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You are here: BAILII >> Databases >> The Dubai International Financial Centre >> ARB 006/2024 Neville v Nigel [2024] DIFC ARB 006 (31 July 2024) URL: http://www.bailii.org/ae/cases/DIFC/2024/DARB_006.html Cite as: [2024] DIFC ARB 006, [2024] DIFC ARB 6

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ARB 006/2024 Neville v Nigel

July 31, 2024 Arbitration - Orders

Claim No. ARB 006/2024

In the name of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Ruler of Dubai

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

NEVILLE

Claimant/Respondent

and

NIGEL

Defendant/Appellant

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ORDER WITH REASONS OF H.E. JUSTICE SHAMLAN AL SAWALEHI

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UPON the without notice Order of H.E Justice Shamlan Al Sawalehi dated 4 April 2024 granting a freezing order and disclosure of information order against the Defendant (the “Injunction Order”)

AND UPON the Defendant’s application to discharge the Freezing Order dated 7 April 2024 (the “Jurisdiction Challenge”)

AND UPON the Claimant’s application to continue the Freezing Order dated 16 April 2024 (the “Continuation Application”)

AND UPON hearing counsel for the Claimant and counsel for the Defendant at the hearing on 17 April 2024

AND UPON the Order of H.E Justice Shamlan Al Sawalehi dated 22 May 2024 (i) allowing the Continuation Application; (ii) ordering that the Injunction Order shall continue until further order of the Court; (iii) dismissing the Jurisdiction Challenge; and (iv) ordering the Appellant to pay the Respondent’s costs of the Discharge and Continuation Applications (the “Continuation Order”)

AND UPON the Defendant’s Notice of Appeal dated 28 May 2024 (the “PTA Application”)

AND UPON the Defendant's application to stay the information disclosure order in the Injunction Order and the costs award in the Continuation Order (the “Stay Application”)

AND UPON the Court’s directions dated 14 June 2024

AND UPON the Defendant’s application dated 21 June 2024 for an order that its PTA Application be referred to the Court of Appeal for decision (the “Referral Application”)

IT IS HEREBY ORDERED THAT:

1. The Appellant/Defendant is granted permission to appeal on Ground 5.3 set out in its Grounds of Appeal dated 27 May 2024. Any remaining issues on jurisdiction set out in the Appellant’s Grounds of Appeal and/or the Supplemental Appeal Submissions dated 9 July 2024 is reserved for the Court of Appeal with the stipulation that the Appellant file a single document, including only the specific issues that are being advanced in Ground 1 and its submissions directed to those issues.

2. The Appellant/Defendant is denied permission to appeal on Ground 2 being full and frank disclosure.

3. The Defendant’s Referral Application is dismissed.

4. The Defendant’s Stay Application is dismissed.

5. Costs of the PTA Application on Ground 1 being jurisdiction to be reserved to the Court of Appeal determining the appeal.

6. The Appellant shall pay the Respondent’s costs of the PTA Application on Ground 2 being full and frank disclosure, to be assessed by the Registrar, if not agreed.

7. The Appellant shall pay the Respondent’s costs related to the Referral Application and the Stay Application, to be assessed by the Registrar, if not agreed.

Issued by:
Hayley Norton
Assistant Registrar
Date of issue: 31 July 2024
Time: 8am

SCHEDULE OF REASONS

1. These reasons address the following three applications filed by the Defendant/Appellant, Nigel (the “Appellant”): (1) application for permission to appeal (the “PTA”); (2) application to refer the PTA to the Court of Appeal (the “Referral Application”); and (3) an application to stay the execution of the disclosure of information and costs orders (the “Stay Application”). I have addressed below each of these applications and reasons for allowing and/or dismissing it.

Application for Permission to Appeal

2. The Appellant’s PTA application is against my 22 May 2024 continuation order (the “Continuation Order”) granting the Claimant/Respondent, Neville’s (the “Respondent”) application to continue the freezing and disclosure of information order issued on 4 April 2024 (the “Injunction Order”/“Disclosure Order”) and dismissing the Appellant’s application to discharge the Injunction Order based on a jurisdiction challenge (the “Jurisdiction Challenge”).

3. The Appellant’s PTA is limited to two grounds. The first ground is jurisdiction (“Ground 1”); and the second ground is full and frank disclosure (“Ground 2”).

Summary of the Appellant’s Position

4. In its 27 May 2024 Grounds of Appeal (“Grounds of Appeal”), filed prior to the issuance of my Reasons for the Continuation Order, on Ground 1, the Appellant submits that I erred as a matter of law in concluding that the DIFC Courts had or have jurisdiction to grant the Injunction Order and the Continuation Order. The Appellant’s submissions were speculative as to the reasons for the Continuation Order and proceeded to address those assumed reasons. They are outlined in paragraphs 5.1 to 5.5 of the Grounds of Appeal.

