the unsuccessful party?

54. That a claim has been brought to a tribunal that has jurisdiction and using the correct procedure does not mean, of course, that the claimant will be the successful party when those proceedings come to an end. If a claimant discontinues his claim in circumstances which amount to failure or if he abandons it, the claimant will generally be liable for any costs incurred. In Brooks v HSBC Bank Plc [2011] EWCA Civ 354, Moore-Bick LJ said:

“[As] Proudman J. in Maini v Maini [explained]: a claimant who commences proceedings takes upon himself the risk of the litigation. If he succeeds he can expect to recover his costs, but if he fails or abandons the claim at whatever stage in the process, it is normally unjust to make the defendant bear the costs of proceedings which were forced upon him and which the claimant is unable or unwilling to carry through to judgment. That principle also underlies the decision of this court in Messih v MacMillan Williams. There may be cases in which it can be said that the defendant has brought the litigation on himself, but even that is unlikely to justify a departure from the rule if the claimant discontinues in circumstances which amount to a failure of the claim. (emphasis added)”

In the present matter, the Claimant had agreed that the issue of the validity of the Resolution be determined by the Tribunal and that the DIFC Courts claim be stayed. The First Defendant submits that a stay of proceedings is one of the reliefs that it has sought throughout these proceedings and that, therefore, it is the successful party. If the First Defendant is correct, the Claimant’s consent to stay these proceedings, I think, implies a failure of his claim. Similarly, the Claimant’s consent for the validity to the Resolution to be determined by the Tribunal could amount to an abandonment of his claim.

55. To expand slightly on the above, the First Respondent’s case regarding the Claimant being the unsuccessful party is that, on its application contesting jurisdiction, it sought either a dismissal of the claim or a stay of these proceedings, while the latter is the relief to which the Claimant has now consented: in other words, Socii submits, it has effectively obtained the order that it sought. However, in my view, it is important to consider two other factors: firstly, the basis on which Socii held that the proceedings should be stayed and secondly, and more importantly, whether there was a change in circumstances that rendered the Claimant’s change in position other than a failure or abandonment of his claim.

56. Regarding the basis on which Socii held that the proceedings should be stayed, this was its position that this Court should not be determining the claim for jurisdictional reasons and that it is a claim to be heard and determined by the arbitral tribunal hearing the underlying dispute between the parties. Socii submits that in accepting that the proceedings should be stayed in favour of the Arbitration, the Claimant has accepted that Socii is right. As I have stated above, however, in my view, the Claimant was entitled to proceed on the basis that Socii was not a party to the Arbitration Agreement when he issued these court proceedings. And it was only after Socii had agreed to be joined to the Arbitration that the Claimant agreed to stay these proceedings. As such, as far as basis is concerned, in my opinion, the basis for the First Defendant’s position that these proceedings should have been stayed was different to both the actual circumstances – this Court did have jurisdiction – and the basis upon which the Claimant actually agreed for them to be stayed. The Claimant did not agree to refer the matter to the Arbitration on the basis of a realisation that this Court never had jurisdiction. Accordingly, from the perspective of basis, the First Defendant cannot be said to have been successful in as much as its position was not conceded to by the Claimant and nor has it been found to be correct by the Court.

57. As for circumstances, the First Defendant initially sought a stay on proceedings in circumstances where, firstly, it was not yet a party to the Arbitration and, secondly, where the Claimant would pay its costs of these court proceedings. For example, on 14 August 2019, the Claimant stated by letter that “on condition that [amongst other things] Socii consents to now be joined as a party to the current Arbitration… our client is prepared to agree (without prejudice to its position) that the DIFC Court proceedings be stayed…” On 27 August 2019, Socii reverted to this making clear that it was prepared to be joined to the arbitration for the limited purpose of allowing the issues in these proceedings to be determined by the arbitral Tribunal, on condition that these proceedings be withdrawn and that it pay Socii’s costs of these proceedings (Socii had sought earlier, in the alternative, a stay on proceedings). In response to this, the Claimant refused to agree to such a joinder on the terms proposed. In the event, on 12 September 2019, Socii consented to being joined to the arbitral proceedings. Mr Al-Jassim’s consent to the joinder was on the express basis set out in his letter to the Tribunal dated 29 September that “this consent is expressly without prejudice to the question of whether the DIFC court proceedings (CFI-031-2019) were properly commenced and the Claimant’s position as set out in those proceedings as to why such proceedings were properly commenced.”

