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Claim No. CFI 060/2020

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

(1) CREDIT SUISSE AG
(2) AL AHLI BANK OF KUWAIT K.S.C.P.
(3) MASHREQ BANK PSC
(4) ARAB BANKING CORPORATION (B.S.C.)
(5) NATIONAL BANK OF OMAN (S.A.O.G.)
(6) AHLI UNITED BANK B.S.C. (DIFC BRANCH)
(7) NATIONAL BANK OF OMAN (S.A.O.G.), DUBAI BRANCH
(8) STATE BANK OF INDIA

Claimants

and

(1) EMIRATES HOSPITALS GROUP LLC
(2) KHALEEFA BUTTI OMAIR YOUSIF AHMED AL MUHAIRI
(3) H.E. SAEED MOHAMMED BUTTI MOHAMMED KHALFAN AL QEBAISI
(4) EMIRATES HEALTHCARE L.L.C.
(5) EMIRATES HOSPITAL L.L.C.
(6) EMIRATES SPECIALITY HOSPITAL FZ-LLC
(7) EMIRATES HOSPITALS & CLINICS L.L.C.
(8) EMIRATES HOSPITALS REHABILITATION AND HOMECARE SERVICES L.L.C.
(9) EXCEL HEALTHCARE L.L.C.
(10) EMIRATES PHARMACY L.L.C.
(11) COSMESURGE AND EMIRATES HOSPITAL PHARMACY L.L.C.
(12) VEINCURE CLINIC DMCC
(13) EMIRATES HOSPITAL DAY SURGERY & MEDICAL CENTRE L.L.C.
(14) EMIRATES HOSPITALS CLINICS BUSINESS BAY L.L.C.
(15) KLINIKA MAHARLIKA L.L.C.
(16) AL SABAH MEDICAL CENTRE LLC
(17) COSMOPOLITAN MEDICAL CENTRE L.L.C.
(18) EMIRATES STAR MEDICAL CENTRE L.L.C.

Defendants

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ORDER WITH REASONS OF JUSTICE WAYNE MARTIN

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UPON the application filed by the Second and Third Defendants with the Joint Judicial Committee (the “JJC”) on 28 October 2020

AND UPON reviewing the registration documents before Dubai Courts and the JJC numbered Case No. 9/2020/710 provided by the Second and Third Defendants by way of email on 28 October 2020

AND UPON reviewing the Order dated 3 November 2020 placing a stay on proceedings in CFI-060-2020

AND UPON reviewing the Claimant’s Application No. CFI-060-2020/4 dated 27 May 2021 seeking a lift of the stay on proceedings and the evidence provided in relation thereto (the “Application”)

AND UPON reviewing the Defendants’ evidence in answer to the Application dated 8 June 2021

AND UPON reviewing the Claimants’ evidence in reply to the Application dated 10 June 2021

AND UPON reviewing all documents recorded on the court file

AND UPON hearing Counsel for the Claimants and Counsel for the Defendants at a hearing on 6 July 2021

IT IS HEREBY ORDERED THAT:

1. The stay on proceedings granted on 3 November 2020 is hereby lifted.

2. The Defendants shall pay the Claimant’s costs of the Application to be assessed by a Registrar if not agreed within 14 days of the making of the order.

Issued by:
Nour Hineidi
Registrar
Date of Issue: 9 August 2021
At: 3.30pm

SCHEDULE OF REASONS

Summary

1. On 27 July 2020 the eight Claimant banks commenced proceedings in this Court against the principal borrower of funds from the banks, two personal guarantors and 15 corporate guarantors of the borrowing. On 5 October 2020, the personal guarantors commenced proceedings in the Dubai Court of First Instance in which they alleged that their signatures on the relevant guarantees had been forged. On 27 October 2020, the personal guarantors applied to the Joint Judicial Tribunal (the “JJT”) established pursuant to Dubai Decree no. 19 of 2016 (the “Decree”) on the basis of an asserted conflict between the proceedings which had been commenced by the claimant banks in this Court, and the proceedings which the personal guarantors had commenced in the onshore courts of Dubai.

2. The legal representatives of the personal guarantors notified the Registry of this Court of the application to the JJT by email, and on 3 November 2020 I directed that these proceedings should be stayed pending the determination of the application to the JJT. That order was made without any application having been made by either party pursuant to RDC Part 23 and was, in effect, made administratively without either party being given the opportunity to be heard, in accordance with the then prevailing practice of the Court.

3. In April 2021, the decision of the Court of Appeal in Lakhan v Lamia¹ (“Lakhan”) was published, in which it was held that the fact that an application had been made to the JJT in respect of proceedings pending before this Court was not, of itself, a sufficient basis for the grant of a stay of those proceedings.

4. Following the decision in Lakhan, the Claimants applied for an order revoking the stay of proceedings which I had previously granted. For the reasons which follow, that application should be granted and the stay revoked.

Procedural history

5. It is necessary to set out the history of the proceedings in this Court, in the onshore courts of Dubai, and in the JJT in order to provide the context for the various submissions which have been advanced in relation to this application.

