Bankmed v Ali Mohammed Salem Abu Adas [2019] DIFC CA 001 — The limits of appealing judicial reasoning (13 June 2019)

Why did the Appellants seek to challenge the CFI judge’s obiter remarks regarding arbitrability in Bankmed v Ali Mohammed Salem Abu Adas [2019] CA 001?

The dispute centers on a banking claim brought by Bankmed (SAL) against Ali Mohammed Salem Abu Adas and Mohammed Jawdat Ayesh Mustafa Al Bargouthi, who acted as guarantors for the First Defendant’s indebtedness. Following the entry of default judgments against them, both defendants successfully applied to the Court of First Instance (CFI) to have those judgments set aside, thereby regaining the opportunity to defend the claims. Despite achieving their primary objective of vacating the default judgments, the Appellants sought to appeal specific remarks made by the CFI judge in his written reasons.

The Appellants were aggrieved by the judge’s commentary regarding the arbitrability of the underlying dispute. Specifically, the judge had expressed views on whether the DIFC Courts possessed jurisdiction over the claims, notwithstanding the existence of an arbitration clause in the Facility Agreement. The Appellants feared that these remarks, though technically obiter dicta, would prejudice their future applications to stay the proceedings in favor of arbitration. As noted in the court record:

The Claimant says that the history of the matter shows these two Defendants seeking to delay matters where there is no defence and that this appeal is part and parcel of that strategy.

The Claimant, Bankmed, characterized this move as a tactical delay, noting that the Appellants had yet to file substantive defenses to the guarantee claims. The case highlights the tension between a party’s desire to "clean up" a judicial record and the procedural finality of the orders themselves.

Which judges presided over the Court of Appeal hearing for Bankmed v Ali Mohammed Salem Abu Adas [2019] CA 001?

The appeal was heard by a panel of the DIFC Court of Appeal consisting of Chief Justice Zaki Azmi, Justice Sir Jeremy Cooke, and H.E. Justice Ali Al Madhani. The hearing took place on 21 May 2019, with the final judgment delivered on 13 June 2019.

What specific legal arguments did counsel for the Appellants and the Respondent advance regarding the appealability of obiter dicta?

Counsel for the Appellants argued that the CFI judge’s comments on jurisdiction and arbitrability were fundamentally flawed and that these remarks created a prejudicial environment for their pending or future stay applications. They contended that if the judge’s reasoning on jurisdiction were allowed to stand unchallenged, it would effectively foreclose their ability to rely on the arbitration clause in the Facility Agreement. They sought to have the Court of Appeal correct these findings to prevent them from being treated as binding or persuasive in subsequent stages of the litigation.

Conversely, counsel for the Respondent, Mr. Mazen Boustany, argued that the appeals were procedurally incompetent. He maintained that the Appellants were attempting to appeal against reasons rather than the operative order, which was entirely in their favor. The Respondent emphasized that the Appellants were using the appellate process as a strategic tool to delay the substantive resolution of the debt claims. The Respondent’s position was that the Court of Appeal lacked the jurisdiction to entertain an appeal where the underlying decision—the setting aside of the default judgment—was not being contested.

What was the precise doctrinal question the Court of Appeal had to resolve regarding the scope of appellate jurisdiction under RDC Part 44?

The Court of Appeal was tasked with determining whether a party has a legal right to appeal against the reasoning or obiter dicta contained within a judgment when the operative order itself is not the subject of the appeal. The court had to decide if the "decision" referred to in RDC 44.117 encompasses the judge’s underlying logic or if it is strictly confined to the final order issued by the court. This required the court to address whether the DIFC legal system permits "appeals against reasons" in the absence of a challenge to the final outcome.

How did Justice Sir Jeremy Cooke apply the common law doctrine regarding the appealability of judicial orders?

Justice Sir Jeremy Cooke, writing for the Court of Appeal, applied the established common law principle that appellate courts exist to review the correctness of orders, not to act as editors of judicial reasoning. He emphasized that the court’s function is to determine whether an order is wrong or unjust, not to refine the judge's commentary. The court held that unless a specific exception applies—such as where the reasoning creates an issue estoppel that would bind the parties in future litigation—the reasons are not subject to appeal.

