Globe Investment Holdings Limited v Commercial Bank of Dubai

The judgment clarifies that:

• The Court has jurisdiction, subject to the question of expediency, to grant a freezing order against any party — even one with no connection to the DIFC and to which no other jurisdictional gateway applies — provided that it holds assets that may ultimately be amenable to enforcement.
• It is insufficient to give the Court jurisdiction that a party owns (rather than is in its own right), a DIFC Establishment, for the purposes of the gateway in Article 5(A)(1)(a) of the Judicial Authority Law No.12 of 2004 (“JAL”).

The Claimant (“Globe”) obtained a worldwide freezing order (“WFO”) against three BVI subsidiaries of the Commercial Bank of Dubai (the “BVI companies”), and an intermediate Cayman holding company (“VS1897”), on the basis of a Sharjah judgment in Globe’s favour for over $150 million.

The Sharjah judgment had been entered only against the BVI companies, and not against VS1897 or the Bank. However, only VS1897 and the Bank had a connection with the DIFC, whereas the BVI companies did not. The Court nevertheless held it had jurisdiction to grant a freezing order against the BVI companies (although it declined to exercise it in this case, on expediency and other grounds).

The DIFC Court has power under JAL Articles 22(2) and 32 to grant an injunction where it considers appropriate. Those are given effect by Part 25 of the Rules of the DIFC Courts (“RDC”) (Interim Remedies), which permits the Court to grant a freezing order restraining a party from dealing with any assets whether located within the jurisdiction or not (RDC 25.1(6)(b), 25.35), and/or in support of foreign proceedings (RDC 25.24(1)).

Article 5(A) JAL sets out the jurisdiction of the Court of First Instance. Article 5(A)(1)(e) (“gateway (e)”) gives the DIFC Court jurisdiction over “Any claim or action over which the Courts have jurisdiction in accordance with DIFC Laws and DIFC Regulations”. Such “DIFC Regulations” include the RDC. Thus, in Nest Investment Holding Lebanon SAL v Deloitte & Touche (ME) [2018] DIFC CA 011, the Court accepted that it therefore had power to join a party to a claim under RDC 20.7 and gateway (e), even if no other jurisdictional gateway applied. The question turns on whether the particular rule, on its proper construction, confers a power on the court or merely regulates procedure.

The Court in this case found that gateway (e), together with the rules permitting the grant of an injunction, meant that in principle it had jurisdiction to grant a freezing order against the BVI companies, over assets with no connection to the DIFC, and in support of proceedings outside the DIFC. The Court based its decision on “the Court’s undoubted power to grant injunctions in aid of its enforcement of foreign judgments” under the rules mentioned above. There was no need for an independent jurisdictional gateway.

However, the jurisdiction is limited by the “enforcement principle” articulated by the Privy Council in Convoy Collateral Ltd v Broad Idea International Limited [2021] UKPC 24. The purpose of a freezing order is to prevent the injuncted defendant from dissipating property which could be the subject of enforcement if the claimant is successful. It followed that the Court had no jurisdiction to grant an injunction against VS1897 or the Bank, which were not judgment debtors under the Sharjah judgment, and their assets could not be the subject of enforcement.

It is also necessary to go on to consider whether the grant of an injunction was just and expedient. In circumstances where the BVI companies had no connection with the DIFC, and substantive enforcement proceedings had been issued in the BVI, the Court held that it was not expedient to continue the injunction, which should be sought from the BVI court instead.

The judgment also clarifies the position under the separate gateway in JAL Article 5(A)(1)(a). That gateway gives the DIFC Court jurisdiction to hear claims to which a DIFC Body or DIFC Establishment is a party. A DIFC Establishment is “any entity or enterprise established, licensed, registered or authorised to carry on business or conduct any activity within the DIFC pursuant to DIFC Laws”. The Court explained that it is not sufficient for that purpose that a defendant is a shareholder of a DIFC Establishment. Accordingly, the Court did not have jurisdiction in respect of VS1897 (which owned a DIFC Establishment) on that basis either.

On the facts of the case, the Court also would have discharged the injunction on the basis that there was no risk of dissipation, and material non-disclosure at the without notice hearing.

Anthony Peto KC and Andrew Trotter acted for the successful respondents. The judgment is available here.