AL SOOR INVESTMENTS v JULIUS BAER [2022] DIFC CFI 088 — Defining the jurisdictional threshold for pre-action disclosure (02 March 2022)

This order clarifies the jurisdictional boundaries of the DIFC Court regarding pre-action disclosure applications, specifically rejecting the use of RDC r. 12.5(1) as a source of jurisdiction and establishing a "beyond argument" test for such proceedings.

Does RDC r. 12.5(1) confer jurisdiction on the DIFC Court for pre-action disclosure under Article 5(A)(1)(e) of the JAL?

The Applicants, Al Soor Investments LLC, Al Baraka Investments LLC, and Sari Investments LLC, sought to leverage RDC r. 12.5(1) to establish the Court’s jurisdiction over their pre-action disclosure application against Julius Baer (Middle East) Limited, Bank Julius Baer & Co Ltd, and two individual respondents. The Applicants argued that because the Respondents had not disputed the Court’s jurisdiction within the prescribed 14-day window, they should be "treated as having accepted" the Court’s jurisdiction, thereby satisfying the jurisdictional requirements of Article 5(A)(1)(e) of the Judicial Authority Law (JAL).

The Court firmly rejected this interpretation. H.E. Justice Ali Al Madhani noted that while RDC r. 12.5(1) creates a procedural consequence for failing to challenge jurisdiction, it does not function as a substantive source of jurisdiction. The Court emphasized that jurisdictional gateways under the JAL are fixed by law and cannot be expanded by the procedural conduct of parties or the rules of court. As noted in the judgment:

For these reasons, I reject the Applicants’ proposition that that RDC r. 12.5(1) is apt to confer upon the Court jurisdiction for the purposes of Article 5(A)(1)(e) of the JAL.

The full reasoning can be reviewed at the DIFC Courts website.

Which judge presided over the jurisdiction application in CFI 088/2019 and when was the order issued?

The application was heard by H.E. Justice Ali Al Madhani in the DIFC Court of First Instance. The hearing regarding the Jurisdiction Application took place on 9 March 2021, and the formal Order was issued on 2 March 2022.

What were the competing legal arguments regarding RDC r. 12.5(1) and the "good arguable case" test in Al Soor Investments v Julius Baer?

The Applicants argued that the jurisdictional threshold for pre-action disclosure should be lowered to a "beyond argument" test, rather than the traditional "good arguable case" standard applied in substantive claims. Furthermore, they contended that RDC r. 12.5(1) acted as a valid gateway for jurisdiction, relying on the precedent of Nest Investment Holding Lebanon S.A.L. & Ors v Deloitte & Touche (M.E.) [2018] DIFC CA 011, where certain RDC rules were found to confer jurisdiction.

Conversely, the Respondents argued that submission to the Court’s jurisdiction cannot create jurisdiction where none exists under the JAL. They maintained that RDC r. 12.5(1) merely waives personal objections to service or forum, but does not grant the Court the power to hear a claim that falls outside its statutory mandate. Counsel for the Respondents emphasized that the Court is bound by the Court of Appeal’s decision in IGPL v Standard Chartered Bank [2015] CA 004, which established that submission cannot extend the scope of the Court's jurisdiction.

What was the precise doctrinal question regarding the jurisdictional gateway for pre-action disclosure that the Court had to resolve?

The Court was tasked with determining whether the jurisdictional gateways provided by Article 5(A) of the JAL are satisfied in the context of a pre-action disclosure application (RDC r. 28.48) where no substantive proceedings have yet been commenced. Specifically, the Court had to decide if the "good arguable case" test—typically used to determine if a court has jurisdiction over a substantive claim—is appropriate for a pre-action disclosure application, or if a different, more restrictive test is required given the absence of a live dispute.

How did Justice Al Madhani apply the "beyond argument" test to pre-action disclosure applications?

Justice Al Madhani reasoned that because pre-action disclosure is a preliminary step, the Court must be careful not to overreach its jurisdiction before a substantive claim is even filed. He determined that the "good arguable case" test, which is standard for substantive claims, is not the correct threshold for these applications. Instead, he adopted a "beyond argument" test, ensuring that the Court only exercises its power when the jurisdictional basis is clear and not subject to reasonable debate.

The Court’s reasoning focused on the distinction between procedural rules and substantive jurisdictional gateways:

The jurisdiction test to be applied in the Disclosure Application is not the “good arguable case” test but rather a “beyond argument” test.

The Judge further clarified the limited effect of RDC r. 12.5(1) in this context:

I think the effect of the Court treating a Defendant as accepting that the Court has jurisdiction or should exercise jurisdiction will generally be limited to the sphere of personal objection to the Court’s jurisdiction and such a Defendant will be deemed to have abandoned any objections previously made or perhaps as not intending to subsequently make any.

Which specific DIFC statutes and RDC rules were central to the Court’s analysis of jurisdiction?

The Court’s analysis centered on Article 5(A)(1)(e) of Dubai Law No. 12 of 2004 (the Judicial Authority Law), which defines the jurisdictional gateways for the DIFC Courts. The procedural rules under scrutiny included RDC r. 28.48 (the rule governing pre-action disclosure) and RDC r. 12.5(1), which outlines the consequences of failing to dispute jurisdiction within 14 days. The Court also referenced RDC r. 20.7 in the context of the Applicants' reliance on Nest Investment Holding.

How did the Court distinguish or apply the precedents of IGPL v Standard Chartered Bank and Nest Investment Holding?

The Court used IGPL v Standard Chartered Bank [2015] CA 004 to reinforce the principle that submission cannot create jurisdiction where the JAL does not provide it. Justice Al Madhani distinguished Nest Investment Holding [2018] DIFC CA 011 by noting that while some RDC rules may be "apt to confer jurisdiction," RDC r. 12.5(1) does not possess that character. He noted that the rule merely creates a rebuttable presumption of acceptance of jurisdiction regarding personal objections, rather than a substantive grant of authority.

What was the final disposition of the Jurisdiction Application and the resulting order for costs?

The Court declared that RDC r. 12.5(1) is not apt to confer jurisdiction upon the Court. It further ordered that the "beyond argument" test is the correct standard for pre-action disclosure applications. The Court ordered that costs for the application be "costs in the case," meaning the ultimate liability for these costs would be determined at the conclusion of the substantive proceedings.

How does this ruling change the practice for litigants seeking pre-action disclosure in the DIFC?

This decision significantly tightens the requirements for pre-action disclosure. Practitioners can no longer rely on a respondent’s failure to file a timely jurisdiction challenge (under RDC r. 12.5(1)) as a shortcut to establishing the Court's jurisdiction. Furthermore, the adoption of the "beyond argument" test creates a higher hurdle for applicants, requiring them to demonstrate a more robust jurisdictional nexus before the Court will compel disclosure of documents. Litigants must now ensure that their jurisdictional arguments are solid from the outset, as the Court will not permit procedural defaults to substitute for statutory jurisdictional requirements.

Where can I read the full judgment in Al Soor Investments v Julius Baer [2022] DIFC CFI 088?

The full judgment can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-088-2019-1-al-soor-investments-llc-2-al-baraka-investments-llc-3-sari-investments-llc-v-4-julius-baer-middle-east-limited-5 or via the CDN link.

Cases referred to in this judgment:

Legislation referenced:

• Dubai Law No. 12 of 2004 (Judicial Authority Law), Article 5(A)(1)(e)
• RDC r. 28.48
• RDC r. 12.5(1)
• RDC r. 20.7