November 23, 2023 court of first instance - Orders
Claim No. CFI 048/2023
IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE
IN THE COURT OF FIRST INSTANCE
BETWEEN
GULF PETROCHEM FZC LLC
Claimant
and
(1) PETROCHINA INTERNATIONAL (MIDDLE EAST) COMPANY LIMITED
(2) PETROCHINA INTERNATIONAL (SINGAPORE) PTE LTD
(3) INTERTEK FUJAIRAH FZC LLC (BRANCH OFFICE)
(4) INTERTEK SHARJAH FZ LLC
Defendants
AMENDED ORDER WITH REASONS OF JUSTICE RENE LE MIERE
UPON the Claimant filing a Part 7 Claim Form dated 10 July 2023 (the “Claim”)
AND UPON the First and Second Defendants' Application No. CFI-048-2023/1 dated 30 August 2023 seeking to set aside the Default Judgment dated 9 August 2023 (the "Default Judgment") entered in this matter (the “First and Second Defendants’ Set Aside Application”)
AND UPON the Third Defendant’s Application No. CFI-048-2023/2 dated 1 September 2023 seeking to set aside the Default Judgment (the “Third Defendant’s Set Aside Application”)
AND UPON the Order of H.E. Justice Nassir Al Nasser dated 19 September 2023 (the “Stay Order”)
AND UPON a hearing having been held before me on 31 October 2023
AND UPON reviewing the case file and submissions set out therein
IT IS HEREBY OREDERED THAT:
1. The Default Judgment is set aside.
2. The Claim was not validly served on the First and Second Defendants in accordance with the Rules of the DIFC Courts.
3. The Particulars of Claim against the First Defendant are struck out.
4. The Claim against the First Defendant is dismissed.
5. The Court declares it does not have jurisdiction to try the Claim against the Second Defendant.
6. The Claim against the Second Defendant is dismissed.
7. The Claimant must pay the First and Second Defendants’ costs of the First and Second Defendants’ Set Aside Application, to be assessed by the Registrar, if not agreed
8. The Claimant must pay the Third Defendant’s costs of the Third Defendant’s Set Aside Application, to be assessed by the Registrar, if not agreed.
9. The Claimant must pay the First and Second Defendants’ costs of the Claim, to be assessed by the Registrar, if not agreed.
Issued by:
Hayley Norton
Assistant Registrar
Date of Issue: 20 November 2023
Date of Re-Issue: 23 November 2023
At: 11am
SCHEDULE OF REASONS
Summary
1. The claimant, Gulf Petroleum FZC LLC (the “Claimant” or “Gulf Petroleum”), commenced this action by Claim Form on 10 July 2023.
2. Essentially, the Claimant claims that it entered a contract with the second defendant, PetroChina International (Singapore) Pte Ltd (the “Second Defendant” or “PetroChina Singapore”) for the purchase and sale of fuel oil; the fuel oil delivered by PetroChina Singapore was not in accordance with the contract; and the Claimant suffered loss and damage as a result. The Claimant also alleges that the third defendant, Intertek Fujairah FZC (the “Third Defendant” or “Intertek Fujairah”) did not test the oil properly and potentially falsified and deliberately distorted the final testing report.
3. On 11 July 2023 the Claimant filed certificates of service certifying that it had served each of the Defendants on 11 July 2023.
4. On 26 July 2023 the Claimant requested default judgment against each Defendant.
5. On 9 August 2023 default judgment was ordered against each Defendant.
6. The Defendants have applied for orders setting aside the default judgment.
7. The Second Defendant and the first defendant (the “First Defendant” or “PetroChina Middle East”) have also applied for orders that they were not validly served with the Claim Form.
8. PetroChina Singapore also applies for orders that the Court has no jurisdiction over it and the action should be dismissed or stayed pursuant to the Arbitration Law1.
9. PetroChina Middle East also applies for an order that the action against it be dismissed pursuant to rule 4.16 (striking out a statement of case).
10. For the reasons which follow the Court will order:
(1) The default judgment against each of the Defendants be set aside.
(2) The claim was not validly served on the First and Second Defendants.
(3) The Particulars of Claim against the First Defendant are struck out.
(4) The Court declares it does not have jurisdiction to try the claim against the Second Defendant.
(5) The claim against the First and Second Defendants is dismissed.
(6) The Claimant must pay the First and Second Defendants’ costs of their application of 30 August 2023 to be assessed by the Registrar, if not agreed.
(8) The Claimant must pay the Third Defendants’ costs of its application of 1 September 2023 to set aside the default judgment to be assessed by the Registrar, if not agreed.
(9) The Claimant must pay the First and Second Defendants’ costs of the claim be assessed by the Registrar, if not agreed.
The parties
11. The Claimant (Gulf Petroleum) is a company established in the Emirate of Sharjah.
12. The First Defendant (PetroChina Middle East) is a DIFC Establishment with its Registered Office in the DIFC.
13. The Second Defendant (PetroChina Singapore) is a Singaporean company with its registered office in Singapore. It has no presence in the DIFC or Dubai. The Claim Form states it is not a resident of UAE and its address is in Singapore. PetroChina Singapore has no connection with the DIFC2.
14. The Third Defendant is described on the Claim Form as Intertek Fujairah FZC LLC (Branch Office).
15. The Fourth Defendant is identified as "Intertek Sharjah FZ LLC" in the Claim Form and "Intertek Sharjah FZC LLC" in the Particulars of Claim (the “PoC”).
16. Fadi El Breidy in his first affidavit swore that he is employed by Intertek Global Limited Abu Dhabi as the MEA and Pakistan General Counsel for the Intertek Group and oversees the internal legal function for all Intertek entities in the region.
17. Mr El Breidy swears:
(a) “The names of the Intertek entities against whom the underlying claim and Default Judgment were issued are incorrect.
(b) The Third Defendant is identified as "Intertek Fujairah FZC LLC (Branch Office)" in the Claim Form. No such entity exists, nor has such an entity ever existed. I assume that the Third Defendant is Intertek Fujairah FZC, and that the words "LLC (Branch Office)" were erroneously included by the Claimant.
(c) The Fourth Defendant is identified as "Intertek Sharjah FZ LLC" in the Claim Form and "Intertek Sharjah FZC LLC" in the Particulars of Claim. Neither such entity exists, or has, in fact, ever existed. Intertek's branch in Sharjah is named ITS Testing Services (UK) Ltd. Shj. Br (Intertek Sharjah).”
