AL BUHAIRA NATIONAL INSURANCE COMPANY v HORIZON ENERGY [2022] DIFC CFI 098 — Jurisdiction and abuse of process in marine insurance disputes (27 April 2022)

What was the nature of the dispute between Al Buhaira National Insurance Company and Horizon Energy regarding the US$70 million claim for the vessel "BETA"?

The dispute arose from a marine insurance contract covering the vessel "BETA," which was insured for US$70 million. In December 2019, the insured, Horizon Energy LLC, discovered the vessel was missing, later identifying it as the "MAKRAN," currently in the service of the Iranian navy. Al Buhaira National Insurance Company (ABNIC) sought to avoid the policies ab initio based on alleged misrepresentations and sought declarations that it was not liable for the loss. Horizon Energy challenged the DIFC Court's jurisdiction and argued that the proceedings constituted an abuse of process.

As noted in the court's summary of the application:

This is Horizon’s application disputing jurisdiction and seeking to have the Claim Form and its service set aside, alternatively seeking to have ABNIC’s claims struck out as an abuse of process. No point is taken that Horizon is denying that the Court has jurisdiction, and at the same time asking that the Court exercise jurisdiction by striking the claims out.

The core of the conflict involved whether the insurer could seek declaratory relief in the DIFC when the insured had initiated a formal claim process under the UAE Insurance Law. The full judgment can be accessed via the DIFC Courts website.

Which judge presided over the jurisdiction challenge in CFI 098/2021 and when was the order issued?

Justice Roger Giles presided over the matter in the DIFC Court of First Instance. The hearing for the application took place on 4 April 2022, and the Order with Reasons was formally issued on 27 April 2022.

What specific legal arguments did Nicholas Craig QC and Gregor Hogan advance regarding the interpretation of the jurisdiction clause?

Nicholas Craig QC, representing the Claimant (ABNIC), argued that the jurisdiction clause in the policies—which submitted disputes to the "courts of the United Arab Emirates"—was sufficiently clear and express to confer jurisdiction upon the DIFC Courts under Article 5A(2) of the Judicial Authority Law. He contended that the DIFC Courts are, by definition, courts of the UAE, and that there was no basis to exclude them from the scope of the agreement.

Conversely, Gregor Hogan, for the Defendant (Horizon Energy), argued that the proceedings were an abuse of process. He contended that ABNIC was attempting to circumvent the mandatory dispute resolution procedures set out in Article 110 of the UAE Insurance Law. The Defendant maintained that the insurer had failed to engage with the statutory notification process and that the DIFC Court was not the appropriate forum for resolving what they characterized as a regulatory insurance dispute.

What was the precise doctrinal issue the court had to resolve regarding the scope of "courts of the United Arab Emirates"?

The court had to determine whether the phrase "courts of the United Arab Emirates" in a commercial contract constitutes a "specific, clear and express" agreement to confer jurisdiction on the DIFC Courts as required by Article 5A(2) of the Judicial Authority Law. Furthermore, the court had to decide if Article 110 of the UAE Insurance Law—which governs insurance disputes—operates as an exclusive statutory bar that prevents an insurer from seeking declaratory relief in the DIFC Courts before the administrative or onshore dispute resolution mechanisms have been exhausted.

How did Justice Roger Giles apply the doctrine of contractual interpretation to the jurisdiction clause?

Justice Giles relied on the established line of authority, including Goel v Credit Suisse and IGPL v Standard Chartered Bank, to interpret the jurisdictional language. He reasoned that the DIFC Courts are constitutional courts of the UAE and that, absent specific language to the contrary, the ordinary meaning of "courts of the United Arab Emirates" includes the DIFC Courts. He rejected the notion that the parties intended to exclude the DIFC forum.

Regarding the interpretation of the clause, the judge noted:

In my view, reason has not been shown to depart from the ordinary and natural meaning of the conferring of jurisdiction on “the courts of the United Arab Emirates“ as including the DIFC Courts.

The court further addressed the abuse of process claim by examining whether ABNIC’s pursuit of declaratory relief violated the spirit or letter of the UAE Insurance Law. Justice Giles concluded that the insurer was entitled to seek clarity on its liability through the court system, and that the existence of a notification process did not strip the court of its jurisdiction to hear a claim for declarations.

Which specific statutes and rules were applied to determine the validity of the DIFC Court's jurisdiction?

The court primarily applied Article 5A(2) of the Judicial Authority Law (Dubai Law No 12 of 2004), which governs the jurisdiction of the Court of First Instance based on written agreement. The court also analyzed the interaction between this provision and Article 110 of the UAE Insurance Law. The court confirmed that the absence of an arbitration agreement was a critical factor, as noted in the judgment:

It is common ground that ABNIC and Horizon did not enter into an arbitration agreement in or in relation to the Policies.

The court also referenced the Rules of the DIFC Courts (RDC) regarding the service of the Claim Form and the criteria for striking out claims for abuse of process.

How did the court utilize the precedents of Goel v Credit Suisse and IGPL v Standard Chartered Bank?

The court utilized Goel v Credit Suisse (Switzerland) Ltd [2021] DIFC CA 002 to establish that the term "courts of Dubai" is not ambiguous and includes the DIFC Courts. By extension, Justice Giles applied the reasoning from IGPL v Standard Chartered Bank [2015] DIFC CA 004, which specifically addressed the phrase "courts of the United Arab Emirates." The court held that these precedents create a "default position" where the DIFC Courts are included within such terminology unless the contract explicitly provides otherwise.

What was the final disposition of the application and the specific orders regarding costs?

The court dismissed the Defendant's application in its entirety, finding that the DIFC Courts had proper jurisdiction and that the claim was not an abuse of process. The Defendant was ordered to pay the Claimant's costs of the application.

As stated in the order:

I order that the application be dismissed, and that the Defendant pay the Claimant’s costs of the application assessed at AED 300,000.

The court further clarified that the insurer's actions were not contrary to the dispute resolution procedures of the Insurance Law:

It follows that ABNIC is not acting contrary to the dispute resolution procedure in Article 110 in bringing these proceedings against Horizon claiming declaratory relief.

How does this judgment influence the practice of marine insurance litigation in the DIFC?

This case reinforces the high threshold required for a defendant to challenge jurisdiction when a contract refers to "courts of the UAE." Practitioners should anticipate that the DIFC Courts will continue to interpret broad jurisdictional clauses in favor of their own competence. Furthermore, the ruling provides clarity that Article 110 of the UAE Insurance Law does not serve as a jurisdictional "shield" that prevents insurers from seeking declaratory relief in the DIFC. Litigants must now anticipate that the DIFC Courts will likely exercise jurisdiction over insurance disputes unless an arbitration agreement or an explicit exclusion of the DIFC is present.

Where can I read the full judgment in Al Buhaira National Insurance Company v Horizon Energy LLC [2022] DIFC CFI 098?

The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-098-2021-al-buhaira-national-insurance-company-v-horizon-energy-llc-1 and via the CDN: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-098-2021_20220427.txt

Cases referred to in this judgment:

Legislation referenced:

• Judicial Authority Law, Dubai Law No 12 of 2004, Article 5A(2)
• UAE Insurance Law, Article 110