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Claim No. CFI 066/2020

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

CREDIT SUISSE (SWITZERLAND) LIMITED

Claimant

and

(1) ASHOK KUMAR GOEL
(2) SUDHIR GOYEL
(3) MANAN GOEL
(4) PRERIT GOEL

Defendants

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REASONS FOR THE ORDER OF JUSTICE WAYNE MARTIN MADE ON 1 OCTOBER 2020

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UPON the Defendants’ Application No. CFI-066-2020/4 dated 27 September 2020 (the “Application”) seeking a declaration that the DIFC Courts do not have jurisdiction

AND UPON hearing counsel for the Claimant and counsel for the Defendant at a hearing on 30 September 2020

AND UPON the Order of Justice Wayne Martin issued on 1 October 2020

UPON reviewing all documents recorded on the Courts’ file

REASONS FOR DECISION

Procedural history

1. Credit Suisse (Switzerland) Limited (the “Bank”) commenced these proceedings against Mr Ashok Kumar Goel, Mr Sudhir Goyel, Mr Manan Goel and Mr Prerit Goel (together the “Guarantors”) claiming a world wide freezing order (“WFO”) restraining the Guarantors from dealing with or disposing of their assets pending determination of a claim to be brought against the Guarantors by the Bank.

2. As is usual practice, and in accordance with RDC Part 25, the Bank’s application for a WFO was heard without notice to the Guarantors. The Judge hearing the application held that the Court lacked jurisdiction to make the order sought, and dismissed the application. In the course of making that ruling however, he held that if he had concluded that the Court did have jurisdiction, he would have made the order sought, as the Bank had made out all the grounds that had to be established for the making of such an order.

3. The Bank appealed against that decision. That appeal was also heard without notice to the Guarantors. The Court of Appeal upheld the appeal on the ground that the Judge at first instance should have concluded that there was a good arguable case to the effect that the Court had jurisdiction and, on that basis, should have made the order sought, leaving it open to the Guarantors to challenge the jurisdiction of the Court when served with the order. The Court of Appeal directed the Judge at first instance to make the order sought, and the WFO was made on 13 September 2020.

4. After the Guarantors received notice of the WFO, they advised the Court that they wished to challenge the jurisdiction of the Court to make the order. As the Judge at first instance had already made a ruling on that subject, and that ruling had been overturned by the Court of Appeal, responsibility for the determination of the jurisdictional issue was transferred to me. I made directions for the exchange of submissions with respect to the jurisdictional issue and suspended the operation of certain provisions of the WFO relating to the provision of information by the Guarantors with respect to their assets and the commencement of substantive proceedings by the Bank, pending determination of the issue with respect to jurisdiction.

5. In order to crystallise the jurisdictional issue the Guarantors lodged an application for a declaration that the Court lacked jurisdiction to entertain the Bank’s claim for a WFO, and for dismissal of the proceedings on that basis. That application, and the jurisdictional issue generally, was listed for hearing before me on a relatively urgent basis.

6. At the conclusion of that hearing, I ruled that the Court had jurisdiction to consider and determine the Bank’s claim against the Guarantors and therefore had jurisdiction to entertain the Bank’s claim for a WFO in support of its claim against the Guarantors. I gave very brief reasons for that conclusion, indicating that fuller reasons would be provided in writing in due course. These are the reasons to which I referred. I also made directions as to the time by which the Guarantors would be ordered to provide the Bank with information relating to their assets, and continued the operation of an earlier direction which I had made to the effect that the Bank was required to commence substantive proceedings against the Guarantors within two (2) business days of the determination that the Court had jurisdiction to entertain that claim.

Should the jurisdictional issue be determined substantively?

7. The first question which arises for determination is whether the Court should continue the WFO on the basis of the Court of Appeal’s decision that there was a good arguable case to the effect that the Court had jurisdiction, or whether the Court should go further and substantively determine the jurisdictional issue. In Tatiana Mikhailovna Akhmedova v Farkhad Teimur Ogly Akhmedov & Anor¹ the Court of Appeal made the following observations with respect to the procedural choices available to the Court when an issue of this kind arises:

“The adoption of the good arguable test when deciding whether there is jurisdiction under a jurisdiction gateway is a reflection of the fact that: (i) often the question is one of mixed fact and law; and (ii) an interlocutory hearing is generally not suitable for a final determination of the issue. However, where the question is solely one of law and the court has the necessary background evidence to determine it, the normal approach is for the court to get on and determine the question.”²

1. [2018] DIFC CA 003 (19 November 2018).
2. At [18], citing para 11-147 of Dicey, Morris and Collins (15th ed) and the observations of Lord Collins in AK Investment CJSc v Kyrgyz Mobil Tel Ltd [2011] UKPC 7 at [81].

