October 26, 2021 court of first instance - Orders
Claim No. CFI 085/2020
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
AL AHLI BANK OF KUWAIT K.S.C.P.
Claimant
and
(1) CENTURION INVESTMENTS
(2) SAEED MOHAMED BUTTI MOHAMED ALQEBAISI
(3) KHALEEFA BUTTI OMAIR YOUSIF AHMED ALMUHAIRI
(4) CENTURION PARTNERS INVESTMENT LLC
(5) INFINITE PARTNERS INVESTMENTS LLC
(6) INFINITE INVESTMENT LLC
(7) FRESHLY FROZEN FOODS FACTORY OWNED BY INFINITE PARTNERS INVESTMENT ONE PERSON COMPANY LLC
(8) SENORA FOODS (LLC)
(9) FRESHLY FOODS BAKERY LLC
(10) SENORA QUALLITY GENERAL TRADING LLC
Defendants
ORDER WITH REASONS OF JUSTICE WAYNE MARTIN
UPON considering the letter received from the Abu Dhabi Judicial Department (“ADJD”) dated 13 September 2021 (the “Letter”)
AND UPON the Court inviting the parties to provide their views on the Letter
AND UPON reviewing the Claimant’s submissions dated 17 October 2021 with respect to the Letter
AND UPON reviewing the Defendants’ submissions dated 17 October 2021 with respect to the Letter
IT IS HEREBY ORDERED THAT:
1. The Court should take no action in response to the letters which have been received from the ADJD and Dubai Courts.
2. The Defendants should pay the Claimant’s costs of this issue to be assessed by the Registrar unless the parties agree the quantum of those costs within 28 days of the date of this Order.
Issued by:
Amna Al Owais
Chief Registrar
Date of issue: 26 October 2021
Time: 8am
SCHEDULE OF REASONS
Summary
1. All Defendants submit that there should be an immediate stay of these proceedings, without the need for any further application, as a consequence of a decision of the ADJD’s Court of First Instance in bankruptcy proceedings commenced in that Court, together with letters issued by that Court consequent upon that decision. That submission must be rejected, for the reasons which follow.
These proceedings
2. These proceedings were commenced on 15 October 2020. The Claimant is a bank carrying on business in the DIFC. The Second and Third Defendants are natural persons, and the other 8 Defendants are corporate entities associated with those natural persons.
3. The claim is for an amount of USD 50,377,851.45, said to be due to the Claimant under a Facility Agreement pursuant to which funds were advanced by the Claimant to the First Defendant, Centurion Investments. The Claimant asserts that the First Defendant is in default of its obligations under the Facility Agreement, as a result of which the Second-Tenth Defendants are each liable to pay the amount due, as guarantors of the First Defendant’s obligations under the Facility Agreement.
4. On 13 January 2021, a Judge of this Court ordered a stay of proceedings pursuant to Article 5 of Dubai Decree no. 19 of 2016 because a petition had been lodged with the Joint Judicial Committee created by that Decree, asserting that there was a conflict between the jurisdiction of this Court and jurisdiction asserted by the Dubai Court of First Instance in related proceedings. It seems that the petition to the Joint Judicial Committee has not yet been determined, and the stay granted in January remains in force. The stay which the Defendants seek as a consequence of the Abu Dhabi proceedings is potentially of a more enduring nature than the stay presently in force, depending of course upon the outcome of the proceedings pending before the Joint Judicial Committee.
The Abu Dhabi proceedings
5. The Third Defendant in these proceedings, Khaleefa Butti Omair Yousif Almuhairi, commenced bankruptcy proceedings in the ADJD’s Court of First Instance (Case No. 7/2021). He is the Applicant Debtor in those proceedings, to which he has joined 29 additional parties as “Joined Litigants”. The Second Defendant in these proceedings, H.E. Saeed Mohamed Butti Mohamed Alqebaisi, is one of the Joined Litigants. The other 28 Joined Litigants are corporate entities. The Joined Litigants include the Fourth, Fifth, Sixth, Eighth, Ninth and Tenth Defendants to these proceedings. Because of differing descriptions of the entities involved, it is not abundantly clear whether the First and Seventh Defendants to these proceedings are Joined Litigants in the Abu Dhabi proceedings. It is unnecessary to resolve that uncertainty for the purposes of determining the issue presently before the Court.
