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Claim No. CFI 043/2022

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

(1) WILLIAM ALLAN JONES
(2) COFFEE PLANET LLC
(3) COFFEE PLANET ROASTERY FZE

Claimants

and

ROBERT ANTHONY JONES

Defendant

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ORDER WITH REASONS OF JUSTICE SIR JEREMY COOKE

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UPON the Freezing Order of Justice Robert French dated 29 June 2022

AND UPON reviewing the Defendant’s Application Notice No. CFI-043-2022/2 dated 19 July 2022 for a declaration that the DIFC Courts does not have jurisdiction (the “Defendant’s Application”)

AND UPON reviewing the Claimants’ evidence in answer to the Defendant’s Application dated 26 August 2022

AND UPON reviewing the Defendant’s evidence in reply dated 2 September 2022

AND UPON reading the Claimants’ skeleton argument dated 5 September 2022

AND UPON reading the Defendant’s skeleton argument dated 5 September 2022

AND UPON reviewing the Claimants’ statement of costs dated 7 September 2022

AND UPON reviewing the Defendant’s Statement of Costs dated 7 September 2022

AND UPON hearing Counsel for the Claimants and Counsel for the Defendant at the hearing on 8 September 2022

AND UPON reviewing the relevant documents on the Courts file

IT IS HEREBY ORDERED THAT:

1. The Defendant’s Application is dismissed.

2. The Court has jurisdiction over the claim.

3. The Defendant shall pay the Claimants 80% of their costs on the standard basis but there should be no enforcement of such a costs order until these proceedings are concluded, when the overall success or failure of the Parties and their respective liabilities, if any, can be set off, one against the other.

4. The existing injunction will continue in its existing form on condition that within 21-day from the hearing date, the Claimant applies to the onshore Dubai court seeking provisional attachment of the identified assets by the Defendant in his affidavit certain witness statements where those assets are situated within on shore Dubai and on condition that the claimant takes all reasonable steps for expedition of the hearing for such provisional attachment.

5. Liberty to apply.

Issued by:
Ayesha Bin Kalban
Deputy Registrar
Date of issue: 12 September 2022
At: 12pm

SCHEDULE OF REASONS

Introduction

1. These are the brief reasons for the order I made on 8 September 2022 which has the effect of continuing the injunction originally granted by Justice Robert French on 29 June 2022, but on specified terms. The order I made was that the injunction and freezing order which froze the specific assets set out in Schedule C to the original Order in respect of which a proprietary claim was made by the Claimants (all of which were in on-shore Dubai) and other assets belonging to the Defendant (only one of which was in the DIFC, the rest being in on-shore Dubai) should be maintained on condition that:

2. I gave liberty to the Parties to apply to this Court following any such determination by the on-shore Dubai Court, with the obvious implication that the freezing injunction in respect of on- shore Dubai assets would be discharged if replaced by Provisional Attachment Orders and equally likely discharged if the Dubai Courts found it inappropriate to make such orders to protect the efficacy of any future judgement it might make. The Dubai Court was, at the time of the grant of the original injunction, seized with the lawsuits instituted by the Defendant against the Claimant in respect of many of the assets referred to and the Claimants had counterclaimed or were about to counterclaim for transfer of some of those assets or damages in lieu. With the exception of the one disclosed asset situated in the DIFC, namely some shares in a DIFC registered company, Yalla Group Software Solutions Ltd, all of the assets referred to in the Defendant’s first affidavit are situated in on-shore Dubai. Apart from the existence of a bank account owned by the Claimant in DIFC and these shares, neither the Claimants nor the Defendant had any other connection with DIFC.

3. The primary dispute between the Parties which I was asked to determine was whether or not the DIFC Court had jurisdiction to grant an injunction in such circumstances where Article 5 (A) (1) (a)- (d) of the Judicial Authority Law, Law No. 12 of 2004 (the ‘‘JAL”) did not provide any “gateway”. The only relevant provision of the JAL relied on was Article 5 (A) (1) (e) which provides that the Court of First Instance (the “CFI”) 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”. The Defendant’s Counsel, Mr Richard Hill QC, submitted that there was no relevant DIFC law or DIFC regulation which gave the DIFC Court jurisdiction to grant a freezing order/preservation of property order in support of proceedings elsewhere than in the DIFC before any judgement in such proceedings had been issued and was recognised (or at least capable of recognition) by the DIFC Court.

