Joint Judicial Tribunal will not tolerate 'guerrilla' litigation tactics in the UAE

The Judicial Tribunal for the Dubai Courts and DIFC Courts (Joint Judicial Committee or JJC) delivered a well-reasoned and progressive judgment last month in the case of Essar Projects Limited (Essar) v McConnell Dowell South East Asia Pte Limited (McConnell). Pinsent Masons, the law firm behind Out-Law, represented McConnell, a Singaporean company; together with Salam Alsmadi of SAT & Co.

The JJC's judgment sends a very clear message that it will not be misused for vexatious litigation and went as far as describing Essar's tactics as an abuse of the JJC process.

The JJC was set up to address genuine conflicts of jurisdiction existing between the DIFC and Dubai courts, as set out in Decree No. 19 of 2016 (the JJC law). It was not established to facilitate parties in pursing meritless litigation in order to delay adherence to, or even escape, their legal obligations. The decision should be applauded as one in which the JJC defends and defines its own jurisdiction, and sends the clear message that it will not allow its process to be abused.

The facts of the case

Essar, a limited liability company established in Dubai's Jebel Ali Free Zone, and McConnell had entered into a deed of guarantee and indemnity under Singaporean law. Essar irrevocably and unconditionally guaranteed to McConnell the performance of obligations in respect of a settlement sum under an earlier agreement. The guarantee included a non-exclusive jurisdiction clause in favour of the courts of Singapore, and wording waiving any objection made then or in the future to the claim being brought in an inconvenient forum.

Essar failed to perform its obligations under the guarantee, and McConnell commenced proceedings before the Singapore courts. Essar claimed that service of the claim had to be through diplomatic channels, delaying service and consequently the proceedings. Ultimately, the Singapore Supreme Court handed down its judgment in favour of McConnell (the Singapore judgment). Essar was ordered to pay the judgment debt plus interest and legal costs.

McConnell then sought to enforce the judgment in the DIFC courts by filing a claim to require payment of the judgment sums (the DIFC claim). In response, Essar:

• applied to the DIFC court of first instance, following receipt of the DIFC claim, for a declaration that the court did not have jurisdiction to enforce the Singapore judgment in the manner sought. That application has not yet been heard;
• filed a claim before the Dubai court of first instance which essentially sought to set aside the Singapore judgment and challenge the validity of the guarantee, before a hearing was fixed in the DIFC court to resolve the dispute;
• filed an application with the JJC seeking a declaration that the Dubai court, rather than the DIFC court, should have general jurisdiction over the dispute in respect of the enforcement of the Singapore judgment and the validity of the guarantee. Essar argued that the execution judge of the Dubai courts has jurisdiction over the execution of foreign judgments.

The DIFC court proceedings were stayed pending the JJC's decision.

What did the JJC decide?

The JJC concluded that "the case that the proceedings in the DIFC Court should be left to take their course is overwhelming". It dismissed Essar's claim, with costs awarded in McConnell's favour. The stay on the DIFC court proceedings has been lifted.

The JJC's decision opens with a candid analysis of Essar's history in the proceedings. The challenges Essar brought in the Dubai court regarding the valid execution of the guarantee were not raised in the substantive proceedings before the Singapore court. Further, when sued on the guarantee in the Singapore courts, "[Essar] dragged the claim out by insisting on service through diplomatic channels".

The JJC said: "It can therefore be seen that by bringing its claim in the Dubai court and making this application to the [JJC] [Essar] is cynically and discreditably attempting to escape its undoubted obligations under the Singapore judgment and is thereby abusing the process of the [JJC]".

As the DIFC court had not yet ruled on Essar's challenge to the DIFC court's jurisdiction to enforce the Singapore judgment, the JJC concluded that there was no conflict of jurisdiction between the Dubai courts and the DIFC courts.

It could not be said that the Dubai courts have general jurisdiction over the parties which takes precedence over the DIFC court, taking into account the particular facts of the case and, specifically, the guarantee being governed by Singapore law and the Memorandum of Understanding entered into by the chief justices of the Singapore Supreme Court and the DIFC court (the MOU). The MOU sets out the requirements for each court to recognise a money judgment rendered by the other court.

The JJC noted that Essar's claim in the Dubai court is a long way from being heard, whereas the DIFC court case has progressed and will conclude quickly if the stay is lifted. Swift resolution of the jurisdiction challenge, if rejected, would also mean that the decision on whether to enforce the Singapore judgment would also be decided quickly, due to the limited grounds for challenge of a foreign money judgment issued by a court of competent jurisdiction.

What do we think?

Undoubtedly, the JJC reached the right conclusion and, whilst characteristically brief, its judgment is unequivocal.

On the one hand, the JJC was able to easily determine that no conflict of jurisdiction existed yet, on the simple ground that the DIFC had not yet ruled on Essar's challenge to its jurisdiction. As such, its jurisdiction was not triggered and Essar's application to the JJC was premature. On the other hand, the JJC took the opportunity to make comments of wider application on its jurisdiction as a whole.

The JJC did not agree with Essar that the Dubai courts had general jurisdiction over the parties, taking precedence over the DIFC court. Whilst it was careful to state that its decision was "[o]n the particular facts of this case", this must surely be correct. In filing its claim with the DIFC courts, McConnell sought to recognise and enforce a foreign judgment. The MOU simply outlines the requirements for enforcement of a Singapore court judgment in the DIFC: that the judgment in question must be final or conclusive and that the Singapore Supreme Court must have had jurisdiction to determine the dispute, according to the DIFC rules on the conflict of laws.

As has been confirmed by the DIFC Court of Appeal and as was argued by Essar before the JJC, the DIFC Courts have jurisdiction to recognise and enforce foreign judgments within the DIFC under Article 24(1)(a) of the DIFC Court Law and Articles 5(A)(1)(e) and 7(4) to 7(6) of the Judicial Authority Law. The presence of assets in the DIFC or otherwise is irrelevant at this stage. A foreign judgment can only be challenged on limited grounds, including that the judgment was obtained by fraud, is contrary to the public policy of the UAE and if the proceedings were contrary to the requirements of natural justice.

In our view, the question of recognition and enforcement before the DIFC courts is a straightforward matter and not one in which the Dubai courts, having not been seized for recognition and enforcement of the Singapore judgment, have any role. This is quite apart from the question of enforcing the judgment against Essar's assets, which will be a matter for the courts with jurisdiction over those assets to determine.

The JJC's message was further underlined by its award to McConnell of its costs, in addition to the JJC's fees. This is the first time that we are aware of a JJC decision awarding a party's 'costs'. It is hoped that this will act as a further deterrent to litigants seeking to use the JJC as a frustration tactic, rather than an arbiter of jurisdiction.

Damian Crosse and Tamim Momeni are litigation experts at Pinsent Masons, the law firm behind Out-Law.