The DIFC Court of First Instance clarified the narrow scope for staying proceedings in light of the Court of Appeal’s decision in Lakhan v Lamia, rejecting attempts to use onshore insolvency orders and "delegation letters" as grounds for halting DIFC litigation.
Why did Justice Sir Jeremy Cooke lift the stay of proceedings in MASHREQ BANK v INFINITE PARTNERS INVESTMENT [2021] DIFC CFI 063?
The litigation concerns a claim brought by Mashreq Bank PSC against Infinite Partners Investment LLC and several co-defendants, including Khaleefa Butti Omair Yousif Almuhairi and His Excellency Saeed Mohamed Butti Mohamed Alqebaisi. The dispute, which had been effectively frozen since December 2020, centered on whether the DIFC Court should defer to the Joint Judicial Tribunal (JJT) or recognize foreign insolvency orders issued by Abu Dhabi courts.
The Claimant, Mashreq Bank, sought to lift the stay, arguing that the previous practice of automatically staying DIFC proceedings upon an application to the JJT was no longer tenable. As noted in the court's reasoning:
(a) The first is an application by the Claimant to lift the stay which I ordered on 9 December 2020 on the basis of an application made by the Defendants to the Joint Judicial Tribunal (the “JJT”).
The court ultimately determined that the stay was no longer legally justified, as the mere filing of an application to the JJT does not, by itself, create the jurisdictional conflict required to oust the DIFC Court’s authority. The full details of the procedural history can be found in the MASHREQBANK v INFINITE PARTNERS INVESTMENT [2021] DIFC CFI 063 — Lifting a stay of proceedings following the Court of Appeal’s clarification on jurisdictional disputes (22 September 2021) order.
Which judge presided over the DIFC Court of First Instance hearing on 20 September 2021?
Justice Sir Jeremy Cooke presided over the hearing in the DIFC Court of First Instance. The order, which addressed both the Claimant’s application to lift the stay and the Defendants’ application to continue or reimpose it, was issued on 22 September 2021.
What were the competing legal arguments regarding the stay of proceedings in MASHREQ BANK v INFINITE PARTNERS INVESTMENT?
The Claimant argued that the Court of Appeal’s decision in Lakhan v Lamia [2021] CA 001 fundamentally altered the landscape for stays. They contended that a stay is only appropriate where there is a genuine, active dispute regarding jurisdiction between the DIFC and onshore Dubai courts, which was absent in this instance.
Conversely, the Defendants sought to maintain the stay by relying on an Abu Dhabi Court order dated 27 July 2021, which purportedly stayed all proceedings against them as part of a broader bankruptcy application. They further argued that the DIFC Court should recognize "delegation letters" issued by both Abu Dhabi and onshore Dubai courts as a matter of judicial cooperation. The Defendants maintained that the DIFC Court should exercise its case management discretion to defer to these foreign insolvency proceedings.
What was the precise doctrinal issue the court had to answer regarding the recognition of foreign insolvency orders and delegation letters?
The court had to determine whether "delegation letters" from onshore courts constitute binding orders that the DIFC Court is obligated to enforce, and whether an Abu Dhabi bankruptcy order automatically triggers a stay of DIFC proceedings under the DIFC Insolvency Law. The core issue was whether the DIFC Court possesses the discretion to stay its own proceedings based on requests for assistance that do not meet the statutory threshold for jurisdictional conflict or formal recognition of foreign judgments.
How did Justice Sir Jeremy Cooke apply the test from Lakhan v Lamia to the stay of proceedings?
Justice Sir Jeremy Cooke applied the ratio from Lakhan v Lamia [2021] CA 001 to conclude that the previous, more permissive practice of granting stays was incorrect. He emphasized that a stay is not a default setting but requires a demonstrated conflict of jurisdiction.
The stay granted cannot therefore be justified and should therefore be lifted with immediate effect and the Defendants, who have opposed this, must pay the costs of the application and must do so on the indemnity basis since the Court of Appeal decision was known to be the foundation of the Claimant’s application.
The judge reasoned that for a stay to be valid, there must be evidence of inconsistent judgments or competing claims of jurisdiction over the same subject matter, neither of which was present in the dispute between Mashreq Bank and the Defendants.
Which specific DIFC statutes and RDC rules were applied by the court in this ruling?
The court relied on the DIFC Insolvency Law No 1 of 2019 regarding the recognition of foreign insolvency proceedings. Furthermore, the court referenced Article 24 of the DIFC Court Law No 10 of 2004, which outlines the court's jurisdiction. Procedurally, the court applied the Rules of the DIFC Courts (RDC), specifically Part 45, which governs the court's case management powers and the assessment of costs.
How did the court characterize the "delegation letters" submitted by the Defendants?
The court examined the nature of the delegation letters issued by the Abu Dhabi and onshore Dubai courts. Justice Sir Jeremy Cooke found that these letters were merely requests for assistance rather than enforceable judicial orders. He noted:
The language, in translation, does not lend itself to easy interpretation but it would, in my judgment plainly be wrong to refer to any of these delegation letters as judgments, decisions or orders of the Courts in question.
Consequently, the court respectfully declined the requests for assistance contained within those letters, as they did not provide a legal basis to override the DIFC Court’s jurisdiction over the ongoing commercial litigation.
What was the final disposition and the court's order regarding costs?
The court granted the Claimant’s application to lift the stay and refused the Defendants’ application for its continuation. Regarding costs, the court held that the Defendants were liable for the Claimant’s costs on an indemnity basis, citing the clarity provided by the Court of Appeal in Lakhan v Lamia.
In the circumstances the application for continuation or reimposition of a stay of the DIFC proceedings must fail and costs must follow the event, including indemnity costs in respect of the Claimant’s application because of the well-known Court of Appeal decision, which made opposition to the application “outside the norm”.
The court ordered that the costs be subject to assessment if not agreed between the parties.
What are the wider implications for practitioners regarding jurisdictional stays in the DIFC?
This ruling confirms that the DIFC Court will no longer grant automatic stays based on applications to the JJT or requests for assistance from onshore courts. Practitioners must now demonstrate a specific, active jurisdictional conflict—such as inconsistent judgments or competing assertions of authority—to justify a stay. The decision also signals a high threshold for the recognition of foreign insolvency orders and clarifies that "delegation letters" are not equivalent to binding orders. Litigants should anticipate that the DIFC Court will strictly adhere to the principles of Lakhan v Lamia when managing cases involving parallel proceedings.
Where can I read the full judgment in MASHREQ BANK v INFINITE PARTNERS INVESTMENT [2021] DIFC CFI 063?
The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-063-2020-mashreqbank-psc-v-1-infinite-partners-investment-llc-2-khaleefa-butti-omair-yousif-almuhairi-3-his-excellency-saeed-1 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/cfi-063-2020-mashreqbank-psc-v-1-infinite-partners-investment-llc-2-khaleefa-butti-omair-yousif-almuhairi-3-his-excellency-saeed-1.txt
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| Lakhan v Lamia | [2021] CA 001 | Established the ratio that a stay is only appropriate where there is a genuine jurisdictional dispute. |
Legislation referenced:
- DIFC Court Law No 10 of 2004, Article 24
- DIFC Insolvency Law No 1 of 2019
- RDC Part 45 (RDC 45.5)