58. As such, it was only after Socii was joined to the Arbitration that the Claimant consented to a stay on these court proceedings and, moreover, without agreeing to withdraw or stay the proceedings or pay Socii’s costs. In my view, Socii joining the Arbitration constitutes a significant change in circumstances that renders the Claimant’s subsequent agreement to stay the proceedings as being other than an indication of Socii being successful in its case. The Claimant says that his overriding concern has been at all times that the Resolution should be subject to legal scrutiny, whether before this Court or an arbitral tribunal, without any further excuse or delay. When the First Defendant initially sought for these proceedings to be stayed, the majority shareholder of Hungerstation DIFC, Socii, who had purportedly passed the Resolution, was not party to the Arbitration. To end the court proceedings in these circumstances would amount to potentially foregoing legal scrutiny of the validity of the Resolution and, in turn, any subsequent binding declarations as to its invalidity. As such, the Claimant’s agreement to stay these court proceedings after Socii was joined to the Arbitration seems to me to be consistent with his position that the Resolution should be subject to legal scrutiny but does not amount to evidence that his case had failed, that he had abandoned it or that the First Defendant was successful in obtaining the remedy it sought; instead, in my opinion, it is primarily evidence of a significant change of circumstances and even compliance on the part of the Claimant with respect to the preferences of his opponents. In my view, a finding that Socii is the successful party because, in the alternative, it sought a stay of proceedings could, in the circumstances, only be the result of a severely technical calculation.

59. With that said, the Claimant consented to Socii’s joinder to the Arbitration and has agreed for these proceedings to be stayed. These were steps that the Claimant did not need to take, particularly in circumstances where he insisted and continues to insist that Socii is not a party to the Arbitration Agreement. And so, in my view, he is to a degree complicit in the unnecessary generation of costs in this dispute; by agreeing for the matter to be determined in the Arbitration he rendered some of the costs incurred until that point waisted. Moreover, while, as explained above, I do not find that the First Defendant is the successful party and that the Claimant is the unsuccessful party, nevertheless, and technically speaking, there is undeniably something of abandonment with respect to the Claimant’s case and the same of success with respect to Socii’s.

60. As stated above, RDC 38.7(1) provides that the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party. In the present matter, I am unable to identify an outright successful party, however. RDC 38.7(2) permits the Court to make a different order and RDC 38.8 requires the Court to consider, as material, the following circumstance in deciding what order to make: “whether a party has succeeded on part of his case, even if he has not been wholly successful.” Under RDC 38.10(1), an order which the Court may make includes an order that a party must pay “a proportion of another party’s costs.” In my view, and for the above reasons, the First Defendant should pay half of the Claimant’s costs in these proceedings and its own costs. This apportioning reflects that fact that the Claimant, on balance, is the successful party as well as his contribution to the costs wasted and incurred by his agreement for the issue of the validity of the Resolution to be determined in the Arbitration.

Should the proceedings be set aside or stayed?

61. While I do not expect that the Defendants will take any further steps inconsistent with the Tribunal’s finding that the Resolution is invalid – including, as the case may require, adequately setting aside or reversing dealings conducted pursuant to the Resolution – still, with the Award being made so recently, in my regard, it would be premature to set aside the proceedings. It is arguable that any lack of cooperation with the Claimant on the part of the Defendants with respect to setting aside or reversing steps taken pursuant to the Resolution could amount to some type of residual, indirect or subsidiary action being taken pursuant to the Resolution, in which case binding declarations from this Court that the Resolution is invalid and that Defendants are not validly authorised to act pursuant to it may be of assistance to the Claimant. The First Defendant’s Set-Aside Application is, therefore, dismissed. In my view, the proceedings should, instead, be stayed, as has been requested by the Claimant and by the First Defendant in the alternative. But insofar as, and as shown above, I have not ordered the Claimant to pay the First Defendant’s costs nor, as the Claimant has requested, have I reserved costs, it follows that the First Defendant’s Stay Application and the Claimant’s Stay Application are both dismissed and my order is instead made pursuant to Article 20(1) of DIFC Law No. 10 of 2004, being the DIFC Court Law, which provides:

“The Court of First Instance has the power, in matters over which it has jurisdiction to make any orders, including interlocutory orders, and to issue or direct the issue of any writs it considers appropriate.”

