Why did GII Islamic REIT (CEIC) Limited seek to set aside the default judgment in CFI 025/2022 despite having admitted the claim?
The dispute originated from a 2019 Sale and Purchase Agreement (SPA) concerning the "Binghatti Horizons" property located in Silicon Oasis, Dubai. The Claimant, Dr. Othman Abdullah O Alswayeh, sought to enforce payment obligations after the Defendant, GII Islamic REIT (CEIC) Limited, failed to list on a stock exchange within the contractually mandated 18-month window. Under Clause 17.13 of the SPA, this failure triggered an obligation for GII to pay the Claimant AED 44 million in exchange for the transfer back of participating shares.
Following a failed jurisdictional challenge, the Claimant secured a default judgment on 23 September 2022. The Defendant subsequently filed an application to set aside this judgment, not by disputing the underlying debt, but by citing severe liquidity constraints. The Defendant argued that its assets were heavily mortgaged and its rental income was pledged to commercial banks, necessitating a payment plan. As noted in the court record:
Moreover, the Defendant requests a further twelve months to raise funds by way of selling certain properties to pay the remainder Judgment Amount AED 42,000,000 (forty-two million Dirhams) by 1 October 2023.
The Defendant essentially sought to convert a court judgment into a structured repayment plan, effectively asking the court to grant it time to liquidate assets to satisfy the AED 42 million balance.
Which judge presided over the application to set aside the default judgment in CFI 025/2022?
The application was heard by H.E. Justice Nassir Al Nasser in the DIFC Court of First Instance. The order, issued on 7 November 2022, followed the Defendant’s formal request filed on 11 October 2022, which sought to challenge the default judgment previously granted by the same judge on 23 September 2022.
What were the specific legal positions of Dr Othman Abdullah O Alswayeh and GII Islamic REIT regarding the enforcement of the SPA?
The Claimant maintained a strict enforcement position, relying on the Defendant’s failure to file a defense within the prescribed timeline. Having secured a default judgment, the Claimant opposed any attempt to reopen the proceedings, particularly since the Defendant had effectively admitted the claim through its subsequent filings.
Conversely, the Defendant, GII, adopted a position of "admitted liability with a request for time." While GII did not contest the validity of the SPA or the debt owed, it argued that the court should exercise its discretion to set aside the judgment to allow for a structured payment schedule. The Defendant’s counsel emphasized the company’s financial distress, noting that:
The Defendant proposes to pay the Claimant an initial payment of AED 2,000,000 (two million dirhams) within ten (10) days of the order in partial satisfaction of the Judgment Amount.
GII argued that forcing immediate payment would be counterproductive given its current cash flow limitations, proposing a twelve-month window to sell properties to satisfy the remaining AED 42 million.
What was the precise doctrinal issue H.E. Justice Nassir Al Nasser had to resolve regarding RDC Rule 14.2?
The court was tasked with determining whether the Defendant’s financial hardship and request for a payment plan met the threshold for setting aside a default judgment under the Rules of the DIFC Courts (RDC). The doctrinal issue was whether the court has the authority to vacate a validly entered default judgment—where the defendant has admitted the claim—solely because the defendant lacks the immediate liquidity to satisfy the debt. The court had to weigh the Defendant's plea for "time to pay" against the Claimant's right to enforce a judgment obtained through the proper procedural channels.
How did H.E. Justice Nassir Al Nasser apply the "real prospect of success" test to the Defendant’s application?
Justice Al Nasser applied a strict interpretation of RDC Rule 14.2, which governs the setting aside of judgments. The rule requires the applicant to demonstrate either a real prospect of successfully defending the claim or "some other good reason" for the court to intervene. Because the Defendant had filed an admission of the claim, it was impossible for them to argue they had a "real prospect of success" in defending the merits of the case.
The judge further reasoned that granting the application would be futile. Because the debt was admitted, the Claimant would be entitled to re-apply for a default judgment immediately if the current one were set aside. As the court noted:
Hence, if the Courts sets aside the Default Judgment, the Claimant has the right to re-apply for Default Judgment and it will be granted again.
Consequently, the court concluded that the Defendant’s financial situation did not constitute a "good reason" to set aside the judgment, as it did not address the legal validity of the claim itself.
Which specific RDC rules and procedural statutes were central to the court’s decision to refuse the application?
The court’s decision was anchored in the following RDC provisions:
- RDC Rule 14.2: This was the primary authority for the application. It mandates that the court may set aside or vary a judgment only if the defendant has a real prospect of successfully defending the claim or if there is another good reason.
- RDC Part 13: This section governs the entry of default judgments. The court noted that the Claimant followed the correct procedure under Part 13 when the Defendant failed to file a defense.
- RDC Part 15: This section governs the admission of claims. The court referenced this to highlight the procedural consequence of the Defendant’s own filings:
Pursuant to Part 15 of the RDC, when an admission is filed by the Defendant, the Claimant may apply for a judgment pursuant to RDC Part 13.
How did the court utilize the precedent of the jurisdictional challenge in CFI 025/2022 to frame the current order?
The court referenced the earlier procedural history of the case to establish that the DIFC Court’s authority over the dispute was already settled. Specifically, the court noted the order of Justice Lord Angus Glennie:
On 26 April 2022, the Defendant filed an Application contesting the jurisdiction of the DIFC Courts (the “Jurisdiction Application”).On 31 August 2022, Justice Lord Angus Glennie issued an order dismissing the Jurisdiction Application and decided that the DIFC Courts has the Jurisdiction to hear and determine the claim.
By citing this, Justice Al Nasser reinforced that the Defendant had already exhausted its opportunities to challenge the court's involvement in the matter, thereby narrowing the scope of the current application strictly to the merits of the default judgment itself.
What was the final disposition of the application and the specific orders made regarding costs?
H.E. Justice Nassir Al Nasser refused the Defendant’s application in its entirety. The court found that the Defendant had no real prospect of success in defending the claim and that no "good reason" existed to justify setting aside the judgment. The order explicitly stated:
I find that the defendant has no real prospect of success for the courts to set aside the Default Judgment nor does it appear to the Court that there is some other good reason.
The court ordered the Defendant to pay the costs of the application, effectively penalizing the Defendant for bringing an application that lacked a substantive legal basis.
How does this ruling influence the strategy for defendants seeking to delay enforcement in the DIFC?
This case serves as a stern warning to litigants that the DIFC Courts will not permit the use of "set aside" applications as a mechanism to secure payment extensions. Practitioners must recognize that once a claim is admitted, the court will not entertain procedural delays based on the defendant's inability to pay. Litigants seeking time to pay must negotiate directly with the claimant or seek a stay of execution rather than attempting to vacate a valid judgment. The ruling reinforces the principle that the DIFC Court is a forum for the resolution of legal disputes, not a debt-restructuring venue for parties who have already conceded their liability.
Where can I read the full judgment in Dr Othman Abdullah O Alswayeh v GII Islamic REIT (CEIC) Limited [2022] DIFC CFI 025?
The full judgment can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0252022-dr-othman-abdullah-o-alswayeh-v-gii-islamic-reit-ceic-limited-2
CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-025-2022_20221107.txt
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| Dr Othman Abdullah O Alswayeh v GII Islamic REIT (CEIC) Limited | CFI 025/2022 | Primary case subject |
Legislation referenced:
- Rules of the DIFC Courts (RDC): Rule 14.2
- Rules of the DIFC Courts (RDC): Part 13
- Rules of the DIFC Courts (RDC): Part 15