8. In this case the facts relevant to the issue of jurisdiction are not contentious. As will appear, the jurisdictional issue turns upon the application of principles of law to the proper construction of two written agreements. It is therefore consistent with the approach commended by the Court of Appeal in Akhmedova for the Court to substantively determine the question of jurisdiction, and I have done so.

The facts relevant to the jurisdictional issue

9. As I have noted, the only issue which I have determined, and the only issue to which these reasons are directed, is the issue of whether the Court has jurisdiction to entertain the Bank’s claim against the Guarantors and consequently to entertain the Bank’s claim for a WFO in support of that substantive claim. It follows that it is only necessary to refer to the facts relevant to that issue in these reasons. As I have also noted, the facts and the evidence which I consider to be relevant to those issues are not contentious.

The parties

10. The Bank is part of a group of companies which was founded in the 1850’s as a Swiss investment bank. The ultimate holding company of the Group is Credit Suisse Group, a company registered in Switzerland. The Bank is a wholly owned subsidiary of that company. Credit Suisse AG, a company also registered in Switzerland, is another wholly owned subsidiary of the ultimate holding company.

11. The Guarantors are all Indian nationals, holding Indian passports, who have been residents of the UAE. However, it seems that they have recently returned to India. All of the Guarantors are associated with the GP Group of companies. That group is headquartered in Sharjah in the UAE, although it has subsidiary companies and offices all over the world. The parent company of the group is GP FZC. The Guarantors are the only four shareholders and are also the only directors of GP FZC.

The borrowing arrangements

12. In May 2016, GP FZC and other members of the GP Group including companies within that group incorporated in Dubai, Singapore, the UK and the Netherlands entered into a Framework Agreement for Commodity Trade Finance with Credit Suisse AG (the “Credit Facility Agreement”). Under that Agreement, credit was extended to each of the nominated borrowers within the GP Group.

The guarantees

13. By written instruments dated 31 May 2016, each of the Guarantors guaranteed the performance of the various borrowers under the Credit Facility Agreement. Each of the guarantees is in identical terms. Under the guarantees, each Guarantor undertakes to pay to Credit Suisse AG any amounts requested by that company in connection with the Credit Facility as if the Guarantor himself was the principal obligor up to a maximum amount of US$100 million. Each guarantee is expressed to impose a continuing obligation upon the Guarantor expiring only upon the full payment and discharge of the guaranteed obligations.

14. Clause 14.3 provides that the Lender (Credit Suisse AG) may assign or transfer all or any part of its rights under the guarantee in accordance with the Credit Facility Agreement.

15. Clauses 16 and 17 of each guarantee are central to the jurisdictional issue. They provide:

The guarantee transfer agreements

16. In September 2016 written agreements were entered into between Credit Suisse AG, the Bank, and each Guarantor for the transfer of the Guarantees from Credit Suisse AG to the Bank. As I have noted, clause 14.3 of the Guarantees expressly provided Credit Suisse AG with the right to transfer the benefit of the Guarantee.

17. The Guarantee Transfer Agreements record that the transfers were occurring in accordance with a Reorganization Program organized so as to enable the Credit Suisse Group to meet the regulatory requirements of its primary regulator in Switzerland. The Guarantee Transfer Agreements also record that the Credit Facility Agreement and each Guarantee is to be transferred from Credit Suisse AG to the Bank, on and from the transfer date. The transfer agreements further record that on and from the transfer date each Guarantor agrees to be bound and to perform its obligations under the Guarantees as if the Bank had been a party to the original Guarantee.

18. Clause 7 of each Guarantee Transfer Agreement provides:

19. Credit Suisse AG was, at all material times, including the times at which the Credit Facility Agreement and the Guarantees were executed, a recognized Foreign Company within the Dubai International Financial Centre (the “DIFC”) and was therefore, at all material times, a “DIFC Establishment” for the purposes of Law No. 12 of 2004 of Dubai – the Judicial Authority Law (the “JAL”). On the other hand, the Bank is not now and never has been a DIFC Establishment within the meaning of the JAL.