The court found that the Appellants were essentially attempting to litigate hypothetical future prejudice rather than an actual grievance with the court's order. The reasoning was clear:

It is trite law in common law jurisdictions that parties can appeal against orders but not against the reasons given in judgments for those orders

By distinguishing between the operative order (which set aside the default judgment) and the judge's commentary on arbitrability, the court concluded that the Appellants had no standing to appeal. The judge’s remarks did not constitute a final determination on the arbitration issue that would prevent the Appellants from raising it in a proper application for a stay.

Which DIFC statutes and RDC rules were central to the court’s analysis of the appeal process?

The court’s analysis was primarily grounded in the Rules of the DIFC Courts (RDC). Specifically, the court examined RDC Part 44.117, which governs the grounds for appeal, requiring that an appeal be brought against a "decision." The court also scrutinized the procedural history of the case in light of RDC Part 16, which dictates the timeline for filing a defense. The court noted:

(b) RDC 10.2 sets out the position where Particulars of Claim are served and gives a defendant the option to make admissions (RDC10.2(1)) and/or file a defence (RDC10.2(2)), but RDC 10.2(3) specifically provides that where Particulars of Claim are served with the Claim Form, the defendant may file an acknowledgment of service in accordance with Part 11.

The court further clarified the application of time limits under RDC 10.2(3) and RDC 11.2(2), noting:

Thus the 28 days provision under sub-rule (2) only applies where the Claim Form includes Particulars of Claim and the Defendant has filed an Acknowledgment of Service, as provided for in RDC 10.2(3) and RDC 11.2(2).

How did the Court of Appeal utilize English and DIFC precedents to reinforce the rule against appealing obiter dicta?

The court relied on DNB Bank v Gulf Eyadah Corporation [2015] CA 007 to define the limited circumstances under which an appeal against findings might be permitted, specifically regarding issue estoppel. The court found that the present case did not meet these high thresholds. Furthermore, the court cited English authorities, including Cie Noga D’Importation et D’Exportation SA v Australia & New Zealand Banking Group Ltd [2002] EWCA Civ 1142 and Morina v Secretary of State for Work and Pensions [2007] EWCA (Civ) 749, to confirm that the principle is consistent across common law jurisdictions. Justice Cooke noted:

In my judgment, no considerations of the kind raised in those authorities arise here and the additional authorities which were cited to us do not gainsay the principles to which I have just referred.

These cases were used to demonstrate that the Appellants' attempt to appeal the judge's reasoning was an outlier that lacked support in established jurisprudence.

What was the final disposition of the appeal and the court’s order regarding costs?

The Court of Appeal dismissed both appeals in their entirety. The court determined that the Appellants had no valid legal basis to challenge the CFI judge’s remarks. Consequently, the court ordered that the costs of the appeal be borne by the Appellants. The court’s order was definitive:

In these circumstances, I dismiss both appeals with costs. Costs to the Respondents and shall be assessed by the Registrar unless agreed.

What are the wider implications of this judgment for DIFC practitioners regarding the use of appeals to challenge judicial reasoning?

This judgment serves as a stern warning to practitioners that the DIFC Court of Appeal will not tolerate "tactical appeals" aimed at sanitizing judicial reasoning. Practitioners must recognize that the appellate process is strictly reserved for challenging the operative outcomes of a case. Attempting to appeal obiter dicta—even when that dicta touches upon sensitive issues like jurisdiction or arbitrability—is likely to be viewed as an abuse of process or a delay tactic. Litigants must wait for a substantive order that actually determines their rights before seeking appellate intervention.

Where can I read the full judgment in Bankmed v Ali Mohammed Salem Abu Adas [2019] CA 001?

The full judgment can be accessed via the DIFC Courts website at: https://www.difccourts.ae/rules-decisions/judgments-orders/court-appeal/ali-mohammed-salem-abu-adas-2-mohammed-jawdat-ayesh-mustafa-al-bargouthi-v-bankmed-sal-trading-difc-under-trade-name-bankmed-dub

Cases referred to in this judgment

Legislation referenced

• RDC Part 44.117 (Grounds for appeal)
• RDC Part 16 (Default judgment and defense timelines)
• RDC 10.2 (Service of Particulars of Claim)
• RDC 11.2 (Acknowledgment of Service)
• RDC 12.4
• RDC 9.2(2)