This order addresses the procedural threshold for challenging DIFC Court jurisdiction, specifically whether a party may amend an Acknowledgment of Service to rectify a failure to properly contest jurisdiction, despite allegations of the party’s professional legal background.
How did the dispute between Zuzana Kapova and Miloslav Makovini regarding the Second Defendant, Pharm Trade Holding, necessitate a challenge to the DIFC Court’s jurisdiction?
The litigation arises from a dispute between the Claimant, Zuzana Kapova, and the Respondents, Miloslav Makovini and Pharm Trade Holding Ltd. The core of the conflict involves allegations of breach of fiduciary duty and professional misconduct. The Claimant asserts that the First Defendant, Miloslav Makovini, acted as her legal advisor in the UAE since 2018 and was instrumental in the establishment of the Second Defendant, Pharm Trade Holding, within the DIFC. The Claimant contends that the First Defendant’s professional conduct and legal advice were central to the business relationship, which has now soured into a contentious legal battle.
The procedural friction began when the Defendants sought to withdraw their initial Acknowledgment of Service to instead challenge the jurisdiction of the DIFC Courts. The Claimant vehemently opposed this, arguing that the Defendants were attempting to circumvent established procedural rules. The Claimant’s opposition was grounded in the assertion that the First Defendant, despite his claims of ignorance regarding common law procedures, is a sophisticated actor who held himself out as a lawyer. As noted in the court records:
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 dispute is essentially a battle over whether the Defendants should be permitted to correct a procedural misstep or be held to their initial, albeit flawed, submission. The Claimant argues that the First Defendant’s professional background as a Slovakian attorney makes his claim of procedural confusion untenable, while the Defendants maintain that their lack of familiarity with the DIFC’s common law system justifies the court's intervention to allow an amendment.
Which judge presided over the application in the Court of First Instance in CFI 004/2023?
The application was heard by H.E. Justice Nassir Al Nasser in the DIFC Court of First Instance. The order, which provided the reasons for granting the Defendants permission to amend their Acknowledgment of Service, was issued on 30 March 2023.
How did the Claimant and the First Defendant, Miloslav Makovini, differ in their arguments regarding the First Defendant’s professional legal capacity?
The parties presented starkly different characterizations of the First Defendant’s professional standing. The Claimant argued that Miloslav Makovini was not merely a business consultant but a practicing attorney who had actively provided legal advice in the UAE. The Claimant pointed to the First Defendant’s LinkedIn profile, which described him as an "experienced Attorney-at-Law," and the website of his Slovakian law firm, which listed him as a partner specializing in corporate law, tax planning, and mergers and acquisitions. The Claimant asserted that the First Defendant’s expertise was the very basis upon which the Second Defendant was established in the DIFC.
Conversely, the First Defendant argued that he was not a UAE-qualified or DIFC-registered lawyer and had never provided legal services in his individual capacity outside of Slovakia. He maintained that his role in the UAE was limited to his position as a director of a consultancy firm. He argued that his initial failure to properly challenge the DIFC Court’s jurisdiction was a result of his lack of familiarity with the common law system. As recorded in the judgment:
The Claimant appears to object to the Defendants’ Application by submitting that the First Defendant represented himself as a lawyer and has acted as the Claimant’s legal advisor in the UAE since 2018.
The First Defendant further contended that he was not a dispute resolution lawyer and had never been involved in contentious matters within the DIFC prior to this case, which contributed to his procedural errors.
What was the precise legal question H.E. Justice Nassir Al Nasser had to answer regarding the Defendants’ request to withdraw or amend their Acknowledgment of Service?
The court was tasked with determining whether to grant the Defendants permission to amend their Acknowledgment of Service under RDC 11.6, rather than allowing them to withdraw it entirely. The legal issue centered on whether the court should exercise its discretion to permit a procedural correction when a party—who may or may not possess legal training—fails to follow the strict timelines and requirements for challenging jurisdiction set out in RDC 12.4. The court had to balance the Claimant’s right to procedural certainty against the overriding objective of the RDC, which emphasizes fairness and ensuring that parties are on an equal footing, regardless of their technical proficiency in common law litigation.
How did the court apply the "overriding objective" test to resolve the conflict between procedural compliance and the Defendants' request?
Justice Al Nasser focused on the court's inherent discretion to manage proceedings in a manner that ensures fairness. While the Claimant argued that the Defendants had missed their window to contest jurisdiction, the court prioritized the substance of the dispute over the technicality of the initial filing. The judge recognized that the First Defendant, despite his professional background in Slovakia, was operating as a litigant in person within the DIFC system at the time of the initial filing.