The Jurisdiction Issue

4. Counsel for the Defendant accepted that it was settled law that the DIFC Court could hear claims to enforce foreign judgements and judgements of the Dubai Court, referring to Article 24 of the Courts Law and Article 7 of the JAL.

5. It was also accepted by Counsel for the Defendant that it was settled law that the judgement of any foreign court could be ratified regardless of the absence of any “gateway” under Article 5 A(i) (a)-(d). It was also agreed that there was no need for the presence of any assets in the jurisdiction for any such foreign judgement to be ratified in accordance with Article 7(6). None of this, he submitted, had or could have any application to the situation where no judgement of a foreign court or the Dubai Court had yet been obtained. There was no Law or Regulation under Article 5 A (1) (e) which provided for any such situation. The jurisdiction of the DIFC Court was entirely statutory and there was no room for the DIFC Court to assume arbitrary powers to grant injunctions or orders where it considered it appropriate to do so.

6. The Defendant accepted that this Court was bound by the decision of the Court of Appeal in Nest Investments v Deloitte & Touche [2018] CA 011 (13 March 2019) where it was decided that a provision in the RDC could qualify as a relevant Regulation under Article 5 A (1) (e) but that whether or not it did so depended upon the proper construction or interpretation of the Rule in question. He submitted that, although the Court of Appeal said that RDC 20.7 was such a Regulation which provided for jurisdiction, there was no such relevant regulation providing for jurisdiction for the grant of ancillary relief to proceedings abroad or in on-shore Dubai prior to the issue of any recognisable judgement by a Court located there. None of the provisions relied on by the Claimant were apt to confer jurisdiction and the effect of the Claimants’ argument would be to create an alarmingly wide jurisdiction which undermined the gateway provisions of Article 5 A(1). There could be no freestanding jurisdiction for which there was no express provision in statute.

7. In this context, reliance was placed on the terms of Article 20 (1) of the Courts Law which, under the heading of “Making of Orders and issuing of Writs”, the CFI was given “the power, in matters over which it has jurisdiction” to make any orders, “including interlocutory orders…it considers appropriate”. It was argued that this requirement of “matters over which it has jurisdiction” meant that there was a need for an independent source of jurisdiction for the exercise of the power both under Article 20 (1) and under Articles 22(2) and 32(2) on which reliance was placed by the Claimant.

8. Reliance was also placed by the Claimant on RDC Rule 25.1 and Rule 25.24. Part 25 is headed “Interim Remedies and Security for Costs”.

9. It is clear that this Rule envisages interim remedies where no substantive claim is being made in the DIFC and the purpose of the relief sought relates to proceedings elsewhere, which would include the Dubai Court. As was pointed out by Counsel for the Claimants, Mr Tom Montagu-Smith QC, if jurisdiction arose under one of the gateways in Article 5 A. (1)(a)-(d), there would then be jurisdiction for the substantive claim itself. The Defendants contend that the RDC cannot enlarge the statutory powers and that this Rule cannot extend the jurisdiction to give injunctions without any jurisdictional limit whatsoever but, in a manner akin to the thought processes revealed in the judgement of the Court of Appeal in Next (ibid), it is hard to see that this Rule can have any application in the absence of a power to grant such a remedy in the circumstances envisaged by the Rule which refers to “proceedings which are taking place or will take place” and not simply to the situation where a judgement has already been issued by a foreign court or the Dubai Court.

10. The Defendant argued that the DIFC regime bore some resemblance to that in England at the time of the decision of the House of Lords, in the Siskina, following which it was thought necessary to legislate for the position where injunctions were sought in relation to foreign proceedings. Moreover, the current English statutory jurisdiction under section 37 of the Supreme Court Act has a jurisdictional limitation by reason of the need for service of proceedings on any defendant, either within the jurisdiction or, with leave, outside the jurisdiction. No such limitation applies in the DIFC save for the connecting factors in Article 5 A (1) of the JAL.

