Al Soor Investments v Julius Baer (Middle East) [2023] DIFC CFI 088 — Pre-action disclosure and the scope of Article 34 (19 May 2023)

How did the Claimants in Al Soor Investments v Julius Baer (Middle East) justify their request for pre-action disclosure regarding potential claims for negligent investment advice?

The dispute centers on investment services provided by the Respondents to the Claimants, a group of UAE-based investment companies. The Claimants allege that they were induced to invest in the "Al Dana Investment Fund" through a series of equity swaps between 2015 and 2018. The core of the dispute involves claims of negligent investment advice, misrepresentations regarding the fund, and potential breaches of DIFC Regulatory Law, specifically regarding whether the Respondents were properly licensed by the DFSA to arrange the relevant deals. The Claimants sought pre-action disclosure to clarify the roles of the individual Respondents (Mr. Emad Odeh and Mr. Nico Tschui) and to identify which corporate entity—Julius Baer (Middle East) Limited or Bank Julius Baer & Co Ltd—was the primary counterparty in the transactions.

The Claimants argued that this information was essential to determine the viability of their substantive claims, which they estimated to be in excess of AED 100 million. The Respondents resisted the application, contending that the procedural requirements for pre-action disclosure were not met. As noted in the judgment:

I agree with the Respondents that the Court’s power to order pre-action disclosure under RDC r. 28.48 has been precluded.

Despite this, the Court found that the Claimants' need for clarity regarding the Respondents' corporate structures and employment relationships justified an order for production, albeit under a different legal mechanism. Further details on the dispute can be found at the DIFC Courts judgment portal.

Which judge presided over the application for pre-action disclosure in CFI 088/2019 and when was the order issued?

The application was heard by H.E. Deputy Chief Justice Ali Al Madhani in the DIFC Court of First Instance. The hearing for both the pre-action disclosure application and the stay application took place on 11 October 2022, with the final Order with Reasons being issued on 19 May 2023.

What were the specific legal arguments advanced by the Claimants and Respondents regarding the applicability of RDC r. 28.48?

The Claimants argued that the Court should exercise its discretion to order the production of documents to facilitate the identification of the correct defendants and the nature of the regulatory breaches. They contended that even if the strict criteria for pre-action disclosure under the Rules of the DIFC Courts (RDC) were technically hampered by the existence of the current proceedings, the Court possessed a broader, residual power to order disclosure to ensure justice.

Conversely, the Respondents argued that the Claimants’ reliance on RDC r. 28.48 was procedurally flawed because that rule is designed exclusively for potential, rather than extant, proceedings. They maintained that since the litigation had already commenced, the specific "pre-action" regime was unavailable. The Respondents further argued that the Claimants had failed to meet the threshold requirements for such an extraordinary order, asserting that the application was a fishing expedition rather than a targeted request for essential evidence.

Does the DIFC Court have the power to order pre-action disclosure under RDC r. 28.48 when proceedings are already extant?

The Court had to determine whether the procedural mechanism of RDC r. 28.48, which is explicitly framed for pre-action scenarios, could be invoked once a claim has been filed. The doctrinal issue was whether the "pre-action" nature of the rule acts as a jurisdictional bar or merely a procedural guideline. The Court addressed the tension between the specific constraints of the RDC and the broader, inherent powers of the Court to manage its own process and ensure the fair determination of disputes.

How did H.E. Deputy Chief Justice Ali Al Madhani interpret the relationship between RDC r. 28.48 and Article 34 of the DIFC Court Law?

The Court reasoned that while the specific rule for pre-action disclosure is limited to cases where proceedings have not yet commenced, the Court is not left without a remedy. Justice Al Madhani held that Article 34 of the DIFC Court Law provides a broad, freestanding power to order the production of documents. He reasoned that the Court could import the principles of the RDC pre-action disclosure regime as a guide for exercising this statutory discretion, even if the rule itself was technically inapplicable.

As the judge explained:

For these reasons, I think the approach proposed by the Applicants, to, if there are good grounds for ordering pre-action disclosure, order the production sought under Article 34, is appropriate in the circumstances of the case.

The Court emphasized that the policy behind the RDC rules remained a relevant consideration for the exercise of its Article 34 powers, effectively bridging the gap between the specific procedural rule and the Court's overarching statutory authority.

Which specific DIFC statutes and RDC rules were applied by the Court to resolve the disclosure dispute?

The Court primarily relied on Article 34 of the DIFC Court Law as the source of its freestanding power to order document production. Regarding the RDC, the Court analyzed RDC r. 28.48, which governs pre-action disclosure, alongside RDC r. 28.17, RDC r. 28.28, and RDC r. 28.56. The Court noted that the jurisdictional requirements of RDC r. 28.48, while not strictly applicable to extant proceedings, provided the necessary framework for determining whether the request for disclosure was reasonable and necessary.

How did the Court utilize English authorities like CPR r. 31.16(3)(c) in interpreting the DIFC disclosure regime?

The Court looked to English authorities to interpret the scope of disclosure obligations. Specifically, the Court cited Personal Management Solutions Ltd v Gee 7 Group Wealth Ltd [2015] EWHC 3859 (Ch) and Hart v Royal Borough of Kensington and Chelsea [2022] EWHC 1090 (QB) to support its reasoning on the application of disclosure rules. The Court noted that its conclusions were consistent with the English approach to CPR r. 31.16(3)(c), which conditions pre-action disclosure on the requirements of standard disclosure. As stated in the judgment:

These conclusions are, in my judgment, in line with the English authorities on the CPR’s equivalent jurisdictional requirement, CPR r. 31.16(3)(c), which makes an order for pre-action disclosure conditional upon the requirements of standard disclosure being met i.e. pre-action disclosure extends only to documents which adversely affect or support a party’s case (CPR r. 31.6).

What was the final disposition of the PAD Application and the Stay Application?

The Court granted the application for pre-action disclosure in part, ordering the Applicants to file a schedule detailing the specific documents required from the witness statement of Sara Jayne Sheffield. The Court directed that any order for production would be made under Article 34 of the DIFC Court Law. Furthermore, the Court dismissed the Respondents' Stay Application, allowing the proceedings to continue. The parties were ordered to provide submissions on costs within the same timeframe as their submissions on the disclosure schedule.

What are the practical implications of this ruling for DIFC practitioners handling complex banking and finance litigation?

This judgment provides significant clarity for practitioners, confirming that the DIFC Court is not constrained by the strict "pre-action" label of RDC r. 28.48 if the underlying need for document production is justified. By affirming the broad scope of Article 34 of the DIFC Court Law, the Court has signaled that it will prioritize the substantive goal of document production over rigid procedural categorization. Litigants should anticipate that even after proceedings have commenced, the Court may use the principles of the RDC pre-action disclosure regime to order the production of documents if it serves the interests of justice.

Where can I read the full judgment in Al Soor Investments LLC v Julius Baer (Middle East) Limited [2023] DIFC CFI 088?

The full judgment is available on 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-1-julius-baer-middle-east-limited-2-4. The document can also be accessed via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-088-2019_20230519.txt.

Cases referred to in this judgment:

Legislation referenced:

• DIFC Court Law Article 34
• RDC r. 28.48
• RDC r. 28.56
• RDC r. 28.36
• RDC r. 28.28
• RDC r. 28.17