The court’s reasoning was anchored in the principle that the DIFC Courts should not permit procedural rigidity to prevent a party from raising a legitimate jurisdictional challenge. By allowing the amendment, the court ensured that the jurisdictional question could be litigated on its merits. The court’s rationale for this exercise of discretion is summarized as follows:
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.
The judge concluded that the First Defendant’s lack of experience with the DIFC’s specific common law procedures warranted a measure of leniency, allowing the Defendants to rectify their Acknowledgment of Service to properly reflect their intention to contest the court's jurisdiction.
Which specific RDC rules and statutory provisions were central to the court’s decision in Zuzana Kapova v Miloslav Makovini?
The court’s decision was primarily governed by the Rules of the DIFC Courts (RDC). Specifically, RDC 11.6 was the mechanism under which the Defendants sought permission to amend their Acknowledgment of Service. The Claimant’s opposition relied heavily on RDC 12.2 and RDC 12.4, which dictate the strict procedural requirements and timelines for challenging the jurisdiction of the DIFC Courts. The Claimant argued that these rules are mandatory and that the Defendants’ failure to adhere to them should preclude them from now challenging jurisdiction.
The Claimant’s argument regarding the procedural requirements was as follows:
The Claimant also submits that RDC 12.2 states that a Defendant who wishes to file an application to dispute the jurisdiction of the DIFC Courts must first file an Acknowledgment of Service in accordance with Part 11 of the RDC.
The Claimant further emphasized that the Defendants had failed to act within the prescribed timelines, noting:
The Claimant submits that the Defendants’ Application would become unnecessary if they had filed an application challenging the jurisdiction of the DIFC Courts in accordance with and within the timelines set out in RDC 12.4.
How did the court reconcile the timing of the Defendants’ intent to challenge jurisdiction with the requirements of the RDC?
The court noted that the Defendants’ underlying intention to contest jurisdiction had been clear from an early stage, even if the procedural vehicle for that challenge was initially defective. Justice Al Nasser observed that the Defendants had acted to clarify their position shortly after the initial Acknowledgment of Service was filed. The court cited the following to justify the procedural flexibility:
In both cases, the Defendant’s intention is to contest the jurisdiction of the DIFC Courts, which was made within 14 days from filing the first Acknowledgment of Service.
By acknowledging this timeline, the court determined that the Defendants had not acted in bad faith or with undue delay, thereby satisfying the court that an amendment—rather than a total dismissal of their jurisdictional challenge—was the appropriate remedy to maintain the overriding objective of the RDC.
What was the final disposition of the court, and what specific orders were made regarding the subsequent conduct of the case?
The Court of First Instance granted the Defendants permission to amend their Acknowledgment of Service, effectively allowing them to proceed with their jurisdictional challenge. Justice Al Nasser issued a structured timeline for the parties to exchange evidence and arguments regarding the jurisdiction application. The specific orders were:
- The Defendants were ordered to amend their Acknowledgment of Service.
- The Defendants were required to file and serve an Application Notice challenging the jurisdiction of the DIFC Courts by 4pm on 6 April 2023, along with supporting evidence.
- The Claimant was ordered to file evidence in answer within 14 days of service of the Jurisdiction Application.
- The Defendants were ordered to file evidence in reply within 7 days of the Claimant’s evidence.
- The parties were ordered to prepare an eBundle and exchange skeleton arguments at least 3 and 5 working days before the hearing, respectively.
- Costs were ordered to be "costs in the case," meaning the ultimate liability for costs would be determined at the conclusion of the proceedings.
What are the practical implications of this ruling for litigants in person and practitioners in the DIFC?
This ruling clarifies that the DIFC Court will prioritize the "overriding objective" of fairness and equal footing over strict procedural adherence when dealing with litigants in person or parties unfamiliar with the DIFC’s common law system. Practitioners should anticipate that the court will likely grant leave to amend procedural filings if the underlying intent of the party is clear and the delay is not prejudicial to the opposing party. However, this does not grant a license for procedural negligence; the court’s decision was heavily influenced by the specific context of the First Defendant’s lack of familiarity with the DIFC system. Future litigants should be aware that while the court is flexible, the burden remains on the party to demonstrate that their procedural error was a genuine mistake rather than a tactical delay.
Where can I read the full judgment in Zuzana Kapova v Miloslav Makovini [2023] DIFC CFI 004?
The full judgment is available on the official 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-1
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No external case law was cited in the Order. |
Legislation referenced:
- Rules of the DIFC Courts (RDC):
- RDC 11.6 (Amendment of Acknowledgment of Service)
- RDC 12.2 (Procedure for disputing jurisdiction)
- RDC 12.3 (Procedure for disputing jurisdiction)
- RDC 12.4 (Timelines for disputing jurisdiction)
- RDC 11.16 (General provisions)
- Part 23 (Applications)