18. The Claimant has not contradicted or challenged Mr El Breidy’s sworn evidence. I will proceed on the basis that it is correct – the Third Defendant is Intertek Fujairah FZC (Intertek Fujairah) and the fourth defendant does not exist.
19. The Third Defendant (Intertek Fujairah) is established in the Fujairah Free Zone, in the Emirate of Fujairah, and is therefore located outside the DIFC and the Emirate of Dubai.
The Claim
20. The Claimant’s PoC are confusing. The primary claim is for damages for breach of contract. The Claimant pleads that it entered a contract with PetroChina Singapore for the sale of a cargo of fuel oil. The oil was not in accordance with the contract specifications and was rejected by Gulf Petroleum’s on buyer. The Claimant sold the oil to another buyer at a loss.
21. The only reference to PetroChina Middle East (i.e., Defendant (1)) in the PoC3 is a reference in [39(f)] where in reference to a communication it is stated:
“It is based on the ‘time pressure that the Defendant (3) provided irregular testing and knowingly falsified their reporting to the detriment of the Claimants, presumably under the instructions of Defendants (1) and Defendant (2)”
22. The Claim Form and PoC do not refer to Intertek Fujairah except in the title to the action.
23. The Claim Form states:
“The dispute also includes a Claim relating to the inconsistency in the testing procedures and reports submitted and supplied by Intertek Brett Caleb LLC, (Defendants 2) regarding potential falsification and deliberate distortion of the final report carried out under homogenization industry testing IP475, which is the international standard adopted for manual methods for testing of petroleum products.” and
“Intertek’s sampling was not carried out in accordance with IP 501 and IP 475 and this invalidated the Intertek shore tank tests; Intertek failed (either deliberately and/or negligently) to comply with the required procedures and/or made the following errors when taking the samples.”
24. Both the Claim Form and the PoC make complaints about the testing carried out by Intertek Brett Caleb LLC or Internet Caleb Brett LLC, neither of which, if they exist, is a party to the action and by “Intertek” which is defined at [22] of the PoC to be Intertek Caleb Brett LLC.
The applications
25. The First and Second Defendants apply for orders:
(1) The default judgment issued against the First and Second Defendants on 9 August 2023 be set aside pursuant to RDC part 14.2.
(2) A declaration that the claim was not validly served on the First and Second Defendants in accordance with the Rules of the Dubai International Financial Centre Courts (RDC) and/ or the Court has no jurisdiction over the First and/ or Second Defendant.
(3) Alternatively, an order that the claim be dismissed or stayed pursuant to Article 13 of DIFC Law No 1 of 2008 (the Arbitration Law) in favour of ongoing arbitral proceedings in Singapore.
(4) Alternatively, the claim be struck out as against the First and/or Second Defendant pursuant to RDC r 4.16.
26. The Third Defendant applies for an order that the default judgment against the Third and Fourth Defendants be set aside pursuant to RDC r 14.1 (1) and/or r 14.2(2).
Claimant’s position
27. The Claimant opposes all the orders sought.
Hearing of the applications
28. Counsel for the Claimant submitted that only the applications to set aside the default judgment had been listed for hearing on 31 October 2023 and not the other pending applications before the Court.
29. Counsel for the Claimant referred the Court to email communications from the Registry which referred to “the set aside applications” and submitted that the “set aside applications” refers only to the Defendants’ applications for orders setting aside the default judgment and not for orders that the claim be dismissed or stayed.
30. I have reviewed the emails between the Registry and the parties. The Registry informed the parties that the First and Second Defendants’ application of 30 August 2023 and the Third Defendant’s application of 1 September 2023, except for that part which sought a stay of execution of the default judgment, which had already been determined, were to be heard on 31 October 2023.
31. Relevantly, the First and Second Defendants filed two applications. The first, is their application of 30 August 2023 which seeks the orders I have referred to earlier in these reasons (briefly, orders setting aside the default judgment, that the claim was not validly served, that the Court does not have jurisdiction, the claim be stayed or dismissed pursuant to the Arbitration Law, and the claim be dismissed pursuant to rule 4.16). The second, ENF-196-2023/1, sought a stay of execution of the default judgment. The Third Defendant filed only one application – its application of 1 September 2023 seeking an order that the default judgment be set aside and an order staying execution of that judgment.
32. On 1 September 2023, after filing its application, the Third Defendant emailed the Registry requesting expedition of “the stay element” of its application.
33. Thereafter, the parties and the Registry gave the elements of the Third Defendant’s application and the two applications made by the First and Second Defendants their own dictionary meanings. The “stay applications” referred to the First and Second Defendants’ application for a stay (ENF-196-2023/1) and the “stay element” of the Third Defendant’s application; the “set aside applications” referred to the First and Second Defendants’ application (CFI-048-2023/1) of 30 August 2023 and the “set aside” element of the Third Defendant’s application.
34. On 19 September 2023 H.E. Justice Nassir Al Nasser ordered on the papers that the stay applications are granted and the enforcement proceedings in ENF-196-2023 are stayed pending the outcome of the First and Second Defendants’ set aside application.
35. Thereafter, there were communications between the parties and the Registry about the hearing date for the outstanding applications. In general, the Defendants sought an earlier and the Claimant a later hearing date. At no time did any party apply for, or the Registry direct that, the First and Second Defendants’ application of 30 August 2023 be bifurcated so that the application for orders setting aside the default judgment be heard separately and before the application for the other orders.
36. On 6 October 2023 the Registry directed:
“The hearing is hereby listed at 10 am GST on 31 October 2023 before Justice Rene Le Miere.
Please submit the case bundle and file your skeleton arguments, as well as any documents to be relied on during the course of the hearing by no later than 4:00 pm GST on 25 October 2023”.
37. Counsel for the Claimant points to an email of 6 October 2023 from the First and Second Defendants’ legal representatives to the Registry in which they said:
“As you will note, the First and Defendant have also applied for a declaration that that the DIFC Court does not have jurisdiction to hear this claim, and that the proceedings should be struck out. It is our clients' position that these matters should be determined by the Court on 31 October 2023.”
