Naqid v Najam [2024] DIFC ARB 004 (28 August 2024)

Claim No: ARB 004/2024

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

NAQID

Claimant

and

NAJAM

Defendant

ORDER WITH REASONS OF JUSTICE RENE LE MIERE

UPON the Order of H.E. Justice Shamlan Al Sawalehi dated 3 May 2024 (the “Enforcement Order”)

AND UPON the Freezing Order of H.E. Justice Shamlan Al Sawalehi dated 3 May 2024 (the “Freezing Order”)

AND UPON the Claimant’s Application No. ARB-004-2024/3 filed on 13 May 2024 for a writ of sequestration (the “First Sequestration Application”)

AND UPON the Claimant’s Application No. ARB-004-2024/4 filed on 13 May 2024 to refer the Defendant and its officers to the Attorney General of Dubai (the “First Committal Application”)

AND UPON the Defendant’s Application No. ARB-004-2024/5 filed on 17 May 2024 seeking to set aside the Enforcement Order and an extension of time to submit evidence (the “Set Aside Application”)

AND UPON the Defendant’s Application No. ARB-004-2024/6 filed on 23 May 2024 seeking to list a Case Management Conference to set a consolidated timetable and an extension of time to submit evidence in reply to the First Sequestration Application (the “Sequestration EOT Application”)

AND UPON the Defendant’s Application No. ARB-004-2024/7 filed on 23 May 2024 seeking to strike out the First Committal Application (the “Strike Out Application”)

AND UPON the Defendant’s Application No. ARB-004-2024/8 filed on 23 May 2024 seeking to discharge the Freezing Order and to seek an extension to submit evidence in support of the Discharge Application and a CMC (the “Discharge Application”)

AND UPON the Defendant’s Application No. ARB-004-2024/9 filed on 7 June 2024 for permission to submit an expert report in support the Set-Aside Application (the “Expert Evidence Application”)

AND UPON the Claimant’s Application No. ARB-004-2024/10 filed on 24 June 2024 for permission to issue a writ of sequestration against the assets of the Defendant (the “Second Sequestration Application”)

AND UPON the Claimant’s Application No. ARB-004-2024/11 filed on 24 June 2024 to refer the Defendant and its officers to the Attorney General of Dubai (the “Second Committal Application”)

AND UPON the Claimant’s Application No. ARB-004-2024/12 filed on 9 July 2024 seeking an antisuit injunction (the “Antisuit Injunction Application”) (the “Consolidated Applications”)

AND UPON the Defendant’s Application No. ARB-004-2024/13 filed on 9 August 2024 seeking permission to cross-examine Mr Nixon at the Hearing listed for 7 October 2024 (the “Defendant’s Application”)

IT IS HEREBY ORDERED THAT:

1. The Defendant’s Application is granted.

2. The Defendant is granted permission to cross-examine Mr Nixon on the hearing of the Consolidated Applications to be heard on 7 October 2024. The cross-examination shall be limited to the issues in the Consolidated Applications.

3. The Claimant shall pay the Defendant’s costs of the Application on the standard basis to be assessed by the Registrar if not agreed.

Issued by:
Hayley Norton
Assistant Registrar
Date of issue: 28 August 2024
At: 10am

SCHEDULE OF REASONS

Summary

1. The Court has made an order that an Arbitration Award in favour of the Claimant against the Defendant be recognized and enforced and has made a Worldwide Freezing Order restraining the Defendant from removing assets from the DIFC or disposing, dealing with, or diminishing the value of assets whether they are in or outside the DIFC.

2. The Claimant has made two applications for orders for permission to issue writs of sequestration against the assets of the Defendant and of directors of the Defendant (the “First and Second Sequestration Applications”), two applications for orders that the Defendant and the directors be committed for contempt of court (the “First and Second Committal Applications”), and an application for an antisuit injunction in relation to any dispute arising out of or in connection with the award (the “Anti-suit Injunction Application”) (together the “Claimant’s Applications”).

3. The Defendant has applied for orders setting aside the enforcement order (the “Set Aside Application”), striking out the First Committal Application (the “Strike Out Application”), discharging the freezing order (the “Discharge Application”), and to put on expert evidence in support of its Set Aside application (the “Expert Evidence Application”) (together the “Defendant’s Applications”).

4. The Claimant’s Applications and the Defendant’s Applications (together the “Consolidated Applications”) are to be heard together at a hearing commencing on 7 October 2024.

5. Mr Nixon is the director of the Claimant. He has made witness statements and affidavits in support of the Applications by the Claimant, including the Claimant’s applications for recognition and enforcement of the Award and for a Worldwide Freezing Order, and in answer to various of the Defendant’s Applications.

6. The Defendant seeks permission under Rule 29.58 of the Rules of the Dubai International Financial Centre Courts 2014 (“RDC”) to cross-examine Mr Nixon on all of his evidence submitted by the Claimant in these Court proceedings at the hearing of the Consolidated Applications.

