The DIFC Court of Appeal clarified the interplay between exclusive jurisdiction clauses and the jurisdictional bar imposed by Article 5(A)(4) of the Judicial Authority Law (JAL), ruling that a judgment obtained in breach of a DIFC-exclusive jurisdiction agreement does not constitute a "final judgment" capable of ousting the DIFC Court’s authority.
What was the nature of the dispute between Barclays Bank and His Excellency Hamad Suhail O. Al Khaili regarding the breach of the exclusive jurisdiction clause?
The dispute arose from an investment agreement between Barclays Bank PLC and the Respondents, His Excellency Hamad Suhail O. Al Khaili and Mr. Ibrahim Daoud Jaffal, which resulted in significant financial losses for the First Respondent. The Respondents initiated proceedings in the Abu Dhabi Courts, despite the existence of a clear contractual provision mandating that any disputes arising from the agreement be resolved exclusively within the DIFC Courts. Barclays sought declarations from the DIFC Court confirming its exclusive jurisdiction and asserting that the Abu Dhabi proceedings were brought in breach of the contract.
The core of the conflict centered on whether the Abu Dhabi Court’s judgment, which had already addressed the substantive investment dispute, effectively barred the DIFC Court from hearing the matter under the JAL. The Respondents argued that the Abu Dhabi judgment was a "final judgment" that triggered the jurisdictional prohibition under Article 5(A)(4). Barclays contended that because the Abu Dhabi proceedings were initiated in direct violation of an exclusive jurisdiction clause, the resulting judgment could not be recognized or enforced within the DIFC, and therefore, it could not serve as a bar to the DIFC Court’s exercise of its own jurisdiction.
In such circumstances, Article 5 (A)(4) of the JAL does not operate to bar the DIFC Courts from exercising their undoubted jurisdiction under Article 5 (A) (1) and (2) of the JAL in respect of the claims for breach of the jurisdiction clause and for declarations that these Courts have exclusive jurisdiction over the substantive dispute which has been determined by the Abu Dhabi Court of Appeal.
Which judges presided over the Barclays Bank v Hamad Suhail O. Al Khaili appeal in the DIFC Court of Appeal?
The appeal was heard by a panel of the DIFC Court of Appeal consisting of Chief Justice Zaki Azmi, Justice Sir Jeremy Cooke, and Justice Wayne Martin. The judgment was issued on 10 February 2021, following a hearing held on 1 February 2021.
What arguments did Barclays Bank and the Respondents advance regarding the interpretation of Article 5(A)(4) of the JAL?
Barclays Bank argued that the DIFC Court’s jurisdiction is established by the "gateways" in Article 5(A)(1) and (2) of the JAL and that the jurisdictional bar in Article 5(A)(4) must be interpreted in light of private international law principles. Barclays maintained that a judgment obtained in breach of an exclusive jurisdiction clause is not a "final judgment" that the DIFC Court is required to recognize, and thus, it cannot be used to oust the DIFC Court's authority.
Conversely, the Respondents argued that Article 5(A)(4) is a categorical and unqualified provision that does not require "recognition" under common law principles. They asserted that a "court" is a "court" regardless of location, and the existence of a final judgment from the Abu Dhabi Court of Appeal was sufficient to trigger the bar, regardless of any underlying breach of contract or jurisdiction clause. They contended that the DIFC Court should not "read down" the statute by importing external common law concepts of private international law.
What was the precise legal question the Court of Appeal had to answer regarding the definition of a "final judgment" under Article 5(A)(4) of the JAL?
The Court was tasked with determining whether the term "final judgment" in Article 5(A)(4) of the JAL—which prohibits the DIFC Court from adjudicating claims already decided by another court—encompasses any judgment rendered by any court, or whether it is limited to judgments that the DIFC Court would recognize under its own conflict of law principles. Specifically, the Court had to decide if a judgment obtained in breach of an exclusive jurisdiction clause in favor of the DIFC could be used as a shield to prevent the DIFC Court from exercising its own jurisdiction.
How did the Court of Appeal apply the doctrine of recognition to determine the scope of the jurisdictional bar?
The Court reasoned that "recognition" is a broad concept that extends beyond mere enforcement against assets. It held that for a judgment to trigger the bar in Article 5(A)(4), it must be a judgment that the DIFC Court would recognize as a matter of law. Because the Abu Dhabi judgment was obtained in violation of an exclusive jurisdiction agreement, it failed the test of recognition.
The questions which remain are whether a judgment obtained in breach of an exclusive jurisdiction clause does fall to be recognised in the DIFC and whether Article 5(A)(4) applies to a judgment which is not so recognised.
The Court concluded that the jurisdictional bar is not an absolute, mechanical rule that applies to any piece of paper labeled a "judgment." Instead, it is subject to the court’s inherent power to protect its own jurisdiction. By finding that the Abu Dhabi judgment was not "recognisable," the Court effectively neutralized the Respondents' attempt to use that judgment to block the DIFC proceedings.
