This Order addresses a failed attempt by Union Properties to challenge the DIFC Court’s interpretation of a Professional Services Agreement (PSA), reinforcing the high threshold for appellate intervention in matters of contractual construction.
What was the specific dispute between Clyde & Co and Union Properties regarding the PSA in CFI 057/2025?
The litigation centers on a disagreement over the interpretation of a Professional Services Agreement (PSA) entered into between the law firm Clyde & Co LLP and the respondents, Union Properties P.J.S.C. and UPP Capital Investment LLC. The dispute reached a critical juncture when the Court granted declarations in favor of the Claimant regarding the meaning of the PSA’s terms.
The Defendants sought to challenge these declarations, specifically targeting the Court’s findings on the construction of the agreement. As noted in the Court’s reasoning:
This is an application by the Defendant for permission to appeal against that part of my Order with Reasons dated 9 December 2025 which granted declarations as to the meaning of the PSA substantially as sought by the Claimant.
The underlying conflict involves the commercial obligations and termination rights stipulated within the PSA. While the Claimant sought declarations to clarify these rights, the Defendants argued that the Court’s initial construction was flawed, leading to the present application for permission to appeal.
Which judge presided over the application for permission to appeal in CFI 057/2025 and in which division was it heard?
The application for permission to appeal was heard by H.E. Justice Roger Stewart KC, sitting in the DIFC Court of First Instance. The Order with Reasons was issued on 2 February 2026, following the Defendants' appeal notice filed on 31 December 2025.
What specific legal arguments did Union Properties advance to challenge the construction of the PSA?
Union Properties P.J.S.C. and UPP Capital Investment LLC raised three primary grounds of appeal in their attempt to overturn the declarations made on 9 December 2025. First, they argued that the Court’s construction of the PSA lacked commercial common sense, suggesting that an alternative interpretation should have been adopted. Second, the Defendants contended that the Court misconstrued the termination provisions of the agreement, characterizing the relevant clauses as "boiler-plate" language that had been misinterpreted. Third, the Defendants sought to invoke the contra proferentem rule to resolve the ambiguity they alleged existed within the contract.
Clyde & Co LLP opposed these arguments, maintaining that the contract language was clear and that the Court’s initial analysis was correct. The Claimant argued that the Defendants failed to meet the threshold for an appeal, as the grounds presented were essentially attempts to re-litigate points that had already been thoroughly addressed and rejected by the Court during the initial proceedings.
What was the precise doctrinal issue the Court had to answer regarding the threshold for granting permission to appeal?
The Court was required to determine whether the Defendants’ proposed grounds of appeal met the "real prospect of success" test as defined under the Rules of the DIFC Courts (RDC). The doctrinal issue was whether the Defendants could demonstrate that an appeal was not merely arguable, but had a realistic—rather than fanciful—prospect of succeeding before the Court of Appeal. Because the initial judgment was rendered under RDC 24.1(b), the Court had to assess whether the Defendants had any viable basis to challenge the finding that there was no real prospect of defending the construction of the PSA.
How did H.E. Justice Roger Stewart KC apply the "real prospect of success" test to the Defendants' grounds of appeal?
Justice Stewart KC conducted a rigorous review of the three grounds of appeal, ultimately finding that none of them met the required standard. He emphasized that the initial judgment was based on a clear analysis of the bargain struck between the parties. Regarding the commercial common sense argument, the Court noted:
The bargain made was unique and each party’s case involved some possibly surprising commercial consequences. What was necessary was a clear analysis of the language of the bargain which I considered was plainly in favour of the Claimant.
The Court further dismissed the argument regarding "boiler-plate" provisions, noting that the language was unambiguous and required no implication of terms. Finally, the Court rejected the reliance on the contra proferentem rule, stating that the rule has no application where the terms of the agreement are clear. The Court concluded that the Defendants’ arguments did not provide a realistic prospect of success.
What specific RDC rules and legal tests were applied by the Court in CFI 057/2025?
The Court relied heavily on Rule 44.19 of the Rules of the DIFC Courts (RDC) to define the criteria for granting permission to appeal. Justice Stewart KC articulated the standard as follows:
The test for the grant of permission to appeal is that the Court must consider that the appeal would have a real prospect of success or there is some other compelling reason why the appeal should be heard in accordance with Rule 44.19 of the Rules of the DIFC Courts (“RDC”).
Furthermore, the Court referenced RDC 24.1(b), which governed the initial judgment on the construction of the PSA. The Court noted that the test for summary judgment under this rule is materially the same as the test for permission to appeal, as both require the Court to be satisfied that there is no realistic prospect of a successful defense or appeal.
How did the Court interpret the "real prospect of success" standard in the context of the Defendants' appeal?
The Court clarified that the threshold for an appeal is high, requiring more than mere arguability. Justice Stewart KC defined the standard by stating:
A real prospect of success means that there is a realistic rather than fanciful prospect of success and requires more than mere arguability.
By applying this definition, the Court effectively signaled that the Defendants' disagreement with the Court's interpretation of the PSA did not constitute a valid legal basis for an appeal. The Court held that because the initial judgment on construction was clear and based on a plain reading of the contract, the Defendants' attempt to re-characterize the provisions as "boiler-plate" or to apply the contra proferentem rule was insufficient to meet the "realistic" threshold.
What was the final disposition of the application and what orders were made regarding costs?
The Court refused the Defendants' application for permission to appeal in its entirety. Consequently, the declarations granted in the Order dated 9 December 2025 remain in effect. Regarding costs, the Court ordered the Defendants to pay the Claimant’s costs of the application. The assessment of these costs is to be conducted on the papers following a strict timeline: the Claimant must serve a Statement of Costs within 21 days, the Defendants have 14 days to respond, and the Claimant has 7 days to reply.
What are the practical implications for litigants seeking to appeal contractual construction rulings in the DIFC?
This ruling serves as a reminder that the DIFC Courts will not grant permission to appeal simply because a party disagrees with a judge’s interpretation of a contract. Litigants must anticipate that where a contract’s language is found to be clear, arguments based on "commercial common sense" or the invocation of interpretive canons like contra proferentem will likely fail if they do not address the specific, plain language of the agreement. The decision reinforces the finality of summary judgments on construction issues when the Court is satisfied that the interpretation is robust and the grounds for appeal are merely fanciful.
Where can I read the full judgment in Clyde & Co LLP v (1) Union Properties P.J.S.C. (2) UPP Capital Investment LLC [2026] DIFC CFI 057?
The full judgment can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0572025-clyde-co-llp-v-1-union-properties-pjsc-2-upp-capital-investment-llc-1 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-057-2025_20260202.txt
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No external case law cited in the Order. |
Legislation referenced:
- Rules of the DIFC Courts (RDC) Rule 24.1(b)
- Rules of the DIFC Courts (RDC) Rule 44.19