This consent order marks a critical procedural pause in the high-stakes litigation involving the liquidators of the Abraaj Group and the global KPMG network, formalizing a stay of proceedings while the Joint Judicial Committee (JJC) determines the appropriate forum for the dispute.
Why did the DIFC Court of First Instance stay the claims in CFI 041/2021 against KPMG Lower Gulf and KPMG LLP?
The lawsuit involves the liquidators of Abraaj Investment Management Limited and Abraaj Capital Limited seeking damages against various KPMG entities, alleging professional negligence and other breaches in relation to the audit and advisory services provided to the collapsed Abraaj Group. The dispute centers on the accountability of the auditors for the financial irregularities that preceded the group's liquidation. Given the complexity of the cross-border corporate structure and the involvement of multiple KPMG entities, the jurisdictional boundaries between the DIFC Courts and the onshore Dubai Courts became a central point of contention.
The stay was necessitated by the First Defendant’s active challenge to the DIFC Court’s jurisdiction, which had been previously addressed in the "Jurisdiction Judgment" issued by Justice Wayne Martin on 3 November 2021. To resolve the conflict of jurisdiction, the First Defendant initiated proceedings before the Joint Judicial Committee (JJC), the specialized body tasked with resolving jurisdictional conflicts between the DIFC Courts and the onshore Dubai Courts. As noted in the court's order:
Until a final determination of the First Defendant’s application to the Joint Judicial Committee, Cassation No. 8 of 2021, the First Claimant’s claim against the First Defendant (including the First Defendant’s appeal of the Jurisdiction Judgment) is stayed.
This stay ensures that the litigation does not proceed in a piecemeal fashion while the fundamental question of whether the DIFC Court is the proper venue remains sub judice before the JJC.
How did Registrar Nour Hineidi exercise the authority of the Court of First Instance in the 19 January 2022 order?
Registrar Nour Hineidi, acting for the Court of First Instance, issued this consent order on 19 January 2022. The order was a procedural mechanism to formalize the agreement between the parties to pause the litigation. By issuing this as a consent order, the Registrar facilitated the parties' desire to avoid further contested hearings regarding the progression of the case while the JJC deliberates on the jurisdictional challenge filed under Cassation No. 8 of 2021.
What arguments did the parties advance regarding the stay of proceedings in CFI 041/2021?
While the order itself is a consent order, the underlying positions of the parties were defined by the First Defendant’s pursuit of an appeal against the Jurisdiction Judgment and the concurrent application to the JJC. The Claimants, represented by their liquidators, sought to advance their claims for damages, while the KPMG Defendants—specifically KPMG Lower Gulf—challenged the court's authority to hear the matter. The First Defendant’s application for permission to appeal the Jurisdiction Judgment, filed on 24 November 2021, signaled a firm stance that the DIFC Court lacked the requisite jurisdiction to adjudicate the claims. By consenting to the stay, the parties effectively agreed to suspend the litigation cycle, including the appeal process, to await the final word from the JJC.
What is the precise jurisdictional issue currently before the Joint Judicial Committee in Cassation No. 8 of 2021?
The doctrinal issue before the JJC is the determination of the appropriate forum for the adjudication of the claims brought by the Abraaj liquidators. Specifically, the JJC must decide whether the dispute falls within the exclusive jurisdiction of the DIFC Courts or whether it should be heard by the onshore Dubai Courts. This involves interpreting the scope of the DIFC’s jurisdiction under the Judicial Authority Law and determining if the nexus between the defendants and the DIFC is sufficient to override potential onshore claims. The JJC’s decision will establish whether the DIFC Court’s previous assertion of jurisdiction, as articulated by Justice Wayne Martin, will be upheld or if the proceedings must be transferred to the onshore courts.
How does the court’s reasoning in the consent order address the interplay between the stay and the pending appeal?
The court’s reasoning is rooted in the principle of judicial economy and the necessity of avoiding conflicting judgments. By staying the proceedings, the court prevents the parties from incurring further costs in a forum whose jurisdiction is currently being challenged at the highest level. The order explicitly links the stay of the First Claimant’s claim against the First Defendant to the outcome of the JJC application. Furthermore, the court extended this logic to the Second Claimant’s claim against the Third Defendant to ensure consistency across the litigation. As stated in the order:
The Second Claimant’s claim against the Third Defendant is stayed until the stay under paragraph 1 hereof is lifted.
This approach ensures that the entire litigation remains in a state of suspension, preventing any procedural steps—such as the filing of further submissions—from occurring until the jurisdictional cloud is cleared.
Which specific RDC rules and legislative authorities govern the procedural timeline following the stay?
The order specifically references RDC 44.14, which governs the submission of documents and procedural responses. The court used this rule to establish a clear timeline for the resumption of the case once the JJC renders its decision. The order mandates:
The First Claimant shall have 21 days from the stay under paragraph 1 hereof being lifted to submit Respondent’s Submissions pursuant to RDC 44.14.
This provides the parties with a clear, predictable framework for restarting the litigation, ensuring that once the jurisdictional hurdle is cleared, the case can proceed without further procedural disputes regarding deadlines.
How did the court utilize the precedent of Cassation No. 8 of 2021 in this order?
The court utilized Cassation No. 8 of 2021 not as a source of substantive law, but as the procedural anchor for the stay. By referencing this specific JJC application, the court effectively "paused" the DIFC litigation clock. The court recognized that any further action taken in the DIFC Court while the JJC is considering the jurisdictional conflict would be premature and potentially futile. The reference to the Jurisdiction Judgment of 3 November 2021 serves to define the scope of what is being stayed, specifically including the First Defendant’s appeal of that judgment, thereby freezing all active litigation threads.
What is the final disposition of the CFI 041/2021 consent order regarding the stay of proceedings?
The court ordered a stay of the First Claimant’s claim against the First Defendant and the Second Claimant’s claim against the Third Defendant. The stay is indefinite in duration, contingent entirely upon the final determination of the JJC in Cassation No. 8 of 2021. Additionally, the court granted the parties "liberty to apply," meaning that if circumstances change or if the JJC process is delayed, the parties can return to the DIFC Court to request further directions or modifications to the stay. No monetary relief or costs were awarded at this stage, as the order was purely procedural and by consent.
What are the practical implications for practitioners dealing with jurisdictional challenges in the DIFC?
This case highlights the reality that even after a favorable jurisdictional ruling from a DIFC judge, practitioners must be prepared for the possibility of a JJC intervention. The use of a consent order to stay proceedings is a prudent strategy for practitioners, as it avoids the costs of contested stay applications and provides a clear, court-sanctioned roadmap for when the litigation will resume. Practitioners must now anticipate that any jurisdictional dispute involving onshore entities will likely involve a parallel JJC process, and they should draft their procedural timelines—such as those under RDC 44.14—with the flexibility to account for these external delays.
Where can I read the full judgment in Abraaj Investment Management Limited v KPMG Lower Gulf [2022] DIFC CFI 041?
The full text of the consent order can be accessed via the DIFC Courts website at the following link: 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-2. The document is also available via the CDN at: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-041-2021_20220119.txt.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| Application to the Joint Judicial Committee | Cassation No. 8 of 2021 | The primary jurisdictional challenge triggering the stay of proceedings. |
Legislation referenced:
- Rules of the DIFC Courts (RDC), Rule 44.14