The claim against Ms Revington and Reed Smith

62. The defence of the Second and Third Defendants is a straightforward one. They say the claim against the them was always misconceived and that there was never a proper purpose in adding them as parties to this litigation. In written submissions, counsel for the Second and Third Defendants succinctly summed up their cases as follows:

63. I agree with the Second and Third Defendants with respect to their submission that the issue of the validity of the Resolution was capable of being fully resolved without their involvement. Their observation that this proposition has been proved by the fact that the matter would be determined by the Tribunal in circumstances where neither of them are parties to the Arbitration is, in my view, correct. However, as I see it, these points do not assist the Second and Third Defendants. To the extent that there was no need for there to be a claim against them, equally, there seems to be little need in their entering anything but the briefest of defences in response to it.

64. It must be borne in mind that this is not a case where a defendant fears that unless he defends his position, he will suffer under a judgment made against him. It is a case where, as the Second and Third Defendants have submitted, the defendants in question take the position that the remedies sought by the Claimant which concern them directly are unnecessary as, if the Resolution is found to be invalid, that decision will bind the whole world, including each of them. For me, this submission concisely and efficiently, but no less adequately, encapsulates the Second and Third Defendants’ cases. Anything beyond this submission was, in my regard, superfluous.

65. But the simple fact is that in these proceedings the Second and Third Defendants did exceed this essential submission. Both of these Defendants argued – and continue to maintain – a jurisdiction challenge on the basis of the Arbitration Agreement and both of them made submissions in objection of the Claimant’s use of the Part 8 procedure when issuing his claim. I am unable to reconcile these two positions with the Second and Third Defendants’ position that it in essence has no position: “In the present case, whether the Resolution is valid or not will turn on whether or not the relevant processes were followed… [In the event the Resolution is found to be invalid], the [Second and Third Defendants] will automatically cease to be appointed.” (It is not lost on me that this statement appears to suggest that the Second and Third Defendants do in fact recognise the appropriateness of the Claimant’s use of the Part 8 procedure.) In my view, it was not the concern of the Second and Third Defendants whether or not the Claim was appropriately issued as a Part 8 claim or whether or not this Court had jurisdiction in the first place. These were the concerns of the First Defendant which the First Defendant would and in fact did defend. There was no need for the Second and Third Defendants to reinforce the First Defendant’s arguments on these issues. And to the extent that these issues were of concern to the Second and Third Defendants, the natural suggestion is that they were properly added as defendants to these proceedings. For me, the Second and Third Defendants are in the difficult position of either conceding that they did have an interest in the proceedings – in which case they were properly added as defendants – or, alternatively, of conceding to unnecessarily making submissions and accruing costs – in which case they will not be able to recover those costs. In my view, an analysis of the pleadings and evidence suggests that both of these conclusions are likely to be at least partially correct.

66. To go back to consider the soundness of the Claimant’s initial decision to add the Second and Third Defendants, in this regard, the Claimant relies upon these parties’ persistence after the Resolution was purportedly passed in acting pursuant to the Resolution as well as their insistence that the Resolution was valid. The Claimant takes the position that these steps justified adding the Second and Third Defendants so that they would be bound by any declaration as to the invalidity of the Resolution. For example, upon receipt of the Resolution, Mr Al-Jassim promptly wrote to Ms Revington and Reed Smith by letters dated 3 and 9 June 2019 pointing out the invalidity of the Resolution. However, in a letter to the Claimant’s legal representatives dated 13 June 2019, Reed Smith stated:

Furthermore, Reed Smith refused to convey to Mr Al-Jassim information about the steps taken pursuant to the Resolution despite Mr Al-Jassim being both a shareholder and director of Hungerstation DIFC. In the letter cited above, for example, Reed Smith also stated:

67. Reiterating his position, on 26 November 2019, the Claimant’s representative sent an email to Reed Smith stating:

“Our client is a 37% shareholder and a director of the Company. In this context he is plainly entitled to know (a) who has been providing instructions on behalf of the company and (b) what approximate fee has been incurred. There can be no legitimate basis for such basic information not being provided to him.”

