March 10, 2023 COURT OF FIRST INSTANCE - ORDERS
Claim No: CFI 095/2022
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
SOCIEDAD DE INVERSIONES Y DESARROLLO PLAYA LEONA S.A.
Claimant
and
(1) GOLD CA FZ LLC
(2) VANESSA THERESA SCHWARK
Defendants
REASONS FOR THE ORDER OF JUSTICE WAYNE MARTIN DATED 23 FEBRUARY 2023
Introduction
1. On 21 February 2023, I heard an application by the Claimant for an order joining 4 You Impex and Sundraparipooranan Pakshirajan as the Third and Fourth Defendants respectively to these proceedings (the ‘‘Joinder Application’’).1
2. I also heard an application brought on behalf of the prospective Third and Fourth Defendants seeking a declaration that the Court has no jurisdiction to join those prospective Defendants as parties to these proceedings (the ‘‘Jurisdiction Objection’’).
3. After hearing oral argument in relation to the Joinder Application and the Jurisdiction Objection, I determined that each application should be dismissed for reasons to be published in due course, and pronounced orders accordingly. The reasons foreshadowed in those orders follow.
The proceedings in this Court
The Claim
4. The proceedings in this Court were commenced by the lodgment of a Claim Form on 23 December 2022.
5. The “Brief Details of Claim” set out on the Claim Form are identical to the Particulars of Claim which were filed at the same time as the Claim Form. It is therefore sufficient to refer to those Particulars.
The Particulars of Claim
6. The allegations made in the Particulars of Claim are as follows.
7. The Claimant is said to be a company incorporated in Panama. The First Defendant is said to be a company incorporated in the Ras al Khaimah Free Zone and the Second Defendant is said to be the director of the First Defendant.
8. I digress to observe that it is common ground that the Second Defendant is the owner of all the issued shares in the First Defendant, and the Second Defendant’s father is the owner of all the issued shares in the Claimant.2
9. In the Particulars of Claim, the Claimant alleges that the prospective Third Defendant is a company incorporated in the Ras al Khaimah Free Zone and the prospective Fourth Defendant is a director of the prospective Third Defendant.
10. The Claimant alleges that in early 2019, the prospective Third Defendant agreed to invest money with the First Defendant for the purposes of operating a gold refining facility in Nicaragua which is affiliated with the Claimant. It is further alleged that a number of payments were made by the prospective Fourth Defendant on behalf of the prospective Third Defendant pursuant to this arrangement – some being made direct to the First Defendant and some to the Second Defendant on behalf of the First Defendant.
11. It is further alleged that three Memoranda of Understanding were agreed between the First Defendant and the prospective Third Defendant, with the prevailing Memorandum of Understanding being a document signed on 24 December 2019.
12. It is further alleged that as a result of the Covid-19 pandemic and consequent lockdowns in Panama and Nicaragua, the gold refining facility was closed, and the First Defendant was unable to meet its obligations under the Memorandum of Understanding signed on 24 December 2019.
13. It is further alleged that in the course of discussions relating to settlement of the issues between the First Defendant and the prospective Third Defendant, an audit was conducted during June 2020 as a result of which an audit confirmation sheet was produced specifying the amounts paid and received as between the First Defendant and the prospective Third Defendant. It is alleged that this document (the ‘‘Audit Confirmation Sheet’’) was signed by the prospective Fourth Defendant in his personal capacity and on behalf of the prospective Third Defendant. It is alleged that the amount shown as owing by the First Defendant to the prospective Third Defendant on that document was the amount of AED 3,701,993.75.
14. It is further alleged that on 10 August 2020 an Assignment Agreement was signed between the Claimant and the First Defendant pursuant to which the Claimant accepted the obligation of undertaking repayment of the amount of AED 3,701,993.75 to the prospective Third Defendant on behalf of the First Defendant, and the obligation was to be satisfied through the transfer of six newly constructed houses in a development project owned by the Claimant in Panama.
15. The Claimant further alleges that the parties to the Assignment Agreement subsequently entered into an agreement in writing to the effect that any dispute arising out of the Assignment Agreement should be subject to the exclusive jurisdiction of DIFC Courts (the ‘‘Jurisdiction Agreement’’).