The DIFC proceedings

6. As I have noted, the proceedings in this Court were commenced on 27 July 2020. The eight Claimants are all banks. The First Defendant, Emirates Hospitals Group L.L.C., is the principal borrower under facilities granted by the Claimants as a syndicate. The banks claim that the Second and Third Defendants, Mr Al Muhairi and H.E Mr Al Qebaisi guaranteed the repayment of those facilities to the Claimants, as did the other 15 Defendants, which are all corporate entities associated with the First Defendant.

7. In these reasons I will refer to the Claimants as (the “Banks”), the First Defendant as (the “Principal Borrower”), the Second and Third Defendants as (the “Personal Guarantors”), and the Fourth-Eighteenth Defendants as (the “Corporate Guarantors”).

8. In the Particulars of Claim filed with the Claim Form, the Banks provided details of the various facility agreements to which the Principal Borrower is said to be a party, and of the guarantees said to have been provided by the Personal Guarantors and the Corporate Guarantors. It is further asserted that the Principal Borrower defaulted in the repayment of monies due under the various facilities, with the result that, as at 22 July 2020, an amount of USD304,510,754.04 was due from the Principal Borrower to the Banks. That amount is claimed from all Defendants as monies owing under the agreements to which they are party, or alternatively, as damages for breach of those agreements.

Jurisdiction of the DIFC Courts

9. In paragraphs [31]-[33] of the Particulars of Claim, the Banks assert that written notice was given to all Defendants pursuant to clauses 44.4 of the Facility Agreements, or clauses 23.4 of each of the Personal Guarantees (as the case may be) requiring that the dispute the subject of these proceedings be litigated, and specifying that the DIFC Courts have exclusive jurisdiction to settle those disputes. The clauses in question provide that in the event that such notices are given, the parties to those agreements agree that the DIFC Courts are to have exclusive jurisdiction to settle any dispute the subject of such notice.

10. Significantly, the Principal Borrower and the Corporate Guarantors have each admitted paragraphs [31]-[33] of the Particulars of Claim in the Defence which they filed in these proceedings on 30 September 2020. Further, each of the Principal Borrower and the Corporate Guarantors have invoked the jurisdiction of the DIFC Courts for the purposes of seeking relief by way of counterclaim, in which reliance is placed upon the terms of the agreements upon which the Banks rely for their claim. So, it is the common position of the Banks, the Principal Borrower and the Corporate Guarantors that the DIFC Courts have exclusive jurisdiction to determine the claims made by the Banks and the counterclaim of the corporate respondents in the proceedings commenced in this Court. None of the Principal Borrower or the Corporate Guarantors have raised any issue with respect to the authenticity of the documents upon which the Banks rely for their claims against them - to the contrary they rely upon those documents for the purposes of their counterclaim.

11. On 14 September 2020, the Personal Guarantors filed Acknowledgements of Service indicating an intention to challenge the jurisdiction of the DIFC Courts, and on 28 September 2020, an application to that effect was filed with the Court. The grounds of the application centre upon an allegation that the signatures on the personal guarantees are not those of the Personal Guarantors.

12. In the meantime, on 27 September 2020, the Personal Guarantors applied to this Court for an order staying the proceedings for a period of six months on the basis of a Decree which had been issued relating to the temporary stay of proceedings against health service providers at a time when the pandemic was placing a strain upon the provision of health services in the UAE. That application was listed for hearing before me on 5 November 2020. In any event, that hearing did not proceed. That application was never determined because the application became otiose after I granted a stay of proceedings on the basis of the application which had been made to the JJT.

13. That stay was granted after the then legal representatives of the Personal Guarantors sent an email to the Registry of the Court on 28 October 2020 advising of the commencement of the proceedings in the Dubai Court and of the application to the JJT based upon the asserted conflict of jurisdiction between the DIFC Courts and the Dubai Court. In that email the lawyers asserted that by the operation of Article 5 of the Decree, the proceedings in both Courts must be stayed “as a matter of law”.

14. That same day, the legal representatives of the Banks sent an email to the Registry advising that they were not previously aware of either the proceedings in the Dubai Courts or the application to the JJT and foreshadowing opposition to the approach proposed by the Personal Guarantors. The lawyers indicated their intention to provide a more detailed response on 2 November 2020.

15. This email exchange was brought to my attention and I directed that the parties be advised that in light of the application to the JJT, the Court proposed to stay the proceedings against the Personal Guarantors until the JJT had made its determination, but that any party wishing to oppose that course should notify the Court and provide grounds of opposition by 3 November 2020. I also directed the Registry to invite the parties to provide further submissions on a particular aspect of the application for a stay based upon the decree relating to claims against health service providers.

16. The lawyers for the Personal Guarantors responded to that advice from the Registry by email on 1 November 2020 in which it was asserted that the Decree imposed an automatic stay upon proceedings against all Defendants, and that it had been the practice of the Court to grant such a stay without allowing the parties to make submissions on the matter. I was advised by Court officials that this email accurately described the then practice of the Court.

17. On 2 November 2020, the lawyers for the Banks sent an email to the Registry requesting that the email be placed before me. In that email it was asserted that the application to the JJT had only been made by the Personal Guarantors and that the proceedings against the Principal Borrower and the Corporate Guarantors should be permitted to proceed in the DIFC Courts. The email made another point with respect to the hearing scheduled for 5 November 2020. No other ground of objection was raised in relation to the assertion that there should be a stay of proceedings against the Personal Guarantors.

