This order addresses the threshold procedural question of whether a defendant, despite holding foreign legal qualifications, may be permitted to withdraw an Acknowledgment of Service to challenge the jurisdiction of the DIFC Courts.
What was the core dispute between Zuzana Kapova and Miloslav Makovini regarding the establishment of Pharm Trade Holding Ltd?
The litigation arises from a complex professional and personal relationship between the Claimant, Zuzana Kapova, and the First Defendant, Miloslav Makovini. The Claimant alleges that the First Defendant acted as her legal advisor in the UAE since 2018, providing professional guidance that led to the incorporation of the Second Defendant, Pharm Trade Holding Ltd, within the DIFC. The Claimant asserts that this relationship was inherently fiduciary in nature and that the First Defendant’s subsequent conduct—including the issuance of a legal notice via a UAE law firm—constitutes a breach of those duties.
The dispute is heavily colored by the Claimant’s allegations of fraud and the First Defendant’s purported role in the corporate structuring of the Second Defendant. As noted in the court's summary:
The proposed withdrawal was opposed by the Claimant for reasons including the Claimant’s position in relation to the alleged pleading of fraud, the Defendant’s fiduciary issues, and factual issues that are not material to the dispute.
The Claimant maintains that the First Defendant’s professional background, including his status as a Slovakian attorney, renders his claims of procedural ignorance regarding the DIFC common law system disingenuous.
Which judge presided over the application in Zuzana Kapova v Miloslav Makovini and in which division was the matter heard?
The application was heard by H.E. Justice Maha Al Mheiri, sitting in the Court of First Instance of the DIFC Courts. The order was issued on 10 March 2023, following the consideration of written submissions regarding the Defendants' request to withdraw their Acknowledgment of Service, which had been filed on 26 January 2023.
What were the competing arguments regarding the First Defendant’s legal expertise and his capacity to navigate DIFC Court procedures?
The First Defendant, Miloslav Makovini, argued that while he is a qualified attorney in Slovakia, he lacks experience in the DIFC’s common law system and is not a UAE-qualified lawyer. He contended that his initial Acknowledgment of Service was filed without the benefit of proper legal counsel, leading to a misunderstanding of his procedural rights. He specifically stated:
Until hiring his present counsel, he did not fully understand the common law system followed by the DIFC Courts. Furthermore, the First Defendant denies being the legal adviser to the Claimant in the UAE since December 2018.
Conversely, the Claimant argued that the First Defendant’s professional profile, including his LinkedIn representation as an "experienced Attorney-at-Law" and his role as a partner in a Slovakian law firm specializing in corporate law and tax planning, belied his claims of ignorance. The Claimant asserted that the First Defendant was fully aware of the implications of his actions, stating:
The Claimant appears to object to the Defendants’ Application arguing that the First Defendant represented himself as a lawyer and has acted as the Claimant’s legal advisor in the UAE since 2018.
What was the precise jurisdictional issue the Court had to resolve regarding the withdrawal of the Acknowledgment of Service?
The Court was tasked with determining whether to exercise its discretion under RDC 11.16 to allow the Defendants to withdraw an Acknowledgment of Service already on the record. The doctrinal issue centered on the balance between the finality of procedural steps and the Court’s "overriding objective" to ensure that parties are on an equal footing. The Court had to decide if the First Defendant’s foreign legal qualifications precluded him from being treated as a "litigant in person" who might have genuinely misunderstood the nuances of DIFC procedural rules, thereby necessitating an opportunity to challenge the Court's jurisdiction.
How did Justice Al Mheiri apply the test of the "overriding objective" to the Defendants' request?
Justice Al Mheiri focused on the necessity of procedural fairness, emphasizing that the Court’s discretion is broad when it serves the interests of justice. The judge acknowledged the tension between the Claimant’s arguments regarding the First Defendant’s professional background and the need to ensure that the Defendants were not unfairly prejudiced by an early procedural error. The Court’s reasoning prioritized the substance of the jurisdiction challenge over the technicality of the initial filing.