Reed Smith replied to this email, asking: “What is the legal basis that would entitle you to this information?” It is clear now following the Tribunal’s Award that the legal basis for the Claimant’s entitlement was, primarily, the invalidity of any Resolution that purported to give the Second and Third Defendants the authority to act on Hungerstation DIFC’s behalf in the Arbitration to his exclusion. However, despite the fact that the Second and Third Defendants were taking steps pursuant to the invalid Resolution, I do not think that there was anything particularly unusual in the forthrightness with which, before the Tribunal’s determination, they defended the validity of the Resolution which they presumably regarded to be precisely valid. Nor has the Claimant directed me to evidence that the Second and Third Defendants would continue to act pursuant to the Resolution if it was found by a competent tribunal to be invalid.

68. I am satisfied by the Second and Third Defendants’ submissions that they would not have acted upon any invalid resolution. Reed Smith is a highly-reputable law firm and the argument that it needs to be bound by this Court in order to not act upon an invalid shareholders’ resolution is, I think, untenable. Nor do I think there is any evidence to suggest that Ms Revington needed to be bound by this Court. It follows, in my regard, that the Second and Third Defendants’ addition to these proceedings created unnecessary costs.

69. RDC 38.10(5) provides that costs orders which the Court may make include an order that a party must pay “costs relating to particular steps taken in the proceedings.” For the above reasons, I think it is fair that the Claimant pay the Second and Third Defendant’s costs of the initial steps they took upon notice of these proceedings, but limited only to their submissions that they were not desirable parties to the proceedings. Any costs incurred by either the Second or Third Defendant in relation to other issues – like the jurisdiction of this Court or the Claimant’s use of the Part 8 procedure – or indeed on this same issue of desirability but in subsequent submissions, the Second and Third Defendants are to each bear themselves. I have used the Second and Third Defendants’ witness statements in these proceedings to come to the following proportions: the Claimant is to pay 11 percent of the Second Defendant’s costs and 14 percent of the Third Defendant’s costs.

70. Though the Second and Third Defendants were not, in my regard, desirable parties to these proceedings when they were issued, still, I am unable to find that they retained this status after the proceedings’ commencement. In my opinion, any right these two parties had to be removed from the proceedings on the basis of undesirability was waived when they decided to participate in them beyond this fundamental issue, supporting and reinforcing the First Defendant’s case. And while, again, I do not think that the Second and Third Defendants – and it must be emphasised, again, that the Third Defendant is a highly reputable law firm – will take steps inconsistent with the Tribunal’s finding regarding the Resolution, for the same reasons that the proceedings should be stayed and not set aside, in my view, it would be premature to remove the Second and Third Defendants from the proceedings until any appropriate setting aside or reversing of steps taken pursuant to the Resolution are resolved. It is hoped, and expected, that the relevancy of these proceedings will quickly diminish and that the Claimant will very soon be in a position to withdraw them entirely. But until then, I do not see a pressing need for this Court to make an intervention.

Conclusion

For the reasons given above, the First Defendant’s Set-Aside Application is dismissed, the Second and Third Defendants’ Removal Applications are dismissed, the Claimant and First Defendant’s Stay Applications are dismissed while the proceedings are nevertheless stayed with the First Defendant paying fifty percent of the Claimant’s costs of these proceedings, the Claimant paying eleven percent of the Second Defendant’s costs of these proceedings and fourteen percent of the Third Defendant’s costs of these proceedings, with the parties otherwise baring their own costs.