18. I reviewed the various emails and attachments provided by the parties. I noted that documents attached to the email from the lawyers for the Personal Guarantors established that the Principal Borrower and the Corporate Guarantors had been joined as parties to the proceedings commenced by the Personal Guarantors in the Dubai Court. I directed that the proceedings in this Court against all Defendants be stayed pursuant to the Decree and an order to that effect was issued on 3 November 2020. The hearing scheduled for 5 November 2020 was vacated on the basis of the stay which I had granted. Because of that stay, no further step was taken in these proceedings until 27 May 2021, when the Banks applied to set aside the stay.

The Dubai proceedings

19. The Personal Guarantors commenced proceedings in the Dubai Court of First Instance on 5 October 2020. The Banks, the Principal Borrower and the Corporate Guarantors are all named as Defendants to those proceedings. In those proceedings, the Personal Guarantors assert that their signatures on the Personal Guarantees are forged. They also assert that some of the signatures attributed to one or more of them on the Facility Agreements are also forged.

20. However, no relief is sought in the Dubai proceedings against any parties other than the Banks. The relief sought against the Banks is as follows:

21. The Dubai Court stayed the proceedings on the basis of the Decree issued with respect to litigation against health service providers during the pandemic. That stay was lifted on 1 March 2021.

22. Although the Banks objected to the jurisdiction of the Dubai Courts on the basis of the exclusive jurisdiction provisions in the various agreements, at the time of the hearing of the application to lift the stay, that objection had not been determined by the Dubai Courts.²

23. Since the lifting of the stay of proceedings in the Dubai Courts on 1 March 2021, there have been two hearings before the Case Management Officer and five hearings before the Court in the Dubai proceedings.

24. At a hearing on 10 March 2021, the Banks submitted a Memorandum in which they:

25. At another hearing on 28 March 2021, the Personal Guarantors lodged a response to the Banks’ Memorandum dealing with the various issues raised by the Banks, including the issues relating to jurisdiction, the stay of proceedings pending the determination of the JJT, and the substantive issues relating to forgery of the signatures.

26. Further, memoranda have been exchanged between the Personal Guarantors and the Banks and, as I have mentioned, various hearings have been held in the Dubai Court. Although the Banks have maintained their objection to the jurisdiction of that Court, in a memorandum filed with that Court after the filing of the application to lift the stay of the proceedings in the DIFC Courts, the Banks no longer pursued their claim for a stay of the proceedings in the Dubai Court until the JJT has issued its determination .

27. Although named as Defendants, neither the Principal Borrower nor any of the Corporate Guarantors have taken any part whatsoever in the proceedings in the Dubai Court. That stance is entirely consistent with their admission in the DIFC proceedings that the DIFC Courts have exclusive jurisdiction to determine the dispute between them and the Banks, and their invocation of that jurisdiction by their counterclaims.

The JJT application

28. On 27 October 2020, the Personal Guarantors filed an application with the JJT. The Banks are the primary respondents to that application, and the Principal Borrower and Corporate Guarantors are named as additional respondents.

29. The application accepts that “whilst the DIFC Court has not yet ruled on its own jurisdiction”³ it is submitted that the JJT should nevertheless determine which of the two Courts has jurisdiction in order to avoid the parties incurring unnecessary costs.

30. The application contains various arguments in support of the proposition that the Dubai Courts are the Courts with relevant jurisdiction. The application also seeks the immediate stay of proceedings in both the DIFC and Dubai Courts until the JJT has made its determination.

31. The Banks have filed memoranda in opposition to the Personal Guarantors’ application to the JJT. In those memoranda the Banks assert that the DIFC Courts has exclusive jurisdiction, including exclusive jurisdiction to determine the allegations of forgery of the personal guarantees. The Banks further assert that the application to the JJT is a deliberate attempt by the Personal Guarantors to cause delay and to block the Banks from bringing their claims in the DIFC Courts. The Banks further submit to the JJT that there is no conflict in jurisdiction in respect of the claims made against the Principal Borrower and Corporate Guarantors, as those parties have not taken any part in the proceedings in the Dubai Courts, and no relief is sought against them in those Courts.

32. Although named as parties, neither the Principal Borrower nor the Corporate Guarantors, nor any of them, have taken any part in the JJT proceedings.

Is the application to lift the stay competent?

33. Before dealing with the substantive issues in the application to lift the stay of proceedings, it is necessary to deal with the Defendants’ submission that the application should be dismissed without regard to its merit because there has been no relevant change in circumstances justifying the application to set aside the previous order of the Court. They submit that absent a relevant change in circumstances, the only way the stay can be set aside is by way of appeal, which was the course followed in Lakhan.

34. The Defendants concede that the stay which was granted was an interim stay and not a permanent stay. They also acknowledge the powers conferred upon the Court by RDC 4.7, which provides that a power to make an order includes a power to vary or revoke the order. However, they submit that this Court has embraced the constraint upon the exercise of that power imposed by the rule in Henderson v Henderson⁴ in order to prevent the making of successive applications raising grounds that had been relied upon and rejected by the Court, or which had been available at the time of the first application.⁵ They further submit that this Court has accepted the authority of Chanel v Woolworth & Co,⁶ to the effect that the enunciation of a change in the law by an appellate court is not a change in circumstance which justifies the exercise of the power to revisit orders previously made. Accordingly, as the only relevant change in circumstance between the time at which the stay of proceedings was granted and the application to revoke that stay was made is the decision in Lakhan, it is submitted that it is not a change of a kind which enlivens the power of the Court under RDC 4.7. Accordingly, the Defendants submit that the jurisdiction conferred by RDC 4.7 should not be exercised unless and until the applicant is able to put new material before the Court⁷ .