16. I digress to observe that it is apparent from Annex 5 to the Claim Form that the Jurisdiction Agreement was executed on 8 December 2022, more than two years after the Assignment Agreement. For reasons which will be developed, it is of some significance that the Jurisdiction Agreement was executed between the time at which the prospective Fourth Defendant commenced proceedings against the Second Defendant in the onshore Courts of Dubai and the time at which these proceedings were commenced.
17. The Claimant further alleges in the Particulars of Claim that on 17 August 2020 the Claimant, First Defendant and prospective Third Defendant signed a document entitled “Settlement Agreement”, pursuant to which it was agreed that the amount due to the prospective Third Defendant of AED 3,701,993.75 would be satisfied by the transfer of ownership of six properties with a cumulative value of AED 3,720,000.00 to the prospective Third Defendant, subject to the prospective Third Defendant issuing an appropriate power of attorney to a representative in Panama in order to enable title to be transferred.
18. The Claimant alleges that it remains committed to the transfer of the properties to the prospective Third Defendant but has been unable to do so because the prospective Third Defendant has not issued a power of attorney to a representative in Panama to enable the transfers to occur.
19. The Claimant further alleges that in November 2022, the prospective Fourth Defendant commenced proceedings in the onshore Dubai Courts against the Second Defendant claiming an amount in excess of the amount specified in the Audit Confirmation Sheet and the Settlement Agreement.
20. The Particulars of Claim conclude by asserting that as a result of the steps taken by the prospective Fourth Defendant “a controversy arose as to the origin of the obligation assigned to the Claimant under the Assignment Contract” as a result of which the Claimant seeks declarations “to obtain clarity as to what was the origin and exact obligation assigned to it by [the First Defendant] under the Assignment Contract”.
21. The relief sought is declarations to the following effect:
(a) the account of all sums invested by the prospective Third Defendant with the First Defendant is as stipulated in the Audit Confirmation Sheet;
(b) any of the amounts mentioned in the Audit Confirmation Sheet that were paid by the prospective Fourth Defendant personally were paid on behalf of the prospective Third Defendant; and
(c) the obligation of the First Defendant to repay the sum of AED 3,701,993.75 to the prospective Third Defendant was assigned to the Claimant by way of the Assignment Agreement.
22. Various annexures were filed with the Claim Form, including copies of an English translation of the alleged Assignment Agreement, and copies of the alleged Settlement Agreement and the Jurisdiction Agreement.
The Assignment Agreement
23. The English translation of the Assignment Agreement contains the date of 10 August 2020. The parties to the Agreement are the Claimant and the First Defendant. The Agreement is very brief and simply provides that the Claimant confirms that it has agreed to accept the assignment of the obligation to repay the sum of AED 3,701,993.75 to the prospective Third Defendant “as calculated in the attached Audit Confirmation”. The Agreement further provides that the repayment would be made by transferring six houses in Colina Del Mar Project located in La Chorerra, Panama to the prospective Third Defendant or its nominee.
24. The Assignment Agreement contains no provision which identifies any consideration passing from the First Defendant to the Claimant in return for the Claimant accepting an assignment of the obligation to repay the First Defendant’s debt to the prospective Third Defendant. This omission is entirely unexplained by the Claimant in any of its submissions or by any evidence which has been adduced. On its face, it suggests that the relationship between the Claimant and the First Defendant is not at arms length, consistently with the familial relationship between the shareholders in those companies to which I have referred.
The Settlement Agreement
25. The Settlement Agreement is in English and is dated 17 August 2020. The parties are the First Defendant, the Claimant and the prospective Third Defendant.
26. The preamble to the Settlement Agreement records that the parties wished to enter into the Agreement in order to settle the repayment of the amount invested by the Third Defendant in the First Defendant in the amount of AED 3,701,993.75. The preamble is expressed to form an integral part of the Agreement.
