August 10, 2022 SCT - Judgments and Orders
Claim No: SCT 151/2022
IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
LUFT
Claimant
and
LYNTI
Defendant
ORDER OF H.E. JUSTICE ALI AL MADHANI
UPON reviewing the Claimant’s Appeal Notice dated 6 June 2022 seeking permission to appeal against the Order with Reasons of H.E Justice Nassir Al Nasser dated 31 May 2022 (the “Claimant’s Application”)
AND UPON reviewing the Claimant’s submissions dated 27 June 2022
AND UPON reviewing Rules 53.2, 53.91 of the Rules of the DIFC Courts (“RDC”)
IT IS HEREBY ORDERED THAT the Claimant’s Application is dismissed.
Issued by:
Hayley Norton
SCT Judge
Date of Issue: 10 August 2022
At: 4pm
Introduction
1. This is an application for permission to appeal the order of H.E. Justice Nassir Al Nasser (the “Judge”) dated 31 May 2022 (the “Order”) filed by the Claimant.
2. In the Order the Judge ruled that the DIFC Courts do not have jurisdiction to hear and determine the claim. The Claimant submits that the finding of the Judge was wrong. For the reason set out below, permission to appeal the Order is denied.
3. I should make it clear that I have read carefully through the evidence submitted by the parties. In this judgment, I do not intend to refer to each point made by the parties. The fact that I may omit some reference to some arguments does not mean that I have overlooked any materials.
Background
4. On 9 May 2022, a claim was filed by the Claimant before the DIFC Courts’ Small Claims Tribunal (the “SCT”). The defendant was identified in the Claim Form as “Lynti (Lynti)” (“Lynti”). Lynti has offices in many countries. The designation “Lynti” refers to a network of member firms. Lynti does not have the requisite legal capacity to sue or be sued. I will deal with this matter later in my reasons.
5. On 5 October 2021, Lynti made an offer of employment to the Claimant (the “Employment Offer”). On 5 December 2021, the Employment Offer was accepted by the Claimant. On 21 February 2022, Lynti withdrew the Employment Offer.
6. On 9 May 2022, the Claimant issues a compensation claim form against Lynti for alleged “financial, professional [and] personal” losses allegedly suffered following the Employment Offer being withdrawn by Lynti. The Claimant asserts that those losses arose from the date the Employment Offer was accepted to the date Lynti’s withdrew the offer, taken into account a deduction of 10 calendar days where the Claimant was offered alternative work by Lynti after the Employment Offer was withdrawn. The claimed losses are in the sum of AED 123,946.88 (the “Claimed Amount”).
7. On 9 May 2022, the Claimant issues a notice of service (the “Notice of Service”) which expressly refers to an email address, which undoubtedly to an employee of Lynti named Luftine. We note, no alternative method of communication such as a postal address, telephone number or fax number was provided in the Notice of Service.
8. As part of the Notice of Service, the Claimant submits 90 exhibits, titled “Attachment No. 1” to “Attachment No. 90.” However, the Claimant does not provide any explanation pertaining to the relevance of those documents to its dispute with Lynti.
9. On 17 May 2022, an Acknowledgment of Service was filed on behalf of Lynti by Luftine. It was noted that Lynti intended to contest the DIFC Courts’ jurisdiction. However, it was not made clear in the Acknowledgment of Service, who intends on contesting the DIFC jurisdiction. As part of the Claim From, the Defendant was identified as “Lynti (Lynti)”, as mentioned above, Lynti is not a legal entity that has a legal capacity to sue or be sued.
10. On 19 May 2022, an application contesting the DIFC Courts’ jurisdiction was filed on behalf of Lynti (the “Jurisdiction Application”). In very brief written submissions, it was stated that:
“2. As shown by “Attachment No. 2 PDF” at page 4 annexed to the Claim Form. It is the Claimant’s own case that his purported offer of employment was to commence employment with an entity in Riyadh, Saudi Arabia.
3. Accordingly, the DIFC Court does not have jurisdiction to entertain this claim as none of the jurisdictional gateways are triggered.
4. The Claimant has failed to explain the basis for his belief that this Court ought to have jurisdiction in the present claim, indeed there is none as there is no actual connection whatsoever with the DIFC in the documents provided by the Claimant or in fact.” [sic].
11. On 20 May 2022, the Claimant filed its response to the Jurisdiction Application. As part of its response, the Claimant exhibited 40 discrete exhibits, including “Attachment A” to “Attachment Z”, many of the “Attachment No. X” documents and additional documents, one of which is titled “The Claimant’s Response to the Defendant’s Application” (the “Response”).
12. In the Response, the Claimant identified Lynti (Dubai branch) (“Lynti Dubai”) as the defendant to the claim. Lynti professional license stipulates that Lynti Dubai is a “Branch of Foreign Company.” (emphasis added).
13. As part of Lynti’s submissions, they argued that the prospective employment was agreed to be with a Saudi entity, the Claimant refutes this statement alleging that the offer had been “issued by its Middle East Head Office, which is located in Dubai… [and] after its purported failure in securing KSA employment visa to the Claimant, reconfirmed the Amended Offer of Employment/Rehiring to the Claimant on 27 January 2022, with first working day to take place in its Middle East Head Office in Dubai, UAE on 01st February 2022.” [sic].
The DIFC Courts’ Jurisdiction
14. The Claimant further argued that RDC rr. 53.2(1) and 53.2(2) are sources of jurisdiction in this case. These rules provide that:
“The SCT will hear and determine claims within the jurisdiction of the DIFC Courts:
(1) where the amount of the claim or the value of the subject matter of the claim does not exceed AED 500,000 or;
(2) where the claim relates to the employment or former employment of a party…”
The amount claimed by the Claimant does not exceed AED 500,000, and, he says, he was formerly employed at Lynti Dubai, taking the case within subparagraphs (1) and (2), respectively.