38. Counsel for the Claimant says that by that email the First and Second Defendants sought to have these applications determined at the hearing on 31 October 2023, but it was not understood “as a matter of fact or right” that these applications would be heard or considered. If the First and Second Defendants believed that the scheduling of the ‘set-aside’ applications included the strike out application and challenging DIFC jurisdiction, counsel for the Claimant submitted, then they would not have needed to re- state this point, four days prior to the hearing.
39. The First and Second Defendants’ email followed an email of 25 October 2023 from the Claimant's legal representatives to the Registry in which they stated that the Claimant would consent to the Defendants’ applications to set aside the default judgment but not the other orders striking off the claim and the jurisdictional challenge filed by the Defendants on 30 August 2023, and that the Claimant intended to file a witness statement and draft order consenting to the application setting aside the default judgments.
40. In their email of 25 October 2023, the Claimant’s legal representatives foreshadowed consenting to an order that the default judgment be set aside. They did not seek an order that “the other applications regarding strike off of the claim and jurisdictional challenge as filed by the defendants on 30 August 2023 and 1September 2023” not be heard on 31 October 2023. Nevertheless, the First and Second Defendants’ legal representatives’ email of 6 October 2023 appears to be confirmation that the First and Second Defendants maintained that those applications should be heard on 31 October 2023, notwithstanding the Claimant’s foreshadowed consent to an order setting aside the default judgment.
41. I am satisfied that the Registry directed that the First and Second Defendants’ application of 30 August 2023 and the “set aside element” of the Third Defendant’s application of 1 September 2023 be heard on 31 October 2023, not just parts of them.
42. I am satisfied that the Claimant has had a proper opportunity to answer those applications. Indeed, the Claimant filed a skeleton argument on 25 October 2023 in which it made submissions in opposition to the defendants’ challenge to the jurisdiction of the DIFC Courts.
43. At the hearing on 31 October 2023, counsel for the Claimant submitted that only that part of the First and Second Defendants’ application of 30 August 2023 that sought orders setting aside the default judgment was listed for hearing that day. However, after I ruled that that was not so, counsel did not apply for an adjournment or for leave to put on further evidence or submissions. To the contrary, counsel said that he would proceed with the hearing of the whole of the First and Second Defendants’ application that day.
Set aside default judgment wrongly entered
Rule 14.1: Court must set aside default judgment wrongly entered
44. RDC r 14.1(1) provides that the Court must set aside a judgment entered in default if judgment was wrongly entered because in the case of a judgment in default of an acknowledgment of service, any of the conditions in rules 13.4 and 13.6 were not satisfied.
45. A condition to be satisfied under r 13.4 is that the relevant time for filing an acknowledgement of service has expired.
46. A default judgment must be set aside pursuant to r 14.1 if there has not been valid service of the Claim Form on the defendant, and thus the time for acknowledging service cannot have expired for the purposes of r 13.4.
47. The fact that the default judgment states on its face and in terms that the claimant has served the claim correctly does not determine that it has been served correctly4.
Evidence of service
48. The Claimant submitted that it had served the Claim Form personally on the First Defendant (PetroChina Middle East), and the Third and Fourth Defendants (Intertek Fujairah, and Intertek Sharjah) by leaving it with a person holding a senior position within the company in accordance with RDC r 9.12.
49. The Claimant relied upon the witness statement of Abdolklalegh Ghazi Kaabi, a paralegal and Public Relations Officer manager at the law firm Franklin Morgan Legal Advisory LLC, the legal representative of the Claimant in these proceedings, in which Mr Kaabi states:
“13. The Claimant then following the directions of the DIFC Court, executed delivery and Service on the First Defendant, Third Defendant and Fourth Defendant, by way of ‘in person’ service, each delivery note, attached hereto … in accordance with RDC Part 9.13.
14. I personally attended each location, on the date and time stamped each attempted delivery on the First Defendant and Third and Fourth Defendant. The attempted delivery of the First Defendant, resulted in the offices being unoccupied and no person was available to accept delivery and service of the Claim Form, Part 7, in accordance with RDC Part 9 (RDC 9.2 (1) in accordance with RDC 9.8.
15. The attempted delivery of the Third Defendant, resulted in being refused by the reception to accept delivery and service of the Claim Form, Part 7, in accordance with RDC Part 9 (RDC 9.2 (1) in accordance with RDC 9.8.
16. The attempted delivery of the Fourth Defendant, resulted in no office location being evident, despite clearly referencing on the Intertek official website https://www.intertek.com/contact/ema/uae/) and in furtherance being advised that the advertising of a company Intertek Sharjah, was not permitted by the Hamriyah Freezone authorities, who granted me access to attempt delivery of the Claim Form Part 7. Therefore, I did attempt delivery of the Claim Form, Part 7, in accordance with RDC Part 9 (RDC 9.2 (1) and RDC 9.8.
17. The delivery of the Claim Form (part 7) on the Second Defendant, was completed through electronic delivery … , which was undertaken, based on the agreement between the Claimant and the Second Defendant, whereby all legal agreements, contracts and communications were undertaken via email or electronic means. … The Claimant and the Second Defendant have never physically met, and all communications, were completed via email. This is further evidenced in the contract (dispute) dated 02 September 2019, between the Claimant and Second Defendant, whereby it is expressly stated on page 19 (of 20) … that all communications regarding the contract, including any disputes, be via email communications, and the contract specifically lists four (4) separate email addresses of the Second Defendant. Nowhere is it stated as a means of communication or delivery of legal documents, that a physical address is provided. The contract, (dated 02 September 2019) under the letterhead of the Second Defendant, expressly provides for all communications to be via email. This condition is one proffered and administered by the Second Defendant. …
18. In accordance with the protocol of the DIFC Courts, and adhering to RDC Part 9.2 (4) I, then using the email address legal@franklinmorganlaw.com, sent notifications to the First Defendant, Second Defendant, Third Defendant and Fourth Defendant, and attach the Certificate of Service, as provided to the DIFC Court Registry. …
19. I confirm that all Defendants were served with the Part 7 Claim Form in accordance with DIFC Court rules and procedures, and it is completely incorrect for the First, Second and Third Defendants to claim otherwise. I am attaching the delivery confirmation for each of the Defendants email delivery of the Claim Form, Part 7, in accordance with RDC 9.2 (4) which was only undertaken after attempted physical delivery at the offices of the First, Third and Fourth Defendant in accordance with RDC 9.2 (1) and 9.8. …”
50. On any fair reading of the witness statement, [13] and [19] are conclusionary statements in which Mr Kaabi asserts the legal effect of the facts stated in [14] - [17]. It is clear in [14] - [16] that Mr Kaabi did not leave the claim form with a person holding a senior position within PetroChina Middle East, Intertek Fujairah, or Intertek Sharjah or indeed with any person at the premises of those companies.