7. For the reasons that follow, the Court will order:

(a) The Defendant is granted permission to cross-examine Mr Nixon on the hearing of the applications to be heard on 7 October 2024 (the Consolidated Applications). The cross-examination shall be limited to the issues in the Consolidated Applications.

(b) The Claimant shall pay the Defendant’s costs of the Application on the standard basis to be assessed by the Registrar if not agreed.

The application to cross examine Mr Nixon

8. It is common ground that where at a hearing other than the trial a witness gives evidence in writing, RDC 29.58 gives the Court discretion to give permission to cross examine the person giving the written evidence. The questions in this Application are whether the Court should exercise its discretion to give the Defendant permission to cross examine Mr Nixon and the scope of the permitted cross examination.

9. The Defendant says he should be granted permission to cross-examine Mr Nixon on all of his evidence because:

(a) the cross-examination of Mr Nixon is reasonably necessary to determine the parties' applications;

(b) the cross-examination of Mr Nixon would cause no prejudice to the Claimant; and

10. The Claimant concedes that the Defendant may cross examine Mr Nixon in relation to his affidavits in support of the Committal Applications - Mr Nixon’s Second and Third Affidavits.

11. The Claimant submits that the Court should refuse permission for the Defendant to cross examine Mr Nixon on his other witness statements and affidavits.

12. It is necessary to consider the relevant applications in more detail than is usual in determining an application for permission to cross examine a witness who has made witness statements in support of an application for a court order. It is necessary for a number of reasons. First, where a party is granted permission to cross examine a witness, the party is usually permitted to cross examine the witness in relation to any matter relevant to the application being heard. Secondly, the Claimant submits that the Defendant should not be permitted to cross examine Mr Nixon on affidavits and witness statements in relation to eight applications related to but separate from the Committal Applications which are to be heard together with the Committal Applications. Thirdly, the parties’ skeleton arguments make conflicting submissions concerning the standard of review relevant to the Set Aside Application. Those submissions impact the hearing of the Set Aside Application as well as the present Application.

13. I will first outline the context in which this Application is to be determined.

The Enforcement Order

14. By arbitration claim form issued on 11 March 2024 the Claimant, Naqid, applied for recognition and enforcement of an award dated 1 November 2023 in MCIA arbitration No. 55 of 2022 by the sole arbitrator, Mr Justice Shiayax Jal Vazifdar (retd.) (the Arbitrator) by which the Arbitrator directed the Defendant, Najam, to pay the Claimant a sum of Rs. 38,58,54,542 and a sum of USD 3,156,658 and costs in the sum of Rs. 1,06,29,316 (the “Award”).

15. On 3 May 2024, the Court issued an order to the effect that:

(a) The Award be recognised and enforced.

(b) The Defendant may apply to set aside the order within 14 days of service of the order.

(c) The Award must not be enforced until after that period or until final disposal of any application by the Defendant within that period.

(d) After the conclusion of the period, the Award may be enforced within the DIFC in the same manner as a judgment or order of the Court to the same effect.

(e) After the conclusion of the period, judgment be entered against the Defendant in the terms of the Award.

(the “Enforcement Order”).

The Freezing Order

16. By application notice issued on 2 May 2024, the Claimant applied for a worldwide freezing order against the Defendant.

17. On 3 May 2024, the Court issued an order, amongst others, to the effect as follows:

“4. Until the Return Date or further order of the Court, the Defendant must not:

(a) remove from the DIFC any of its assets which are in the DIFC up to the value of Rs 39,50,12,697 (or USD equivalent at the time of payment) and USD 3,156,658; or

(b) in any way dispose of, deal with or diminish the value of any of its assets whether they are in or outside the DIFC up to the same value.

6. This prohibition includes the following assets in particular:

(b) the vessel known as Niya;

9. The Defendant must immediately or within 72 hours of service of the order, and to the best of its ability inform the Claimant’s legal representatives of [the information there set out].

10. Within 7 working days after being served with the order, the Defendant must swear and serve on the Claimant’s legal representatives, an affidavit setting out the above information.

11. This order does not prohibit the Defendant from spending US$ 5,000 a week towards legal advice and representation. But before spending any money the Defendant must promptly inform the Claimant’s legal representatives where the money is to come from. The Defendant shall also account to the Claimant’s legal representatives every month for the amount of money spent under this paragraph.

12. This order does not prohibit the Defendant from dealing with or disposing of any of its assets in the ordinary and proper course of business, provided that any disposals be at fair market value and the value of such disposals remain subject to this freezing order and their identity be disclosed to the Claimant’s legal representatives. The Defendant shall account to Claimant’s legal representatives every month with respect to this exception.

16. Anyone served with or notified of the order may apply to the Court to vary or discharge the order.”

(the “Freezing Order”).