11. At pages 28 – 29 of the DIFC Courts Practice, there is discussion of the central question in issue here. Reference is made to a number of decisions where the DIFC Courts have indicated that they had a freestanding jurisdiction to grant interim remedies in support of non-DIFC arbitration and court proceedings. There are no reasoned judgements, although the reasoning appears from some of the orders made. The conclusion reached by the authors is that: “the result may now be that the DIFC Courts will grant interim remedies in support of non-DIFC litigation and arbitration in appropriate cases. If so, that is to be welcomed. The policy case in favour of such a jurisdiction is overwhelming and in line with the approach of other major international dispute resolution centres”.

12. In Childescu v Gheorgiu, the Deputy Chief Justice Al Mheiri considered that the provisions of the JAL, the Court Law and the RDC were not of themselves sufficient to confer a wide-ranging jurisdiction upon the DIFC court but the position is, to my mind impacted by the decision of the Court of Appeal in Next, to which he was referred and by the later first instance decision of Justice Wayne Martin in Lateef v Liela [2020] ARB 017, by reference to the decision of the Privy Council referred to below.

13. I am fortified in the conclusion that I would otherwise have reached in any event, on the basis of the provisions in the JAL, Court Law and RDC to which I have referred, in the light of Next, by the decision in Lateef, which draws heavily on the notion of the “Enforcement Principle”, as enunciated by Lord Leggatt in the Privy Council decision in Broad Idea v Convoy Collateral Limited [2021] UKPC 24. The Claimants submitted that Justice Wayne Martin found that there was an unfettered freestanding jurisdiction to grant injunctions, without reference to any of the gateways or alternatively that he found that the Enforcement Principle meant that injunctions ancillary to the enforcement of projected foreign judgements or judgements of the Dubai Court fell within the ambit of the Court’s jurisdiction.

14. The essence of the reasoning, following recital of the parties’ submissions in that case and the relevant provisions of the statute and RDC to which I have already referred, appears at paragraphs 96 – 131 and more particularly paragraphs 122 – 129 of the judgement.

15. As pointed out by the learned Justice at paragraph 112, citing Lord Nicholls, “the essential purpose of a freezing injunction is to assist the enforcement through the Court’s process of a money judgement (which is usually prospective): the claimant’s underlying cause of action is relevant only in so far as it bears on the prospect that such a judgement will be obtained”. Lord Leggatt expressed the “Enforcement Principle” in this way: “the first and primary principle is that the purpose of a freezing order is to stop the injuncted defendant dissipating or disposing of property which could be the subject of enforcement if the claimant goes on to win the case it has brought.” The principle justified the scope of the jurisdiction to grant a freezing injunction against a third party against whom no claim for substantive relief lay. In such circumstances, once the purpose was recognised, there was no reason in principle to link the grant of injunctions the existence of a cause of action.

16. The learned Justice, at paragraph 121, envisaged that these statements of principle would be adopted by common law courts around the world and at paragraph 122 stated that restricting the grant of orders to cases in which a judgement had already been entered (and possibly enforcement proceedings commenced) would be contrary to such principles and would dramatically undermine the efficacy of the remedy and thereby undermine the efficacy and integrity of the court process not only in the local court but also in the jurisdiction in which the substantive proceedings were being conducted. In his view such a conclusion would be perverse and could only follow from a clear and unequivocal restriction in the statutory provisions relating to the exercise of the court’s jurisdiction.

17. The learned Justice then construed the Courts Law as conferring broad and unqualified injunctive powers, analogous to those enjoyed historically by Courts of Chancery in common law jurisdictions. He noted that there were no qualifications or constraints, express or to be implied from any provision in the legislation relating to the jurisdiction of the court in relation to interim injunctions and focused on the jurisdiction of the court to enforce foreign judgements, relying on the Privy Council decision as authoritatively establishing that the grant of freezing orders pursuant to the enforcement principle was an incident of that jurisdiction. He arrived at the same conclusion by reference to the RDC. At paragraph 127 he concluded:

18. I, like Justice Martin, see no difficulty in adopting this principle without reference to the gateways provided by Article 5 A (1)(a)-(d) in the light of Article 5 A(1)(e) and the terms of Article 7 of the JAL, Article 24 of the Courts Law and the terms of the RDC. This is not an arbitrary exercise of jurisdiction (which will in any event depend upon effective service which is not now in issue here, although it once was). The jurisdiction of the Court to grant interim injunctions in such situations as the present is, by reason of the wide wording of the provisions to which I have referred, without any limitation of the kind that the Defendants would like to impose and by reason of the “Enforcement Principle” a necessary adjunct to the powers given in relation to enforcement of judgements of foreign courts and the Dubai Court. I do not see the need myself to describe this as a freestanding power and it is not arbitrary, since its exercise will be limited by the other principles referable to the grant of interim injunctions of this kind and interim injunctions generally.