35. It is further submitted that the significant period of delay between the making of the order on 3 November 2020, and the making of the application to set it aside on 27 May 2021, during which time the parties incurred substantial costs in relation to the Dubai Court proceedings, militates strongly against the exercise of the power in this case.

36. With respect, these submissions rather overstate the position in a number of respects.

37. First, it is not correct to say that the broad power conferred by RDC 4.7 can only be exercised when there has been a material change in circumstances. In accordance with the principle in Henderson v Henderson the courts will exercise restraint in the exercise of the power and will not allow it to be used for the purpose of re-litigating issues already determined. However, while the existence of a material change in circumstances is one of the circumstances in which the principle in Henderson v Henderson will not be undermined by reconsideration of an issue, it is not the only circumstance. Nor should a change in material circumstances be regarded as an unwritten condition upon the exercise of a power which is not expressly constrained by any condition.⁸ Rather, “the cases all warn against an exhaustive definition of the circumstances in which a principled exercise of the discretion” (to vary an order) “may arise”.⁹

38. Second, it is not correct to say that a change in the law can never be regarded as a material change in circumstances. While the cases, including Chanel v Woolworth, establish that a change in the law enunciated at appellate level will not ordinarily be regarded as sufficient justification to reconsider orders made before the change in the law, there are also cases in which a change in the law has been regarded as a sufficient change in circumstances.¹⁰

39. Third, the principles upon which reliance is placed must necessarily have modified application to an application to review an interim stay. An interim stay is, of its nature, temporary,¹¹ and irrespective of RDC 4.7, necessarily includes the power to lift the stay.¹² The power to lift a stay will be exercised in the interests of justice, without constraints imposed by presumptions or onerous conditions which must be satisfied before the power can be exercised¹³ . Further, a stay is an example of a continuing order¹⁴ which the exigencies of case management may require to be reviewed as the case unfolds.¹⁵ The review of a stay will not therefore necessarily be conditioned upon the occurrence of a material change in circumstances.¹⁶

40. Moreover, the principle in Henderson v Henderson, which underpins the various cases upon which reliance is placed by the Defendants, presumes that the order in question has been made in the regular exercise of the Court’s powers and that all parties affected by that order have had a proper opportunity to present their case with respect to the making of the order. That is not an assumption which can be applied to the circumstances of the present case.

41. RDC 23.2 provides that “the general rule is that an applicant must file an application notice”, although RDC 23.3 empowers the Court to dispense with the requirement for an application notice. It might be contended that this power was implicitly exercised in this case when the Court acted upon the email sent to the Registry by the representatives of the Personal Guarantors. However, even if that view is taken, it is clear that the power was exercised on the basis of the erroneous acceptance of the proposition contained in the second email from those lawyers to the effect that the grant of a stay following an application to the JJT was automatic and should be undertaken by the Court administratively without receiving submissions from the parties.

42. The consequence of that erroneous view (for which I must take responsibility) was that the Banks were denied the application of the various provisions of RDC Part 23 which ensure procedural fairness in relation to the consideration and determination of applications, including the presumptive right to a hearing of an application.¹⁷ Although the Banks had the opportunity to put an email before the Court, and exercised that opportunity, the very limited nature of that opportunity cannot be meaningfully compared to the presumptive right to a hearing in opposition to an application for a stay of proceedings.

43. Accordingly, this is not a case in which an order was made after all parties had a full opportunity to present evidence and submissions relevant to the making of the order, nor is it a case like Chanel where an order was made with the fully informed consent of both parties. Rather, this is a case in which the exercise of the Court’s powers miscarried with the result that a party was denied a full and fair opportunity to present argument in opposition to the orders sought and made. It follows that the principles enunciated in cases like Henderson and Chanel are inapplicable to the present circumstances.

44. The current circumstances are analogous to those for which provision is made by RDC 23.86 and 23.87, which provide:

45. These provisions give expression to the basic principles of procedural fairness which underpin all proceedings in this Court. Regrettably, those principles were not given full effect in the process which preceded the order staying the proceedings in this case. This application to set aside that order is, in a very real and practical sense, the first opportunity the Banks have had to present argument on the question of whether there should be such a stay. This is therefore an appropriate circumstance in which to consider the exercise of the power conferred by RDC 4.7, as expressly contemplated by RDC 23.86 and 23.87.

46. Turning to the subject of delay, until the publication of the decision in Lakhan, it would not have been reasonable to expect the Banks to have exercised the power to seek reconsideration of the stay because the practice which had been followed at the time the stay was granted corresponded to the then practice of the Court in relation to such matters. Nor, given the circumstances in which the stay was granted in this case, would it be reasonable to require the Banks to bring an appeal from the order made, as was done in Lakhan, given the less expensive and more expedient route available under RDC 4.7. The decision in Lakhan came to the attention of the legal adviser to the Banks in mid May 2021, a few weeks after it was published, and the application to set aside the stay was made about two weeks later. The periods involved are reasonable, and the Banks cannot be properly criticized for the time at which the application to set aside the stay was brought, given all the circumstances of the case.