Acknowledgement of service

18. On 13 May 2024 the Defendant filed an acknowledgement of service by which it states that it intends to defend all of the claim and to contest jurisdiction and seeks, amongst other things, an order discharging the Freezing Order and an order setting aside the Enforcement Order.

The Consolidated Applications

19. The Claimant has relevantly made the following applications:

(a) ARB-004-2024/3, dated 13 May 2024, for permission to issue a writ of sequestration against the assets of the Defendant and permission to issue a writ of sequestration against the assets of the following directors and officers of the Defendant: (a) Nori; (b) Nawaf; (c) Naufil; (d) Novak; (e) Neal; and (f) Nobel (the “Directors”) on the ground that the Defendant has failed to comply with [4], [6(b)], [11] and [12] of the Freezing Order (the “First Sequestration Application”).

(b) ARB-004-2024/4, dated 13 May 2024, for an order that the Defendant and the Directors are guilty of contempt of court in failing to comply with [4], [6(b)], [11] and [12] of the Freezing Order and the matter shall be referred to the Attorney General of Dubai for appropriate punishment and the Defendant and the Directors shall pay a fine and/or furnish security for good behaviour (the “First Committal Application”).

(c) ARB-004-2024/10, dated 24 June 2024, for permission to issue a writ of sequestration against the assets of the Defendant and permission to issue a writ of sequestration against the assets of the Directors on the ground that the Defendant has failed to comply with [9] and [10] of the Freezing Order (the “Second Sequestration Application”).

(d) ARB-004-2024/11, dated 24 June 2024, for an order that the Defendant and the Directors are guilty of contempt of court in failing to comply with [9] and [10] of the Freezing Order and the matter shall be referred to the Attorney General of Dubai for appropriate punishment and the Defendant and the Directors shall pay a fine and/or furnish security for good behaviour (the “Second Committal Application”).

(e) ARB-004-2024/12, dated 9 July 2024, for an order that the Defendant be restrained from commencing, prosecuting, continuing, taking steps in or otherwise participating in proceedings in any court or tribunal in the United Arab Emirates or otherwise except before the appropriate courts in Mumbai, India, against the Claimant, in respect of any dispute arising out of or in connection with the Award, including prosecuting or continuing the Annulment Proceedings before the Dubai Court of Appeal (the “Anti-suit Application”).

20. The Defendant has made applications for orders as follows:

(a) ARB-004-2024/5, dated 17 May 2024, for an order that the Enforcement Order be set aside pursuant to Article 44(1)(a)(ii) and (v) of the Arbitration Law of 2008 ("Arbitration Law") on the ground that with respect to the underlying arbitral proceedings, the Defendant was not given proper notice of the appointment of the arbitrator or was otherwise unable to present his case and that the award has not yet become binding on the parties or has been set aside or suspended by a Court of the State or jurisdiction in which, or under the law of which, that award was made. (Set Aside Application)

(b) ARB-004-2024/6, dated 23 May 2024 for procedural orders (the “Consolidated Procedure Application”).

(c) ARB-004-2024/7, dated 23 May 2024 for an order that the Claimant’s First Committal Application be struck out on the grounds that the application and the evidence served in support of it disclose no reasonable grounds for the Claimant to allege that the Defendant is guilty of a contempt of court; the application is an abuse of the Court’s process; and the application fails to comply with the Rules (the “Strike Out Application”).

(d) ARB-004-2024/8, dated 23 May 2024 for an order that the Freezing Order be discharged and, at the Return Date, no further freezing order be granted, on the grounds that (a) the Court lacked jurisdiction to grant the Freezing Order and lacks jurisdiction to continue the Freezing Order at the Return Date; (b) there is no real risk that the Defendant will dissipate its assets; (c) the Claimant has failed to provide evidence that its undertakings in damages to the Court are valuable; and (d) the Claimant has breached its full and frank disclosure obligations (the “Discharge Application”).

(e) ARB-004-2024/9, dated 7 June 2024 for permission to put in evidence Mr. Nyoka’s Report, dated 7 June 2024, in support of the Defendant's Set Aside Application (the “Expert Evidence Application”).

Mr Nixon’s affidavits and witness statements

21. Mr Nixon has made three witness statements and sworn four affidavits which have been filed by the Claimant in support of, or in answer to, various of the Consolidated Applications. The witness statements and affidavits are as follows:

(a) First Witness Statement dated 8 March 2024 in support of the Claimant’s application for recognition and enforcement of the Award, which the Defendant seeks to set aside by way of the Set Aside Application.

(b) First Affidavit sworn 2 May 2024 in support of the Claimant’s application for a worldwide freezing order, which the Defendant seeks to set aside by the Discharge Application.

(c) Second Witness Statement dated 13 May 2024 in support of the Claimant’s application for service by alternative method or for dispensation with personal service (the “Dispensation Application”).