19. Further, like the learned Justice, I do not see the decision of the Court of Appeal in Akhmedova v Akhmedov [2018] CA 003 (19 June 2018) as standing in the way. It antedated Next and did not consider the position which now obtains in the light of Broad Idea and is readily distinguishable for the reasons given by him.

20. In my judgement, all the public policy issues militate in favour of the grant of assistance to a foreign court or the Dubai Court in circumstances where it cannot achieve with the same facility a result which this Court can. Contrary to the submissions of the Defendant, this Court does not seek to usurp the powers of the Dubai Court, nor to compete with it, but to assist it by freezing assets against which its judgements might be enforced and which might otherwise be dissipated with the result of rendering the judgement ineffective. The substantive jurisdiction rests with the Dubai Court.

21. I conclude therefore that this Court has jurisdiction to grant an interlocutory injunction freezing assets in the hands of a defendant in support of proceedings taking place abroad or in the Dubai Court. Whether it should do so as a matter of discretion brings in a range of other factors including some of those referred to below.

The DIFC Court/ Dubai Court Issue

22. When the ex parte application was made to Justice Robert French he asked Counsel about comparable remedies available in the Dubai Court. This was an obvious question to ask in circumstances where the Dubai Court was already seized of the substantive dispute between the Parties, subject to a counterclaim which had yet to be brought. There is no issue between the parties that the substantive disputes are to be decided in the Dubai Courts which are currently in the process of doing so. Without descending into any detail as to the exchanges between the Justice and counsel for the Claimant, most, if not all of which is quoted in paragraph 119 of the Claimants’ skeleton argument, the Court was told that although it was possible in principle to obtain attachment orders in relation to property within the jurisdiction of the Dubai Court, there was no equivalent to an “in personam” freezing order in that jurisdiction. There might have to be several different actions in those courts and the process would be more prolonged. “It might well be the case that that sort of relief is difficult or impossible to obtain where there is a dispute”… It would not be a clear shot. It might be a difficult application… Likely that it would take some days and would probably need to be made in multiple ways”.

23. The Defendant, in the written submissions, contended that there had been a failure to make full and frank disclosure of the position in on-shore Dubai. The point was not pursued in oral argument because of the order that I suggested was likely to be made, having determined that the Court had jurisdiction to grant an injunction for the reasons set out earlier in this judgement. The point was not abandoned by Counsel for the Defendant but when reference is made to the evidence supplied by lawyers qualified to act in on-shore Dubai, I consider that the point was doomed to fail. The evidence adduced on behalf of the Defendant came from the lawyers actually instructed by him in the proceedings before the Dubai Court. It was therefore not independent in the usual sense in which that word is used. Regardless of that, I concluded on the basis of the evidence adduced by the Claimants in relation to on-shore Dubai law that:

24. In the result, it appears to me that the Claimants were fully justified in seeking a freezing order in the DIFC as opposed to seeking provisional attachment orders in the Dubai Court which would undoubtedly have been more complex, more prolonged and more uncertain in outcome and effect, whilst not covering any assets, known or unknown in the DIFC.

25. Nonetheless, because the purpose of the jurisdiction, as set out above, in relation to proceedings elsewhere than in the DIFC is essentially to assist the local court in question, the usual form of assistance required relates to assets which are within the jurisdiction of the DIFC as opposed to assets which are amenable to the other court’s jurisdiction. In this case, assuming for these purposes that the Defendant’s evidence as to his assets is accurate, the vast majority of those assets lie within the jurisdiction of the Dubai Court and if it can itself grant orders for attachment which will have the effect of ensuring that any judgement rendered by it is not rendered fruitless, it is right that it should control its own procedures and apply its own tests as to the relief to be granted.