The Decree

47. The operation and effect of the Decree were considered at length by the Court of Appeal in Lakhan. I gave further consideration to the operation and effect of the Decree in a recent decision – Five Holding Limited v Orient UNB Takaful PJSC.¹⁸

48. It is unnecessary to repeat at length what is said with respect to the operation and effect of the Decree in those two decisions, which should both be read for a fuller understanding of these reasons. It is sufficient for present purposes to note the following propositions which emerge from those decisions:

Is there a conflict of jurisdiction?

49. The first question which arises in the assessment of whether or not there is a conflict of jurisdiction in this case is the question of whether separate consideration should be given to the positions of the different Defendants in the DIFC proceedings, and in particular, to the different positions of the Personal Guarantors on the one hand, as compared to the Principal Borrower and the Corporate Guarantors on the other.

50. The obverse question arose in Five Holding Limited.²⁰ In that case, Five Holding Limited was a party to each of the proceedings in the DIFC Courts, but was not a party to the proceedings which had been commenced by its subsidiary companies in the Dubai Courts. It was submitted that there was no conflict of jurisdiction in respect of that company’s claims, which should be permitted to proceed. I rejected that submission on the basis that, as a matter of substance rather than form, the claims of that company were so inextricably connected to and linked with the claims of the subsidiary companies that any distinction between the claims of the parent and the claim of the subsidiary was artificial and illusory, with the result that the continuation of the claims by Five Holding Limited in the DIFC Courts would give rise to a conflict in the jurisdiction which was being exercised by the Dubai Courts in respect of the claims of its subsidiaries.

51. In this case the converse issue arises, in that the same parties have been named as parties to all proceedings – in the DIFC Courts, the Dubai Courts and the JJT. However, viewed as a matter of substance rather than form, the Principal Borrower and the Corporate Guarantors have taken no part whatsoever in the proceedings before the Dubai Courts or the JJT. No relief is sought against those parties in the Dubai Courts and the only reason they are named as parties to the proceedings in those Courts is because the Personal Guarantors chose to name them.

52. Only the Personal Guarantors contend that the Dubai Courts have jurisdiction in relation to the dispute. The Banks, the Principal Borrower and the Corporate Guarantors have all expressly accepted that the DIFC Courts have exclusive jurisdiction to determine their dispute.

53. Senior Counsel for the Personal Guarantors submitted that the Principal Borrower and the Corporate Guarantors would be bound by any decision made by the Dubai Courts in proceedings to which they are named parties. In answer to the proposition that the Dubai Courts would not determine issues relating to the validity of the Facility Agreements when none of the parties to those Agreements disputed their validity (and the Personal Guarantors are not party to those Agreements), Senior Counsel contended that it was possible that the parties to those Agreements other than the Banks might decide to impugn their validity if it appeared that the Personal Guarantors were likely to be successful in the Dubai proceedings.

54. There are two answers to this contention. First, it is entirely speculative and this application must be determined on the basis of the current circumstances and not on the basis of future possibilities. Second, all parties to the Facility Agreements have, in the DIFC proceedings, expressly admitted their authenticity, and all parties seek remedies pursuant to those Agreements. Further, all parties to those Agreements agree that the DIFC Courts have exclusive jurisdiction to determine disputes arising under those Agreements. In these circumstances it would be extremely difficult for any party to resile from those positions.

55. There is not the same connection or linkage between the claims brought by the Banks against the Personal Guarantors and the claims brought by the Banks against other parties as there was in relation to the claims brought by Five Holding Limited and its subsidiaries in that case. In this case the validity of the Personal Guarantees will be determined in one or other of the proceedings between the Banks and the Personal Guarantors. The resolution of that question has the potential to have an effect upon the rights and obligations of the Corporate Guarantors because of the right of each guarantor to claim contribution from other guarantors. However, the right to claim contribution does not arise unless and until a guarantor has discharged part or all the obligation under the Guarantee, and none of the Corporate Guarantors have yet made any payment to the Banks. Accordingly, no Corporate Guarantor presently has any right to claim contribution from the Personal Guarantors, or vice versa. Further, there are no claims as between the respective guarantors in either the DIFC Courts or the Dubai Courts – that is, none of the guarantors have sought relief against any of the other guarantors – for example, by way of declaration as to the validity of the guarantees, or with respect to the obligation of contribution.

56. In summary, as things presently stand, the only parties whose rights and obligations will be affected by the determination of the issues relating to the validity of the Personal Guarantees are the Personal Guarantors and the Banks. In this respect the circumstances of this case are very different to the circumstances of Five Holding Limited, where the claims of the different parties were inextricably interlinked and intertwined.

57. For these reasons, in assessing whether there is a conflict of jurisdiction, it is appropriate and indeed necessary to give separate consideration to the differing positions of the Personal Guarantors on the one hand, and the Principal Borrower and the Corporate Guarantors on the other.

Conflict of jurisdiction – the Principal Borrower and the Corporate Guarantors

58. The Banks submit that neither the DIFC Courts nor the Dubai Courts have taken any steps in the exercise of jurisdiction with respect to the claims brought by the Banks against the Principal Borrower and the Corporate Guarantors. By contrast, the Defendants submit that both Courts have exercised jurisdiction in respect of those claims which should therefore be stayed, pending the determination of the JJT.