20. It is sufficient for present purposes to note that the Bank claims to be entitled to enforce each Guarantee against each Guarantor, and seeks to do so by substantive proceedings in this Court. For the purposes of these reasons it is unnecessary to recount the circumstances in which those claims arise, as they are not relevant to the issue of jurisdiction.

The gateway issue

21. At the risk of an oversimplification which is not strictly complete, for present purposes it is sufficient to observe that the resolution of this jurisdictional issue turns critically upon whether the Bank can establish that its claims against the Guarantors pass through one or other of the “gateways” to the jurisdiction of this Court specified in Article 5 of the JAL.

22. Article 5(A)(1) provides that the Court of First Instance shall have exclusive jurisdiction to hear and determine five categories of proceeding including:

“(a) Civil or commercial claims and actions to which the DIFC or any DIFC Body, DIFC Establishment or Licensed DIFC Establishment is a party …”

As I have noted, the Bank is not a DIFC Establishment, and obviously none of the Guarantors are DIFC bodies. It was faintly suggested in the written submissions served on behalf of the Bank, and initially in oral argument by Senior Counsel appearing on behalf of the Bank, that this Court had jurisdiction because Credit Suisse AG was a DIFC Establishment at the time the Guarantees were entered into. However, that proposition was quite properly abandoned by Senior Counsel for the Bank. The Bank, which is the party to these proceedings, is not now and never has been a DIFC Establishment. No party to these proceedings is a DIFC Body or Establishment. It follows that Article 5(A)(1)(a) does not provide an available “gateway” for the Bank’s claims against the Guarantors.

23. However, this is not to say that the fact that Credit Suisse AG was a DIFC Establishment at the time each Guarantee was entered into is irrelevant to the jurisdictional issue. To the contrary, in my view it is a very relevant fact, for reasons which I will develop.

24. None of the categories of exclusive jurisdiction in Article 5(A)(1) have any application to the circumstances of this case. It follows that the only available “gateway” is Article 5(A)(2) which provides:

“The Court of First Instance may hear and determine any civil or commercial claims or actions where the parties agree in writing to file such claim or action with it whether before or after the dispute arises, provided that such agreement is made pursuant to specific, clear and express provisions.”

25. The Bank submits, and the Guarantors deny, that clause 17.1 or in the alternative clause 17.2 of the Guarantee comprise an agreement in writing which comes within Article 5(A)(2) and thereby confers jurisdiction upon this Court to entertain and determine the Bank’s claims against the Guarantors.

The proper construction of commercial agreements under Dubai law

26. As the authorities to which I will shortly refer make clear, the question of whether any particular written agreement satisfies the requirements of Article 5(A)(2) of the JAL turns upon the proper construction of that agreement. In this case, as I have noted, clause 16 of each Guarantee provides that the agreement is governed by “the laws of the Emirate of Dubai and the applicable Federal Laws of the United Arab Emirates”. It is those laws which must be applied to the construction of clause 17 of each Guarantee. I turn now to the relevant principles of those laws.

27. Article 258 of the UAE Civil Code provides:

28. Article 265 of the UAE Civil Code provides:

29. In the commentary on the UAE Civil Code authorized by the UAE Ministry of Justice, it is observed that:

“The interpretation of a contract means deducing the joint intention of the parties.”⁴

3 Each translation taken from the text by Mr James Whelan – “UAE Civil Code and Ministry of Justice Commentary”.
4 Whelan, supra at 2-0309 p.167.

30. The commentary also makes clear that the joint intention to be ascertained is what common lawyers would describe as objective intention, and what apparently Islamic scholars would describe as overt rather than covert intention. In this context, the commentary observes:

“It is the external intention that is relied upon by the contracting parties in their dealings with others. … For this purpose, the person making the interpretation stops at the expressions contained in the contract and gives them an objective analysis in order to extract the correct meanings. These meanings are regarded as the intention of the contracting parties. … The intention of the parties is to be deduced from the indication given by the words used in the contract. … This gives stability to transactions and provides the lawful confidence that each of the contracting parties should have in the other in being able to rely on the correct meanings contained in the word used by the other. …”

31. These observations will strike a very familiar chord with common lawyers. Although the commentary authorized by the UAE Ministry of Justice to which I have referred suggests that there is a significant distinction between the principles of contractual construction applicable under UAE law and those applicable under English law, I find it difficult to identify any such significant distinctions. Under both legal systems the task of the Court is to ascertain the joint intention of the parties. That intention is to be derived by construing the words which they have used to record their agreement objectively, as they would be understood by a reasonable business person having knowledge of the circumstances known to the parties at the time they entered into their contract.

