This order marks a pivotal moment in DIFC insolvency practice, confirming that the DIFC Courts will no longer grant automatic stays of proceedings based on applications to the Joint Judicial Tribunal (JJT) or foreign bankruptcy orders unless strict jurisdictional and statutory criteria are met.
Why did Justice Sir Jeremy Cooke grant the Claimant’s application to lift the stay in CFI 063/2020?
The dispute centered on the Claimant’s, Mashreqbank PSC, attempt to proceed with litigation against Infinite Partners Investment LLC and six other defendants, despite a previous stay order issued by the Court on 9 December 2020. That initial stay had been granted as a matter of standard judicial practice at the time, pending the determination of an application by the Defendants to the Joint Judicial Tribunal (JJT).
Following the Court of Appeal’s landmark ruling in Lakhan v Lamia [2021] CA 001, the Claimant sought to lift the stay, arguing that the previous practice of granting automatic stays upon a JJT referral was no longer legally sound. Justice Sir Jeremy Cooke agreed, noting that the stay was originally granted based on a practice that had since been clarified as incorrect by the appellate court. As the judge noted:
(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 found that without an actual conflict of jurisdiction between the DIFC Courts and the onshore Dubai Courts, the stay could not be maintained. Consequently, the Court granted the application to lift the stay, effectively allowing the litigation to resume.
Which judge presided over the application to lift the stay in CFI 063/2020?
The application was heard and determined by Justice Sir Jeremy Cooke in the DIFC Court of First Instance. The hearing took place on 20 September 2021, with the formal Order and written reasons issued on 4 October 2021.
What were the specific legal arguments advanced by Mashreqbank and the Defendants regarding the stay of proceedings?
Mashreqbank argued that the stay of proceedings was no longer sustainable in light of the Court of Appeal’s decision in Lakhan v Lamia. The Claimant contended that the JJT referral did not constitute a valid jurisdictional dispute under the relevant legal framework, and therefore, the DIFC Court was obligated to exercise its jurisdiction over the matter.
Conversely, the Defendants sought the continuation of the stay, relying on an Abu Dhabi Court bankruptcy order dated 27 July 2021. They argued that the DIFC Court should recognize this order and the associated "Delegation Letters" issued by the Abu Dhabi and onshore Dubai Courts. The Defendants maintained that the DIFC Court should cooperate with the Abu Dhabi proceedings by staying the current action, effectively treating the delegation letters as binding mandates for the DIFC Court to halt its own proceedings.
What was the precise doctrinal issue the Court had to answer regarding the recognition of foreign bankruptcy orders and delegation letters?
The Court was tasked with determining whether the "Delegation Letters" and the Abu Dhabi bankruptcy order satisfied the statutory requirements for recognition under the DIFC Insolvency Law. Specifically, the Court had to decide if these documents constituted enforceable orders that could compel the DIFC Court to stay its own proceedings, or if they were merely requests for assistance that the Court retained the discretion to decline. The doctrinal issue was whether the DIFC Court’s case management discretion could be invoked to grant a stay in the absence of a clear statutory mandate or an actual jurisdictional conflict.
How did Justice Sir Jeremy Cooke apply the test for jurisdictional disputes and the nature of delegation letters?
Justice Sir Jeremy Cooke applied the principles established in Lakhan v Lamia, emphasizing that a stay is only appropriate where there is a genuine, active dispute regarding jurisdiction between the DIFC and onshore courts. He found that the Defendants failed to demonstrate such a conflict. Regarding the "Delegation Letters," the judge scrutinized their legal status, concluding that they did not carry the weight of a court order. As the judge reasoned:
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.
The Court further noted that the stay could not be justified under the guise of judicial cooperation when the statutory requirements for recognizing foreign insolvency proceedings were not met. The judge concluded:
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.
Which specific statutes and rules did the Court rely upon to reach its decision?
The Court relied heavily on the DIFC Insolvency Law No 1 of 2019, which governs the recognition of foreign insolvency proceedings. Additionally, the Court referenced Article 24 of the DIFC Court Law No 10 of 2004 regarding the Court's jurisdiction. Procedurally, the Court applied the Rules of the DIFC Courts (RDC), specifically Part 45 and RDC 45.5, in determining the costs and the management of the stay application. The Court also cited Article 4 of Decree 19 of 2016 as the benchmark for identifying when a jurisdictional dispute between the DIFC and onshore courts actually arises.
How did the Court use the precedent of Lakhan v Lamia [2021] CA 001 in this insolvency context?
The Court used Lakhan v Lamia as the primary authority to dismantle the previous "universal judicial practice" of granting automatic stays upon JJT applications. Justice Sir Jeremy Cooke cited paragraphs 29 to 37 of the Lakhan judgment to establish that a stay requires evidence of inconsistent judgments or competing claims of jurisdiction. By applying this ratio, the Court effectively narrowed the scope for defendants to use JJT applications as a tactical tool to delay DIFC proceedings, ruling that the stay in this case was "outside the norm" following the appellate guidance.
What was the final outcome and the specific relief granted by the Court?
The Court granted the Claimant’s application to lift the stay and refused the Defendants' application for the continuation or reimposition of the stay. Furthermore, the Court formally declined the letters of request for assistance from both the Dubai Courts and the Abu Dhabi Court. Regarding costs, the Court ordered the Defendants to pay the Claimant’s costs on an indemnity basis, noting:
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”
What are the wider implications for practitioners handling insolvency-related stays in the DIFC?
This judgment signals a significant shift toward a more rigorous, evidence-based approach to stays of proceedings. Practitioners must now anticipate that the DIFC Court will no longer accept "Delegation Letters" or foreign bankruptcy orders as automatic grounds for a stay. Litigants seeking a stay must prove that the statutory requirements for recognition are fully satisfied and that there is a genuine jurisdictional conflict. The imposition of indemnity costs for opposing such applications serves as a strong deterrent against using tactical stays that contradict the principles set out in Lakhan v Lamia.
Where can I read the full judgment in Mashreqbank PSC 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-3
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| Lakhan v Lamia | [2021] CA 001 | Established the ratio that stays require an actual jurisdictional dispute. |
Legislation referenced:
- DIFC Insolvency Law No 1 of 2019
- DIFC Court Law No 10 of 2004, Article 24
- Decree 19 of 2016, Article 4
- RDC Part 45, RDC 45.5