5. On Ground 2, the Appellant submits that I erred as a matter of law in failing to discharge the Injunction Order and Continuation Order in its entirety by virtue of the Respondent’s breach of its duty of full and frank disclosure. The Appellant’s submissions on Ground 2 were also speculative as to the reasons for the Continuation Order. They are outlined in paragraphs 8.1 to 8.4 of the Grounds of Appeal.

6. The Appellant filed a supplemental PTA submission dated 10 July 2024 (“Supplemental Appeal Submissions”) after the issuance of the Reasons for the Continuation Order.

7. On Ground 1, the Appellant appears to assert, amongst others, that since there was no express agreement, the conclusion regarding the DIFC seat could only have been reached by implying such a term in the Sales Agreement, and the implied term is an error. Further, that it was an error for the Court to have disregarded certain of the legal authorities cited by the Appellant and/or to have placed little reliance on such legal authorities. Also, the Appellant takes issue with the adequacy of explanation provided by the Court regarding its weighing of the contextual factors in reaching the conclusion that the parties more likely than not intended the DIFC, as opposed to non-DIFC Dubai, to be the seat. Additionally, the Appellant submits it is an error to have referenced the evidence of Mr. Norbert, being the post contractual subjective belief of a representative of the Respondent.

8. On Ground 2, the Appellant submits the conclusion that there was no material non-disclosure by the Respondent is an error because I was misguided in concluding that certain legal authorities relied upon by the Appellant on jurisdiction, which the Appellant submits the Respondent ought to have brought to the Court’s attention at the ex parte hearing, was of limited relevance.

Summary of the Respondent’s Position

9. The Respondent’s position is that the Court should refuse to hear the Appellant’s application unless and until it (a) provides the documents withheld from those stipulated in the Disclosure Order and (b) complies with the terms of the Disclosure Order; or alternatively dismiss the Appellant’s PTA with costs, with costs of Ground 2 to be assessed on an indemnity basis. In the further alternative if permission is granted, the Respondent submits it should be conditional on the Appellant satisfying (a) and (b) above and paying into court a sum on account of the Respondent’s costs and its costs of the proposed appeal.

10. The Respondent made further detailed submissions in response to Grounds 1 and 2, which I will only reproduce as necessary for disposing this PTA application.

Discussion

11. Pursuant to Rule 44.19 of the Rules of the DIFC Courts (“RDC”), permission to appeal may be given only where the Court considers that: (1) the appeal would have a real prospect of success; or (2) there is some other compelling reason why the appeal should be heard.

12. Rule 44.22 of the RDC states that an order giving permission to appeal may: (1) limit the issues to be heard; and (2) be made subject to conditions.

13. Rule 44.23 of the RDC states that where the lower Court or the appeal Court gives permission to appeal on some issues only, it will: (1) refuse permission to appeal on any remaining issues; or (2) reserve the question of permission to appeal on any remaining issues to the Court hearing the appeal.

14. Rule 44.24 of the RDC states that if the lower Court reserves the question of permission to appeal under Rule 44.23(2), the appellant must, within 14 days after receipt of the notification of the decision, inform the appeal Court and the respondent in writing whether it intends to pursue the reserved issues. If the appellant does intend to pursue the reserved issues, the parties must include in any time estimate for the appeal hearing, their time estimate for the reserved issues.

15. In its Supplemental Appeal Submissions, the Appellant appears, correctly in my view, to concede that many of the issues identified in its Grounds of Appeal may be otiose. However, the Appellant has not identified which specific issues are no longer being pursued.

16. I am not persuaded that any of the Appellant’s arguments advanced in its Grounds of Appeal and the Supplemental Appeal Submissions on Grounds 1 and 2 have a realistic prospect of success.

17. Nonetheless, pursuant to RDC 44.19(2) I am granting the Appellant permission to appeal on the limited issue of jurisdiction identified in paragraph 5.3 of its Grounds of Appeal.

18. In my view there is compelling reasons for the appeal to be heard on this issue, namely to enable the Court of Appeal, especially subsequent to the issuance of Decree 34 of 2021 and the coming into force of the statute of the Dubai International Arbitration Centre (“DIAC”) and the DIAC Rules, to provide guidance on whether in the context of an ad hoc (non-institutional) arbitration the words “Dubai Arbitration” can be interpreted to constitute a choice of a DIFC or non-DIFC Dubai seat.

