LARMAG HOLDING BV v ABDULLA SAEED BAKHEET OBAID ALJABERI [2019] DIFC CFI 054 — Post-judgment freezing order enforcement (20 October 2021)

Did the pre-judgment freezing order in Larmag Holding BV v Abdulla Saeed Bakheet Obaid Aljaberi automatically expire upon the issuance of the August 2021 judgment?

The status of the existing freezing order became a point of contention following the court's decision on 15 August 2021, which awarded the Claimant damages totaling approximately 64.3 million Euros. The Claimant initially sought the continuation of the existing order, which had been granted "until trial or further order of the Court." However, the court identified a potential procedural ambiguity regarding whether the transition from a pre-judgment to a post-judgment phase necessitated a fresh application.

On 14 September 2021, the Claimant applied ex parte on the papers for the continuation of a freezing order against the Third Defendant ( “D3” ) which had been made “until trial or further order of the Court” prior to the judgment issued on 15 August 2021 which upheld the Claimants and awarded the Claimant damages in the sum of circa Euros 64,352,669.

To resolve this uncertainty, the court directed the Claimant to file a new application for a freezing injunction. As noted in the judgment, the Claimant proceeded with this request while maintaining its position that the original order remained effective.

Whether it had come to end was arguable either way and Mr Black made it clear when moving for a fresh order that he was doing so without prejudice to the Claimant’s case that the pre-judgment had order had not ceased to apply.

The court's insistence on a new application ensured that the enforcement measures were clearly grounded in the post-judgment context, avoiding potential challenges to the validity of the injunction during the execution phase. The full details of the procedural history can be found at the DIFC Courts website.

Which judge presided over the Larmag Holding BV v Abdulla Saeed Bakheet Obaid Aljaberi enforcement hearing in the DIFC Court of First Instance?

Justice Sir Richard Field presided over the application for the post-judgment freezing order. The hearing took place on 16 September 2021, following the court's instruction on 15 September 2021 for the Claimant to apply for a fresh injunction. The written reasons for the order were subsequently issued on 20 October 2021.

What legal arguments did Mr. Black QC advance regarding the necessity of a fresh freezing order against the Third Defendant?

Representing Larmag Holding BV, Mr. Black QC argued that the court possessed clear jurisdiction to grant a post-judgment freezing order to protect the substantial judgment debt of 64.3 million Euros. He emphasized that the Claimant, as a judgment creditor, was entitled to the court's assistance in securing assets for enforcement.

Mr. Black drew the court's attention to established English authorities, such as Babanaft International Co S.A. v Bassatne and Masri v Consolidated Contractors International Co SAL, to demonstrate that courts are generally more inclined to grant freezing injunctions post-judgment than during the interim phase. He contended that the Third Defendant’s conduct throughout the proceedings necessitated the continuation of the restraint to prevent the dissipation of assets that would otherwise be used to satisfy the judgment.

What was the precise jurisdictional question the court had to answer regarding the issuance of a post-judgment freezing order?

The court had to determine whether it possessed the requisite authority to grant a fresh freezing injunction specifically in the post-judgment context, and if so, whether the circumstances justified such an exercise of discretion. The doctrinal issue centered on whether the transition from an interim remedy to an enforcement tool required a new application under the Rules of the DIFC Courts (RDC) and the DIFC Court Law, particularly when the underlying merits of the claim had already been resolved in the Claimant's favor.

How did Justice Sir Richard Field apply the test for asset dissipation in the context of a post-judgment application?

Justice Sir Richard Field applied the principles established in Bocimar International N.V. v Emirates Trading Agency LLC, focusing on whether it was "fair and just" to grant the order. The court evaluated the risk of dissipation by looking at the Third Defendant's history of non-compliance and fraudulent conduct during the litigation.

In my judgment, the Claimant has clearly demonstrated that it is appropriate (that is to say, that it is fair and just in the circumstances) to make the worldwide freezing order asked for, in particular because there is strong evidence of a real risk that, unless restrained by an order of the Court, D3 would dissipate and/or conceal his assets so as to deprive the Claimant of the value of the judgment obtained against him.

The court emphasized that the Claimant, as a judgment creditor, did not need to re-establish a "good arguable case" for the substantive claim, as the judgment debt itself provided the necessary foundation for the relief.

Which specific DIFC statutes and RDC rules were cited to support the court's authority to grant the freezing order?

The court relied on Article 32(b) of the DIFC Court Law, which grants the court broad powers to issue injunctions as it considers appropriate for the conduct of proceedings. Furthermore, the court cited RDC 25.6(2) to confirm that such remedies are available even after judgment has been entered.

Further, RDC 25.6(2) specifically provides that an order for an interim remedy can be made at any time, including after judgment has been given.

These provisions collectively provide the procedural framework for the court to assist judgment creditors in the enforcement of their debts.

How did the court utilize English case law precedents to guide its discretion in this enforcement matter?

The court referenced several English decisions to articulate the guiding principles for post-judgment relief. Specifically, it looked to The Niedersachsen and TTMI v ASM Shipping regarding the definition of a "real risk" of dissipation. It also cited Stronghold Insurance v Overseas Union and Motorola Credit Corporation v Uzan (No 2) to clarify that assets are likely to be dealt with in a way that hinders enforcement unless restrained.

Mr Black also drew my attention to the following decisions of the English courts in which there are articulated a set of guiding principles for when the Court is exercising its discretion whether to make a post-judgment freezing order.

These authorities were used to reinforce the court's finding that the Third Defendant's prior conduct demonstrated an "unacceptably low standard of commercial morality," which served as a primary indicator of the risk of future asset dissipation.

What was the final disposition of the application and the specific relief granted to Larmag Holding BV?

The court granted the application for a fresh worldwide freezing order against the Third Defendant. The order was issued to secure the judgment debt of 64,352,669 Euros. The court notably excluded the "ordinary course of business" exception, reflecting the heightened need for protection given the evidence of potential bad faith and the risk of asset concealment by the Third Defendant.

What are the practical implications for practitioners seeking to enforce judgments in the DIFC?

This judgment serves as a reminder that the DIFC Court is prepared to exercise its robust powers to assist judgment creditors, particularly where there is a demonstrated risk of asset dissipation. Practitioners should note that while pre-judgment orders may provide a bridge, it is often safer to apply for a fresh post-judgment freezing order to avoid procedural ambiguity. The decision also highlights that the court will not hesitate to remove standard exceptions, such as the "ordinary course of business" clause, when the debtor's conduct suggests a lack of commercial morality.

Where can I read the full judgment in Larmag Holding BV v (1) Abdulla Saeed Bakheet Obaid Aljaberi (2) Ali Mohamed (3) Elite Holding Group [2019] DIFC CFI 054?

The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/larmag-holding-bv-v-1-abdulla-saeed-bakheet-obaid-aljaberi-2-ali-mohamed-3-elite-holding-group-2019-difc-cfi-054. The text can also be accessed via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-054-2019_20211020.txt.

Cases referred to in this judgment:

Legislation referenced:

• DIFC Court Law, Article 32(b)
• Rules of the DIFC Courts (RDC), Rule 25.6(2)