51. Alternatively, the Claimant submits that it effected service by electronic means on PetroChina Middle East by email to Phinu-philip@PetroChina.com.sg, on PetroChina Singapore by email to Thomas-Lim@PetroChina.com.sg, on Intertek Fujairah by email to Felix. Cotiango@Intertek.com and on Intertek Sharjah by email to Tin.Aung@Intertek.com.
Part 9 rules and service by electronic means
52. RDC r 9.3 provides:
Where a document is to be served by electronic means:
(1) the party who is to be served or his legal representative must previously have expressly indicated in writing to the party serving:
(a) that he is willing to accept service by electronic means; and
(b) the fax number, email address or electronic identification to which it should be sent;
(2) the following shall be taken as sufficient written indication for the purposes of sub-paragraph (1) above:
(a) a fax number set out on the writing paper of the legal representative of the party who is to be served; or
(b) a fax number, email address or electronic identification set out on a statement of case or a response to a claim filed with the Court;
(3) the party seeking to serve the document should first seek to clarify with the party who is to be served whether there are any limitations to the recipient’s agreement to accept service by such means including the format in which documents are to be sent and the maximum size of attachments that may be received;
(4) the address for service given by a party must be within the DIFC or Dubai and any fax number must be at the address for service. Where an email address or electronic identification is given in conjunction with an address for service, the email address or electronic identification will be considered to be at the address for service; …
53. The purported email service on PetroChina Middle East did not comply with those requirements. Neither PetroChina Middle East nor its legal representative have previously expressly indicated in writing to the Claimant that it is willing to accept service by electronic means.
54. The Claimant, relying upon the decision of this Court in Kralj v. Royal Vision Intelligent Fund Limited5, submits that a claim form may be effectively served electronically pursuant to rule 9.19 notwi hstanding that the party served has not previously expressly 13 of 31 indicated in writing that it was willing to accept service by electronic means and hence r 9.3 has not been complied with.
55. Rule 9.19 provides:
Where:
(1) no legal representative is acting for the party to be served; and
(2) the party has not given an address for service,
the document must be sent or transmitted to, or left at, the place shown in the following table.
Nature of party to be served | Place of service |
---|---|
Individual | Usual or last known residence |
Proprietor of a business | Usual or last known residence; or Place of business or last known place of business. |
Individual who is suing or being sued in the name of a firm | Usual or last known residence; or Principal or last known place of business of the firm |
Corporation incorporated in the DIFC other than a company | Principal office of the corporation; or Any place within the DIFC or Dubai where the corporation carries on its activities and which has a real connection with the claim |
Company registered in the DIFC | Principal office of the company; or Any place of business of the company within the DIFC or Dubai which has a real connection with the claim |
Any other company or corporation | Any place within the DIFC or Dubai where the corporation carries on its activities; or Any place of business of the company within the DIFC or Dubai |
56. In Krajl the Court stated:
“In accordance with RDC 9.15, I read the places of service in RDC 9.19 to include transmittal by email to an email address provided by the individual or company. In the present case, each of the Defendants was served by email at an address provided by them as established by the Certificate of Service filed on 19 May 2023. … I am therefore of the view that service of the claim form on all Defendants was effected properly by email on 28 April 2023 and that RDC 13.22(1) was satisfied. I do not consider it was necessary to serve the First Defendant out of the jurisdiction as it is clear on the evidence that the First Defendant had a place of business in the DIFC within the meaning of RDC 9.19,”
57. Rule 9.15 provides:
A party must give an address for service within the DIFC or Dubai. A physical address in Dubai or the UAE will not be required if an email address is given.
58. In supplementary submissions the Defendants analysed in detail the decision and reasons in Krajl. I find it unnecessary to do so.
59. The reasons for judgment in Krajl did not set out how or the circumstances in which the defendants gave or provided an email address. It is not clear that the Court held that the bare provision of an email address in a communication not related to the service of legal process and made prior to the action having been commenced, is enough to give a right to serve a claim form by email on that address,
60. However, if, as the Claimant submits, Krajl did hold that the bare provision of an email address in a communication not related to the service of legal process and made prior to the action having been commenced, is enough to give a right to serve a claim form by email on that address, there are powerful reasons for not following that holding.
61. First, r 9.19 does not authorise service by email. The rule provides for a document to be served by being sent or transmitted to, or left at, the place shown in the table. The table does not include any reference to an email. The rule may extend to a document being transmitted by fax to a machine located at the place described in r 9.19 but transmission to an email address is not transmission to a place. Email is the electronic exchange of computer stored messages from a sender to a recipient via the internet. The recipient does not receive the email unless and until they download it on their device wherever they may be situated at the time.
62. Rule 9.15 allows a party to give an email address in an address for service. The rule says nothing about giving an email address other than in an address for service. Merely sending a communication to a person from an email address or referring to an email address in a communication is not giving an email address in an address for service.
63. Secondly, an interpretation of rules 9.15 and 9.19 that the bare provision of an email address in a communication not related to the service of legal process and made prior to the action having been commenced is enough to give a right to serve a Claim Form by email on that address would render rule 9.3 otiose. A statutory instrument must be construed as a whole. So far as possible, a construction that gives a harmonious or coherent meaning to the various provisions is to be preferred. The construction should give meaning and effect to every word and provision. A harmonious construction of the rules is that rule 9.15 applies only to giving an email address as an address for service and does not apply so as to extend transmittal to the places in rule 9.19 to include transmittal to an email address previously used by or referred to by an individual or company.
64. Secondly, an interpretation of rules 9.15 and 9.19 that the bare provision of an email address in a communication not related to the service of legal process and made prior to the action having been commenced is enough to give a right to serve a Claim Form by email on that address would render rule 9.3 otiose. A statutory instrument must be construed as a whole. So far as possible, a construction that gives a harmonious or coherent meaning to the various provisions is to be preferred. The construction should give meaning and effect to every word and provision. A harmonious construction of the rules is that rule 9.15 applies only to giving an email address as an address for service and does not apply so as to extend transmittal to the places in rule 9.19 to include transmittal to an email address previously used by or referred to by an individual or company.