32. As will be seen, in each of the three authorities in this Court which I consider most pertinent to the issue which I have to determine, the Court has taken precisely this approach to the construction of the agreement which is said to satisfy the gateway requirement of Article 5(A)(2). Each of those agreements was governed by the laws of Dubai and applicable Federal UAE laws. It follows that the objective approach to the construction of agreements which are said to satisfy the requirements of Article 5(A)(2) cannot be said to be controversial under UAE law.

33. In this case, witness statements were provided from each of the Guarantors in which they set out their understanding, or in fact their lack of understanding of clause 17 in the Guarantee Agreement which they signed. It is unnecessary to refer to that evidence as in my view it is irrelevant. The subjective understanding, or lack of understanding, of the Guarantor at the time he signed the relevant Guarantee has no bearing upon the objective interpretation of clause 17 of the Guarantee by reference to the meaning which a reasonable business person with knowledge of all relevant circumstances would have given to the words used in that clause.

34. In this case, the task of ascertaining the meaning which should be given to the words in clause 17.1 of each Guarantee is made considerably easier by the fact that very similar words have been construed by this Court in three prior decisions relating to the application of Article 5(A)(2) of the JAL, and to which I will now turn.

The prior decisions in this Court – clause 17.1 of the Guarantee

Sunteck

35. In Sunteck Lifestyles Ltd v Al Tamimi and Company Ltd & Anor⁵, the relevant agreement contained a provision in the following terms:

“This agreement shall be governed and construed in accordance with the law of United Arab Emirates as applied by the courts of the Emirate of Dubai. The parties hereto irrevocably consent to the jurisdiction of the courts of Dubai for the resolution of disputes with respect to this agreement and agree to comply with all the requirements necessary to give such court jurisdiction.”

5 [2017] DIFC CFI 048.

36. In that context, Justice Sir Jeremy Cooke observed:

“The test to be applied requires the Court to ascertain the ordinary and natural meaning of the words of the jurisdiction agreement as they would have been mutually understood by the parties, having regard to the background circumstances, the nature of the agreement and the context in which the words were used. I need not refer in any detail to the decisions in National Bonds Corporation PJSC v Tallem [2011] DIFC CA 001, Corinth Pipeworks SA v Barclays Bank plc [2011] DIFC CA 002 and Injazat v DWS [2010] DIFC CFI 019 which show that, where the form of words used refers simply to the courts of Dubai or equivalent terminology, those words are apt to apply to both the courts of DIFC and onshore Dubai and the critical question therefore has to be decided on the basis of the context in which those words appear, including not only the contract itself but the surrounding circumstances.”⁶

6 At [11].

37. Sir Jeremy then considered the particular circumstances of that case and concluded that they led inexorably to the conclusion that the parties intended, in those particular circumstances, that the words “courts of Dubai” meant only the DIFC Courts, and not the onshore courts.

38. He then dealt with an argument to the effect that the use of the words “courts of Dubai” did not satisfy the requirement of Article 5(A)(2) to the effect that the agreement conferring jurisdiction upon the DIFC Courts must use “specific, clear and express” words. In that context his Honour observed:

“At the end of the day, it would be nonsensical to conclude that the parties had agreed to the jurisdiction of the DIFC courts, as opposed to the onshore courts but that the words were not sufficiently ‘specific, clear or express’ to amount to an agreement for the purposes of Article 5(A)(2) of the amended JAL, with the result that the matter would have to be determined in the onshore courts. If the purpose of the amended JAL had been to allocate all cases with Dubai choice of law agreements to the onshore courts unless the relevant agreement included the actual words ‘the courts of the DIFC’, ‘the courts of the Dubai International Financial Centre’ or ‘DIFC’ in some form, that is what the provision would have said. What it is looking for is an agreement which is specific enough and sufficiently clearly expressed to amount to a choice of the DIFC courts. Whilst, in an ideal world, the use of wording such as that set out in the Practice Direction would be employed, the courts do not live in an ideal world and have to construe the contracts in issue to determine the parties chosen jurisdiction when faced with clauses such as those found here. Once the clause has been construed the court reaches its conclusion which in itself means that the words used are specific enough, clear enough and express enough for that conclusion to be reached. When general words such as those used here are first seen, they do not appear to be ‘specific clear and express’ as a choice of either the DIFC courts or the onshore Dubai courts. It is only when the process of analysis is undertaken that the true meaning is ascertained. If the parties have agreed to the jurisdiction of the DIFC courts, on the proper construction of the jurisdiction clause, the agreement is, ex hypothesi, sufficiently specific, clear and express. The words used are given a meaning so that the provision is express. In the context, the words are specific in identifying the DIFC courts and in the overall circumstances it is clear that this is what the parties intended. The provisions are therefore ‘specific, clear and express’.”⁷