(d) Second Affidavit sworn 13 May 2024 in support of the Claimant’s First Sequestration Application, which the Defendant opposes, and First Committal Application, which the Defendant opposes and seeks to set aside by the Strike Out Application.

(e) Third Affidavit sworn 13 June 2024 in support of the Claimant’s Second Sequestration Application, and Second Committal Application, which the Defendant opposes.

(f) Third Witness Statement dated 5 July 2024 in response to the Defendant’s Strikeout and Discharge Applications and the Defendant’s answer to the Claimant’s First Sequestration Application.

(g) Fourth Affidavit sworn 15 July 2024 in response to the Defendant’s answer to the Claimant’s Second Sequestration Application and Second Committal Application.

22. As I have said, the Claimant submits that the Defendant should be permitted to cross examine Mr Nixon about the contents of two of his affidavits, the Second and Third Affidavits which were sworn in support of the First and Second Committal Applications, but not about the contents of the other affidavits and the witness statements.

23. The Claimant’s approach is contrary to the scope of cross examination of a witness usually permitted under RDC 29.58 in a hearing other than a trial, as I will explain later in these reasons.

24. The Claimant may have been induced to its approach by the wording of the Defendant’s Application. The Defendant applied for an order for permission to cross-examine Mr Nixon on all of his evidence submitted in these Court proceedings at the hearing of the Consolidated Applications.

25. I do not take the Defendant’s Application to be confined to cross examination of Mr Nixon on the facts narrated in his affidavits and witness statements. For example, the Defendant asserts that it is entitled to cross examine Mr Nixon in relation to credit. The Defendant’s Application should properly be considered as an application to cross examine Mr Nixon in respect of the matters in issue in the Consolidated Applications.

26. The essence of the Claimant’s opposition to the Defendant’s Application is that the Defendant should be confined to cross examining Mr Nixon in respect of the issues in the Committal Applications, not merely the facts narrated by Mr Nixon in his Second and Third Affidavits.

27. In any event, the relevant matter for determination on this Application is whether the Defendant should be permitted to cross examine Mr Nixon in relation to the matters in issue in the Consolidated Applications or only in relation to the matters in issue in the Committal Applications.

Cross examination in relation to committal applications

28. The Claimant concedes that the Defendant may cross examine Mr Nixon in relation to his affidavits in support of the Committal Applications – Mr Nixon’s Second and Third Affidavits.

29. The Claimant is right to make that concession, but in its terms that concession is too narrow.

30. Whilst the Rules do not specifically say so, a person accused of contempt of court generally has the right to cross-examine witnesses at the hearing of the contempt application. This right is part of the broader right to a fair hearing and ensures that the accused can challenge the evidence presented against them.

31. If the cross examination is to be confined to the Committal Applications, that does not mean that the cross examination will be limited to the facts narrated in Mr Nixon’s affidavits sworn in support of the Committal Applications.

32. The principles concerning cross examination of a witness during an interlocutory application, or at a hearing other than a trial, are well established, see for exampleMarsden v Amalgamated Television Services Pty Ltd [2000] NSWC 66, Levine J, [4], [7].

33. Cross-examination must relate to relevant facts, that is facts relevant to the matters in issue in the application. But the cross-examination is not confined to the facts to which the witness testified in his examination-in-chief, in this case in Mr Nixon’s Second and Third Affidavits. The cross-examination can go beyond the facts narrated in the witness’s affidavits, but all questions must relate to relevant facts. The relevant facts in cross examination may involve questions affecting the credit of the witness, and such questions are permissible in cross examination. But questions irrelevant to the matters in issue or not intended to contradict or qualify the statements in the witness’s affidavits, or which do not impeach the credit of the witness, cannot be allowed in cross examination.

34. The Defendant will be permitted to cross examine Mr Nixon about any fact relevant to the matters in issue in the Committal Applications, including credit, whether the cross examination relates to the facts narrated in Mr Nixon’s Second or Third Affidavits, facts narrated in his other affidavits or witness statements, or facts not narrated in any of his affidavits or witness statements.

35. The Defendant will be permitted to cross examine Mr Nixon on any matter relevant to the Committal Applications, not merely in relation to the facts narrated in his Second and Third Affidavits. However, the question arises whether the Defendant should be permitted to cross examine Mr Nixon in relation to matters relevant to the other applications but not relevant to the Committal Applications or to credit.

36. The limits of cross examination are normally decided at the hearing in response to objections to questions put in cross examination. However, I will consider the scope of the permitted cross examination to assist the parties prepare for the Consolidated Hearing.

Cross examination in relation to the other Consolidated Applications

37. I will permit the Defendant to cross examine Mr Nixon in relation to the matters in issue in the other Consolidated Applications for three reasons, the first two of which are related.

38. First, some of the other Consolidated Applications are inextricably linked with the Committal Applications. The applications are so closely connected that they cannot be considered independently of each other.