27. The Agreement contains an acknowledgment that the amount which remains outstanding in respect of the funds invested by the prospective Third Defendant in the First Defendant is the amount of AED 3,701,993.75. The Agreement further records that the settlement amount will be paid by the First Defendant to the prospective Third Defendant by the transfer of ownership of six properties having a total value of AED 3,720,000.00 to the prospective Third Defendant or its nominees. The Agreement contains a term to the effect that the prospective Third Defendant or its nominee will issue a power of attorney to a representative in Panama to enable the transfers of title to be concluded.
28. The Agreement provides that its terms constitute full and final settlement of all matters relating to the investment made by the prospective Third Defendant with the First Defendant.
29. The Settlement Agreement also provides that in the event of any dispute or difference arising out of or in connection with the Agreement the parties are to first use reasonable endeavours to resolve the dispute amicably and if the dispute is not resolved within a period of 30 calendar days, the dispute is to be referred to arbitration in accordance with the rules of the Dubai International Arbitration Center.
The Jurisdiction Agreement
30. As noted, the Jurisdiction Agreement is dated 8 December 2022. The parties to the Agreement are the Claimant and the First Defendant. The Second Defendant is not a party to the Agreement.
31. The Agreement provides that any “dispute, difference, controversy or claim arising out of or in connection with the Assignment Agreement dated 10 August 2020 … including (but not limited to) any question regarding the existence, validity, interpretation, performance, discharge and applicable remedies of the underlying contract in dispute, shall be subject to the exclusive jurisdiction of the Courts of the Dubai International Financial Centre”.
32. I digress to observe that there is nothing on the face of the Particulars of Claim or any of the annexures to the Particulars which would indicate that there is any dispute between the Claimant and either Defendant to these proceedings. The only dispute apparent from the Particulars of Claim and the annexures thereto is the dispute between the prospective Fourth Defendant and the Second Defendant to these proceedings in relation to the amount which is due to be repaid as a result of the sums invested in the First Defendant, which is the Dispute which is the subject of the proceedings in the onshore Courts of Dubai. Neither of the prospective Defendants is a party to the Agreement conferring jurisdiction upon this Court. To the contrary, the prospective Fourth Defendant has commenced proceedings against the Second Defendant to these proceedings in the Courts of Dubai.
33. None of the relief sought in the Particulars of Claim is relief sought against either of the Defendants. The first declaration relates to the state of the account as between the First Defendant and the prospective Third Defendant. The second declaration sought is to the effect that all sums owed by the First Defendant are owed to the prospective Third Defendant, and not to the prospective Fourth Defendant.
34. The object or purpose of the third declaration sought is somewhat obscure. The declaration sought is to the effect that the obligation of the First Defendant to repay the sum of AED 3,701,993.75 to the prospective Third Defendant was assigned to the Claimant by way of the Assignment Agreement. Clearly the purpose of the declaration cannot be to bind the Claimant, because the Claimant is the party seeking the declaration, and expressly avers that it has assumed the obligation to pay the amount owed by the First Defendant to the prospective Third Defendant. It follows that the apparent purpose of this declaration must be to attempt to bind the prospective Third Defendant to the Assignment Agreement, even though the prospective Third Defendant is not a party to that Agreement. It seems more likely that what is sought in substance is declaratory relief to the effect that the Settlement Agreement, to which the prospective Third Defendant is a party, is binding. An obvious obstacle to the grant of any relief of that sort by this Court is the arbitration agreement contained in the Settlement Agreement – an obstacle which the Claimant has not addressed in any submission.
35. Leaving that issue aside, on any view the relief sought in the third declaration is not relief sought as against either of the Defendants to these proceedings, and there is no evidence, nor any suggestion in the Particulars of Claim that either Defendant has denied or disputed the validity of the Assignment Agreement to which the third declaration relates.
36. Nor do the Particulars of Claim provide any apparent reason or justification for the joinder of the Second Defendant to the proceedings. She is not a party to any of the Assignment Agreement, Settlement Agreement, or Jurisdiction Agreement. No relief is sought against her. For reasons which I will develop, there is a fair inference that the only reason she has been joined is because she is the defendant in the proceedings which have been commenced in Dubai.