Taaleem

39. At first instance in Taaleem PJSC v National Bonds Corporation PJSC & Anor⁸, Sir John Chadwick referred to the DIFC Courts and what may be described as the “onshore” courts of Dubai before observing:

“The Dubai Courts and the DIFC Courts are each integral parts of the Dubai legal system: they are each ‘Courts of Dubai’.”⁹

40. In that case the relevant jurisdiction agreement provided:

“Each of the parties irrevocably agrees for the benefit of the Seller that the courts of Dubai, UAE shall have jurisdiction to hear and determine any suit action or proceedings …”

41. After distinguishing the earlier decision in Hardt & Anor v Damac (DIFC) Company Ltd¹⁰ and, in effect, confining it to its own particular facts and circumstances, his Honour went on to conclude that the jurisdiction agreement conferred jurisdiction upon the DIFC Courts. His Honour referred to the contrary proposition in the following terms:

“But that is to equate the phrase ‘the courts of Dubai, UAE’ with the ‘Dubai courts’ to the exclusion of the ‘DIFC courts’. As I have explained, on a proper understanding of the position within the Emirate of Dubai, both Dubai courts and DIFC courts are ‘courts of Dubai’. Absent some compelling context – which does not exist in the present case – there is no basis for holding that the phrase ‘courts of Dubai, UAE’ means the Dubai courts rather than the DIFC courts. It follows that the premise is flawed. The better view is that, by the use of that phrase in the … agreement, the parties have agreed to litigate disputes in Dubai, rather than somewhere else, but without choosing which between the two court systems in Dubai: that is to say, they have agreed to submit their disputes to whichever of the Dubai courts and the DIFC courts has jurisdiction under the laws of Dubai.”¹¹

42. An appeal from that decision¹² was dismissed. The Court of Appeal observed:

“Firstly, whenever the DIFC courts has to determine an issue as to its jurisdiction in the face of an argument based on Article 5(A)(2) … the underlying exercise is to ascertain whether there has been an agreement to confer jurisdiction in respect of the dispute in question on some other court. That involves ascertaining (i) what the parties mutually intended when at the time they entered into their agreement they used words identifying their chosen court and (ii) whether the dispute giving rise to the claim in question falls within the scope of the words which they have used to delineate the class of disputes in which they have agreed to confer jurisdiction on their chosen court. In relation to this threshold exercise the legal burden rests on that party who asserts that the parties have contracted out of the jurisdiction of the DIFC courts. In respect of (i) the test to be applied is the ordinary and natural meaning of the words of the jurisdiction agreement as they would have been mutually understood by the parties when they entered into that agreement. That mutual understanding is to be ascertained from all the circumstances in which the agreement was entered into, its nature and the context in which the words were used.”¹³

43. Although the Court of Appeal agreed with the Judge at first instance that the jurisdiction agreement, properly construed, conferred jurisdiction on the DIFC courts, it took a rather different approach to the construction of the agreement in order to arrive at that conclusion. In the circumstances of that case, the Court of Appeal considered that it was of particular significance that the parties should be taken to have agreed that the law of the DIFC would govern their agreement, leading to the conclusion that the parties should be taken to have also agreed to confer jurisdiction upon the courts of the DIFC.

IGPL

44. The prior decision most pertinent to the circumstances of this case is the decision of the Court of Appeal in Investment Group Private Limited v Standard Chartered Bank¹⁴. In that case, a jurisdiction agreement in one of the relevant agreements was in the following terms:

“…this Pledge and all non-contractual obligations arising in any way out of or in connection with this Pledge are governed by the laws of the Emirate (of Dubai/Abu Dhabi) and the applicable federal laws of the UAE, and the Pledgor irrevocably submits to non-exclusive jurisdiction of the Dubai Courts.”

45. Other relevant agreements contained provisions whereby the parties agreed to submit “to the jurisdiction of the courts of the UAE”.