In exercising this discretion, the Court relied on the following principle:
In the exercise of the Court’s overriding objective, the Court has a discretion to giving the parties equal footing in pleading their Claim before the Court.
By granting the application, the Court effectively allowed the Defendants to reset their position, ensuring that the jurisdictional challenge could be heard on its merits rather than being barred by a procedural misstep made during the initial stages of the litigation.
Which specific RDC rules and statutory frameworks were invoked in this dispute?
The primary procedural rule cited was RDC 11.16, which governs the amendment or withdrawal of an Acknowledgment of Service. The Court’s authority to manage the proceedings and grant the application was rooted in the general case management powers provided under Part 23 of the Rules of the DIFC Courts. The dispute also touched upon the nature of legal services provided by the First Defendant, with the Claimant referencing the First Defendant's alleged role in the establishment of the Second Defendant within the DIFC, which is governed by the DIFC Companies Law.
How did the parties utilize the First Defendant’s professional background as a Slovakian lawyer in their arguments?
The parties used the First Defendant’s professional credentials as a double-edged sword. The Claimant highlighted the First Defendant's LinkedIn profile and his law firm’s website to demonstrate that he held himself out as an expert in international corporate law, mergers, and acquisitions. The Claimant argued:
The Claimant argues that the Second Defendant was established in the Dubai International Financial Centre (DIFC) on the basis of the advice and recommendations of the First Defendant. The assertion that the First Defendant he did not offer legal services to the Claimant in his capacity as the director of Second Defendant is untrue.
The First Defendant, however, used his status as a foreign lawyer to distinguish his expertise from the requirements of the DIFC’s common law jurisdiction. He argued that his experience in the Slovakian civil law system did not translate to an understanding of DIFC procedural requirements, specifically regarding the filing of an Acknowledgment of Service. He further maintained:
The assertion that the First Defendant he did not offer legal services to the Claimant in his capacity as the director of Second Defendant is untrue.
(Note: The First Defendant’s submission was that he did not offer legal services in the UAE, whereas the Claimant argued he did.)
What was the final disposition of the application and the specific orders regarding the jurisdiction challenge?
The Court granted the Defendants' application to withdraw the Acknowledgment of Service. The order mandated that the Defendants file a formal Jurisdiction Application by 17 March 2023, supported by evidence. The Court also set a strict timetable for the subsequent exchange of evidence:
The Claimant shall file evidence in answer by no later than 14 days after service of the Jurisdiction Application.
The Defendants shall file evidence in reply by no later than 7 days after service of the Claimant’s evidence in reply to the Jurisdiction Application.
Costs were ordered to be "costs in the case," meaning they will be determined at the conclusion of the proceedings based on the ultimate success of the parties.
What are the practical implications for practitioners regarding the withdrawal of an Acknowledgment of Service in the DIFC?
This case serves as a reminder that the DIFC Courts prioritize the "overriding objective" of fairness over strict adherence to procedural timelines, particularly when a party has acted without legal representation at the outset. Practitioners should note that even if a defendant possesses legal qualifications in another jurisdiction, the Court may still grant leniency if it is satisfied that the defendant did not fully comprehend the specific requirements of the DIFC common law system. For claimants, this means that early procedural victories—such as an Acknowledgment of Service—may be vulnerable to challenge if the defendant can demonstrate a genuine lack of understanding of the DIFC rules at the time of filing.
Where can I read the full judgment in Zuzana Kapova v Miloslav Makovini [2023] DIFC CFI 004?
The full order can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0042023-zuzana-kapova-v-1-miloslav-makovini-2-pharm-trade-holding-ltd
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No specific case law precedents were cited in the provided Order. |
Legislation referenced:
- Rules of the DIFC Courts (RDC) Rule 11.16
- Rules of the DIFC Courts (RDC) Part 23