Service on PetroChina Middle East
65. The purported service by email on PetroChina Middle East was not effective service because the uncontradicted and unchallenged evidence before the Court is that PetroChina Middle East had not at any time expressly indicated in writing to the Claimant that it would accept service by electronic means (whether email or otherwise) as required by RDC r. 9.3(1)6.
Service on PetroChina Singapore
66. The purported service by email on PetroChina Singapore was not effective service because the uncontradicted and unchallenged evidence before the Court is that PetroChina Singapore had not at any time expressly indicated in writing to the Claimant that it would accept service by electronic means (whether email or otherwise) as required by RDC r. 9.3(1)7.
67. urther and in any event, PetroChina Singapore was not served by an email transmitted to a place in the DIFC or Dubai. PetroChina Singapore is a Singaporean company with its registered office in Singapore. It has no presence in the DIFC or Dubai. Part 9 section III of the Rules provides that it is the responsibility of the party serving process to ensure he complies with the rules regarding service of the place where he is seeking to effect service8. Where a claim form is to be served out of the DIFC or Dubai, it may be served by any method permitted by the law of the place in which it is to be served9.
68. There is no evidence, and it cannot be assumed, that the law of Singapore permits service by email on the email address of a former employee of the company without prior agreement.
69. There is a further reason why the default judgment was wrongly entered against PetroChina Singapore. The period for filing an acknowledgement of service where a claim form has been served out of the DIFC or Dubai is 28 days after the service of the claim form10. Twenty-eight days had not expired from the time of the purported service of the Claim Form when the Claimant requested default judgment against PetroChina Singapore or by the date the default judgement issued.
Service on Intertek Fujairah
70. The purported service by email on Intertek Fujairah was not effective service because the uncontradicted and unchallenged evidence before the Court is that Intertek Fujairah had not at any time expressly indicated in writing to the Claimant that it would accept service by electronic means (whether email or otherwise) as required by RDC r. 9.3(1)11.
71. Further and in any event, Intertek Fujairah was not served by an email transmitted to a place in the DIFC or Dubai. Intertek Fujairah is established in the Fujairah Free Zone, in the Emirate of Fujairah, and is therefore located outside the DIFC and the Emirate of Dubai.
72. There is no evidence, and it cannot be assumed that the law of the Emirate of Fujairah permits service by email on the email address of a former employee of the company without prior agreement.
73. Further, the period for filing an acknowledgement of service where a claim form has been served out of the DIFC or Dubai is 28 days after the service of the claim form12. Twenty-eight days had not expired from the time of the purported service of the Claim Form when Gulf Petroleum requested default judgment against Intertek Fujairah or by the date the default judgment issued.
Service on Fourth Defendant
74. The evidence is that the fourth defendant does not exist. If there is such an entity, the evidence is that it was not served with the Claim Form in accordance with the rules and the default judgment against it must be set aside for the same reasons that the default judgment against Intertek Fujairah must be set aside.
Default judgment must be set aside
75. For all those reasons the default judgment against each of the defendants was wrongly entered because the conditions in Rule 13.4, that the defendant had not filed an acknowledgment of service and the relevant time for doing so had expired, were not satisfied. In those circumstances the Court must set aside the default judgment13.
Rule 14.2: Set aside default judgment not wrongly entered
76. If I was not satisfied that the conditions in rule 13.4 had not been satisfied, I would have exercised my discretion to set aside the default judgment under rule 14.2. In summary my reasons for doing so are;
(a) each of the Defendants has a real prospect of successfully defending the claim;
(b) the Court has real doubts about its jurisdiction over PetroChina Singapore and Intertek Fujairah;
(c) each of the Defendants has shown good reason for its failure to file an acknowledgement of service; and
(d) each of the Defendants applied to set aside the default judgment sufficiently promptly.
First and Second Defendants’ application to strike out the claim
The application
77. In their application of 30 August 2023, the First and Second Defendants applied for an order that:
“the claim be struck out as against the first and/ or second defendants pursuant to RDC r 4.16.”
78. Rule 4.16 provides:
The Court may strike out a statement of case if it appears to the Court:
(1) that the statement of case discloses no reasonable grounds for bringing or defending the claim;
(2) that the statement of case is an abuse of the Court’s process or is otherwise likely to obstruct the just disposal of the proceedings; or
(3) that there has been a failure to comply with a Rule, Practice Direction or Court order.
79. In their submissions the First and Second Defendants submitted that the statement of case discloses no reasonable grounds for bringing the claim14 and that the statement of case is an abuse of the Court’s process15.
80. I will first consider the submission that the statement of case discloses no reasonable grounds for bringing the claim because the abuse of process submission is based on the premise that the statement of case discloses no reasonable grounds for bringing the claim.
Statement of case discloses no reasonable grounds for bringing the claim;
81. The only cause of action expressly stated in the Claimant’s PoC (titled Statement of Claim) is a claim against PetroChina Singapore for damages for breach of contract.
82. The PoC do not assert any cause of action against PetroChina Middle East nor do the PoC allege any facts that give rise to a cause of action against PetroChina Middle East
83. The PoC persistently refer to “the defendant”. That must be a reference to the Second Defendant, PetroChina Singapore, because the Claimant pleads that the contract on which it sues is a contract between it and PetroChina Singapore.
84. The PoC only refers to the PetroChina Middle East (“First Defendant” or “D1”) twice:
“[2] Pursuant to a legally binding contract dated 23 August 2019 (the “Contract”) Gulf Petrochem FZC (the “Claimant”) agreed to buy, and PetroChina International (Singapore) PTE. LTD. (the “Defendant 1”) agreed to sell, two cargoes of fuel oil … “and
“[39(f)] It [an exchange of WhatsApp messages] is based on the time pressure that the Defendant (3) provided irregular testing and knowingly falsified their reporting to the detriment of the Claimants, presumably under the instructions of Defendants (1) and Defendant (2).”
85. The reference in [2] to Defendant 1 is a mistake. The reference is to PetroChina Singapore.
86. At [39(f)] the Claimant speculates that PetroChina Middle East as well as PetroChina Singapore gave an instruction to “Intertek” which created “time pressure” on Intertek. This assertion is not elaborated upon or developed. It does not give rise to any claim against PetroChina Middle East.