Which specific statutes and rules did the Court of Appeal rely upon to determine the recognition of foreign and Emirati judgments?
The Court relied heavily on Article 5(A)(1), (2), and (4) of the Judicial Authority Law (JAL) (Dubai Law No. 12 of 2004, as amended). Additionally, the Court referenced Article 24 of the DIFC Courts Law and Article 7(6) of the JAL, which govern the recognition and enforcement of judgments from outside the DIFC.
It was common ground between the parties that the rules governing recognition and enforcement of judgments from outside Dubai are set out in Article 24 of the DIFC Courts Law and Article 7 (6) of the JAL.
The Court also noted that the UAE Civil Procedure Law (1992) has no application within the DIFC, reinforcing that the DIFC’s jurisdictional framework is autonomous and governed by its own legislative instruments.
How did the Court of Appeal utilize English and DIFC precedents to support its reasoning on jurisdiction and estoppel?
The Court cited several English authorities to support the principle that a claim for damages exists for the breach of an exclusive jurisdiction agreement, including Ellerman Lines v Read [1928] 2 KB 144 and OT Africa Line Ltd v Magic Sportswear Corpn [2006] 1 AER (Comm) 32. These cases were used to establish that parties cannot rely on a judgment obtained in breach of contract to create an estoppel.
Regarding DIFC precedents, the Court referenced DNB Bank ASA v Gulf Eyadah Corporation [2015] DIFC CA 007 to confirm the DIFC Court’s jurisdiction to hear claims for the recognition and enforcement of foreign judgments. Furthermore, the Court distinguished IGPL v Standard Chartered Bank [2015] DIFC CA 005, noting that while conflicting judgments may sometimes require referral to the Union Supreme Court, such a conflict only arises when there are two valid, final judgments on jurisdiction.
It is also accepted, as a matter of principle, that a claim for damages will run for the breach of an exclusive jurisdiction agreement.
What was the final outcome of the appeal and what orders were made by the Court?
The Court of Appeal allowed the appeal, declaring that the DIFC Court possesses exclusive jurisdiction over both the dispute regarding the breach of the jurisdiction clause and the underlying substantive investment dispute. The Court ordered that the Respondents pay the costs of the appeal and the costs incurred in the court below.
It follows that Barclays is entitled to the declarations sought as set out in the Order and to the costs of this appeal and the costs below.
What are the wider implications of this judgment for practitioners dealing with exclusive jurisdiction clauses in the DIFC?
This ruling provides significant clarity for practitioners, establishing that Article 5(A)(4) of the JAL is not a "get-out-of-jail-free" card for parties who breach exclusive jurisdiction agreements. It confirms that the DIFC Court will not allow a judgment obtained in bad faith—specifically in violation of a forum selection clause—to be used as a jurisdictional bar. Litigants must now anticipate that the DIFC Court will look behind the existence of a foreign judgment to determine if it is "recognisable" before applying the jurisdictional prohibition. This reinforces the sanctity of exclusive jurisdiction clauses and ensures that parties cannot circumvent their contractual obligations by racing to a different court.
Where can I read the full judgment in Barclays Bank PLC v (1) His Excellency Hamad Suhail. O. Al Khaili (2) Mr Ibrahim Daoud Jaffal [2021] DIFC CA 003?
https://www.difccourts.ae/rules-decisions/judgments-orders/court-appeal/barclays-bank-plc-v-1-his-excellency-hamad-suhail-o-al-khaili-2-mr-ibrahim-daoud-jaffal-2021-difc-ca-003-1
https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-appeal/DIFC_COA_Barclays_Bank_PLC_v_1_His_Excellency_Hamad_Suhail_O_Al_Khaili_2_Mr_Ibrahim_20210210.txt
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| Ellerman Lines v Read | [1928] 2 KB 144 | Establishing damages for breach of jurisdiction agreement |
| Akai Pty Ltd v People’s Insurance Co Ltd | [1998] 1 Lloyd’s Rep 90 | Principles of jurisdiction agreements |
| OT Africa Line Ltd v Magic Sportswear Corpn | [2006] 1 AER (Comm) 32 | Breach of exclusive jurisdiction agreement |
| National Navigation Co Ltd v Endesa Generacion, SA, The Wadi Sudr | [2009] EWCA Civ 1397 | Anti-suit injunctions and jurisdiction |
| DNB Bank ASA v Gulf Eyadah Corporation | [2015] DIFC CA 007 | Jurisdiction for recognition of judgments |
| IGPL v Standard Chartered Bank | [2015] DIFC CA 005 | Conflict of judgments and Union Supreme Court |
Legislation referenced:
- Dubai Law No. 12 of 2004 (Judicial Authority Law)
- DIFC Courts Law Article 24
- DIFC Law No. 3 of 2004 Article 8 (2) (e)
- UAE Civil Procedure Law 1992