26. It was in these circumstances that I suggested to the parties that, if there was jurisdiction in this Court to grant and continue the injunction which had been ordered, the right course would be to continue it in its existing form in order to hold the ring until the Dubai Court could make its own decisions as to the appropriateness of provisional attachments over assets within its jurisdiction. Neither party had a convincing reason to advance against this course save for the inevitable additional expenditure which would be involved in litigating the attachment issues as well as the substantive issues, having already incurred approximately $500,000 of costs each in this jurisdiction.

27. I can see no reason why the injunction should not continue in relation to assets within the DIFC, particularly as there was a dispute as to the value of those assets, however limited that value might be in the context of the overall dispute between the Parties.

Good arguable case

28. In their respective skeleton arguments, neither party invited the court to attempt to resolve the conflict of evidence. Both parties accepted that it is for the Dubai Courts, which are seized of the substantive dispute between the parties, to determine the facts and not for this Court to do so.

29. Moreover, the voluminous evidence adduced by the Parties gave rise to a considerable range of disputed issues of fact relating to the ownership of the various pieces of property which have been frozen by the freezing injunction and which could be the subject of provisional attachment in on-shore Dubai. Each individual party points to inconsistencies in the evidence given by the other, in one jurisdiction or the other, or in both, and the unlikely and implausible explanations which are provided for a situation where the father has essentially provided money for the purchase of the property which is registered in his son’s name. In the absence of proper documentation of the arrangements between them, any Court faced with determining the issues between them is likely to have to decide matters on the basis of what used to be called, in old-fashioned terms, a “swearing match”.

30. Family issues arise on undocumented loans/gifts or transfers. The hiding of assets or holding of assets in trust for covert purposes is a possibility, whether in the context of the sons’ divorce proceedings, the father’s inability to obtain a mortgage or the desire of one or both to get a bank account or Golden Visa. There are a number of possibilities not all of which may have been advanced as yet. Both father and son may be right in some or all of their accusations against the other, but there is no way of determining this on paper. Large volumes of evidence were adduced on fact issues which cannot be determined (and a substantial body of evidence was wrongly produced by the Defendant on 2 September on such issues when permitted only to file reply evidence on jurisdiction). I concluded that all that could be said was that each party had a good arguable case. With that indication Mr Hill did not pursue the points he would otherwise have wished to pursue. To my mind this aspect somewhat fortifies my conclusion that the right court to decide whether properties should be frozen or attached on an interim basis is the Court which has ultimately to decide the substantive merits of the positions of the Parties.

Risk of Dissipation of Assets

31. This point too was not the subject of argument because of the solution suggested by the Court once the jurisdiction issue had been resolved. It was plain on the documents and indeed admitted, that the son had attempt to sell some of the property which is currently frozen, including the house in which he had lived with his estranged wife, who claims an interest in it and the Lamborghini. Whilst he says that this was not an attempt to avoid payment of any judgement sum that might be awarded against him, the fact remains that he was seeking to sell property, some of which he knew was claimed by his father. Without hearing full argument on the subject I formed no concluded view but it appeared to me that they Defendant would have an uphill struggle in persuading me that there was no risk which justified the maintenance of the injunction.

Just and Convenient

32. For the reasons already explained, I have come to the conclusion that the just and convenient course is to make the order outlined at the beginning of this judgement.

Costs

33. Because I have concluded that the Claimants were justified in seeking the freezing injunction in the first place and the Defendant’s jurisdiction challenge has failed, the ultimate position arrived at is one in which the Claimants have met with a good measure of success although the matter is now to go to the Dubai Court for it to decide on issues of provisional attachment and for any reconsideration by this Court to be made in the light of any such determination. In those circumstances, I consider that the Claimants are entitled to an order for payment of 80% of their costs on the standard basis but that there should be no enforcement of such a costs order until these proceedings are concluded, when the overall success or failure of the Parties and their respective liabilities, if any, can be set off, one against the other.

34. The costs incurred thus far are considerable and much more will be spent on lawyers if the Parties cannot see their way to settlement of a family dispute. It is stating the obvious to say that the Parties should use every effort to reach an agreement rather than eat up family wealth, apparently hard- earned wealth, in a dispute which will reveal to the public, or at least to anyone sufficiently interest to take notice, a range of private matters which it would not seem to be in any of the protagonist’s interests be made known.