59. In the DIFC Courts all Defendants other than the Personal Guarantors have filed Acknowledgements of Service submitting to the jurisdiction of those Courts. Further, in their Defence, all Defendants other than the Personal Guarantors have expressly admitted that the DIFC Courts have exclusive jurisdiction to determine the disputes. Moreover, the Principal Borrower has brought a counterclaim against the Banks in those proceedings, and the Corporate Guarantors assert that their liabilities are reduced by the extent of that counterclaim.

60. Although the occasion for the DIFC Courts to take any step in the substantive resolution of the dispute was averted by the stay of the proceedings, if that stay is lifted, as between the Banks and all Defendants other than the Personal Guarantors, the Court will be obliged to proceed with the substantive exercise of its jurisdiction. It follows that if the Dubai Courts are also exercising jurisdiction in respect of that dispute, there would be a risk of contradictory or inconsistent judgments and a multiplicity of proceedings with respect to the one dispute, contrary to the objectives of the Decree.

61. Accordingly, as regards the Principal Borrower and the Corporate Guarantors, the critical question is whether the Dubai Courts have exercised jurisdiction in respect of the dispute between the Banks and those parties. The answer to that question, viewed as a matter of substance rather than form, must be in the negative. Neither the Principal Borrower nor any of the Corporate Guarantors has taken any part in the proceedings in the Dubai Courts. No relief is sought by or against them in those proceedings. As no party to the Facility Agreements disputes the validity or authenticity of those agreements, it is highly unlikely that the Dubai Courts will determine any issue with respect to the validity or authenticity of those agreements, and in any event, all parties to those agreements accept that the Dubai Courts lack jurisdiction to make any determinations with respect thereto.

62. Accordingly, as the Banks, the Principal Borrower and all Corporate Guarantors accept that the DIFC Courts have exclusive jurisdiction to determine their dispute, and the Dubai Courts are not exercising jurisdiction in relation to that dispute, there is no conflict of jurisdiction as between the Courts in relation to that dispute or those claims and counterclaims, and therefore no basis for staying the proceedings brought by the Banks against those parties in the DIFC Courts.

Is there a conflict of jurisdiction in relation to the Personal Guarantors?

63. Turning now to the position with respect to the Personal Guarantors, the parties’ submissions with respect to the exercise of jurisdiction by the respective Courts in relation to those parties are also diametrically opposed.

64. Dealing firstly with the Dubai Courts, at the time of the hearing of the application to lift the stay the Banks’ objection to the jurisdiction of those Courts had not been resolved., However, the Dubai Courts had engaged with both the Banks and the Personal Guarantors in relation to the resolution of the merits of the substantive dispute relating to the validity of the Personal Guarantees, That gave rise to a question as to whether the Dubai Courts had engaged in the exercise of jurisdiction with respect to the substantive dispute, in such a way as to impede the attainment of the objectives of the Decree in relation to the avoidance of the risk of inconsistent or contradictory judgments, or the multiplicity of proceedings in respect of the same dispute. However, because it is clear beyond argument the DIFC Courts have not yet reached the point of exercising jurisdiction in relation the Banks’ claims against the Personal Guarantors, it is unnecessary to resolve that question. .

65. In the DIFC proceedings the position in relation to the Banks’ claims against the Personal Guarantors is identical to the position of the claim against the defendant in Lakhan – namely, the only step which has been taken by those defendants is to object to the jurisdiction of the Court. The Court will have to determine that objection before proceeding to exercise jurisdiction against the Personal Guarantors, and the Court of Appeal has decided in Lakhan that the mere determination of an objection to jurisdiction does not, of itself, give rise to a conflict of jurisdiction so as to enliven the operation of the Decree.

66. For these reasons, when the position is viewed from the perspective of the claims made by and against the Personal Guarantors, the position is relevantly identical to the position in Lakhan, in that no conflict of jurisdiction has yet arisen, because, as the Personal Guarantors expressly concede in their application to the JJT, the DIFC Courts have not yet determined whether they have jurisdiction to entertain the Banks’ claim against the Personal Guarantors. Accordingly, the question of whether the Dubai Courts have exercised jurisdiction in relation to those claims is not determinative of whether the stay should be lifted, because the stay should be lifted in any event, on the ground that the DIFC Courts have not yet exercised jurisdiction or decided whether to exercise jurisdiction in respect of those claims.

Conflict of jurisdiction - summary

67. For these reasons, while the DIFC Courts should be taken to be exercising jurisdiction in relation to the Banks’ claims against the Principal Borrower and the Corporate Guarantors, the Dubai Courts are not exercising jurisdiction in relation to those claims. Further, as the DIFC Courts are yet to make a determination as to whether they have jurisdiction to entertain the claims by the Banks against the Personal Guarantors, no conflict in jurisdiction has arisen in relation to those claims, whatever the position might be in the Dubai Courts in relation to those claims.. Accordingly, there is no conflict in jurisdiction in relation to the dispute as between the Banks and any of the Defendants to the DIFC proceedings, and therefore no reason to grant a stay pending the determination of the JJT.

68. In an attempt to avoid the consequences of these conclusions, the Defendants advance a number of ingenious but ultimately unsuccessful arguments. I will deal with each in turn.

