The DIFC Court of First Instance affirmed the enforceability of a settlement agreement arising from ICC arbitration, granting immediate judgment for unpaid instalments totaling over AED 12.6 million.
What was the specific nature of the dispute between BILT Middle East and Al Ghandi Consolidated Contractors International Company regarding the ICC arbitration settlement?
The lawsuit concerned a breach of a settlement agreement that had been reached to resolve ongoing arbitration proceedings. The parties had previously been engaged in a dispute before the International Court of Arbitration of the International Chamber of Commerce (Case No. 26472/MDY). To resolve that matter, they entered into a formal settlement agreement on 25 October 2021, which included a specific payment schedule.
There is no dispute that the Claimant and Defendant entered into a Settlement agreement dated 25 October 2021 in respect of arbitration proceedings in Case No. 26472/MDY in the International Court of Arbitration of the International Chamber of Commerce.
The core of the dispute involved the Defendant's failure to adhere to the agreed-upon payment schedule. Under the agreement, the Defendant was obligated to pay a total sum of AED 17,987,122.65 in 11 instalments. While the Defendant initially complied, they ceased payments after the first four instalments, leading the Claimant to initiate proceedings in the DIFC Court to recover the outstanding balance.
Which judge presided over the BILT Middle East v Al Ghandi Consolidated Contractors International Company proceedings in the DIFC Court of First Instance?
The matter was presided over by Justice Sir Jeremy Cooke in the DIFC Court of First Instance. The order was issued on 22 November 2022, following the Court’s determination that the case could be resolved on paper without the necessity of a formal hearing.
What were the respective legal positions of BILT Middle East and Al Ghandi Consolidated Contractors International Company regarding the unpaid instalments?
BILT Middle East argued that the Defendant had breached the clear terms of the settlement agreement by failing to pay instalments due between January and June 2022. The Claimant asserted that, under clause 3 of the agreement, it was entitled to declare the unpaid instalments immediately due and payable following the Defendant’s failure to cure the default within the 14-day notice period. Consequently, the Claimant sought the recovery of the principal sum plus interest.
Al Ghandi Consolidated Contractors International Company filed an Acknowledgement of Service indicating an intention to defend the claim. However, the Defendant failed to file any evidence or substantive arguments to support a defence. As a result, the Court found that the Defendant’s position lacked any factual or legal basis to contest the Claimant’s entitlement to the outstanding funds.
What was the precise legal question the Court had to answer regarding the waiver of the final AED 1 million instalment?
The Court had to determine whether the final instalment of AED 1 million, which was subject to a conditional waiver under the settlement agreement, had become due and payable. The agreement stipulated that if the Defendant paid the first 10 instalments in full and on time, the final instalment would be waived.
By the terms of clause 2.3 of the Settlement Agreement, if the Defendant should pay the first 10 instalments in full and on time, the final instalment of AED 1 million, due on 31 July 2022 would be waived.
The legal question was whether the Defendant’s failure to pay the intermediate instalments triggered the obligation to pay the final AED 1 million. The Court concluded that because the condition precedent for the waiver (full and timely payment of the first 10 instalments) was not met, the waiver did not apply.
Because the Defendant failed to make the payments in question, the further sum of AED 1 million fell due on 1 July 2022.
How did Justice Sir Jeremy Cooke apply the test for immediate judgment in the absence of a substantive defence?
Justice Sir Jeremy Cooke exercised the Court's power to determine the matter on paper. The reasoning was predicated on the absence of any genuine dispute of fact. Because the Defendant failed to provide evidence to support its stated intention to defend, the Court concluded that there was no triable issue.
Finally, by a letter before action dated 1 July 2022, the Claimant, by its solicitors, claimed the total of the outstanding instalments with interest, including the sum of AED 1 million which was not waived because of the failure to make payment of the earlier instalments. No payment was forthcoming and in accordance with the letter before action, these proceedings were instituted.
The Court reasoned that where a settlement agreement is clear and the breach is admitted or evidenced by non-payment, the Claimant is entitled to immediate judgment. By failing to respond to the evidence presented by the Claimant, the Defendant left the Court with no alternative but to grant the relief sought.
Which specific DIFC statutes and practice directions were applied to determine the interest rates for the judgment sum?
The Court relied on Articles 17(1) and 17(2) of DIFC Law No. 7 of 2005 to award pre-order interest. The Claimant requested interest based on the prevailing EIBOR rates plus an uplift of 2%, which the Court accepted as a reasonable reflection of the cost of borrowing for a commercial entity.
For post-order interest, the Court applied the mandatory provisions of the DIFC Courts' Practice Direction No. 4 of 2017. This direction provides a standardized rate for interest on judgment debts, ensuring consistency in the enforcement of monetary awards within the DIFC jurisdiction.
How did the Court utilize the EIBOR-plus-uplift methodology in its assessment of pre-order interest?
The Court accepted the Claimant’s submission that the EIBOR rate, supplemented by a 2% margin, was the appropriate benchmark for calculating damages for the loss of use of the funds. This methodology is frequently used in DIFC commercial disputes to ensure that the Claimant is adequately compensated for the time value of money during the period of default prior to the court's intervention.
The court accepts that as an appropriate rate of interest in respect of the instalments due up to the date of this Order.
What was the final disposition and the specific monetary relief ordered by the Court?
The Court ordered the Defendant to pay the Claimant the total sum of AED 12,659,512.60, representing the seven unpaid instalments. Additionally, the Court awarded pre-order interest of AED 372,917.59. Post-order interest was set at 9% per annum on the total judgment sum from the date of the order until the date of full payment.
The Claimant is entitled to interest on the Judgement at 9% per annum pursuant to paragraph 3 of Practice Direction No. 4 of 2017.
Regarding legal costs, the Court ruled in favor of the Claimant, ordering that the costs of the proceedings be assessed by the Registrar if the parties could not reach an agreement on the quantum.
The Claimant’s costs of these proceedings to be the subject of assessment by the Registrar if not agreed.”
What are the wider implications of this ruling for parties seeking to enforce settlement agreements in the DIFC?
This case reinforces the high degree of enforceability afforded to settlement agreements within the DIFC. It serves as a reminder to practitioners that the DIFC Court will not tolerate "holding" defences—where a party files an acknowledgement of service without subsequently providing evidence to support a substantive defence.
Litigants should anticipate that the Court will readily grant immediate judgment on paper when a breach of a clear, written settlement agreement is demonstrated. Furthermore, the case confirms the Court's willingness to apply commercial interest rates (EIBOR + 2%) for pre-judgment periods, alongside the standard 9% post-judgment rate, providing a robust mechanism for claimants to recover the full economic value of their claims without protracted litigation.
Where can I read the full judgment in BILT Middle East v Al Ghandi Consolidated Contractors International Company [2022] DIFC CFI 059?
The full judgment can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0592022-bilt-middle-east-llc-v-al-ghandi-consolidated-contractors-international-company-llc
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | N/A |
Legislation referenced:
- DIFC Law No. 7 of 2005, Articles 17(1) and 17(2)
- Practice Direction No. 4 of 2017, Paragraph 3