46. At first instance Justice Sir David Steel concluded that the DIFC courts were properly included within the meaning of the expressions “courts of the UAE” and “courts of Dubai”. He observed:

“The DIFC Courts is one of the courts of Dubai: see National Bonds Corporation v Taaleem. By extension it is a court of the UAE. Indeed within Dubai, it has exclusive jurisdiction. Accordingly, absent an agreement to accord exclusive jurisdiction to another court, there is no basis for excluding the DIFC courts as a court of the UAE. It is thus a court of competent jurisdiction …” ¹⁵

7 At [24].
8 [2010] DIFCCFI 014.
9 At [6].
10 [2009] CFI 036.
11 At [13].
12 National Bonds Corporation PJSC v Taaleem PJSC & Anor [2011] DIFCCA 001.
13 At [30]
14 [2015] DIFCCA 004.
15 See the appeal decision at [34].

47. It is of some significance to note that in IGPL, the argument advanced by the appellant was to the effect that each of the jurisdiction agreements involved an agreement to confer exclusive jurisdiction on a court other than the DIFC courts – in one case the onshore courts of Dubai, and in the other cases the courts of the Federal Judicial Authority of the UAE. In other words, it was an “opt out” case, rather than an “opt in” case. I will return to the significance of that distinction in due course.

48. The Court of Appeal confirmed the approach taken to the construction of the jurisdiction agreements in Taaleem – namely that:

“...the test to be applied was the ordinary and natural meaning of the words of the jurisdiction agreement as they would have been mutually understood by the parties having regard to the background circumstances and the nature of the agreement and the context in which the words are used.”¹⁶

49. The Court of Appeal rejected the proposition that the expression “Dubai courts” encompasses only the non-DIFC Dubai courts.¹⁷ The Court observed:

“The DIFC Courts established under the JAL, is an independent judicial authority in the Emirate of Dubai. However, it is nevertheless an integral part of the Emirates judicial system, a fact that was recognized by the DIFC courts in Taaleem … The judgments issued by the DIFC courts are in the name of His Highness, the Ruler of Dubai. Within the Emirate of Dubai, these judgments are directly enforceable by the competent authority within Dubai Courts, as if they were, for enforcement purposes, judgments of the non-DIFC Dubai Courts.

50. The court distinguished the earlier decision in Hardt, and rejected any analogy with the decision in Dhir v Waterfront Property Investment Limited¹⁸ which was concerned with the construction of an arbitration agreement and in particular the terms of that agreement relating to the seat of the arbitration. In that context, the court observed:

“With jurisdiction agreements, and in contrast with choosing arbitral seats, parties are free to (and often do) confer jurisdiction on more than one forum. In the present case, the parties could have intended the phrase ‘Dubai courts’ to mean (i) only the non DIFC Dubai courts (as IGPL contends), (ii) only the DIFC courts, or (iii) both (as SCB contends). IGPL now seeks to persuade us that the parties have chosen to confer jurisdiction on only one forum, the non DIFC courts. The question before us is therefore this: was there any reason why the parties would wish to deprive themselves of the benefit of one of two closely related and complementary forums in Dubai?”¹⁹

51. After again rejecting any analogy with DHIR’s case, the Court went on to observe:

16 At [125]
17 At [127].
18 [2009] CFI 011.
19 At [136]
20 At [137]-{138]

52. The decisions to which I have referred establish the following propositions:

Analysis – clause 17.1

53. As I have noted, the decision in IGPL involved an argument to the effect that the parties had agreed to “opt out” of the jurisdiction of the DIFC courts, whereas the present issue is whether, by clause 17.1 of each Guarantee, they have agreed to “opt in”.

54. Two consequences flow from that distinction although, in the result, neither is of particular significance in the circumstances of this case. The first consequence relates to the burden of proof. A party seeking to establish that the parties have, by their agreement, agreed to exclude the jurisdiction of the DIFC courts carries the burden of making that proposition good, as does a party seeking to establish that the parties have agreed to confer jurisdiction upon the DIFC courts in accordance with Article 5(A)(2). In practical terms, in each case the burden will be discharged by proving the terms of the relevant agreement which will then be construed by the court in accordance with the principles to which I have referred. In these circumstances the burden of proof will not ordinarily be of great significance – the critical question will turn upon the proper construction of the relevant agreement.