Approbation and reprobation

69. The Defendants rely upon the general principle to the effect that a party is not permitted to approbate and reprobate – that is to say, to blow hot and cold.²¹ The general principle is not in doubt. It is related to the principles of waiver and election so that, in some circumstances, once a party has elected (for example, to affirm the continued existence of a contract following a breach), that party will not be permitted to rescind its election and adopt an inconsistent position.

70. The Defendants submit that this principle applies such that the Banks cannot be permitted to depart from the position which they adopted in the Dubai proceedings, in which they sought an order of the Dubai Courts staying those proceedings pending the determination of the JJT. The Defendants submit that such a position was only consistent with an assumption that there was a conflict in jurisdiction so as to enliven the jurisdiction of the JJT, an assumption from which the Banks have departed in order to bring the present application.

71. With respect, the submission goes too far. The principles sometimes described as the principle against approbation and reprobation, or election, do not impose forensic straitjackets upon parties to litigation in respect of all aspects of the conduct of that litigation. While there will be some circumstances in which those principles are properly applied, they cannot and should not be universally applied to all procedural positions adopted by a party. To take an obvious example, the principles do not apply to prevent a party from amending a pleading in order to adopt a position different to that previously adopted in relation to a particular issue, subject of course to questions of prejudice to other parties.

72. But in any case, the position adopted by the Banks in relation to the stay of proceedings has been both consistent and reasonable at all times. The Bank has consistently asserted that the DIFC Courts have exclusive jurisdiction to determine all disputes between these parties, and that as a consequence, the Dubai Courts lack jurisdiction. There has been no change in the Banks’ position in that regard.

73. After the Personal Guarantors commenced proceedings in the Dubai Courts, which the Banks assert to be a breach of the provisions of each Guarantee, stays of proceedings were granted in both Courts – in the Dubai Courts on the basis of the Decree related to litigation against health service providers and in the DIFC Courts on the basis of the Decree. That position prevailed until 1 March 2021, when the Dubai Courts lifted the stay of proceedings and invited the parties to deal with the substantive issues in those proceedings, without first determining the Banks’ objection to jurisdiction. In those circumstances, given that a stay was in place in the DIFC Court, which the Banks have always contended has exclusive jurisdiction to determine the dispute it was entirely reasonable for the Banks to seek a stay of the proceedings in the Dubai Courts equivalent to that which had been granted in the DIFC Courts. There was no inconsistency in the position adopted by the Banks in that respect, nor was there any requirement for the Banks to make any relevant election.

74. After the Banks became aware of the decision in Lakhan, and applied to set aside the stay granted in the DIFC Courts, the Banks in effect withdrew their application to the Dubai Courts for a stay pending the determination of the JJT – an application which has never been determined²² . There was at that time no inconsistency in the position adopted by the Banks, as it did not contend that the proceedings in either Court should be stayed pending the determination of the JJT.

75. In substance, all that the Banks have done is withdraw an application to the Dubai Courts for a stay of proceedings pending the determination of the JJT before that application was determined. The principle against approbation and reprobation does not go nearly so far as to prevent a party from withdrawing an application prior to its determination.

76. The Defendants’ contention that the Banks cannot now apply to this Court to lift the stay of proceedings cannot be accepted.

The grant of a stay under the Court’s general powers

77. The Defendants submit that if, contrary to their primary submission, a stay is not mandated by the provisions of the Decree, it should nevertheless be maintained in the exercise of the general powers of the Court by reference to principles such as lis alibi pendens, or forum non conveniens. They submit that the Dubai Courts are Courts of plenary jurisdiction appropriate to the determination of issues relating to the forgery of documents and that, because the proceedings in those Courts involving the Personal Guarantors are much further advanced than the corresponding proceedings in the DIFC Courts, the stay of the DIFC Courts proceedings should be maintained - relying on Reichhold Norway ASA v Goldman Sachs International²³ ; Klockner Holdings Gmbh, Balli Group Plc v Klockner Beteiligungs Gmbh²⁴ .

78. It is unnecessary to delve into the applicable principles or the authorities in any detail because there are at least two reasons why this submission must be rejected.

79. First, in IGPL v Standard Chartered Bank²⁵ the Court of Appeal held that the doctrine of forum non conveniens had no application in the DIFC Courts if the alternative forum was another court of the UAE. The existence of mechanisms for the resolution of disputes as to jurisdiction between different courts within the UAE by a reference to the Union Supreme Court was instrumental in that conclusion. In Lakhan the Court relied upon the analogy between those circumstances and the circumstance in which there are issues as to the competing jurisdiction of the courts within the Emirate of Dubai to which the Decree applies as part of its process of reasoning.

80. So, issues with respect to conflicts of jurisdiction between the DIFC Courts and the Dubai Courts must be resolved by the application of the provisions of the Decree, and not by reference to broader principles developed in either the common law or private international law.

81. Second, in this case the Banks assert that the DIFC Courts have exclusive jurisdiction. It seems clear that if the Personal Guarantors signed the Guarantees, there is no basis upon which that assertion can be challenged. So, if the Guarantees are valid and enforceable, no question of courts with competing or parallel jurisdictions arises and there is no scope for the application of the broader principles to which the Defendants refer.

82. For these reasons the contention that the stay can be maintained in the exercise of the general powers of the Court cannot be accepted.

