The DIFC Court of First Instance has clarified that a party cannot rely on a mandatory mediation clause to secure a procedural extension if they previously ignored the claimant’s genuine attempts to resolve the dispute through those same mechanisms.
What was the specific monetary value and nature of the dispute in Agro Resource Tarim Gida IC VE DIŞ TICARET v Promising International Trading CO?
The dispute concerns a commercial claim brought by the Turkish-based entity, Agro Resource Tarim Gida IC VE DIŞ TICARET A.S., against the Dubai-based respondent, Promising International Trading CO. DMCC. The litigation centers on a substantial financial claim arising from an underlying commercial agreement between the two parties.
On 10 July 2025, the Claimant filed a claim against the Defendant claiming the sum of AED 10,870,306.20 (the “Claim”).
The core of the disagreement involves the enforceability of the parties' contractual obligations and the procedural path for resolution. While the Claimant sought to recover the aforementioned sum through the DIFC Courts, the Defendant attempted to pivot the proceedings toward a mandatory mediation process, citing the arbitration and mediation clauses contained within their agreement.
Which judge presided over the application for an extension of time in CFI 071/2025?
The application was heard and determined by H.E. Justice Nassir Al Nasser in the DIFC Court of First Instance. The order was issued on 18 September 2025, following a review of the parties' submissions regarding the Defendant’s request to delay the jurisdictional challenge proceedings until 30 November 2025.
What were the specific legal arguments advanced by Promising International Trading CO regarding the mediation clause?
The Defendant argued that the DIFC Court should grant an extension of time to contest jurisdiction because the underlying agreement mandated a specific dispute resolution hierarchy. They contended that the parties were contractually obligated to exhaust a mediation step before the court could properly exercise jurisdiction over the merits of the claim.
The Defendant submits that the reason of its Application is because the Agreement between the parties contains a binding arbitration clause and a mandatory mediation step requiring disputes first to be referred to mediation.
Furthermore, the Defendant asserted that they had formally invoked this clause on 5 August 2025, inviting the Claimant to participate in mediation under clause 16 of their agreement. They argued that because they had not received a response to this specific invitation, the mediation process remained an unexhausted condition precedent, necessitating a stay or extension of the current court proceedings.
What was the precise doctrinal issue the Court had to resolve regarding the interplay between mandatory mediation and procedural timelines?
The Court was tasked with determining whether a defendant is entitled to an extension of time to contest jurisdiction based on a mandatory mediation clause when that same defendant previously ignored the claimant's pre-litigation attempts to mediate. The doctrinal issue centered on the concept of "reasonableness" in procedural applications. The Court had to decide if the Defendant’s reliance on the mediation clause was a good-faith attempt to adhere to contractual dispute resolution mechanisms or merely a tactical maneuver to delay the litigation process after having failed to engage with the Claimant’s earlier efforts.
How did H.E. Justice Nassir Al Nasser apply the test of reasonableness to the Defendant’s request for an extension?
Justice Al Nasser evaluated the timeline of the parties' interactions, noting that the Claimant had attempted to initiate mediation through the DMCC Dispute Centre as early as April 2025, and had subsequently reached out directly to the Defendant, only to be met with silence. The Court reasoned that the Defendant’s sudden interest in mediation—only after the Claimant had been forced to file a formal claim—lacked the requisite good faith to justify a significant procedural delay.
I find it unreasonable to delay the matter until 30 November 2025, when the Claimant tried to resort to mediation without any response and after the Claimant initiates proceedings, the Defendant tries to mediate. I find that the Defendant’s Application is unreasonable.
By contrasting the Defendant's prior inaction with their current reliance on the mediation clause, the Court established that the right to insist on contractual mediation steps is not absolute if the party seeking to enforce it has previously frustrated those same efforts.
Which specific Rules of the DIFC Courts and procedural steps governed the Defendant’s acknowledgment of service?
The Defendant’s procedural path was dictated by the Rules of the DIFC Courts (RDC). Having been served with the claim, the Defendant followed the standard procedure for challenging the court's authority.
The Defendant acknowledged the Claim with the intention to contest the jurisdiction of the DIFC Courts on 6 August 2025.
Following this acknowledgment, the Defendant was bound by the strict timelines set out in the RDC for filing a formal application to contest jurisdiction. The Defendant’s failure to adhere to these timelines, and their subsequent attempt to secure an extension until 30 November 2025, triggered the Court’s intervention under its case management powers to ensure the matter proceeded without undue delay.
How did the Court utilize the Defendant’s filing history to determine the outcome of the extension application?
The Court utilized the filing history to demonstrate a lack of diligence on the part of the Defendant. The record showed that the Defendant had formally signaled its intent to contest jurisdiction on 6 August 2025, yet waited until 19 August 2025 to file the application for an extension.
On 19 August 2025, the Defendant filed the Application seeking an extension of time to file an application to contest the DIFC Courts’ jurisdiction to 30 November 2025.
By examining the sequence of events—specifically the Claimant’s documented attempts to mediate in April 2025 versus the Defendant’s invocation of the clause in August 2025—the Court concluded that the Defendant’s application was not a genuine attempt to resolve the dispute, but rather a tactical delay. Consequently, the Court denied the extension and enforced a strict timeline for the jurisdictional challenge.
What was the final disposition and the specific orders made regarding costs in this matter?
The Court rejected the Defendant’s application in its entirety, effectively denying the request for a delay until November 2025. The Court imposed a strict deadline for the Defendant to proceed with its jurisdictional challenge.
The Defendant shall file an application to contest jurisdiction by no later than 7 days from the date of this Order.
Additionally, the Court held the Defendant liable for the costs associated with the failed application, signaling the court's disapproval of the procedural delay.
The Defendant shall pay the Claimant the cost of this Application to be assessed after filing the statement of costs within 5 days from the date of this Order.
What are the wider implications for practitioners regarding the use of mandatory mediation clauses in the DIFC?
This ruling serves as a warning to practitioners that mandatory mediation clauses cannot be used as a "shield" for tactical delay if a party has previously ignored the other side’s attempts to mediate. Litigants must be prepared to demonstrate consistent good faith in their engagement with alternative dispute resolution (ADR) mechanisms. If a party fails to respond to pre-litigation mediation invitations, they may be estopped from later relying on those same clauses to stall court proceedings once a claim has been filed. Practitioners should advise clients that the DIFC Courts will scrutinize the history of correspondence to determine whether an application for an extension is a genuine effort to resolve a dispute or a procedural tactic.
Where can I read the full judgment in Agro Resource Tarim Gida IC VE DIŞ TICARET v Promising International Trading CO [2025] DIFC CFI 071?
The full order can be accessed via the official DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0712025-agro-resource-tarim-gida-ic-ve-dis-ticaret-s-v-promising-international-trading-co-dmcc
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | N/A |
Legislation referenced:
- Rules of the DIFC Courts (RDC)