The Joinder Application
37. On 26 December 2022, three days after these proceedings were commenced, the Claimant filed the application to join the prospective Third and Fourth Defendants. The ground of the application was expressed in the following terms:
It is desirable to add the proposed new parties in order to resolve all the matters in dispute in the proceedings and/or there are issues involving the new proposed parties and the existing parties connected to the matters in dispute in the proceedings and it is desirable to add the new parties so that the court can resolve those issues.
38. I digress to observe that the ground is, in effect, a paraphrase of Rule 20.7 of the DIFC Court Rules (the “RDC”), which provides that:
The Court may order a person to be added as a new party if:
(1) It is desirable to add the new party so that the Court can resolve all the matters in dispute in the proceedings; or
(2) There is an issue involving a new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the Court can resolve that issue.
Nest Investment
39. The Joinder Application is also made in reliance upon the principle established by the decision of the Court of Appeal in Nest Investment Holding Lebanon SAL v Deloitte & Touche (ME).3 In that case it was held that for the purposes of Article 5 of the Judicial Authority Law4 , the Rules of the DIFC Courts in general, and RDC 20.7 in particular, are “DIFC Regulations” which can confer jurisdiction upon the Courts in accordance with Article 5(A)(1)(e). In other words, in that case it was held that if the Court is seized with jurisdiction in respect of a dispute or controversy, RDC 20.7 confers jurisdiction upon the Court to join another party or parties to the proceedings relating to that dispute or controversy, irrespective of whether or not that other party or parties would otherwise be amenable to the jurisdiction of the Court.
The evidence in support of the Joinder Application
40. Three witness statements by Mr Ulrich Schwark have been filed in support of the Joinder Application. As noted, it is common ground that Mr Schwark is the father of the Second Defendant. He is also a director of the Claimant, and its only shareholder. The first statement does no more than annex what is, in effect, a summary of the argument in support of the joinder application. It reiterates the matters alleged in the Particulars of Claim and asserts that because the prospective Fourth Defendant has brought proceedings in the onshore Courts of Dubai “seeking sums far in excess of the sums that were agreed upon based on the Audit Confirmation Sheet, the Claimant seeks clarity on the amount that had been assigned to it by” the First Defendant. In this context it is contended that the prospective Third and Fourth Defendants should be joined so that this Court can determine whether the prospective Third and Fourth Defendants are bound by the figures stipulated in the Audit Confirmation Sheet and determine the amount owed by the First Defendant to the prospective Third Defendant, which is the obligation which has been assumed by the Claimant.
41. In his second statement, Mr Schwark acknowledges that the prospective Third and Fourth Defendants are not parties to either the Assignment Agreement or the Jurisdiction Agreement. I digress to observe that neither Mr Schwark nor his legal representatives have ever explained why the rights or obligations of the prospective Third and Fourth Defendants could have been affected by the Assignment Agreement, to which they were not parties. As I have noted, the position in relation to the Settlement Agreement is different, but the Claimant’s case, and the declaratory relief sought is focused upon the Assignment Agreement. In his second statement Mr Schwark emphasises the importance of this Court deciding whether the prospective Fourth Defendant has in fact signed the Audit Confirmation Sheet and the Settlement Agreement. He asserts that it was on the faith of those documents that the Claimant accepted the obligation to repay the amounts specified in the Assignment Agreement and the Settlement Agreement.
42. There is nothing in Mr Schwark’s second witness statement which would suggest that there is any dispute or controversy between the Claimant and either of the Defendants to these proceedings.
43. The third witness statement of Mr Schwark is limited to the advancement of legal contentions, and in particular the principle derived from the decision in Nest Investment to which I have referred. As with his previous statements, there is nothing in this statement to suggest that there is any dispute or controversy between the Claimant and the Defendants to these proceedings.
The Acknowledgments of Service
44. On 30 December 2022, Acknowledgements of Service were filed on behalf of each of the First and Second Defendants. However, those Acknowledgements were accompanied by documents prepared by the lawyers who are nominated in the Acknowledgements as those representing the First and Second Defendants, from which it is clear that in fact those lawyers represent the prospective Third and Fourth Defendants. The accompanying documents set out various reasons why the Joinder Applications in relation to the prospective Third and Fourth Defendants should be dismissed, and are served on behalf of those parties.