87. The PoC are liable to be struck out pursuant to rule 4.16.
No real prospect of succeeding on claim against PetroChina Middle East
88. As I have said the PoC disclose no reasonable grounds for bringing the claim against PetroChina Middle East. Indeed, the PoC contains no cause of action or claim against PetroChina Middle East.
89. In its Skeleton Argument dated 12 September 2023, filed in response to the stay application, the Claimant asserts that it states in its Claim Form:
“… the First & Second Defendant and Third & Fourth Defendant conspired to defraud the Claimant, by providing a falsified or misleading report, which the Defendants et al, materially were aware of, and used to induce the Claimant to accepting a product which they knowingly were aware was not as per the specifications of the Contract of Sale.
This assertion of ‘Fraud’ ‘or criminal Conspiracy’ and deliberate intent to mislead is covered under UAE Federal Law No 3 of 1987, and as the acts were committed within the United Arab Emirates, the claim of an Arbitration Clause is meritless.
In furtherance to the potential criminality of the First & Second Defendants, they have also materially and egregiously breached DIFC Law Rule No 5 of 2005 Article 32 (d)
A person is liable for misrepresentation to a representee if:
(a) he is the representor in relation to a misrepresentation;
(b) the representee has entered into a contract after misrepresentation has been made;
(c) the misrepresentation influences the representee to enter into a contract or affects the terms upon which he agrees to enter into it; and
(d) the representee suffers loss as a result of entering into the contract
What is undeniable and cannot be in dispute, is the Second Defendant misrepresented the product being sold to the Claimant, with the assistance in communication by the First Defendant, and the conspired involvement of the Third & Fourth Defendant.”
90. The Claim Form states that the claim is for loss and damage caused by PetroChina Singapore’s breach of contract. The Claim Form states that the dispute also includes a claim relating to the inconsistency in the testing procedures and reports submitted and supplied by “Intertek Brett Caleb LLC (Defendants 2)” regarding potential falsification and deliberate distortion of the final report carried out under homogenization industry testing. PetroChina Middle East is not referred to in the Claim Form except that it is named a defendant and PetroChina Singapore is erroneously referred to as “D1”.
91. The Claimant has no real prospect of succeeding on its claim against PetroChina Middle East. Indeed, the Claimant has not articulated any claim against PetroChina Middle East.
Abuse of process
92. PetroChina Middle East and PetroChina Singapore submit that the claims against them should be struck out as an abuse of process because it is apparent that the claim in the DIFC has been brought against PetroChina Middle East purely on the basis that it engages the Article 5(A)(1)(a) jurisdiction, but no cause of action is actually pleaded or advanced against it. To use PetroChina Middle East as a pure “anchor” defendant where there is no issue to be tried against it seeks to invoke an extreme long-arm jurisdiction for this Court which is contrary to judicial comity and self-restraint.
93. The proposition that it is an abuse of process to bring a claim against an anchor defendant as a device, designed simply to act as a "hook" to allow the claimant to pursue a foreign defendant in the jurisdiction was advanced in the litigation which resulted in the UK Supreme Court decision in Vedanta Resources PLC & Anor v Lungowe & Ors16.
94. The essence of the appellants’ argument was that it is an abuse of EU law to use article 4 of the Recast Brussels Regulation as a means of enabling claimants to establish jurisdiction against an anchor defendant for the collateral purpose of attracting a member state’s international jurisdiction against foreign defendants, who are the real targets of the claim. The High Court held17 that there is a high hurdle for a defendant to clear at an interlocutory stage. The defendant would need to show that joining the defendant to the proceedings was an abuse of EU law, and that means proving that the sole object was to oust the jurisdiction of another court, or alternatively that the basis of the joinder was fraudulent. The Court of Appeal18 and the Supreme Court essentially agreed. Lord Briggs, with whom the other members of the Supreme Court agreed, recognised it would be an abuse of the jurisdiction rule to allow claimants to sue an English domiciled anchor defendant solely to pursue a foreign co-defendant (a real target) in the English courts but that this exception should be applied strictly.
95. Although the Claimant has not articulated a claim against PetroChina Middle East, it is unnecessary and I am not willing to find that the Claimant has joined PetroChina Middle East solely to pursue PetroChina Singapore in this Court.
96. It is unnecessary to decide whether the Claimant has joined PetroChina Middle East solely to pursue PetroChina Singapore in this Court. PetroChina Middle East’s argument is based on the premise that the claim discloses no triable issue between the Claimant and PetroChina Middle East. If that premise is made out, then the claim is liable to be struck out pursuant to rule 4.16 (a) and it is not necessary to consider rule 4.16 (b). The point was alluded to by Lord Briggs in Vedanta Resources v Lungowe19:
“For the purposes of analysis, the abuse of EU law claim needs to be approached upon the assumption, but without at this stage deciding, that the claim discloses a real triable issue as against Vedanta. If it does not, then Vedanta falls away as an anchor defendant, and the necessary or proper party gateway, as against KCM, closes”.
97. PetroChina Middle East’s application to strike out the claim against it is brought under rule 4.16. Paragraph (1) of the rule provides that the Court may strike out a statement of case if it appears to the Court that the statement of case discloses no reasonable grounds for bringing the claim.
98. At the hearing of these applications the parties addressed whether the PoC disclose a reasonable ground for bringing the claim against PetroChina Middle East. For the reasons stated earlier in these reasons, the PoC disclose no reasonable ground for bringing the claim. The PoC should be struck out against PetroChina Middle East.
99. Rule 4.17 provides that when the Court strikes out a statement of case it may make any consequential order it considers appropriate. The Court may order that the action against PetroChina Middle East be dismissed, or it may permit the Claimant to replead its statement of case.
100. It is not appropriate to permit the Claimant to replead its statement of case against PetroChina Middle East. Neither the Claim Form, the PoC or the evidence before the Court advances a reasonable claim against PetroChina Middle East. Despite having been given adequate opportunity, counsel for the Claimant did not articulate the Claimant’s case against PetroChina Middle East. The appropriate order is that the case against PetroChina Middle East be dismissed.
No jurisdiction over PetroChina Singapore
101. The DIFC Court’s jurisdiction is solely governed by the Judicial Authority Law20
102. A claimant must establish that the case falls within one of the gateways of jurisdiction specified in Article 5(A)(1) off the Judicial Authority Law.