19. Further, pursuant to RDC 44.23(2) I am reserving the question of permission to appeal on any remaining issues regarding Ground 1 that is set out in the Appellant’s Grounds of Appeal and/or the Supplemental Appeal Submissions to the Court of Appeal with the stipulation that the Appellant file a single document, including only the specific issues that are being advanced in Ground 1 and its submissions directed to those issues.

20. Finally, I am of the view generally that it serves little useful purpose for the first instance judge who issued the Reasons to elaborate on those Reasons in a PTA application. Notwithstanding, I feel compelled to clarify what appears to be a mischaracterization and/or misunderstanding on the Appellant’s part regarding my conclusion on the parties’ intended seat.

21. Contrary to what is asserted in the Supplemental Appeal Submissions, my conclusion was not based on the mere acceptance of the Respondent’s submissions or on the basis that the seat was “so obvious” or because they “go without saying”. Rather, it was a conclusion I reached, on the balance of probability, after carefully deliberating and weighing all the contextual factors. It is a well-established principle of contractual interpretation that where there are two possible constructions, the court is entitled to prefer the construction that is more consistent with business common sense and to reject the other.See Lukoil Asia Pacific Pte Ltd v Ocean Tankers (Pte) Ltd (the “Ocean Neptune”) [2018] 2 All ER (Comm) 108

22. On Ground 2, I am not satisfied that there is either a realistic prospect of success or a compelling reason for the issue to be heard on appeal. Therefore, permission to appeal on the Ground 2 is denied.

23. The Respondent points out that the Appellant’s case in its notice of application being that“the Claimant presented to the Court that DIAC/DIFC seated arbitration had been agreed by the parties, when in fact there was no such agreement”is not only a disputed issue but is also different to the issues and arguments the Appellant subsequently raised regarding Ground 2, which latter issues, the Respondent submits the Appellant should be barred from pursuing. Moreover, the Respondent takes particular issue with the Appellant’s characterization developed in its skeleton argument that the alleged breach of the duty of full and frank disclosure wasdeliberate(emphasis added).

24. As I indicated in my Reasons for the Continuation Order, which I find unnecessary to repeat here, the issues the Appellant identified as the basis for the alleged breach of the duty of full and frank disclosure were issues that were apparent to me and any failure by the Respondent to specifically draw the Court’s attention to those issues did not amount to a material non-disclosure, no less a deliberate or culpable non-disclosure.

25. Ultimately, as articulated inTugushev v Orlov & Others [2019] EWHC 2031 (Comm) [7] and affirmed by this Court in Globe Investment Holdings Limited CFI 028/2023 the primary question is whether in all the circumstances the effect of any non-disclosure was such as to mislead the court in any material respect, which question I answered in the negative after careful consideration.

Referral Application

26. The Appellant’s second application is to refer the PTA to the Court of Appeal for a decision pursuant to Rule 44.8 of the RDC which states that “The lower Court may refer an application for permission to appeal to the appeal Court for decision.” The Referral Application is opposed by the Respondent.

27. Through the Referral Application, at the time which it was filed my Reasons for the Continuation Order having not been issued and which was cited by the Appellant as a basis for the Referral Application, the Appellant sought to have the jurisdictional question determined by the Court of Appeal on an expedited basis. The Respondent points out that no evidence was provided regarding urgency and since the Reasons for the Continuation Order had been issued, the primary basis on which the Referral Application was made has now fallen away and there was no real prospect of achieving the Appellant’s aim of accelerating the appeal process considering the overall circumstances, including the timelines necessary to file the partis’ submissions.

28. Based on the foregoing combined with my reasons for the PTA application, which partially grants the Appellant’s PTA application on an issue of jurisdiction while reserving the question of permission to appeal on any remaining jurisdiction issues to the Court of Appeal, in my view, there are no good reasons to circumvent the well-established appeal procedure set out in RDC Part 44. I dismiss the Appellant’s Referral Application.

Stay Application

29. The Appellant’s third application is for orders staying the execution of the “Disclosure Order” and paragraph 4 of my 27 May 2024 Continuation Order awarding costs to the Respondent for the Injunction Application, the Jurisdiction Challenge and the Continuation Order (the “Costs Order”).

30. As a preliminary observation, the Appellant’s reliance onAl Khorafi v Bank Sarasin [2009] CFI 026 (20 November 2014), cited in Mr. Norman’s witness statement filed in support of its Stay Application, for the proposition that pending a decision on a PTA application the Court has discretion to stay any orders if it considers it appropriate is merely academic at this stage given that I have already granted the Appellant permission to partially appeal the Jurisdiction Challenge. As such, the question of whether or not to grant a stay of execution of the Disclosure Order and Costs Order sought by the Appellant turns on the relative risk of injustice in granting or not granting a stay in the particular facts of this case.

