The DIFC Court of First Instance issued a decisive default judgment in favor of Johnson Arabia LLC, ordering Al Reyami International Steel Tech LLC to pay over AED 1.2 million following the defendant's failure to engage with the court process.
What was the specific monetary dispute and the nature of the claim in Johnson Arabia v Al Reyami International Steel Tech?
The lawsuit centered on a debt recovery claim initiated by Johnson Arabia LLC against Al Reyami International Steel Tech LLC. The claimant sought the recovery of a specific outstanding sum, which the court ultimately quantified as AED 1,234,249. The dispute arose from the defendant’s failure to satisfy its financial obligations, leading the claimant to formalize the debt through the DIFC Court of First Instance.
Because the defendant failed to file an Acknowledgment of Service or a Defence within the prescribed timelines, the claimant moved for a default judgment to secure the outstanding amount. The court’s intervention was necessary to provide a legal mechanism for the recovery of the principal sum, interest, and associated legal costs incurred during the proceedings. As noted in the court's findings:
The Request is one permitted by RDC 13.4 on the basis that the Defendant has failed to file an Acknowledgment of Service or a Defence to the claim (or any part of the claim), with the DIFC Courts, and the relevant time for so doing has expired.
Which judge presided over the default judgment in CFI 054/2021 and in which division was the order issued?
The matter was heard before H.E. Justice Maha Al Mheiri, sitting in the DIFC Court of First Instance. The order was issued on 20 June 2021, following the claimant’s request for default judgment filed on 17 June 2021.
What procedural positions did Johnson Arabia LLC take to secure the default judgment against Al Reyami International Steel Tech?
Johnson Arabia LLC maintained that it had strictly adhered to the Rules of the DIFC Courts (RDC) regarding service and the application for default judgment. The claimant’s primary legal argument was that the defendant had been properly served, as evidenced by the Certificate of Service filed on 15 June 2021, and that the defendant had subsequently failed to respond to the claim within the mandatory period.
The claimant argued that because the defendant did not file an Acknowledgment of Service or a Defence, the court was empowered under RDC 13.1 to grant the request for judgment. Furthermore, the claimant asserted its right to interest on the judgment sum, providing the necessary calculations in the Claim Form to satisfy the requirements of RDC 13.14. The claimant’s position was that the procedural requirements for default judgment had been fully satisfied, leaving no barrier to the court granting the relief sought.
What was the jurisdictional and procedural question the court had to answer regarding the application of RDC 13.3?
The court was tasked with determining whether the claimant’s request for default judgment met the stringent procedural criteria set out in the Rules of the DIFC Courts. Specifically, the court had to verify that the request was not prohibited under RDC 13.3 (1) or (2), which restricts the entry of default judgments in certain circumstances, such as when a defendant has already filed an acknowledgment of service or a defense.
Additionally, the court had to confirm that the claimant had properly executed service of the claim form. The doctrinal issue at the heart of the inquiry was whether the procedural "due process" requirements—specifically the filing of a Certificate of Service and the expiration of the time for the defendant to respond—had been met to justify the court’s exercise of its power to enter a judgment without a trial on the merits.
How did H.E. Justice Maha Al Mheiri apply the RDC procedural tests to reach the decision in CFI 054/2021?
Justice Al Mheiri conducted a systematic review of the claimant’s compliance with the RDC. The judge first verified that the request was not prohibited under RDC 13.3, then confirmed that the defendant had failed to file any response to the claim. The court relied on the evidence of service provided by the claimant to establish that the defendant had been given adequate notice of the proceedings.
The judge’s reasoning followed a clear path of verifying each procedural step, ensuring that the claimant had fulfilled its obligations before the court could grant the requested relief. As stated in the judgment:
The Claimant has filed a Certificate of Service in respect of the Defendant under RDC 9.43 on 15 June 2021.
By confirming that the claimant had followed the required procedures under RDC 13.7 and 13.8, the court established a solid foundation for the default judgment. The judge also ensured that the request for interest was properly calculated and supported by the claim form, satisfying the requirements of RDC 13.14.
Which specific RDC rules were applied by the court to validate the default judgment request?
The court relied on a series of RDC provisions to validate the claimant's request. Specifically, the court cited RDC 13.1 (1) and (2) as the basis for the request for default judgment. The court also referenced RDC 13.3 (1) and (2) to confirm the absence of any prohibitions against the judgment.
Furthermore, the court utilized RDC 9.43 to confirm the validity of the service of the claim form. The procedural compliance was further grounded in RDC 13.7 and 13.8, which govern the specific steps for obtaining a default judgment. Finally, RDC 13.14 was applied to authorize the inclusion of interest on the judgment sum.
How did the court utilize DIFC Courts Practice Direction No. 4 of 2017 in determining the interest rate?
The court applied DIFC Courts Practice Direction No. 4 of 2017 to determine the applicable interest rate on the judgment sum. This Practice Direction serves as the standard authority for the court when awarding post-judgment interest. By invoking this authority, the court ensured that the claimant was entitled to interest at a rate of 9% per annum, calculated from the date of the default judgment until the date of full payment.
This application of the Practice Direction provided the legal basis for the court’s order regarding the interest, as reflected in the following finding:
In addition, pursuant to DIFC Courts Practice Direction No. 4 of 2017 the Defendant shall pay interest on the Judgment Sum to the Claimant from the date of this default judgment, until the date of full payment, at the rate of 9% annually, until the date of payment.
What was the final disposition and the specific relief granted to Johnson Arabia LLC?
The court granted the claimant's request for default judgment in its entirety. The defendant was ordered to pay the judgment sum of AED 1,234,249 within 14 days of the order. Additionally, the court ordered the defendant to pay interest on this sum at a rate of 9% per annum until the date of full payment.
Regarding the costs of the proceedings, the court ordered the defendant to bear the financial burden of the claimant’s legal expenses and court filing fees. As noted in the order:
The Defendant shall pay the Claimant’s costs of these proceedings which comprises: (1) the Claimant’s legal costs, until the date this request was fully pleaded; and (2) costs of the Court filing fee.
How does this default judgment impact the expectations for litigants regarding procedural compliance in the DIFC?
This case reinforces the necessity for defendants to engage promptly with the DIFC Court process. The court’s willingness to grant a default judgment for a significant sum (AED 1,234,249) underscores that failure to file an Acknowledgment of Service or a Defence within the stipulated timeframes will lead to an enforceable judgment against the respondent.
For practitioners, the case serves as a reminder that the DIFC Courts maintain a strict adherence to the RDC. Claimants must ensure that their service of process is impeccable and that their requests for default judgment are fully supported by the required documentation, including certificates of service and clear interest calculations. Litigants should anticipate that the court will not hesitate to grant relief where the procedural hurdles have been cleared and the defendant has remained silent.
Where can I read the full judgment in Johnson Arabia LLC v Al Reyami International Steel Tech LLC [2021] DIFC CFI 054?
The full judgment can be accessed via the official DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-054-2021-johnson-arabia-llc-v-al-reyami-international-steel-tech-llc
Legislation referenced:
- Rules of the DIFC Courts (RDC):
- RDC 9.43 (Service of Claim Form)
- RDC 13.1 (1) and (2) (Default Judgment)
- RDC 13.3 (1) and (2) (Prohibitions on Default Judgment)
- RDC 13.4 (Default Judgment conditions)
- RDC 13.7 and 13.8 (Procedure for Default Judgment)
- RDC 13.14 (Interest on Default Judgment)
- DIFC Courts Practice Direction No. 4 of 2017 (Interest on Judgments)