39. Secondly, on 9 August 2024 the Court ordered that the Consolidated Applications be heard together at a single hearing, not that they be heard one after the other. The evidence in one application will be evidence in the others, in so far as it is relevant. The applications remain as they were, but there will be only one hearing. The Claimant will adduce its evidence by presenting each affidavit, witness statement and other document once only. When the Claimant has put the affidavits and witness statements of Mr Nixon into evidence, it will present Mr Nixon for cross examination. Mr Nixon will be cross examined only once, not multiple times in relation to each of the Consolidated Applications. It would be impractical, inconvenient and unjust to permit cross examination in relation to the Committal Applications and not the other Consolidated Applications where evidence adduced in the Committal Applications is relevant to the matters in issue in the other Consolidated Applications, including the credit of Mr Nixon.

40. Thirdly, I would have permitted the Defendant to cross examine Mr Nixon in relation to some or all of the other Consolidated Applications if they were being heard separately and not together.

The Sequestration Applications

41. The Consolidated Applications most obviously inextricably linked with the Committal Applications are the Sequestration Applications. The Sequestration Applications are so closely connected with the Committal Applications that they cannot be considered independently of the Committal Applications.

42. The First Sequestration Application is made on the same ground as the First Committal Application - that the Defendant has failed to comply with [4], [6(b)], [11] and [12] of the Freezing Order. The evidence advanced by the Claimant in support of the First Sequestration Application is the same evidence advanced by the Claimant in support of the First Committal Application – Mr Nixon’s Second Affidavit.

43. Similarly, the Second Sequestration Application is made on the same ground as the Second Committal Application - that the Defendant has failed to comply with [9] and [10] of the Freezing Order. The evidence advanced by the Claimant in support of the Second Sequestration Application is the same evidence advanced by the Claimant in support of the Second Committal Application – Mr Nixon’s Third Affidavit.

44. It would be absurd to permit cross examination of Mr Nixon about facts relevant to whether the Defendant failed to comply with [4], [6(b)], [9], [10], [11], and [12] of the Freezing Order in determining the Committal Applications but not to consider the evidence elicited in that cross examination in determining the Sequestration Applications.

45. It would be impractical to do so. What if the Court would come to different findings whether the Defendant failed to comply with the Freezing Order by considering evidence elicited in cross examination or not considering that evidence?

46. In any event, I would have permitted cross examination of Mr Nixon in relation to the Sequestration Applications.

47. On hearing an application for a writ of sequestration, the Court may order that any issue or question, a decision on which is necessary to determine the rights of the parties, be tried in any manner in which any question of fact or law arising in proceedings may be tried: RDC 48.35. Where, as in this case, the issue of writs of sequestration is dependent upon findings of contempt, the Court will permit the respondent to cross examine witnesses who give evidence against him.

Set Aside Application

48. The Claimant submits that the Defendant may not cross-examine Mr Nixon on his First Witness Statement which he made in support of the Claimant’s application for recognition and enforcement of the Award, which the Defendant seeks to set aside by the Set Aside Application.

49. For the reasons I have stated, the relevant question is not whether the Defendant may cross-examine Mr Nixon on his First Witness Statement but whether the Defendant should be permitted to cross examine Mr Nixon on the matters in issue in the Set Aside Application.

50. The Claimant raises a specific objection to cross examination in relation to the Set Aside Application. The Claimant submits in effect that cross examination should not be permitted because it is not necessary for the Court to determine any factual dispute in the application. Before turning to that issue, I will refer to the discretion of the Court to permit cross examination.

51. RDC 29.58 gives the Court discretion to permit cross examination of a witness who gives evidence in writing at a hearing other than the trial. The discretion is broad and unfettered and may be exercised whenever the Court considers it just and convenient.

52. The discretion is normally exercised cautiously or somewhat sparingly, seeSullivan v Henderson [1973] 1 WLR 333,Selvaratnam v St George -A division of Westpac Banking Corp (No2) [2021] FCA 486, (Selvaratnam) Stewart J, [45].

53. A hearing other than a trial is commonly interlocutory, in the sense that it deals with a procedural issue and is different from a trial that finally disposes of the proceedings and decides the dispute between the parties.

54. Permission to cross-examine at an interlocutory hearing is less likely if the proposed cross examination will involve a rehearsal of, or dry run at, the issues relevant to the trial. Such a cross examination will trespass upon issues of fact that go to the core of the proceedings, and it may give an unfair advantage to one side, seeSelvaratnam [45] andWest London Pipeline and Storage Ltd v Total UK [2008] EWHC, Beatson J, [84].

55. Those considerations do not arise in the Set Aside Application. The Set Aside Application will determine the dispute between the parties concerning the recognition and enforcement of the Award.

56. Nevertheless, permission to cross-examine is unlikely to be granted in interlocutory applications where there is no conflict on the affidavits or witness statements or, even if there is conflict, resolution of the conflicts is not required to determine the issue before the court.