45. The procedural course taken by these lawyers was seriously flawed. An Acknowledgement of Service filed by a lawyer on behalf of a party does at least two things:
(a) it acknowledges that the party has been served with the proceedings; and
(b) it acknowledges that the lawyer is representing the party served.
46. Clearly the lawyers concerned had no authority from the First or Second Defendant to file Acknowledgements of Service on their behalf. It was quite wrong for them to do so.
47. On 18 January 2023, other lawyers filed Acknowledgements of Service on behalf of the First and Second Defendants. In those Acknowledgements it was asserted that “the Defendant” intended to defend part of the claim. However, the document does not identify which Defendant intended to defend which part of the claim, or on what grounds. Indeed, as the claim does not seek any relief as against either Defendant, identifying a part of the claim which could be defended by either or both of those Defendants would not be a simple task.
48. Apart from filing Acknowledgements of Service, those lawyers have taken no other step in these proceedings and did not participate in the hearing. During the hearing, when I asked counsel for the Claimant whether he had any indication of the part of the claim which the Defendants proposed to defend, or the grounds of defence, he replied that he had “no idea”.5
The jurisdictional objection
49. On 10 January 2023, the prospective Third and Fourth Defendants filed an application disputing the Court’s jurisdiction to add those Defendants as parties to these proceedings.
50. As the lawyer representing those parties expressly conceded during the hearing, this application was premature and misconceived. The Court has not purported to exercise any jurisdiction over the prospective Third and Fourth Defendants. The question of whether it should do so was raised by the Joinder Application issued by the Claimant. Issues with respect to the jurisdiction of the Court were appropriately raised in answer to that application, rather than by way of a separate challenge to the jurisdiction of the Court. Any such challenge was premature and unnecessary until the Court had purported to exercise jurisdiction over the prospective Defendants.
51. This is why I ordered the Jurisdiction Objection to be dismissed. I further ordered that there be no order as to the costs of that application, on the basis that, while the prospective Defendants should not recover their costs of making a misguided application, the application did not add significantly to the Claimant’s costs, because the arguments advanced in support of the Jurisdiction Objection were essentially identical to the arguments advanced in opposition to the Joinder Application.
The Claimant’s Skeleton argument
52. The skeleton argument served in support of the Joinder Application reiterated the allegations made in the Particulars of Claim and in Mr Schwark’s witness statements. Various documents were exhibited to the skeleton, including the three memoranda of understanding, the Audit Confirmation Sheet, the Assignment Agreement and the Settlement Agreement.
53. In the skeleton it is asserted that the final account reached under the Settlement Agreement has been upset by the commencement of proceedings in the onshore Dubai Courts. It is contended that:
The Claimant is thereby entitled to seek judicial determination of the issue against the First Defendant and the Second Defendant in the form of a declaratory relief, not only for the accuracy of its accounts … but also for the filings it has to make as a corporation in Panama.6
54. The basis for this submission is not explained in the skeleton. It is trite to observe that declaratory relief, being equitable in nature, will only be granted to quell a real dispute or controversy as between the parties. No attempt is made in the skeleton to identify any dispute or controversy between the Claimant and the First and Second Defendants. To the contrary, the thrust of the skeleton, like the various documents which preceded it, is to the effect that the dispute or controversy arises not as between the Claimant and the First and Second Defendants, but as a result of the prospective Fourth Defendant’s assertion that he has a claim against the Second Defendant for an amount greater than the amount of the obligation assumed by the Claimant. However, that is not a dispute or controversy which entitles the Claimant to obtain declaratory relief against either the First or the Second Defendant and indeed, as I have noted, no such relief is sought in the proceedings.
55. Like the documents which preceded it, the skeleton emphasises the need to determine the circumstances in which the Audit Confirmation Sheet was prepared and apparently signed and to determine the true balance of account owed to the prospective Third and/or Fourth Defendants.
