BROOKFIELD MULTIPLEX CONSTRUCTIONS v DIFC INVESTMENTS [2016] DIFC CFI 020 — Anti-suit injunctions and the preservation of evidence (28 July 2016)

The DIFC Court of First Instance clarified the boundaries of anti-suit injunctions in the context of arbitration, ruling that seeking court-ordered expert evidence preservation in non-DIFC Dubai courts does not constitute a breach of an arbitration agreement.

Did the DIFC Court have jurisdiction to hear Brookfield Multiplex Constructions' application for an anti-suit injunction against DIFC Investments and DIFC Authority?

The dispute arose from a construction contract for "The Gate" building, which contained an arbitration clause requiring disputes to be submitted to arbitration in the Emirate of Dubai. Brookfield sought an anti-suit injunction to restrain the respondents from pursuing Lawsuit No. 9/2016/65 in the non-DIFC Dubai Courts, where the respondents had obtained an order for an expert to inspect the building. Brookfield argued this action breached their arbitration agreement. The respondents contested the DIFC Court's jurisdiction to interfere with the proceedings of the non-DIFC Dubai Courts. Justice Sir Jeremy Cooke addressed the jurisdictional threshold, noting:

In consequence, there can be no doubt that this Court has jurisdiction in respect of the parties and the subject matter of their dispute, subject to the arbitration agreement contained in the construction contract.

The court affirmed its authority to hear the matter, as the dispute involved entities within the DIFC and touched upon the interpretation of an arbitration agreement, even where the seat of that arbitration was potentially outside the DIFC. Source: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/brookfield-multiplex-constructions-llc-v-1-difc-investments-llc-2-dubai-international-financial-centre-authority-2016-difc-cfi-0

Which judge presided over the Brookfield Multiplex Constructions v DIFC Investments hearing in the Court of First Instance?

The matter was heard by Justice Sir Jeremy Cooke in the DIFC Court of First Instance. The hearing took place on 22 June 2016, with the final judgment delivered on 28 July 2016.

What were the specific legal arguments advanced by Brookfield Multiplex Constructions and the respondents regarding the breach of the arbitration agreement?

Steven Thompson QC, representing Brookfield, argued that the respondents’ initiation of Lawsuit No. 9/2016/65 in the non-DIFC Dubai Courts was a direct violation of the arbitration agreement. Brookfield contended that the scope of the expert report sought by the respondents went beyond mere evidence preservation and encroached upon the substantive merits of the construction dispute, which were reserved for the arbitral tribunal.

Conversely, Tom Montagu-Smith, for the respondents, argued that the application to the non-DIFC Dubai Courts was a purely procedural, precautionary measure. He asserted that seeking an expert report to document the condition of "The Gate" did not constitute a breach of the arbitration agreement, as it did not seek a final determination on liability or damages. The respondents offered undertakings to refrain from pursuing substantive claims in the non-DIFC courts, effectively narrowing the dispute to the legitimacy of the evidence-gathering process.

Did the seeking of a court-appointed expert in the non-DIFC Dubai Courts constitute a breach of the arbitration agreement sufficient to warrant an anti-suit injunction?

The court had to determine whether the act of petitioning a non-DIFC court for the appointment of an expert to preserve evidence is inherently inconsistent with an agreement to arbitrate. The doctrinal issue centered on whether such procedural steps are "substantive" in nature—thereby triggering a breach—or whether they are merely "precautionary" measures that fall outside the scope of the arbitration agreement's exclusivity. The court also had to balance the principle of party autonomy in arbitration against the principle of judicial comity between the DIFC Courts and the non-DIFC Dubai Courts.

How did Justice Sir Jeremy Cooke apply the doctrine of judicial comity and the test for anti-suit injunctions in the context of parallel proceedings?