57. The Claimant submits that applications for recognition and enforcement of an award or to set aside an order for recognition and enforcement of an award are summary proceedings. The Claimant submits that such applications are determined on the basis of whether or not there is a real prospect of success or some other compelling reason why the issue should be disposed of at a trial and in making this determination courts do not conduct a trial involving oral evidence and cross-examination of witnesses.

58. The Defendant’s case in the Set Aside Application is that it was not given proper notice of the appointment of the Arbitrator and the Award has not yet become binding on the parties.

59. The burden of proof is on the party resisting recognition and enforcement – the Defendant. The standard of proof is the civil standard, on the balance of probabilities, see for exampleHub Street Equipment Pty Ltd v Energy City Qatar Holding Company [2021] FCAFC 110, [19] Stewart J (with whom Allsop CJ and Middleton J agreed) in relation to the corresponding provision of the International Arbitration Act 1974 (Cth) [Australia].

60. The Claimant submits that at the enforcement stage, it is for court to determine whether enforcement ought to be refused without the necessity of a full hearing, by applying the usual test on summary judgment. In support of that proposition the Claimant refers toHoneywell International Middle East Ltd v Meydan Group LLC [2014] EWHC 1344 (“Honeywell”).

61. Honeywell does not support the proposition for which the Claimant cites it. Mr Justice Akenhead had made an order under section 101 of the Arbitration Act 1996 (UK) for leave to enforce an award. The defendant disputed the court’s jurisdiction and applied to set aside the order on the ground that the court should refuse to recognise or enforce the award under section 103(2) of the 1996 Act because, among other reasons, the award was not valid because the contract had been procured by bribery and the defendant had been wrongly prevented from nominating an arbitrator. Mr Justice Ramsey conducted a hearing to consider whether the respondent's application to set aside the order could be determined summarily as having no real prospect of success or whether a final hearing was needed in which case further directions would be given leading to a later hearing. After considering the evidence and parties’ submissions, Mr Justice Ramsey considered that the respondent had not raised any ground which had a real prospect of success in relation to its application to set aside the order by which Honeywell was given leave to enforce the award in the same manner as a judgment or order of the court to the same effect and dismissed the respondent’s application to set aside the order.

62. At [68] Mr Justice Ramsey said:

“On an application to enforce an award issues may arise, such as those which arose in Sovarex SA v Romero Alvarez SA [2011] EWHC 1661 (Comm) in which it is necessary for the court to decide an issue based on disclosure and cross examination of evidence. However, in my judgment, the court should be cautious about taking that approach and will generally be able to come to a decision on whether the grounds are made out without the necessity for holding a full hearing but will be able to deal with them on the basis of the usual test on summary judgment that is whether there is a real prospect of successfully establishing a ground under s.103 or whether there is some compelling reason why the issue should be disposed of at a trial.”

63. More recently, in A v B [2020] EWHC 952 (Comm) the defendant applied to set aside an order (the "October Order") granting leave to enforce an arbitration award. The court held that it was not open to the court to make an order in the terms of the October Order. In the light of the decision that the October Order should be set aside, the court considered whether the claimant's application for leave to enforce the award (to the extent it relied upon section 66 of the Arbitration Act (UK) should be dismissed. Mrs Justice Moulder said at [37]:

“Section 66 is a summary procedure: Russell on Arbitration at 8-003. The court has a discretion whether to grant leave. The approach to be taken where there are disputed questions of fact in relation to an application under section 66 was addressed in the judgment of Hamblen J in Sovarex S.A v Romero Alvarez S.A [2011] EWHC 1661 (Comm) at [46]-[49]:

"46. Given that the court has the power under CPR Part 62 to give appropriate directions to enable issues of fact to be determined, there is no obvious reason why the enforcing party should be compelled to start proceedings all over again by commencing an action on the award, thereby potentially wasting both time and costs. S.66 is meant to deal with enforcement generally and there is nothing in s.66 itself or in the CPR which requires an alternative mode of procedure to be adopted in the event of the application being challenged on the facts. Consistent with the Overriding Objective the priority must be to progress matters sensibly and cost effectively rather than to waste time and costs for formalistic reasons ….

48. For all these reasons I consider that the court does have the power to direct that there be a determination of disputed issues of fact under s.66 and that there is no necessity for this to be done by way of action on the award. No doubt there will be cases where it will still be appropriate for the proceedings to continue as if it was an action, particularly where the dispute is one of some complexity. However, in a case such as the present which involves relatively straightforward issues of fact such as are commonly determined on a s.67 application, I consider it is appropriate for the issues to be dealt with under s.66 and for appropriate directions to be given under CPR Part 62.7.”

64. The Defendant submits that there is nothing uncommon about cross-examining witnesses in set-aside applications. For instance, in the High Court of England and Wales in HellenicPetroleum Cyprus Limited v Premier Maritime Limited [2015] EWHC 1894, Mr Justice Flaux concluded in the context of an application to set aside an award that cross-examination of witnesses was useful in forming his own view of their credibility.