Objection to jurisdiction involves determination of the merits

83. On behalf of the Personal Guarantors it is submitted that the decision in Lakhan is distinguishable from the present circumstances because their objection to the jurisdiction of the DIFC Courts is inextricably intertwined with the merits of the proceedings in both Courts, as it turns upon the question of whether the signatures on the personal guarantees are forged.

84. It is unnecessary to determine whether or not this is a proper basis for distinguishing the decision in Lakhan because of the significance of the exclusive jurisdiction provisions in the personal guarantees upon which the Banks rely. If the Personal Guarantors signed the guarantees containing those provisions, the only courts which can determine authoritatively the validity or enforceability of the guarantees are the DIFC Courts. It follows that if the guarantees are in fact valid, the only authoritative determination to that effect must come from the DIFC Courts. Any intermixture between jurisdiction and merits is therefore a necessary step along the path towards an authoritative determination as to the jurisdiction of the DIFC Courts.

85. Further, it cannot be assumed that the DIFC Courts must necessarily determine the question of whether the Personal Guarantors signatures on the personal guarantees have been forged in order to determine the objection to jurisdiction. It is quite possible that there may be another gateway to the jurisdiction of the Court, or that the Court might decide that it has jurisdiction to determine the allegation of forgery as part of the substantive determination of the case. So it does not necessarily follow that the determination of the objection to jurisdiction will, of itself, create the risk of a decision on the question of the forgery of the personal guarantees, thereby creating a conflict in the jurisdiction being exercised by the DIFC and Dubai Courts.

Pointlessness

86. The Personal Guarantors further submit that lifting the stay of proceedings against them is pointless, because their objection to jurisdiction must then be determined. If it is upheld the claims against them in the DIFC Courts will be dismissed. But if their objection is dismissed, then there will be a conflict in jurisdiction with the Dubai Court and the stay will have to be reimposed.

87. The answer to this submission is that it cannot be accepted that there is no point in this Court determining if it has jurisdiction. If it decides that it does not have jurisdiction, then the issue before the JJT becomes otiose and the proceedings in this Court against the Personal Guarantors will be dismissed.

88. I also observe that the situation in this case is no different in this respect to the position in Lakhan. In that case, if the objection to jurisdiction was dismissed by the DIFC Courts, a conflict in jurisdiction would inevitably arise and the stay would have to be reimposed pending any decision of the JJT. But that did not prevent the Court from lifting the stay to enable the Court to determine the question of jurisdiction.

Events Subsequent to the hearing

89. Following the hearing and shortly before these reasons were due to be published, the parties advised the Court of two developments in other Courts which were said to be relevant to the application to lift the stay.

90. Those developments are:

91. The Defendants contend that the dismissal of the proceedings by the Dubai Court does not mean that the stay of these proceedings should be lifted, because the decision is a decision at First Instance and may be reversed on appeal, and they intend to bring such an appeal.

92. I accept that the decision of the Dubai Court does not alter the outcome of the application to lift the stay, but for a different reason. For the reasons given above, it is clear that the Dubai Courts have never exercised jurisdiction in respect of defendants other than the Personal Guarantors, and because the DIFC Courts have not exercised or determined whether to exercise jurisdiction against the Personal Guarantors, the stay must be lifted whatever the position of the Dubai Courts.

93. The Defendants also contend that there would be little purpose in lifting the stay at this point in time, because application will be made to recognise and enforce the decision of the Abu Dhabi Court, which will result in another stay being granted on different grounds. They contend that lifting the stay now would result in wasted time and costs.

94. There are 2 reasons why this contention should be rejected. First, not all Defendants are parties to the Abu Dhabi proceedings, and there is no reason why the stay should not be lifted in relation to the Defendants who are not parties to those proceedings.

95. Second, and more significantly, it would be wrong in principle to pre-empt the outcome of an application for recognition and enforcement of a judgment before that application has been made.

Conclusion

96. For these reasons the Banks’ application to set aside the stay of these proceedings should be granted and the stay set aside.

Costs

97. At the conclusion of the hearing, I invited counsel to address me on the question of the costs of the application. However, although each party had filed a Statement of Costs, neither counsel had given any consideration to those Statements, and neither was in a position to address on the question of the reasonableness of the costs claimed. Further, the Defendants asserted that their position on costs could be affected by the reasons given for the disposition of the various arguments which had been raised in relation to the application. It was therefore agreed that any final orders as to costs should be stood over.

98. However, it might assist the parties if I express the tentative view that there doesn’t appear to me to be any reason why costs should not follow the event and the Defendants ordered to pay the Banks’ costs of the application. In relation to the quantum of the Banks’ costs, rather than undertake an elaborate process of written submissions or a further hearing on that question, the preferable course may be to order that the costs be assessed by a Registrar of the Court unless agreed within fourteen (14) days. Accordingly, unless any party opposes this course, I would propose to order that the Defendants pay the Banks’ costs of the application to be assessed by a Registrar of the Court if not agreed within fourteen (14) days of the making of the order for costs. I will however give all parties fourteen (14) days from the date of publication of these reasons within which to indicate their opposition to such orders, and provide submissions in support of that opposition. If any party exercises that liberty, the other party will have fourteen (14) days within which to provide written submissions in response, after which I will determine the question of costs on the papers.