This order marks a significant exercise of the Court’s equitable jurisdiction to preserve assets valued at over AED 659 million pending the resolution of complex commercial claims.
What is the nature of the dispute between Globe Investment Holdings and the respondents in CFI 028/2023?
The lawsuit involves a high-value commercial claim brought by Globe Investment Holdings Limited against five respondents, including the Commercial Bank of Dubai and four corporate entities: Hortin Holding Limited, Lodge Hill Limited, Westdene Investment Limited, and VS 1897 (Cayman) Limited. The core of the dispute centers on the preservation of assets to satisfy a potential judgment amounting to AED 659,256,078. The claimant sought and obtained a Worldwide Freezing Order (WFO) to prevent the dissipation of assets, specifically targeting real estate interests in London and other holdings.
The scope of the injunction is comprehensive, covering assets held both within and outside the DIFC. The court’s intervention was deemed necessary to ensure that the respondents do not diminish their financial standing while the underlying litigation proceeds. As noted in the order:
Paragraph 5 applies to all the Respondent’s assets whether or not they are in its own name and whether they are solely or jointly owned. For the purpose of this Order the Respondent’s assets include any asset which it has the power, directly or indirectly, to dispose of or deal with as if it were its own. The Respondent is to be regarded as having such power if a third party holds or controls the asset in accordance with its direct or indirect instructions.
Which judge presided over the application for the freezing order in CFI 028/2023?
The application was heard by Justice Michael Black in the DIFC Court of First Instance. The order was issued on 3 May 2023, following a hearing conducted without notice to the respondents. The court scheduled a return date for 16 May 2023 to allow the respondents an opportunity to contest the continuation of the order.
What legal arguments were advanced by Globe Investment Holdings to justify the freezing order?
Represented by Khaled Hamed, the claimant, Globe Investment Holdings, argued that the respondents’ assets were at risk of dissipation, necessitating immediate judicial intervention to protect the integrity of the potential final judgment. The claimant’s position relied on the necessity of securing the sum of AED 659,256,078, asserting that without a WFO, the respondents might move or dispose of assets—specifically the properties listed in London—thereby rendering any future court award unenforceable.
The respondents, having not been present at the initial without-notice hearing, were granted the procedural right to apply for a variation or discharge of the order at a later stage. The court’s decision to grant the order was based on the evidence presented in the affidavits, which satisfied the threshold for a freezing injunction under the DIFC Rules of Court.
What was the jurisdictional and doctrinal question the court had to resolve regarding the scope of the freezing order?
The court had to determine whether it possessed the authority to issue a worldwide injunction against the Second to Fifth Respondents that extended to assets held by third parties or held in the names of entities other than the respondents themselves. The doctrinal issue involved the "power to dispose of or deal with" assets, effectively piercing the corporate veil for the purpose of the injunction to ensure that the respondents could not hide assets behind nominee structures or indirect control.
The court also had to balance the claimant’s need for security against the respondents' right to conduct business in the ordinary course. This required defining the precise limits of the "ordinary and proper course of business" exception to ensure the injunction did not paralyze the respondents' legitimate commercial operations while still protecting the AED 659 million claim.
How did Justice Michael Black apply the test for the granting of a freezing order?
Justice Michael Black applied the standard test for a freezing injunction, which requires the applicant to demonstrate a good arguable case and a real risk of dissipation of assets. By granting the order, the court accepted that the claimant had met these criteria and that the interests of justice required the respondents to be restrained from dealing with their assets up to the specified value.
The reasoning emphasized the inclusive nature of the assets covered by the order, ensuring that the respondents could not circumvent the injunction through complex ownership structures. The order explicitly defined the scope of the respondents' assets as follows:
For the purpose of this Order the Respondent’s assets include any asset which it has the power, directly or indirectly, to dispose of or deal with as if it were its own. The Respondent is to be regarded as having such power if a third party holds or controls the asset in accordance with its direct or indirect instructions.
Which specific DIFC Rules of Court and legal principles were applied in CFI 028/2023?
The order was issued pursuant to the court’s inherent jurisdiction to grant interim relief under the Rules of the DIFC Courts (RDC). The court utilized the standard form for a Worldwide Freezing Order, incorporating specific protections for third-party banks and ensuring that the claimant provided the necessary undertakings. The order also referenced the specific valuation of the claim, AED 659,256,078, as the cap for the freezing of assets.
The court also applied the principle of "ordinary and proper course of business," which serves as a standard carve-out in freezing orders to prevent the injunction from being overly oppressive. As stipulated in the order:
Save for the assets listed at paragraph 7(1) above, this Order does not prohibit the Respondent from dealing with or disposing of any of its assets in the ordinary and proper course of business.
How did the court address the rights of third-party banks in the freezing order?
The court included specific provisions to protect banks and financial institutions from being held in contempt for processing transactions that might otherwise appear to breach the order, provided those transactions fall within the permitted exceptions. This ensures that the banking system is not disrupted by the injunction. The order provides:
This injunction does not prevent any bank from exercising any right of set off it may have in respect of any facility which it gave to the Respondent before it was notified of this Order.
Furthermore, the order clarifies that banks are not required to police the respondents' withdrawals:
No bank need enquire as to the application or proposed application of any money withdrawn by the Respondent if the withdrawal appears to be permitted by this Order.
What was the outcome of the application and the specific relief granted to Globe Investment Holdings?
The court granted the Worldwide Freezing Order against the Second to Fifth Respondents. The order prohibits the respondents from removing assets from the DIFC or disposing of assets worldwide up to the value of AED 659,256,078. The respondents were also put on notice that any breach of the order could result in contempt of court proceedings, including fines or the seizure of assets. The costs of the application were reserved for the judge hearing the matter on the return date.
What are the wider implications of this order for DIFC practitioners?
This case highlights the court’s willingness to grant robust interim relief in complex, multi-party commercial disputes. Practitioners should note the court's strict approach to asset definition, which captures assets held indirectly or through third parties. The inclusion of specific London properties in the order demonstrates the extraterritorial reach the DIFC Court is prepared to exercise when necessary to protect the claimant's position. Litigants must be prepared to provide clear evidence of the risk of dissipation and be ready to defend the scope of the assets sought to be frozen.
Where can I read the full judgment in Globe Investment Holdings v Commercial Bank of Dubai [2023] DIFC CFI 028?
The full text of the Freezing Order can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0282023-globe-investment-holdings-limited-v-1-commercial-bank-dubai-2-hortin-holding-limited-3-lodge-hill-limited-4-westdene-1
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | N/A |
Legislation referenced:
- Rules of the DIFC Courts (RDC)
- DIFC Court Law (Law No. 10 of 2004)