65. The Claimant has not applied for the Set Aside Application to be immediately dismissed. The Court has not ordered that at the Consolidated Hearing on 7 October 2024 it will determine whether the Set Aside Application should be dismissed on the ground that the Defendant has no real prospect of succeeding and there is no other compelling reason why the application should be disposed of at a final hearing.

66. To the contrary, the Court has ordered that the Defendant’s Set Aside Application be finally determined at the Consolidated Hearing. At that hearing the Court will determine any disputed facts where it is necessary to determine those facts to determine the Set Aside Application.

67. The purpose of an order to permit cross examination is to make the Court process effective, seeAzzam Faisal Khouj v Acropolis Capital Partners Limited, Acropolis Capital Management Limited [2021] EWHC 1667 (Comm), Christopher Hancock QC Sitting as a Judge of the High Court of England and Wales [45]. If there are disputed facts, permission should be given to cross examine Mr Nixon because it will assist the Court to determine the disputed facts.

68. In his witness statement dated 7 June 2024 Novak, the Managing Director of the Defendant gives evidence in support of the Defendant's Set Aside, Discharge, and Strike Out Applications. Mr Novak gives evidence concerning the appointment of the Arbitrator and the notification of the Award. Mr Novak says that the Defendant did not receive the Petition for the appointment of a sole arbitrator attached to an email referred to as the Service Email. Mr Novak says that the Claimant sent the Service Email to two former employees who were no longer working for the Defendant and as a result, no proper notice of the Petition was given to the Defendant, and it did not participate in the proceedings for the appointment of an arbitrator.

69. In his First Witness Statement Mr Nixon says that notice of the Petition was issued to the Defendant at its addresses in Liberia and UAE through the Ministry of Law and Justice and to its address at Gujarat, India through registered post and by email. Mr Nixon says other documents concerning the arbitration were served on the Defendant.

70. There is a factual dispute concerning how the arbitration came to be commenced, as well as steps subsequently taken in these DIFC enforcement proceedings (and in other jurisdictions) by the Claimant. The Defendant intends to challenge Mr Nixon’s evidence.

71. Cross examination of Mr Novak and Mr Nixon will assist the Court to determine the factual disputes between them concerning whether the Defendant was given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present its case. Cross examination of Mr Nixon will render the Court process effective by facilitating the resolution of the factual disputes.

72. I would give permission for the Defendant to cross examine Mr Nixon in relation to matters relevant to the facts in issue in the Set Aside Application if it was being heard separately from the other Consolidated Applications. That includes but is not confined to cross examination about matters in Mr Nixon’s First Witness Statement.

73. Further, the Set Aside Application is to be heard with the Committal and Sequestration Applications. The Defendant will be permitted to cross examine Mr Nixon in relation to the facts in issue in those applications, including matters of credit. The Defendant might be permitted to challenge Mr Nixon on assertions in his First Witness Statement on the ground it goes to credit. It would be artificial and impractical and would bring the Court into disrepute to consider such evidence in determining the Committal and Sequestration Applications but not the Set Aside Application.

Consolidation Application

74. This application raises procedural matters. It is not necessary to consider it at this time.

Strike Out Application

75. The Strike Out Application is the Defendant’s application for an order that the Claimant’s First Committal Application be struck out on the grounds that the application and the evidence served in support of it disclose no reasonable grounds for the Claimant to allege that the Defendant is guilty of a contempt of court; the application is an abuse of the Court’s process; and the application fails to comply with the Rules.

76. The Claimant submits that the Defendant may not cross-examine Mr Nixon on his Third Witness Statement which he made. in response to the Defendant’s Strikeout and Discharge Applications and the Defendant’s answer to the Claimant’s First Sequestration Application.

77. As I have explained, the question is not whether Mr Nixon may be cross examined on his Third Witness Statement but whether he may be cross examined on issues relevant to the Strike Out Application.

78. The Strike Out Application is inextricably linked with the Claimant’s First Committal Application. The Strike Out Application is part of the Defendant’s answer to the First Committal Application. The two applications are so closely connected that they cannot be considered independently of each other.

79. The Defendant will be permitted to cross examine Mr Nixon in relation to facts in issue in the First Sequestration Application including facts asserted in Mr Nixon's Third Witness Statement insofar as they relate to the First Sequestration Application.

80. I will give permission for the Defendant to cross examine Mr Nixon in relation to facts relevant to the issues in the Strike Out Application. That includes but is not confined to matters in Mr Nixon’s Third Witness Statement.

