This order addresses the procedural friction between DIFC Court proceedings and concurrent on-shore Dubai litigation, specifically regarding the threshold for granting a stay pending a decision by the Joint Judicial Committee (JJC).
How did the Registrar’s decision in CFI 041/2021 trigger a de novo review application by KPMG Lower Gulf and KPMG LLP?
The underlying dispute involves liquidators of Abraaj Investment Management Limited and Abraaj Capital Limited pursuing claims against KPMG Lower Gulf, an individual named Liund, and KPMG LLP. As the litigation progressed, the First and Third Defendants sought to halt the DIFC proceedings by invoking the jurisdiction of the Joint Judicial Committee (JJC), established under Dubai Decree 19 of 2016 to resolve jurisdictional conflicts between the DIFC Courts and on-shore Dubai courts. When the Registrar initially refused to grant a stay of proceedings on 5 May 2021, the Defendants challenged that refusal.
The procedural escalation was formalized shortly thereafter. As noted in the court records:
An application was made by the First and Third Defendants on 10 May 2021 for a de novo review of her decision under paragraph 2 of PD No. 3 of 2015.
This application sought to bypass the Registrar’s initial refusal, effectively asking the Court of First Instance to reconsider the necessity of a stay while the JJC deliberated on the competing jurisdictional claims. The claimants, represented by their liquidators, resisted this, arguing that the DIFC Court was bound by recent appellate authority regarding the interpretation of the Decree.
Which judge presided over the de novo review of the Registrar’s decision in the Court of First Instance?
Justice Sir Jeremy Cooke presided over the Court of First Instance in this matter. The hearing, which culminated in the order issued on 19 June 2021, focused on the Defendants' attempt to secure a case management stay. Justice Cooke’s role was to determine whether the Registrar’s initial refusal to stay the proceedings was legally sound in light of the binding precedent set by the Court of Appeal earlier that year.
What arguments did KPMG Lower Gulf and KPMG LLP advance to justify a stay of the DIFC proceedings?
The First and Third Defendants argued that the existence of parallel proceedings in the on-shore Dubai courts necessitated a stay of the DIFC action to prevent the risk of conflicting judgments. They sought to introduce expert evidence regarding the translation and interpretation of Dubai Decree 19 of 2016, contending that the Registrar’s reliance on previous case law was misplaced. Specifically, they argued that the nuances of the Arabic text of Article 4 of the Decree required a different approach to "waiving" jurisdiction than that adopted by the Court of Appeal.
Conversely, the Claimants argued that the Defendants' position was legally untenable under the doctrine of precedent. They maintained that the Court of Appeal’s ruling in Lakhan v Lamia was dispositive of the matter. The Claimants asserted that the Defendants were attempting to re-litigate a settled point of law regarding the mandatory nature of the JJC stay, and that the DIFC Court was obligated to continue its proceedings unless and until a positive decision to waive jurisdiction was made, which had not occurred.
What was the precise legal question regarding the interpretation of Article 4 of Dubai Decree 19 of 2016 that the Court had to resolve?
The core legal question was whether the DIFC Court is required to stay proceedings automatically upon the mere filing of an application to the Joint Judicial Committee, or whether the Court must first make a positive determination regarding its own jurisdiction. The court had to interpret whether Article 4 of Dubai Decree 19 of 2016, which governs the "waiver" of jurisdiction, mandates a stay when there is a risk of contradictory judgments between the DIFC and on-shore courts. The court specifically examined whether the term "thereon" in the Decree refers to inconsistent judgments on the merits of the action or merely inconsistent judgments on the threshold issue of jurisdiction.
How did Justice Sir Jeremy Cooke apply the ratio of Lakhan v Lamia to the Defendants' application?
Justice Cooke adopted a strict adherence to the Court of Appeal’s recent guidance, finding that the present case was indistinguishable from Lakhan v Lamia. He emphasized that the appellate court had already performed an exhaustive analysis of the Arabic text of the Decree, rendering the Defendants' new expert evidence on translation redundant.