56. As I have already noted, these issues do not give rise to any dispute or controversy as between the Claimant and the First or Second Defendant.
57. The skeleton also develops the principle in Nest Investment, to which I have referred.
The hearing
58. The theme of the skeleton was maintained in oral argument advanced by counsel on behalf of the Claimant who opened the case in support of the Joinder Application with the assertion that:
The entire case is based around obligations owed by the First Defendant to the proposed Third Defendant. Those obligations were then assigned to the Claimant.7
59. During the course of the hearing, I invited counsel for the Claimant to identify the relevant dispute or controversy between the Claimant and the Defendants on a number of occasions. His responses included:
(a) a reference to the proceedings commenced in the onshore Courts of Dubai by the prospective Fourth Defendant disputing the amount owed;8
(b) a concession that here is no evidence before the Court of any dispute between the Claimant and the Defendants as to the amount owing,9
(c) “uncertainty” as to the amount owing arises from the proceedings brought in the onshore Courts of Dubai;10
(d) the real dispute is that raised in the Dubai Courts between the Second Defendant and the prospective Fourth Defendant;11
(e) although the dispute is between the Defendants and the prospective Defendants, it involves the Claimant because the Claimant has taken an assignment of the obligation;12
(f) there is uncertainty with respect to the amount owing, and the obligation to pay that amount has been assumed by the Claimant;13
(g) there will be a dispute between the Claimant and the First and Second Defendants if the onshore Dubai Courts determine that a different amount is owing – although counsel accepted that there is no evidence of a current dispute between the Claimant and the Defendants;14
(h) there could be a situation in which there is a different amount owing under the Assignment Agreement between the Claimant and the First Defendant, and the amount determined to be owed by the Second Defendant to the prospective Fourth Defendant in the Dubai Proceedings;15
(i) counsel for the Claimant could not comment on whether the First Defendant asserted that the amount shown on the Audit Confirmation Sheet was incorrect;16 and
(j) counsel “had no idea” as to which part of the claim the Defendants proposed to defend or why.17
60. With respect, none of these assertions reveal any live dispute or controversy as between the Claimant and either Defendant. The only parties to the Assignment Agreement are the Claimant and the First Defendant. Neither are parties to the proceedings in the Dubai Courts. The determination of those proceedings will have no effect upon the rights and obligations of the parties to the Assignment Agreement as neither will be bound by any determinations made by the Dubai Courts. The same can be said of the Settlement Agreement, as none of the parties to that Agreement are parties to the proceedings in the Dubai Courts. While it might be reasonably inferred that there is a dispute between the prospective Third Defendant and the other parties to that Agreement, there is no evidence of any dispute or controversy as between the Claimant and the First Defendant in relation to the terms or effect of that Agreement.
61. It follows that when the circumstances are properly analysed, the Dubai proceedings create no relevant “uncertainty” for any of the parties to these proceedings, and the fact that the Claimant has apparently assumed an obligation to satisfy a debt said to be owed by the First Defendant to the prospective Third Defendant does not give rise to any dispute or controversy as between the Claimant and either Defendant to these proceedings.
62. In summary:
(a) there is no averment of any dispute or controversy as between the Claimant and either Defendant;
(b) no relief is sought by the Claimant against either Defendant;
(c) there is no evidence of any dispute or controversy between the Claimant and either Defendant;
(d) there is no process of reasoning or argument which sustains the conclusion that there is any dispute or controversy as between the Claimant and either Defendant; and
(e) there is no apparent reason for the joinder of the Second Defendant as a party to these proceedings.
63. These circumstances, coupled with:
(a) the familial relationship between the directors and shareholders of the Claimant and First Defendant, one of whom is the Second Defendant; and
(b) the terms of the Assignment Agreement between the Claimant and the First Defendant and the unexplained lack of any consideration passing to the Claimant for its assumption of the First Defendant’s obligations;
compel the conclusion that there is in fact no dispute or controversy between the Claimant and either Defendant.