Discharge Application

81. The Discharge Application is the Defendant’s application for an order that the Freezing Order be discharged and, at the Return Date, no further freezing order be granted, on the grounds that (a) the Court lacked jurisdiction to grant the Freezing Order and lacks jurisdiction to continue the Freezing Order at the Return Date; (b) there is no real risk that the Defendant will dissipate its assets; (c) the Claimant has failed to provide evidence that its undertakings in damages to the Court are valuable; and (d) the Claimant has breached its full and frank disclosure obligations.

82. There are factual disputes, for example whether the evidence supports the inference that there is a risk that the Defendant’s assets would be dissipated and the sufficiency of the evidence as to dissipation of assets.

83. The Claimant submits that the Defendant may not cross-examine Mr Nixon on his First Affidavit sworn in support of the Claimant’s application for a worldwide freezing order, which the Defendant seeks to set aside by the Discharge Application nor on his Third Witness Statement made in response to, amongst others, the Defendant’s Discharge Application.

84. Again, the question is not whether Mr Nixon may be cross examined on his Third Witness Statement but whether he may be cross examined on issues relevant to the Discharge Application.

85. The Court will permit cross examination if it is necessary or useful to resolve conflicts of fact which are relevant to whether a freezing order should continue or be discharged.

86. This is such a case. The Court will be assisted in resolving factual disputes in the Discharge Application by cross examination of Mr Nixon in relation to facts in issue in that application.

87. Furthermore, the Discharge Application is to be heard together with the other Consolidated Applications in respect of which Mr Nixon will be cross examined and it is impractical to segregate his cross examination in relation to facts in issue in those applications, including credit, from facts in issue in the Discharge Application.

Expert Report

88. This application raises procedural matters. It is not necessary to consider it at this time.

Anti-suit application

89. The Anti-suit Application is the Claimant’s application for an order that the Defendant be restrained from commencing, prosecuting, continuing, taking steps in or otherwise participating in proceedings in any court or tribunal in the United Arab Emirates or otherwise except before the appropriate courts in Mumbai, India, against the Claimant, in respect of any dispute arising out of or in connection with the Award, including prosecuting or continuing the Annulment Proceedings before the Dubai Court of Appeal.

90. The Court has discretion to permit the cross-examination of a witness in applications for anti-suit injunctions, but it is not common, it depends on the specifics of the case. The court will order cross-examination if it deems it necessary to resolve factual disputes or to ensure justice is served.

91. The Anti-suit Injunction Application is inextricably linked with the other Consolidated Applications. For example, the Claimant’s statement of case in support of the Anti-suit Injunction Application:

(a) relies on Mr. Nixon’s First Witness Statement, which was made in support of the Claimant’s application for recognition and enforcement of the Award, which the Defendant seeks to set aside by the Set Aside Application;

(b) refers to the particulars of claim in support of the Claimant’s application for the Enforcement Order, which the Defendant seeks to set aside by the Set Aside Application, and the application for the Freezing Order, which the Defendant seeks to discharge by the Discharge Application.

(d) refers to the Set Aside Application; and

(e) refers to the Discharge Application.

92. The Consolidated Applications are to be heard together. It is neither practical nor just and convenient to attempt to segregate the evidence to be considered in determining the Anti-suit Injunction Application from the evidence in the other applications which might be relevant to the facts in issue in the Anti-suit Injunction Application.

Conclusion

93. The draft order submitted by the Defendant is that:

“[The Defendant] is granted permission to cross- examine Mr Nixon on all of his written evidence submitted in these DIFC Court proceedings at the merits hearing(s) to be held on [7 October 2024].”

94. This form of order may be misleading, in that it might be understood to confine the cross examination of Mr Nixon to the facts to which he has testified in his affidavits and witness statements. The cross examination will not be so confined. The cross-examination must relate to relevant facts, that is facts relevant to the matters in issue in the applications, including credit. But the cross-examination is not confined to the facts to which Mr Nixon narrates in affidavits and witness statements. The cross-examination can go beyond the facts narrated in the affidavits and witness statements, but all questions must relate to relevant facts. The relevant facts in cross examination may involve questions affecting the credit of the witness

95. The order will be to the effect:

“The Defendant is granted permission to cross-examine Mr Nixon on the hearing of the applications to be heard on 7 October 2024 (the Consolidated Applications). The cross-examination shall be limited to the issues in the Consolidated Applications.”

Costs

96. The general rule is that the unsuccessful party will be ordered to pay the costs of the successful party.

97. The Defendant is the successful party.

98. There is no reason to depart from the general rule.

99. The Court cannot make an immediate assessment of the Defendant’s costs because the Defendant has not filed a statement of costs.

100. The Court will order that the Claimant pay the Defendant’s costs of the Application on the standard basis to be assessed by the Registrar if not agreed.

The Dubai International Financial Centre

ARB 004/2024 Naqid v Najam

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You are here: BAILII >> Databases >> The Dubai International Financial Centre >> Naqid v Najam [2024] DIFC ARB 004 (28 August 2024) URL: http://www.bailii.org/ae/cases/DIFC/2024/DARB_0042.html