103. The evidential standard for establishing that a claim falls within a jurisdictional gateway is that of “a good arguable case”21. There will be a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it22.
104. In its Claim Form the Claimant states that the law giving rise to the jurisdiction of the DIFC Courts is:
“Article 5(A)(1)(a) confers ‘party’ jurisdiction over: Civil or commercial claims and actions to which the DIFC or any DIFC Body, DIFC Establishment or Licensed DIFC Establishment is a party.”
105. Article 5(A)(1)(a) gives the Court of First Instance exclusive jurisdiction to hear the civil or commercial claims and disputes to which the DIFC, or any of the DIFC Bodies or DIFC Establishments, is a party.
106. DIFC Bodies is defined to mean:
“The bodies established pursuant to paragraph (3) of Article (3) of the above-mentioned Law No. (9) of 2004 and any other entity established by these bodies or by the President.”
107. DIFC Establishments is defined to mean:
“Any entity or enterprise that is duly established, or that conducts any activity, within the DIFC. This includes Licensed DIFC Establishments.”
108. Licensed DIFC Establishments is defined to mean:
“Any entity licensed, registered, or otherwise authorised to conduct financial or banking business, including the activities and business referred to in Article (9) of the above-mentioned Law No. (9) of 2004.”
109. PetroChina Singapore is not a DIFC Body.
110. PetroChina Singapore is not incorporated in the DIFC, Dubai or the UAE. It is incorporated in Singapore.
111. The uncontradicted and unchallenged evidence is that PetroChina Singapore is not duly established or does not conduct any activity within the DIFC and is not a licenced DIFC Establishment
112. Gateway Article 5(A)(1)(a) is not satisfied.
Necessary and desirable party
113. The Court has jurisdiction by reference to Article 5(A)(1)(a) combined with RDC r 20.7 to hear claims against defendants by reason of their being necessary and proper parties23. The authors of the Blue Book24 observe that the test under r 20.7 is that it is “desirable” to add a party and might present a lower hurdle than that in the English law of necessity.
114. To satisfy the “necessary or proper” or “desirable” gateway, the claimant must show that there is a real and live issue between the claimant and the anchor defendant which the claimant may reasonably ask the Court to try25. When making the assessment, the Court must examine the claimant’s claim against the anchor defendant in isolation, on the assumption that the foreign defendant is not joined.
115. In England, the assertion by a foreign defendant seeking to set aside permission to serve outside the jurisdiction under the necessary or proper party gateway that the claim against the anchor defendant discloses no real issue to be tried involves a summary judgment test26. In the present case, there is no "real issue" if the claim is liable to be struck out on an immediate judgment basis, that is the Claimant has no real prospect of succeeding on the claim.
116. For the reasons stated earlier in these reasons, there is not a real and live issue between the Claimant and the anchor defendant, PetroChina Middle East, which the Claimant may reasonably ask the Court to try. The Claimant has no real prospect of succeeding on the claim against PetroChina Middle East and the Court may give immediate judgment against that claim.
117. The Court does not have jurisdiction over PetroChina Singapore.
Dismissal or stay pursuant to Arbitration Law
118. PetroChina Singapore seeks an order that the claim be dismissed or stayed pursuant to Article 13 of DIFC Law No 1 of 2008 (the Arbitration Law) in favour of ongoing arbitral proceedings in Singapore.
119. The contract on which Gulf Petroleum sues PetroChina Singapore contains a term providing for arbitration in Singapore.
120. The Claimant has commenced an arbitration in Singapore against PetroChina Singapore in which the Claimant makes claims based on breaches by PetroChina Singapore of the contract on which the Claimant sues PetroChina Singapore in this action.
121. The uncontradicted and unchallenged evidence is that the subject matter of the claim in this action is identical to that which the Claimant advances in the Singapore arbitration.27
122. The Arbitration Law of 2008 section 13 provides:
“(1) If an action is brought before the DIFC Court in a matter which is the subject of an arbitration agreement, the DIFC Court shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, dismiss or stay such action unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed.”
123. I find, and counsel for the Claimant agrees, that this action is brought in a matter which is the subject of an arbitration agreement, that is the arbitration agreement in the contract between the Claimant and PetroChina Singapore on which the Claimant brings this action.
124. The Arbitration Law of 2008 section 13 is mandatory. If an action is brought before the DIFC Court in a matter which is the subject of an arbitration agreement, the Court must dismiss or stay such action unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed.
125. The Claimant does not submit that the arbitration agreement is null and void, inoperative or incapable of being performed. Indeed, the Singapore arbitration is in progress.
126. The claim against PetroChina Singapore must be dismissed or stayed. Indeed, on the hearing of this application, counsel for the Claimant agreed that the claim against PetroChina Singapore must be dismissed or stayed.
Costs
Exercise of discretion
127. The Court has discretion as to whether costs are payable by one party to another, the amount of those costs and when they are to be paid28.
128. The general rule is that the costs follow the event, unless it appears from a consideration of all the circumstances that some other order should be made. The Defendants were successful in all their applications and hence the Claimant should pay their costs unless the circumstances make some other order just.
129. Justice to a successful party is not achieved if it comes at the price of being out-of-pocket, so a party who is responsible for litigation should bear its costs. Underlying both the general rule that costs follow the event, and the qualifications to it, is the idea that costs should be paid in a way that is fair, having regard to the responsibility of each party for the incurring of the costs.
130. In this case the Claimant was responsible for the Defendants incurring the costs of setting aside the default judgments because the defendants were caused to incur costs in setting aside default judgments which were wrongly entered by the Claimant.
131. In response to the Defendants’ applications for the costs of setting aside the default judgment, the Claimant says that it was prepared to consent to the setting aside of the default judgment and communicated to the Defendants’ counsel on the 25 October 2023 first telephonically and then subsequently via email; the Third Defendant chose not to respond until 26 October the First and Second Defendants on 27 October; and substantial costs could have been averted if the defendants would have agreed to the Claimant consenting to the default judgment being set-aside, without the need for the hearing on 31October 2023.