31. It is relevant to note that at the outset although the Appellant outrightly refused to comply with the Court’s Disclosure order dated 7 April 2024, it has since, in an affidavit of Mr. Norval dated 10 July 2024, made partial disclosure while withholding certain other information on grounds of privilege against self-incrimination. The Appellant has not indicated to the Court that it no longer seeks to pursue the Stay Application.

32. In support of its Stay Application, the Appellant relies on the witness statements of Messrs. Norman and Norval while the Respondent relies on the witness statements of Messrs. Norwood and Norbert. After carefully considering all the witness statements and the legal authorities cited therein, I am not satisfied that the Appellant has discharged its burden of demonstrating that a Stay of the Disclosure Order, to the extent that it is currently applicable given the Appellant’s belated partial disclosure on 10 July 2024, and Costs Order should be granted in its favour.

33. Although at the outset the Appellant asserted that it will suffer “irremediable prejudice” if it complies with the Disclosure Order because of the “sensitive nature” of the information being sought, no further particulars or evidence was furnished in support of that assertion.

34. Nonetheless and notwithstanding the Appellant having maintained such a basis for its non-compliance for over a period of more than three months, on 10 July 2024 the Appellant provided partial disclosure. The Appellant’s belated partial disclosure brings into question the reliability, if not veracity, of the explanation for refusing to comply with any part of the Court’s Disclosure Order until 10 July 2024.

35. While I acknowledge the Appellant’s current stance that it is withholding the remaining information based on privilege against self-incrimination, no explanation has been provided to the Court as to why this rationale was not provided sooner for its refusal to comply with any part of the Disclosure Order.

36. Further, Mr. Norval’s statement that the reason for withholding the remaining information is based on him having been “advised that, if those documents were to be produced in these proceedings, this might expose me to the risk of prosecution under UAE law” is lacking in particulars and uncorroborated by any evidence.

37. For its part, the Respondent asserts that privilege against self-incrimination is not available in the DIFC and even if some version of the English privilege did exist in the DIFC, it would not extend to proceedings relating to property being the USD 230m by reason of Section 13 of the UK Fraud Act. Additionally, the Respondent submits that Mr. Norval waived any privilege in relation to the documents being withheld by virtue of him having described in his affidavit the transactions of which the missing documents are said to form part.

38. Be that as it may and separate and apart from the question of whether privilege against self-incrimination is an available defence in the DIFC, even assuming without deciding that privilege against self-incrimination is available, I agree with the Respondent that in this instance there is a dearth of particulars including the identification of the crime relied on, the circumstances which could amount to that crime, or the facts based upon which prosecution is likely. In the overall circumstances of this case and based on the available evidence, the Court is unable to simply accept at face value the Appellant’s stated basis for withholding the remaining information.

39. The evidence indicates the Respondent made substantial sums of prepayments to the Appellant; the whereabouts of which sums were unknown to the Respondent until recently when the Appellant made partial disclosure.

40. Based on the totality of the available evidence, I am unable to conclude that refusing the Stay Application will likely cause irremediable prejudice to the Appellant or that any risk of injustice to the Appellant outweighs the risk of injustice to the Respondent. Conversely, based on the available evidence, I am satisfied that the Appellant’s failure to comply fully with the Disclosure Order will likely be prejudicial to the Respondent and the risk of injustice to the Respondent outweighs any risk of injustice to the Appellant.

41. Similarly, although the Appellant asserts that refusal of a stay of execution of the Costs Order will result in “injustice” no further particulars or supporting evidence was provided by the Appellant. It is well established and as articulated by Justice Steel in TaaleemPJSC v. (1) National Bonds Corporation PJSC (2) Deyaar Development PJSC [2010] CFI 014 (27 April 2015) “the bare assertion that there may be a significant risk of non-recovery in the event of a successful appeal unsupported by any evidence does not establish a ground for a stay."

42. The Respondent has provided a cross-undertaking in damages for any potential loss that the Appellant may incur should it later be held that the injunction ought not to have been made.

43. Based on the foregoing reasons, I dismiss the Appellant’s Stay Application.

Costs

44. Costs of the PTA Application on Ground 1 is reserved for the Court of Appeal determining the appeal.

45. The Appellant shall pay the Respondent’s costs of the PTA Application on Ground 2, to be assessed by the Registrar, if not agreed.

46. The Appellant shall pay the Respondent’s costs related to the Referral Application and the Stay Application, to be assessed by the Registrar, if not agreed.