What was the specific nature of the dispute between Stelian Gheorghe and BSA Ahmad Bin Hezeem & Associates that led to the CFI 045/2025 litigation?
The litigation concerns a professional negligence and breach of fiduciary duty claim brought by Stelian Gheorghe against a prominent law firm and its managing partner. The dispute centers on an escrow arrangement involving funds transferred by a third-party entity. As noted in the court's findings:
The Claimant’s Dispute before this Court arises from an escrow agreement dated 14 October 2020 between the Claimant, the First Defendant, and a company incorporated in Abu Dhabi Global Markets named Holding 5 Limited (the “Escrow Agreement”).
The Claimant alleged that the Second Defendant, Jimmy Haoula, was personally liable due to his role as Managing Partner and his direct involvement in facilitating the receipt of escrow funds. The Claimant sought to invoke the jurisdiction of the DIFC Courts, asserting that the agreement's governing law clause provided a sufficient nexus for the court to hear the merits of his claims regarding fraud and misrepresentation.
Which judge presided over the stay of proceedings application in Stelian Gheorghe v BSA Ahmad Bin Hezeem & Associates and when was the order issued?
The application for a stay of proceedings was heard by H.E. Justice Sapna Jhangiani of the DIFC Court of First Instance. The hearing took place on 22 October 2025, and the formal Order with Reasons was issued on 28 October 2025.
What were the primary legal arguments advanced by Stelian Gheorghe and the Defendants regarding the court's jurisdiction?
Stelian Gheorghe argued that the DIFC Courts held jurisdiction over the dispute, citing Article 5(A)(1)(a) of the Judicial Authority Law. He contended that the Escrow Agreement contained an "opt-in" clause that clearly designated DIFC law and the DIFC Courts as the appropriate forum for resolving any disputes arising from the contract.
Conversely, the Defendants, represented by counsel, argued that the court lacked jurisdiction to hear the merits of the claim because the parties had entered into a binding arbitration agreement under Clause 15 of the Escrow Agreement. They maintained that the court was required to stay the proceedings under Article 13(1) of the DIFC Arbitration Law. Furthermore, the Second Defendant argued that the claim against him was legally unsustainable and should be struck out, asserting that the allegations of regulatory breaches were vague and failed to establish a private cause of action.
What was the precise doctrinal question the court had to answer regarding the validity of the arbitration clause?
The court was tasked with determining whether Clause 15 of the Escrow Agreement—which explicitly referred to the now-defunct "DIFC-LCIA Arbitration Centre"—remained a valid and enforceable agreement to arbitrate. Specifically, the court had to decide if the reference to a defunct institution rendered the arbitration agreement "null, void or incapable of being performed," or if it could be saved through judicial interpretation in light of the legislative changes introduced by Decree 34 of 2021.
How did Justice Sapna Jhangiani apply the doctrine of interpretation to the defunct DIFC-LCIA reference in the Escrow Agreement?
Justice Jhangiani applied a purposive approach to the interpretation of the arbitration clause, consistent with the DIFC Court’s established pro-arbitration stance. The court determined that the parties' clear intention to arbitrate should not be frustrated by the administrative dissolution of the specified arbitral institution. The court held:
The reference to the DIFC-LCIA arbitration centre in Clause 15 shall be interpreted as a reference to the DIAC, and the reference to the DIFC-LCIA arbitration centre does not render Clause 15 null, void or incapable of being performed
By invoking the principles established in Narciso v Nash [2024] DIFC ARB 009 — Anti-suit injunctions and the seat of arbitration (20 June 2024), the court confirmed that Decree 34 mandates the transition of such legacy clauses to the DIAC, thereby preserving the integrity of the parties' original agreement to resolve disputes outside of the court system.
Which specific DIFC statutes and RDC rules were applied to justify the stay of proceedings?
The court relied primarily on Article 13(1) of the DIFC Arbitration Law (DIFC Law No. 1 of 2008), which mandates that a court must stay proceedings if a party requests it and the dispute is subject to a valid arbitration agreement. Additionally, the court referenced Article 10 and Article 14 of the same law regarding the scope and enforcement of arbitration agreements. Regarding the procedural aspects of the costs application, the court cited RDC 38.34 and 38.35, which govern the filing of updated schedules of costs and the subsequent assessment process.
How did the court utilize the cited precedents to resolve the jurisdictional challenge?
The court employed Fiona Trust & Holding Corp v Privalov [2007] UKHL 40 to underscore the principle that arbitration clauses should be interpreted broadly to encompass all disputes arising from the relationship. Furthermore, the court looked to Neal v Nadir (DIFC CA 001) to reaffirm that a valid arbitration clause effectively ousts the jurisdiction of the DIFC Courts in favour of the agreed arbitral forum. Finally, the court distinguished the Claimant's allegations of regulatory misconduct from the principles in DNB Bank ASA v Gulf Eyadah [2015] DIFC CA 007, noting that the vagueness of the Claimant's assertions did not provide a sufficient basis to bypass the mandatory arbitration agreement.
What was the final outcome of the application and what orders were made regarding costs?
The Court granted the Defendants' application for a stay of proceedings. The order explicitly stated:
These proceedings are stayed pursuant to Article 13(1) of the DIFC Arbitration Law, pending reference of the dispute to arbitration in accordance with Clause 15 of the Escrow Agreement dated 14 October 2020.
The court further ordered that the Defendants were entitled to their costs of the proceedings and the applications. The Claimant was ordered to file submissions regarding the costs assessment by 10 November 2025, with the Defendants permitted to file reply submissions by 17 November 2025.
What are the wider implications of this ruling for practitioners dealing with legacy arbitration clauses?
This decision reinforces the high threshold for challenging arbitration agreements in the DIFC. Practitioners must anticipate that the DIFC Courts will consistently apply Decree 34 to "save" arbitration clauses that refer to the defunct DIFC-LCIA, regardless of whether the claimant attempts to frame the dispute as one of regulatory breach or fraud. The ruling serves as a reminder that the court will not permit parties to use allegations of professional negligence or regulatory misconduct as a "shield" to avoid their contractual obligations to arbitrate.
Where can I read the full judgment in Stelian Gheorghe v BSA Ahmad Bin Hezeem & Associates [2025] DIFC CFI 045?
The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0452025-stelian-gheorghe-v-1-bsa-ahmad-bin-hezeem-associates-llp-2-jimmy-haoula or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-045-2025_20251028.txt.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| Fiona Trust & Holding Corp v Privalov | [2007] UKHL 40 | Broad interpretation of arbitration clauses |
| DNB Bank ASA v Gulf Eyadah | [2015] DIFC CA 007 | Regulatory misconduct does not override arbitration |
| Narciso v Nash | [2024] DIFC ARB 009 | Recognition of Decree 34 and DIAC transition |
| Neal v Nadir | DIFC CA 001 | Arbitration clause ousts court jurisdiction |
Legislation referenced:
- DIFC Law No. 12 of 2004 (Judicial Authority Law) Article 5(A)(1)(a)
- DIFC Law No. 1 of 2008 (Arbitration Law) Articles 10, 13(1), 14
- RDC 38.34 and 38.35