55. The second consequence arises from the obligation imposed by Article 5(A)(2) to the effect that an agreement coming within its terms must contain provisions which are specific, clear and express. However, the authorities in this court to which I have referred establish that this obligation will be taken to be satisfied if the words used by the parties, in their natural and ordinary meaning, would have been objectively understood by those parties to confer jurisdiction upon the DIFC courts, in all the circumstances of the case. It follows that, once again, the critical issue is the proper construction of the words which the parties have used in their agreement. If those words are construed as reflecting the mutual intention of the parties to confer jurisdiction upon the DIFC courts, the requirements of Article 5(A)(2) will be satisfied.²¹ The various decisions establishing that the natural and ordinary meaning of the words “Dubai courts” or “courts of Dubai” includes all the courts established in the Emirate of Dubai, including the DIFC Courts, are also very pertinent to the question of whether the jurisdiction agreement contains provisions which are specific, clear and express.

21 See Sunteck, above.

56. It follows from these observations that, notwithstanding that IGPL was an “opt out” case rather than “opt in” case, it remains of particular significance to the resolution of the question which I have to determine. In particular, in that case, as in this:

57. Given those significant similarities, unless there are any points of significant difference, I consider that I am bound to apply the reasoning in that case to conclude that clause 17.1 of each Guarantee embodied the mutual intention of the parties, at the time Guarantee was signed, to confer jurisdiction upon all the courts of Dubai in relation to disputes arising under the Guarantee, including the DIFC courts. The fact that Credit Suisse AG was a DIFC Establishment at the time each Guarantee was signed, is a factor which points very strongly towards the conclusion that it was the mutual intention of the parties that the DIFC courts were to be included within the meaning of the expression “courts of Dubai”. In those circumstances, IGPL establishes that a very clear and express indication of a mutual intention to exclude the jurisdiction of the DIFC courts would have to be found.

58. The circumstances in which the guarantees were signed, and the context in which clause 17.1 is found within those agreements provide no such indication. To the contrary, those matters support the proposition that the words “courts of Dubai” in clause 17.1 should be given their natural and ordinary meaning and include this court. Those circumstances include the following:

59. To the extent that these circumstances point in any direction, they support the proposition that the parties should be taken to have intended to confer jurisdiction upon a court within the Emirate of Dubai which has international characteristics, as well as upon the parochial or onshore courts of Dubai. To paraphrase the observations of the Court of Appeal in IGPL, the circumstances provide no reason to suppose that the parties would wish to deprive themselves of the benefit of one of two closely-related and complementary forums in Dubai.

60. Of course I do not overlook the fact that the Guarantee agreements are governed by the laws of Dubai and applicable federal laws, and not by DIFC law. The governing law of the agreement was regarded as a significant factor in Taaleem. However, with the greatest of respect to the views expressed in that case, it seems to me that while the adoption of the laws of the DIFC as the substantive law of the agreement provides a strong indication that the parties would have intended the DIFC courts have jurisdiction, the converse proposition does not carry nearly so much weight. That is because it is commonplace for the opt in jurisdiction of this Court to involve the resolution of disputes governed by substantive laws other than the laws of the DIFC. The fact that Article 5(A)(2) contains no requirement for any connection between the DIFC and the parties agreeing to confer jurisdiction upon the DIFC courts, necessarily connotes that prospect.

61. It remains to consider whether the Guarantee Transfer Agreements lead to some other conclusion. In my view they do not. To the contrary, by clause 7 of each of those agreements, the enforcement provisions of the original Guarantees are expressly maintained in force. Those enforcement provisions include clause 17.1.

The Guarantors’ submissions relating to clause 17.1

62. For the sake of completeness, I will now turn to the arguments advanced by the Guarantors in their written and oral submissions.

63. The Guarantors submit that the Guarantee Transfer Agreements should be construed as excluding the jurisdiction of the DIFC courts because the benefit of the Guarantees were transferred from a DIFC Establishment to the Bank, which is not a DIFC Establishment. This argument must be rejected. The Guarantee Transfer Agreements had the consequence that Article 5(A)(1)(a) no longer conferred jurisdiction upon the DIFC courts. However, that fact tells one nothing in relation to the proper construction of clause 17.1 of the Guarantees at the time they were executed and, as I have noted, clause 7 of each Guarantee Transfer Agreement expressly preserves the continued force of clause 17.1 of each Guarantee.