132. I raised this matter with counsel for the Claimant at the outset of the hearing on 31 October 2023. Counsel informed me that the Claimant was only willing to consent to the default judgment being set aside under rule 14.2, that is in the exercise of the Court's discretion to set aside a default judgment regularly entered and on the basis that costs should be determined at a later time. I informed counsel that it was necessary to determine whether the default judgment was regularly entered because that was relevant to the costs of the applications. If the default judgment was wrongly entered, then the general rule is that the defendants should have the costs of setting them aside. On the other hand, if the default judgment was properly entered, then the general rule is that the defendants, who were seeking an indulgence, should pay the costs. Counsel maintained that the Claimant would only consent to the default judgment being set aside on the discretionary basis and costs being determined at a later time. Accordingly, I proceeded to hear the applications to set aside the default judgments.
133. The Defendants were successful on their applications to set aside the default judgment on the basis that the default judgment was wrongly entered. Having regard to all the circumstances, the Claimant should pay the defendants’ costs of the applications to set aside the default judgment.
134. The Claimant was responsible for the First Defendant incurring the costs of resisting the claim and applying to dismiss the claim which should not have been brought by the Claimant because the Claim Form and PoC disclose no reasonable grounds for bringing the claim. Indeed, counsel for the Claimant did not articulate any claim against the First Defendant.
135. The Claimant was responsible for the Second Defendant incurring the costs of resisting the claim and applying to dismiss the claim which should not have been brought by the Claimant because the Court has no jurisdiction over the Second Defendant and in any event the claim against the Second Defendant could not be maintained in this Court because it was brought in a matter which is the subject of an arbitration agreement, as counsel for the Claimant agreed at the hearing of this application.
136. The Claimant should pay the Defendants’ costs of each of the applications.
Basis of assessment
137. The threshold for indemnity costs is high.
138. In determining whether costs should be assessed on the indemnity basis a judge will consider in the exercise of his discretion, amongst other things29:
(i) circumstances where the facts of the case and/or the conduct of the paying party are/is such as to take the situation away from the norm; for example, where the Court has found deliberate misconduct in breach of a direction of the Court or unreasonable conduct to a high degree in connection with the litigation; or
(ii) otherwise, inappropriate conduct in its wider sense in relation to a paying party’s pre-litigation dealings with the receiving party, or in relation to the commencement or conduct of the litigation itself; or
(iii) where the Court considers the paying party’s conduct to be an abuse of process.
139. I am not satisfied that the facts of the case or the conduct of the Claimant is such as to take the situation away from the norm so as to warrant an award of indemnity costs.
140. Costs should be assessed on the standard basis.
Immediate assessment of costs
141. The Court may make an immediate assessment of the costs30.
142. The applications have been fully determined. It is appropriate to make an immediate assessment of the costs of the applications if I am reasonably able to do so.
143. Where the amount of costs is to be assessed on the standard basis the Court will only allow costs which are proportionate to the amount in issue and resolve any doubt which it may have as to whether costs were reasonably incurred or reasonable and proportionate in amount in favour of the paying party.31
144. Costs will be proportionate if they bear a reasonable relationship to the sums in issue in the proceedings, the value of any non-monetary relief in issue in the proceedings, the complexity of the litigation, and any additional work generated by the conduct of the paying party,
145. The claim value stated in the Claim Form – UDS10,553,253.29 - is substantial.
First and Second Defendants
146. The applications by the First and Second Defendants were relatively complex. They involved two defendants, to which their legal representatives had to give separate consideration and were brought on multiple bases seeking multiple orders.
147. The applications were supported by two witness statements. The First and Second Defendants filed a 820 page case bundle.
148. The First and Second Defendants filed a substantial and detailed skeleton argument and further written submissions after the oral hearing in response to further written submissions filed by the Claimant pursuant to permission requested by the Claimant and given at the oral hearing.
149. The First and Second Defendants had a team of two partners, one associate and one paralegal working on the applications. Their statement of costs filed on 2 November 2023 discloses their total costs for the applications to be AED 251,852.86 made up as follows:
No. of hours | AED | |
---|---|---|
Attendances on | 13 | 35,070.5 |
Attendances on opponents | 9 | 24,452.5 |
Attendances on others | 15.7 | 37,335 |
Other work | 0.3 | 877.5 |
Work done on documents | 29 | 65,450 |
Attendance at hearing | 9 | 28,175 |
counsel | 53,595.36 | |
Court fees | 7,345 |
150. I consider the attendance of two partners in addition to an associate and counsel at the hearing may not have been reasonably necessary and may be disproportionate. I also consider the number of hours for attendances on and attendances on others may be more than was reasonably necessary and may be disproportionate. However, I do not have enough information to make an assessment whether those amounts are reasonable and proportionate and, if they are not, what is a reasonable and proportionate amount to allow. The matter is all the more so when I compare the costs incurred by the First and Second Defendants with the costs incurred by the Third Defendant.
Third Defendant
151. The Third Defendant had a team of two partners, three associates and one cost lawyer working on the applications.
152. The Third Defendant’s application was less complex than that of the First and Second Defendants. The application sought essentially one order.
153. The Third Defendant filed two affidavits, a skeleton argument and further written submissions after the oral hearing.
154. The Third Defendant’s statement of costs filed on 2 November 2023 discloses their total costs for the applications to be AED 346,243.80 made up as follows
No. of hours | AED | ||
---|---|---|---|
Attendances on | 4.5 | 12,535.25 | |
Attendances on opponents | 1.1 | 2,721.75 | |
Attendances on others | 1.1 | 2,679 | |
Work done on documents | 94.3 | 273,281.25 | |
Attendance at hearing | 11 | 26,386.25 | |
Other | 31,373.75 |
155. Most of the costs were incurred on work done on documents. It may be that that work included work on the skeleton argument and post hearing written submissions by Mr Prasifka, who appeared as counsel at the hearing. No separate fee has been charged for Mr Prasifka’s attendance at the hearing. It may be that has added to the work on the documents. Nevertheless, the number of hours work on the documents is more than three times the number of hours spent by the First and Second Defendants on work on the documents. It may be that the work includes work done that is accounted for differently by the First and Second Defendants. Nevertheless, I am not able to reconcile the amount claimed by the Third Defendant for working on the documents with the amount of work done on the documents by the First and Second Defendants. There may be an explanation for the apparent discrepancy, which I am not aware of.
156. In all the circumstances I am not able to make a proper assessment of the costs which should be allowed to each defendant. Furthermore, the First and Second Defendants are entitled to their costs of the claim. Those costs will be assessed by the Registrar. In those circumstances the appropriate order is that the costs of the applications be assessed by the Registrar.