What was the nature of the USD 70 million dispute between Horizon Energy and Al Buhaira National Insurance Company?
The dispute originated from a marine insurance claim involving the vessel "BETA," a 55,909 GT tanker insured for USD 70 million under a Hull and Machinery Policy and a Marine Hull War Policy. Following the vessel's disappearance—and its subsequent identification as a vessel in the service of the Iranian Navy—the insured, Horizon Energy, sought compensation from the insurer, Al Buhaira National Insurance Company. The insurer, however, questioned the circumstances of the loss and the adequacy of the information provided by the insured.
The litigation was triggered when the insurer sought a negative declaration in the DIFC Court of First Instance to avoid the insurance policies, alleging misrepresentation. Horizon Energy contested this, arguing that the dispute was subject to mandatory administrative procedures under the UAE Insurance Law. As the court noted regarding the initial communications:
The Respondent’s lawyers wrote to the Appellant on 21 September 2021 stating that the Respondent had not been provided with the necessary information “to confirm their coverage position”.
It reserved its right to claim under the Hull and Machinery Policy.
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The Respondent acknowledged receipt of the claim on 2 November 2021 and said it would revert in due course.
The case is accessible at the DIFC Courts Judgment Repository.
Which judges presided over the Court of Appeal hearing in Horizon Energy v Al Buhaira National Insurance Company?
The appeal was heard by a distinguished panel of the DIFC Court of Appeal, comprising H.E. Justice Shamlan Al Sawalehi, Justice Lord Angus Glennie, and Justice Robert French. The hearing took place on 30 January 2023, with the final amended judgment issued on 4 May 2023.
What were the primary legal arguments advanced by Horizon Energy and Al Buhaira National Insurance Company regarding the jurisdiction of the DIFC Courts?
Horizon Energy, represented by Ms. Zoe O’Sullivan KC and Mr. Gregor Hogan, argued that the DIFC Courts lacked jurisdiction because Article 110 of the UAE Insurance Law (Federal Law No. 6 of 2007) mandated an administrative dispute resolution process. They contended that this process was a prerequisite to any judicial action and that the "competent court" for such matters was the onshore Sharjah court, not the DIFC.
Conversely, Al Buhaira National Insurance Company, represented by Mr. Nicolas Craig KC, maintained that the jurisdiction clause in the insurance policies, which specified the "courts of the United Arab Emirates," naturally encompassed the DIFC Courts. They argued that the DIFC Courts are a legitimate part of the UAE judicial system and that Article 110 did not create an exclusive administrative forum that would strip the DIFC Courts of their inherent jurisdiction to hear insurance-related claims, particularly those seeking a negative declaration.
Did Article 110 of the UAE Insurance Law preclude the DIFC Courts from hearing an insurer's claim for a negative declaration?
The court had to determine whether the administrative dispute resolution mechanism established by Article 110 of the Insurance Law—which allows insured parties to file complaints with an administrative committee—acts as an ouster of the DIFC Courts' jurisdiction. The central doctrinal issue was whether an insurer, as opposed to an insured party, is bound by this administrative path, and whether the existence of such a mechanism renders the DIFC Courts an "incompetent" forum for insurance disputes involving policies governed by UAE law.
How did the Court of Appeal apply the doctrine of "ordinary meaning" to the jurisdiction clause in the insurance policies?
The Court of Appeal rejected the Appellant's narrow interpretation of the jurisdiction clause. The judges reasoned that because the DIFC Courts are established under the UAE constitution and federal law, they are, by definition, courts of the UAE. Therefore, a clause selecting "the courts of the United Arab Emirates" is broad enough to include the DIFC. The court emphasized that the administrative process in Article 110 is not an absolute bar to judicial intervention. As the court held:
this Court does not accept that the asymmetric dispute resolution mechanism provided by Article 110 operates to deprive the DIFC Courts of jurisdiction to entertain claims by an insurer against the insured, including a negative declaration to the effect that the relevant policy has been avoided.
The court further clarified that even if the administrative process were mandatory for the insured, it would not prevent an insurer from seeking relief in the DIFC.
Which specific statutes and rules were central to the Court of Appeal’s analysis of DIFC jurisdiction?
The court relied heavily on the Judicial Authority Law (Federal Law No. 12 of 2002), specifically Article 5(A)(2), which defines the jurisdiction of the DIFC Courts. Additionally, the court examined the interaction between the DIFC's jurisdictional framework and the federal Insurance Law. The court also addressed procedural challenges under the Rules of the DIFC Courts (RDC), specifically citing:
The Respondent then pointed to Rule 44.94(1) which empowers an appeal court to strike out the whole or part of an appeal notice subject to the requirement in RDC 44.95 that the court will only exercise its powers under Rule 44.94 “where there is a compelling reason to do so”.
How did the Court of Appeal distinguish or apply previous DIFC precedents regarding jurisdiction?
The court relied on established jurisprudence, including [2021] DIFC CA 002, which affirmed that references to "the Courts of Dubai" include the DIFC Courts. By extending this logic to "the courts of the United Arab Emirates," the court reinforced the principle that jurisdictional clauses should be interpreted according to their ordinary commercial meaning. The court also referenced [2015] DIFC CA 004 to emphasize that the DIFC Courts will not lightly decline jurisdiction when parties have agreed to a forum that is legally competent within the UAE framework.
What was the final disposition of the appeal and the orders made regarding costs?
The Court of Appeal dismissed the appeal in its entirety, affirming the decision of the Court of First Instance. The court ruled that the DIFC Courts possess the necessary jurisdiction to entertain the insurer's claim for a negative declaration. The Appellant was ordered to pay the Respondent's costs, to be assessed by the Registrar if the parties could not reach an agreement.
What are the wider implications of this judgment for insurance litigation in the DIFC?
This judgment provides significant clarity for insurers operating in the UAE. It confirms that federal administrative procedures, such as those under Article 110 of the Insurance Law, do not create an exclusive jurisdiction that overrides the DIFC Courts. Practitioners should note that the DIFC Courts will continue to assert jurisdiction where the parties have selected the "courts of the UAE" or similar broad language, provided there is a nexus to the DIFC. This prevents parties from using administrative hurdles as a tactical device to delay or avoid litigation in the DIFC.
Where can I read the full judgment in Horizon Energy v Al Buhaira National Insurance Company [2022] DIFC CA 015?
The full judgment can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-appeal/horizon-energy-llc-v-al-buhaira-national-insurance-company-2022-difc-ca-015-1
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| Construction of 'the Courts of Dubai' | [2021] DIFC CA 002 | Applied to interpret UAE court references |
| Sufficiency of jurisdictional provisions | [2021] DIFC CA 008 | Applied to confirm CFI jurisdiction |
| Ordinary meaning of agreements | [2015] DIFC CA 004 | Applied to interpret jurisdiction clauses |
Legislation referenced:
- Federal Law No 12 of 2002 (Judicial Authority Law) Article 5(A)(2)
- Federal Law No 6 of 2007 (Insurance Law) Article 110
- RDC 44.94(1)
- RDC 44.95