EMIRATES REIT (CEIC) PLC v NASDAQ DUBAI LIMITED [2020] DIFC CFI 054 — Dismissal of Norwich Pharmacal application for client identity disclosure (04 November 2020)

This order clarifies the high evidentiary threshold required for DIFC Courts to grant Norwich Pharmacal relief, specifically addressing the balance between market integrity and confidentiality obligations when an applicant alleges market manipulation.

What specific market manipulation allegations led Emirates Reit (Ceic) Plc and Equitativa (Dubai) Limited to seek a Norwich Pharmacal order against Nasdaq Dubai Limited?

The dispute centers on trading activity occurring in February 2020 involving the shares of Emirates Reit (Ceic) Plc, which are traded exclusively on the Nasdaq Dubai exchange. The Applicants, Emirates Reit and its fund manager, Equitativa (Dubai) Limited, alleged that specific trades executed on 5, 6, and 13 February 2020 constituted "marking the close"—a form of market manipulation designed to artificially depress the closing price of the company's shares.

The Applicants contended that these trades, executed by a London-based broker on behalf of undisclosed clients, lacked economic rationale and were timed specifically to influence the closing auction period. Because Nasdaq Dubai held the identities of these clients but refused to disclose them due to confidentiality obligations, the Applicants sought a Norwich Pharmacal order to compel disclosure. They argued that this information was necessary to pursue legal redress against the unknown wrongdoers. However, the court remained unconvinced that the disclosure was warranted, noting:

Having regard to the weakness of the Applicant’s cases for redress by legal action, on the ultimate question of whether justice requires disclosure of the clients’ identities, I am not satisfied that it does.

Further details regarding the Applicants' claims can be found at the DIFC Courts website.

Which judge presided over the CFI 054/2020 application and when was the order issued?

Justice Roger Giles presided over this application in the Court of First Instance. The matter was heard on 19 October 2020, and the formal order dismissing the application was issued on 4 November 2020.

What were the primary legal arguments advanced by the Applicants and the Respondent regarding the disclosure of client identities?

The Applicants argued that the "hallmarks of market manipulation" were present in the February 2020 trades, asserting that they had a "good arguable case" of a breach of Article 54 of the Market Law (DIFC Law No 1 of 2012). They maintained that Nasdaq Dubai, having facilitated the trading environment, was under a duty to assist the victims of the alleged tortious conduct by revealing the identities of the clients behind the suspicious orders. They also pointed to broader concerns regarding activist shareholders attempting to undermine the fund management.

Nasdaq Dubai adopted a neutral stance throughout the proceedings. While they acknowledged their role as the exchange operator, they emphasized their regulatory and contractual confidentiality obligations. They did not actively oppose the legal principle of the Norwich Pharmacal order but insisted that the Applicants must satisfy the court that the disclosure was necessary in the interests of justice and that the Applicants had a viable, non-speculative basis for subsequent legal action.

What was the precise doctrinal issue the court had to determine regarding the threshold for Norwich Pharmacal relief?

The court had to determine whether the Applicants had met the high threshold required to override the Respondent’s confidentiality obligations. The doctrinal issue was not merely whether a "good arguable case" of wrongdoing existed, but whether the Applicants could demonstrate that the disclosure of the clients' identities served a "real purpose" in facilitating a viable legal claim. The court had to decide if the application was a legitimate pursuit of redress or an impermissible "fishing expedition" intended to gather evidence to determine if a case existed in the first place.

How did Justice Roger Giles apply the Norwich Pharmacal test to the facts of the Emirates Reit case?

Justice Giles acknowledged that the Applicants successfully established a "good arguable case" that the trades constituted market manipulation. He noted that the timing and nature of the sell orders suggested an intent to create an artificial closing price. However, he distinguished between the existence of a potential wrong and the necessity of the court’s intervention to provide the "missing piece of the jigsaw."

The judge reasoned that even if the trades were manipulative, the Applicants failed to demonstrate that they had a sound basis for actual legal redress or that they had suffered quantifiable loss that would justify the exceptional measure of a Norwich Pharmacal order. He emphasized that the court's power is not to be used for speculative investigations. As stated in the judgment:

I accept that the February trades have the hallmarks of market manipulation, and that there is a good arguable case of breach by the clients of Article 54 by, in short, creating an artificial closing price for the Company’s shares. But this is a quite limited conclusion.

Which specific DIFC statutes and regulatory provisions were cited in the determination of this application?

The court referenced several key pieces of DIFC legislation to frame the regulatory context of the exchange and the obligations of the parties:

• Market Law (DIFC Law No 1 of 2012), Article 54: Cited regarding the prohibition of market manipulation.
• Regulatory Law (DIFC Law No 1 of 2004), Article 94: Referenced in the context of the Respondent’s regulatory obligations and investigatory powers.
• Law of Obligations (DIFC Law No 5 of 2005), Article 36: Provided the statutory backdrop for the underlying tortious claims.

How did the court utilize English and DIFC precedents to evaluate the application for disclosure?

Justice Giles relied heavily on the foundational English authority Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133, which established the equitable principle that a third party mixed up in wrongdoing has a duty to assist the victim. He also cited P v T Ltd [1997] 1 WLR 1309 and Ashworth Hospital Authority v MGN Ltd [2002] 1 WLR 2033 to confirm that the principle extends beyond torts to contractual wrongdoing and other legitimate purposes like disciplinary action.

Furthermore, the court referenced Ramilos Trading Ltd v Buyanovsky [2016] CLC 896 to reinforce the limitation that the order cannot be used as a "fishing expedition." The court also looked to the DIFC precedent Trustee in Bankruptcy and Liquidator of Cash Plus Ltd [2009] DIFC CFI 024 to confirm the standard of proof required for such relief. These cases collectively underscored that while the "good arguable case" test is necessary, it is not sufficient if the applicant cannot show a clear path to legal redress.

What was the final disposition of the case and the court's order regarding costs?

The court dismissed the application in its entirety, finding that the interests of justice did not favor the disclosure of the clients' identities. Consequently, the Applicants were ordered to bear the costs of the Respondent. The court assessed these costs at AED 50,000, noting that the Applicants' legal fees were "generous" regarding out-of-court work.

I order that the application be dismissed, and that the Applicants pay the Respondent’s costs assessed at AED 50,000.

What are the practical implications of this judgment for future litigants seeking Norwich Pharmacal orders in the DIFC?

This judgment serves as a stern reminder that the DIFC Courts will not facilitate "fishing expeditions" under the guise of Norwich Pharmacal relief. Practitioners must be prepared to demonstrate not only that a wrong has occurred but that the applicant has a concrete, viable plan for legal action and has suffered actual, identifiable loss. The decision reinforces that the "good arguable case" threshold is merely the starting point; the ultimate hurdle remains the "interests of justice" test, which requires a compelling justification for overriding the confidentiality of third parties. Litigants should anticipate that the court will strictly scrutinize the necessity of the requested information before granting such an exceptional power.

Where can I read the full judgment in Emirates Reit (Ceic) Plc v Nasdaq Dubai Limited [2020] DIFC CFI 054?

The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-054-2020-1-emirates-reit-ceic-plc-2-equitativa-dubai-limited-v-nasdaq-dubai-limited-3

Cases referred to in this judgment:

Legislation referenced:

• Market Law, DIFC Law No 1 of 2012, Article 54
• Regulatory Law, DIFC Law No 1 of 2004, Article 94
• Law of Obligations, DIFC Law No 5 of 2005, Article 36