Justice Sir Jeremy Cooke emphasized that the DIFC Court must exercise restraint when dealing with the processes of other competent courts. He reasoned that an anti-suit injunction is an exceptional remedy, particularly when the foreign court is within the same Emirate. He noted:

I do not therefore accept that, even if the seat of the arbitration is non-DIFC Dubai, the Court has no jurisdiction to grant an anti-suit injunction but it would be an unusual and exceptional case where the Court did so, particularly bearing in mind the appropriate respect that the courts of the two different systems in the Emirate of Dubai must have for each other.

The judge concluded that the appointment of an expert for evidence preservation was a procedural necessity rather than a substantive breach. He further observed:

It is clear that these Articles provide for a procedural remedy in order to avoid the loss of relevant evidence.

By distinguishing between substantive litigation and procedural evidence preservation, the court found no basis to grant the injunction, as the respondents' actions did not undermine the arbitral process.

Which specific DIFC and English authorities were applied to determine the court's power to grant an anti-suit injunction?

The court relied on several key authorities to frame its jurisdictional analysis. Regarding the court's power to grant an anti-suit injunction, the court cited:

This Court does have jurisdiction to grant an anti-suit injunction, even if the seat of the arbitration is not in the DIFC.

The court referenced Article 5(A)(1) and Article 36 of the DIFC Courts Law No. 10 of 2004 as the statutory basis for its jurisdiction. Furthermore, the court looked to English jurisprudence, specifically AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC [2013] 1 WLR 1889, to discuss the principles governing anti-suit injunctions in support of arbitration.

How did the court utilize the cited precedents to distinguish between substantive and procedural interference?

The court utilized Angelic Grace [1995] 1 Lloyds Rep 87 and Nomihold Securities Inc v Mobile Telesystems Finance SA [2012] 1 Lloyd’s Rep 442 to establish the standard for when an anti-suit injunction is appropriate—namely, when the foreign proceedings are vexatious or oppressive. By citing U&M Mining Zambia Ltd v Konkola Copper Mines PLC [2013] 2 Lloyds Rep 218, the court reinforced the idea that the DIFC Court should not interfere with the procedural orders of other courts unless there is a clear breach of the arbitration agreement. The court also drew upon DIFC precedents like Dhir v Waterfront Property Investment Ltd [CFI 011/2009] and Corinth Pipeworks v Barclays Bank [CA 002/2011] to confirm its jurisdiction over the parties, while using Taaleem v National Bonds Corporation [CFI-014-2010] to emphasize the necessity of judicial respect between the DIFC and non-DIFC court systems.

What was the final disposition of the application for an anti-suit injunction?

The court dismissed Brookfield’s application for an interim anti-suit injunction. Justice Sir Jeremy Cooke held that the respondents' actions in the non-DIFC Dubai Courts were limited to the preservation of evidence and did not constitute a breach of the arbitration agreement. The court stated:

I refuse the interim anti-suit injunction sought by Brookfield for the reasons which I have given.

Regarding costs, the court indicated that the claimant, Brookfield, would generally be responsible for the costs of the application, noting:

The lion’s share of costs should, in my judgment, subject to any peculiarities of which I am not aware, fall to be paid by Brookfield.

What are the wider implications of this judgment for practitioners dealing with arbitration and evidence preservation in the DIFC?

This judgment provides critical guidance for practitioners regarding the limits of anti-suit injunctions. It establishes that the DIFC Court will not view the appointment of a court-ordered expert for evidence preservation in non-DIFC courts as a breach of an arbitration agreement, provided the scope of that appointment is limited to procedural matters. Practitioners must anticipate that the DIFC Court will prioritize judicial comity and will be reluctant to interfere with the procedural orders of the non-DIFC Dubai Courts unless there is clear evidence of an attempt to bypass the arbitration agreement on the merits of the dispute.

Where can I read the full judgment in Brookfield Multiplex Constructions v DIFC Investments [2016] DIFC CFI 020?

Full Judgment (DIFC Courts)
CDN Mirror

Cases referred to in this judgment:

Legislation referenced:

• DIFC Courts Law No. 10 of 2004: Article 5(A)(1), Article 36