64. For the same reasons, the Guarantors’ contention that, at the time of transfer of the Guarantees, it was necessary to amend clause 17.1 to expressly confer jurisdiction upon the DIFC courts must also be rejected. If, as I have concluded, at the time they Guarantees were executed clause 17.1 properly construed, conferred jurisdiction upon the DIFC courts, at the time of the transfer of the Guarantees the parties expressly recorded and agreed upon the continued force and operation of those provisions.

65. The Guarantors also point to the fact that there is no evidence that any of the principal debtors or Guarantors have property within the DIFC and, since the transfer of the Guarantees from Credit Suisse AG , neither party to the Guarantees has any connection with the DIFC. However, it is clearly established that the existence of property owned by the putative debtor within the jurisdiction in which a WFO is sought is not a precondition to the grant of such an order. Further, as I have noted, the opt in jurisdiction created by Article 5(A)(2) necessarily connotes that the Court will have jurisdiction to hear and determine cases which have no connection with the DIFC other than the parties agreement that this Court should have jurisdiction. The Guarantors’ assertion lacks weight for these reasons.

66. The Guarantors also assert that the onshore Dubai courts lack jurisdiction to issue WFO’s, and also raise issues relating to enforcement of a WFO in Dubai outside the DIFC and in other Emirates. However, these submissions are not relevant to the issue which I have to determine, which relates to the jurisdiction of the DIFC courts. Further, the Guarantors’ reference to the possibility of inconsistent decisions between the DIFC courts and the Dubai courts is not a matter which goes to the determination of the ambit of this Court’s jurisdiction. The ambit of this Court’s jurisdiction is determined by the proper application of Article 5 of the JAL. Overlaps in jurisdiction and the possibility of conflicting decisions are dealt with by the protocol between the courts.

67. The Guarantors also refer to the portion of Article 5(A)(2) which requires “specific, clear and express” provisions. I need not reiterate the views that I have already expressed in relation to the effect of those words and their application to the circumstances of this case.

68. Similarly, the Guarantors point to the fact that the substantive laws of the Guarantee are the laws of Dubai and applicable federal laws, not DIFC laws. I have addressed this contention above.

69. The Guarantors also refer to provisions of the UAE Civil Code relating to good faith and the requirement for a contract to contain mutual benefits. With respect to the Guarantors, I don’t consider those provisions to be relevant to the issue which I am required to determine.

70. The Guarantors have also advanced written submissions with respect to the question of whether or not the Court should grant relief in the exercise of its jurisdiction. Those submissions are not relevant to the question I am deciding, and need not be addressed.

71. The Guarantors also placed significant reliance upon the reasons given by the Judge at first instance, when deciding that the Court lacked jurisdiction. However, that decision was overturned by the Court of Appeal and it has fallen to me to determine the issue of jurisdiction afresh.

Conclusion – Clause 17.1

72. For the reasons set out above I concluded that clause 17.1 of each Guarantee constitutes an agreement conferring jurisdiction upon the DIFC courts to hear and determine disputes arising under each Guarantee through the gateway embodied in Article 5(A)(2). That agreement was expressly continued in force when the Guarantees were transferred from Credit Suisse AG to the Bank. I therefore concluded that the Court has jurisdiction to hear and determine any substantive claim by the Bank against the Guarantors for enforcement of the Guarantees, and therefore has jurisdiction to entertain claims by the Bank which are ancillary to those claims, including the Bank’s application for a WFO.

Clause 17.2

73. The Bank submits, in the alternative, that if clause 17.1 does not confer jurisdiction upon this Court, it follows that this Court must be an “other court” for the purposes of clause 17.2 and that clause constitutes an agreement between the parties which engages the gateway to jurisdiction in Article 5(A)(2). That submission is, of necessity, a true alternative to the Bank’s primary submission, in that both submissions cannot be upheld. As I have upheld the Bank’s primary submission. it follows that it is neither necessary nor appropriate for me to determine a submission which depends upon the hypothesis that the Bank’s primary submission has been rejected.

General conclusion

74. For these reasons I concluded that the Court has jurisdiction to hear and determine the Bank’s claims against the Guarantors including the Bank’s claims for a WFO. For the same reasons I dismissed the Guarantors’ application for a declaration that the Court lacked jurisdiction and made directions relating to the continuation of the WFO. As the Guarantors failed in their contention that the Court lacked jurisdiction, I also ordered that they should pay the Bank’s costs of the jurisdictional issue to be assessed if not agreed.

Issued by:
Nour Hineidi
Deputy Registrar
Date of issue: 4 October 2020
At: 3pm