64. It is now necessary to consider the impact of that conclusion upon the Joinder Application.
65. RDC 20.7 has been set out above. It has two limbs. The first limb enables a new party to be joined if it is desirable “so that the Court can resolve all the matters in dispute in the proceedings”. The second limb enables a new party to be joined if “there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the Court can resolve that issue”.
66. Given the terms in which the Rule is expressed, it is impossible to apply the Rule in any meaningful way without identifying “the matters in dispute in the proceedings”. That is an essential precondition to a determination of whether it is desirable to add a new party so that all those matters can be resolved, or whether there is an issue involving the new party and an existing party which is “connected to” those matters.
67. Where, as in this case, there are no matters in dispute in the proceedings, it is obviously impossible to conclude that it would be desirable to add a new party to resolve all matters in dispute, or that there is an issue involving a new party and an existing party which is connected to the matters in dispute.
68. As the Claimant has failed to establish that there are any matters in dispute in the proceedings between it and either Defendant, it follows that there is no possible basis for the joinder of a new party pursuant to RDC 20.7 and the Joinder Application must be dismissed. That conclusion is sufficient to dispose of the Joinder Application.
69. However, my conclusion that there is no dispute or controversy as between the Claimant and either Defendant begs the obvious question of the purpose of the commencement of these proceedings.
70. As I put to counsel for the Claimant, the circumstances of this case give rise to a clear inference, which I draw, to the effect that these proceedings were only commenced for the purpose of attempting to secure an alternative or additional forum for the resolution of the issues raised in the onshore Dubai Courts by the proceedings which were commenced in November 2022. That inference arises from the following facts:
(a) Shortly after the proceedings were commenced in the onshore Dubai Courts, the Claimant and the First Defendant entered into the Jurisdiction Agreement conferring jurisdiction upon this Court in relation to matters arising under the Assignment Agreement (but not the Settlement Agreement, as the prospective Third Defendant is a party to that Agreement);
(b) These proceedings were commenced shortly thereafter;
(c) The entire focus of the Particulars of Claim is upon the dispute between the Defendants to these proceedings, and the prospective Defendants;
(d) There is no averment nor any evidence of any dispute between the Claimant and the First and Second Defendants;
(e) No relief is sought against either Defendant.
(f) Very soon after these proceedings were commenced the Joinder application was made; and
(g) There is no apparent reason for the joinder of the Second Defendant as a party to these proceedings, apart from the fact that the proceedings in the Dubai Courts have been brought against her, and it is apparently thought desirable to join her so that, if the Joinder Application is granted, all parties to those proceedings will be before this Court.
71. The jurisdiction of the Court to use RDC 20.7 to join parties who would not otherwise be within the jurisdiction of the Court has been described as the “long arm jurisdiction” of the Court. It is not without its critics. As this case reveals, it creates the potential for abuse, such as the manufacture of an apparent dispute coming within the jurisdiction of the Court for the purpose of utilising RDC 20.7 to join parties not otherwise amenable to the jurisdiction of the Court, so that the real dispute or controversy, which involves those parties, can be determined by this Court. Such a practice is particularly egregious in a case such as this, where the real dispute or controversy is already pending before another Court with jurisdiction to determine that dispute.
72. This case reveals that the Court should scrutinise applications for the exercise of the long arm jurisdiction created by RDC 20.7 with particular care so as to ensure that:
(a) The requirements for the joinder of a new party pursuant to RDC 20.7 are satisfied; and
(b) The discretion conferred by RDC 20.7 is not exercised in a way which could lend itself to an unprincipled expansion of the Court’s jurisdiction.
73. As I have concluded that the purpose of the commencement of these proceedings was not to resolve any dispute between the parties to them, but rather to attempt to use the long arm jurisdiction of the Court to bring before the Court parties not otherwise amenable to its jurisdiction for the purpose of resolving a dispute involving those parties, had I concluded that RDC 20.7 had some potential application, I would nevertheless have exercised the discretion inherent in the terms of that Rule against the joinder of the additional parties.
74. For these various reasons the Joinder Application was dismissed with costs.
Issued by:
Delvin Sumo
Assistant Registrar
Date of Issue: 10 March 2023
At: 11am