The reasoning process was clear: the court must continue to hear a case unless it makes a positive decision to waive jurisdiction. Justice Cooke noted:
The ratio of that decision, as set out in paragraphs 29-37 directly applies to this case, even though in the case under consideration in the Court of Appeal, no acknowledgement of service had been filed by the defendant.
Furthermore, the judge clarified the interpretation of the Decree’s final clauses:
If the last phrase in the Article refers to a decision on the merits of the action, as I consider it does in the light of the distinction drawn in Article 1.1 and 1.2 and in Article 5.1 and 5.2, then the point made at the end of paragraph 33 of the Court of Appeal judgment is emphasised.
By aligning with the appellate court's view, Justice Cooke concluded that the Defendants' interpretation of the waiver requirement failed to advance their position, regardless of whether the "merits" or "jurisdiction" interpretation was applied.
Which specific statutes and rules were applied to determine the jurisdictional stay?
The court primarily applied Article 4 and Article 5 of Dubai Decree 19 of 2016. Article 4 serves as the primary mechanism for the JJC to resolve conflicts of jurisdiction, while Article 5 outlines the procedural obligations of the courts involved. Additionally, the court relied on Practice Direction No. 3 of 2015, which governs the procedure for reviews of decisions made by the Registrar. The court also cited Lakhan v Lamia [2021] DIFC CA 001 as the binding authority for the interpretation of these provisions.
How did the Court of Appeal’s decision in Lakhan v Lamia influence the interpretation of the Arabic text of the Decree?
The court utilized Lakhan v Lamia as the definitive guide to the linguistic and legal requirements of the Decree. The Court of Appeal had previously analyzed three different English translations of the Arabic text of Article 4 to ensure that the jurisdictional test was applied consistently. Justice Cooke noted that the Defendants' attempt to introduce a new translation was insufficient to displace the established ratio.
As the court observed:
The ratio turns on the wording of Article 4 in the Arabic, where the Court of Appeal considered three different English translations but concluded that the effect was the same on the point at issue - see paragraphs 30-37.
This reliance ensured that the DIFC Court maintained a consistent approach to jurisdictional challenges, preventing parties from using the JJC application process as a tactical tool to delay proceedings indefinitely.
What was the final disposition of the application and the order regarding costs?
Justice Cooke refused the application for a de novo review, upheld the Registrar’s decision, and denied the Defendants' request for a case management stay. The court also refused permission to appeal the decision to the Court of Appeal. Regarding the costs of the application, the court held the First and Third Defendants liable.
The order regarding costs was specific:
Unless the Defendants seek, in reasoned written submissions to the Court, to contest the sum claimed for such costs within 7 days hereof, the Claimants costs are assessed in the sum of US$18,918.00.
The court ultimately issued a firm refusal of the stay, stating:
The Defendant’s Application for a case management stay of their challenge to the jurisdiction of the DIFC Courts is refused.
What are the wider implications of this ruling for practitioners dealing with concurrent Dubai court proceedings?
This ruling reinforces the principle that the DIFC Court will not automatically stay proceedings simply because a party has initiated an application before the Joint Judicial Committee. Practitioners must anticipate that the DIFC Court will follow the Lakhan v Lamia precedent, which requires a positive determination of jurisdiction rather than a passive stay. This limits the tactical utility of filing JJC applications solely to delay DIFC litigation. Litigants must now be prepared to argue the merits of jurisdiction in the DIFC Court immediately, rather than relying on the existence of parallel on-shore proceedings to trigger an automatic stay.
Where can I read the full judgment in Abraaj Investment Management Limited v KPMG Lower Gulf [2021] DIFC CFI 041?
The full text of the order can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-041-2021-1-abraaj-investment-management-limited-official-liquidation-2-abraaj-capital-limited-official-liquidation-v-1-kpmg-1 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-041-2021_20210619.txt.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| Lakhan v Lamia | [2021] DIFC CA 001 | Binding authority on the interpretation of Article 4 of Dubai Decree 19 of 2016. |
Legislation referenced:
- Dubai Decree 19 of 2016, Article 4
- Dubai Decree 19 of 2016, Article 5
- RDC PD No. 3 of 2015