15. However, RDC rr. 53.2(1) and 53.2(2) cannot be independent sources of the DIFC Courts’ jurisdiction. RDC r. 53.2 sets out the circumstances in which the SCT will hear and determine claims within the jurisdiction of the DIFC Courts. In other words, RDC r. 53.2 allocates certain types of cases which already fall within the Courts’ jurisdiction to the SCT, but it does not create free-standing jurisdiction for the SCT. Accordingly, it is always necessary to go back to the DIFC Courts’ source of jurisdiction in order to determine, firstly, whether the Courts have jurisdiction, secondly, determine if the said claim is one that may be allocated to the Court of First Instance (“CFI”) or rather the SCT.
16. The jurisdiction pertaining to the CFI is mandated under the Dubai Law No. 12 of 2004, and its amendments, being the Judicial Authority Law (the “JAL”), and in particular Article 5(A) thereof. In order for the DIFC Courts to have jurisdiction to hear and determine a claim, that claim must fall within at least one of the “jurisdictional gateways” of Article 5(A) of the JAL, which are as follows:
“(A) The Court of First Instance:
(1) The Court of First Instance shall have exclusive jurisdiction to hear and determine:
(a) Civil or commercial claims and actions to which the DIFC or any DIFC Body, DIFC Establishment or Licensed DIFC Establishment is a party;
(b) Civil or commercial claims and actions arising out of or relating to a contract or promised contract, whether partly or wholly concluded, finalised or performed within DIFC or will be performed or is supposed to be performed within DIFC pursuant to express or implied terms stipulated in the contract;
(c) Civil or commercial claims and actions arising out of or relating to any incident or transaction which has been wholly or partly performed within DIFC and is related to DIFC activities;
(d) Appeals against decisions or procedures made by the DIFC Bodies where DIFC Laws and DIFC Regulations permit such appeals;
(e) Any claim or action over which the Courts have jurisdiction in accordance with DIFC Laws and DIFC Regulations.
(2) 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.”
Discussion
17. I will keep these reasons brief. If the DIFC Courts has jurisdiction to hear and determine the Claimant’s claim, it will most likely be through Article 5(A)(1)(a) of the JAL. As ‘DIFC Courts Practice’ (Reed QC, R., & Montagu-Smith QC, T. (Eds.)) explains:
Article 2 defines ‘DIFC Establishment’ to include ‘any entity or enterprise established … to carry on business or conduct any activity within the DIFC pursuant to DIFC Laws’, including ‘Licenced DIFC Establishments’. They are in turn defined as: ‘Any entity or enterprise licensed, registered or authorised by the Dubai Financial Services Authority to provide financial services, or conduct any other activities in accordance with the DIFC Laws.’
The Court of Appeal in Corinth Pipeworks SA v. Barclays Bank plc [2011] DIFC CA 002 (22 January 2012) held that the result of these provisions was that the DIFC Court will have exclusive jurisdiction over any claim brought against an entity with a branch in the DIFC, even if the activity the subject of the claim was not related to the DIFC branch. (Weale, J., 3)
18. Lynti Dubai appears to be an unincorporated branch of a company and therefore part of a legal entity rather than a separate legal entity. If this is correct, it would follow that, if the proper defendant to this claim (which would appear to be the company of which Lynti Dubai is a branch) has a branch in the DIFC, then the DIFC Courts would likely have jurisdiction to hear and determine the Claimant’s claim pursuant to Article 5(A)(1)(a) of the JAL. If, on the other hand, the proper defendant to the claim does not have a branch in the DIFC and instead has a separately incorporated subsidiary in the DIFC, unless the Claimant’s dealings were with that subsidiary, the DIFC Courts will not have jurisdiction to try to dispute. I invited the Claimant to file further submissions on these questions.
19. Those further submissions have been reviewed. The Claimant’s case now is that the proper defendant to this claim is Lynti (Middle East Group) Limited (“LyntiLtd”) which is “Registered Under &/or the Direct/Indirect Sole Shareholder of multiple DIFC Trade Names.”
20. Lynti Ltd does not appear to be a DIFC Establishment or Licenced DIFC Establishment for the purposes of Article 5(A)(1)(a) of the JAL. Nor has the Claimant argued that it is. Neither has it been explained what “Registered Under” means; what the basis of the Claimant’s proposition that LyntiLtd is “Registered Under … multiple DIFC Trade Names” is; and what the consequences, if correct, would be for the purposes of establishing the Court’s jurisdiction to hear and determine the present claim.
21. It is correct, however, that LyntiLtd is the shareholder of two discrete DIFC companies, namely; Lynti Limited and Lynti But it is the shareholder of these DIFC Establishments rather than a DIFC Establishment itself or a Licenced DIFC Establishment. The Claimant has not demonstrated by what means the Court’s jurisdiction is or might be engaged on the basis that Lynti LD Ltd, who allegedly is the correct defendant to its claim. I think the Claimant’s proposition is analogous to an argument that the court of a certain country had jurisdiction because the children of the defendant were nationals of that country. Such a proposition would have to be supported by law, expressly a law that provides that the country’s court would have jurisdiction in such a circumstance. It is not sufficiently convincing to merely set out the close causal connection between the defendant and the country.
22. The Claimant has had ample of opportunities to convince the Court as though the DIFC Court has jurisdiction over this claim. Having considered the Claimant’s arguments, I do not think that the proposed appeal would have a real prospect of success. Further, I do not see any other grounds on why this appeal should be heard.
23. It follows that the Claimant’s application for permission to appeal must be dismissed.