6. On 27 July 2021, the ADJD’s Court of First Instance issued a ruling (the “Abu Dhabi Bankruptcy Decision”) in which it ordered, among other things, that:
(a) a Trustee in bankruptcy be appointed;
(b) the Trustee is to make an inventory of the assets of the Applicant Debtor and the Joined Litigants;
(c) the Trustee is to provide a report to the Court with respect to both the Applicant Debtor and the Joined Litigants;
(d) the Trustee was to call for submissions from creditors of the Applicant Debtor and the Joined Litigants; and
(e) the Trustee was to prepare and develop a restructuring plan for the Applicant Debtor and the Joined Litigants.
7. Of direct relevance to the present question, the ADJD also ordered that:
Judicial proceedings against the Debtor and the Joined Litigants and the execution proceedings against their assets thereof are stayed. Permission is given to address letters to the competent authorities and to issue a “To Whom It May Concern” certificate to advise of the content of this decision.
8. On 9 August 2021, the ADJD’s Court of First Instance issued a document described as a “To Whom It May Concern” certificate referring to the ruling of the Court to which I have just referred. The certificate included the following:
Based on the above we would like to inform whoever it concerns that the Court decided as follows:
1. …
5. Stay court proceedings against the Applicant Debtor and the Joined Litigants and the execution proceedings on their assets.
9. On 17 August 2021, the ADJD’s Court of First Instance sent a letter to the President of the Dubai Court of First Instance referring to the decision in the bankruptcy proceedings to which I have referred above, and stating:
It is decided to delegate to Your Excellency to address the Dubai International Financial Centre to stay the proceedings in the cases tried before it against the Debtor and the Joined Litigants and to stay the execution procedures on their assets …
10. On 9 September 2021, the Dubai Civil Court of First Instance sent a letter to the Chief Justice of the DIFC Courts (the “Delegation Letter”) which included the following:
It is ordered by the Dubai Court of First Instance on 8 September 2021 in the said delegation above to address this Honourable Court to execute the content of the order of the Abu Dhabi Court of First Instance in Case no. 7/2021 bankruptcy, Abu Dhabi, as per its request.
11. On 13 September 2021, the ADJD’s Court of First Instance wrote to this Court (the “ADJD Letter”), referring to the bankruptcy proceedings in Abu Dhabi and asserting:
Pursuant to the order rendered by the Bankruptcy Circuit in the Abu Dhabi Commercial Court, it has been decided to address you (the Dubai International Financial Centre Courts) to stay the proceedings in the cases listed before you, against the Debtor and the Joined Litigants and to stay execution proceedings on their assets further to the decision rendered by the Bankruptcy Circuit in Case No. 7 of 2021 Abu Dhabi Bankruptcy on 27/07/21.
12. On 26 September 2021, the ADJD’s Court of First Instance ordered:
(a) the appointment of two partners from DeLoitte as additional Trustees; and
(b) that the Applicant Debtor and the Joined Parties pay into Court the sum of AED 2.9 million on account of the fees of the additional Trustees.
13. On 28 September 2021, the Applicant Debtor and the Joined Litigants filed a grievance petition with the ADJD against that decision. Those parties have not paid into Court the amount ordered by the ADJD pending the resolution of their grievance petition.
14. In their submissions the Defendants assert:
it is apparent from … [the Abu Dhabi Bankruptcy Decision] … that the centre of main interest of the debtor and Joined Litigants is in Abu Dhabi.
I do not accept that assertion insofar as it relates to the Joined Litigants. In the course of its reasons for the Abu Dhabi Bankruptcy Decision, the Court found that the Applicant Debtor carried out his business interests primarily from Abu Dhabi, but made no findings with respect to the place or places in which the Joined Litigants had their centre of main interest. Nor is there any evidence before this Court which would enable any findings to be made with respect to that issue in relation to the Defendants in these proceedings.
The Defendants’ submissions
15. The Defendants rely upon the DIFC Insolvency Law1 which incorporates, as Schedule 4 to that Law, a modified form of the UNCITRAL Model Law.
16. The Defendants submit that for the purposes of the application of the UNCITRAL Model Law in DIFC, the ADJD is a foreign court and the Abu Dhabi bankruptcy proceedings are foreign proceedings, and this appears to be common ground.
17. The Defendants place particular reliance upon Article 25 of Schedule 4 which provides:
In matters referred to Article 1, the Court may co-operate with foreign courts or foreign representatives, either directly or through a DIFC insolvency office holder.
18. The Defendants submit that the implementation of a stay of proceedings plainly falls within the co-operation which should be extended in response to the requests issued by the ADJD.
19. The Defendants also place reliance upon the inherent power of this Court to order a stay of proceedings, expressly preserved by RDC 4.2(6).
20. The Defendants have not applied for recognition and/or enforcement of the orders of the ADJD in this Court. Indeed, the Defendants make no application at all but submit that these proceedings must be stayed without need for any application. It follows that it is neither necessary nor appropriate to express any view with respect to the likely outcome of an application for recognition and/or enforcement of the Abu Dhabi Bankruptcy Decision unless and until such time as an application of that kind is made.
21. Similarly, although the Defendants place reliance upon the Delegation Letter sent from the Dubai Court of First Instance to the Chief Justice of this Court, no reliance is placed upon Article 7(5) of the Judicial Authority Law.2 That clause refers to the execution of the judgments, decisions or orders issued by the Dubai Courts and requires the issue of an execution letter to the Chief Justice of the DIFC Courts, together with an application by the person requesting execution accompanied by a copy of the judgment decision or order of the Dubai Courts. The Defendants have made no application of that kind, presumably because the judgment upon which they rely is not a judgment of the Dubai Courts.
The Claimant’s Submissions
22. The Claimant’s submissions rely heavily (understandably) upon the decision of Justice Cooke in Mashreqbank PSC v Infinite Partners Investment LLC & Ors.3 The Second and Third Defendants in that case are the Second and Third Defendants in this case. The other Defendants in that case are corporate entities who are not parties to these proceedings. The issues determined by Justice Cooke arose from the same judgment of the ADJD’s Court at First Instance in bankruptcy and from the same communications from that Court to the Dubai Courts and to this Court as in this case.
23. In that case, the Defendants sought orders for recognition and/or enforcement of the judgment of the ADJD in the bankruptcy proceedings and/or of the Delegation Letters to the DIFC Courts issued by the ADJD and the Dubai Courts. A significant part of the reasons of Justice Cooke relate to his rejection of those applications. As noted, no applications of that kind have been made in this case, and it is therefore unnecessary to refer to that portion of Justice Cooke’s reasons.
24. In that case, the Defendants also placed reliance upon the provisions of the DIFC Insolvency Law4 and in particular, Schedule 4 of that Law, which incorporates the modified UNCITRAL Model Law. In that respect, the submission appears to be identical to the submission made by the Defendants in this case.
25. Justice Cooke rejected that submission. In my earlier decision in Al Ahli Bank of Kuwait K.S.C.P. & Ors v Emirates Hospitals Group LLC & Ors,5 I set out:
(a) the reasons given by Justice Cooke for rejecting that submission;
(b) my reasons for respectfully disagreeing with those reasons; and
(c) my reasons for arriving at the same conclusion as Justice Cooke – namely, that the Court should not exercise its discretion to stay the proceedings under either Chapter IV of Schedule 4 of the DIFC Insolvency Law, together with my reasons for rejecting the alternative submission that the discretion to stay proceedings conferred by the Rules of Court should be exercised.
26. Those reasons apply with equal force to this application and these proceedings and should be taken to be incorporated herein by reference. It is unnecessary to repeat them verbatim.
27. For these reasons, at least in the circumstances as they presently exist, the Court should take no action in relation to the Abu Dhabi Bankruptcy Decision or the correspondence issued by the ADJD following that decision.
Costs
28. The Defendants should pay the Claimant’s costs of this issue to be assessed by the Registrar unless the parties agree the quantum of those costs within 28 days of the date of this order.
