MOHAMMED SADIYYAH v KHATIB & ALAMI [2021] DIFC CFI 099 — Stay of proceedings pending enforcement of exclusive jurisdiction clause (14 June 2022)

What was the nature of the dispute between Mohammed Sadiyyah and Khatib & Alami regarding the Global Settlement Agreement?

The litigation centers on a substantial financial claim arising from a long-standing employment and shareholder relationship. The Claimant, Mr. Mohammed Sadiyyah, a former General Manager and Executive Vice President of the Defendants' operations, sought to recover significant funds he alleged were owed under a contract executed in 2019. The Defendants, Khatib & Alami and Khatib & Alami Partners Ptd Ltd, contested both the validity of the service of the claim and the appropriateness of the DIFC as a forum for the dispute.

As noted in the court’s summary of the claim:

The Claimant, Mr Mohammed Sadiyyah, commenced proceedings in this Court claiming USD 10,940,815, being monies which he asserts the Defendants, Khatib & Alami and Khatib & Alami Partners Ptd Ltd, are obliged to pay him pursuant to a written agreement described as a “Global Settlement Agreement” (the “GSA”) executed by the parties on 18 April 2019.

The financial stakes were high, involving not only the principal sum but also substantial interest claims. The Claimant’s position was that the GSA represented a binding commitment to settle his employment entitlements, while the Defendants argued that the agreement itself mandated that any disputes be resolved exclusively in Beirut, Lebanon. The full details of the claim can be reviewed at the DIFC Courts website.

Which judge presided over the hearing of Mohammed Sadiyyah v Khatib & Alami in the Court of First Instance?

The matter was heard by Justice Wayne Martin in the DIFC Court of First Instance. The hearing took place on 10 May 2022, with the resulting Order with Reasons issued on 14 June 2022.

What were the primary legal arguments advanced by Sarah Malik and Tom Montagu-Smith QC regarding the DIFC Court’s jurisdiction?

Sarah Malik, appearing for the Claimant, argued that the DIFC Court possessed the necessary jurisdiction to hear the dispute. She contended that the negotiations surrounding the GSA, which took place within the DIFC, provided a sufficient nexus to satisfy the jurisdictional requirements under the Judicial Authority Law. The Claimant’s position was that the court should exercise its discretion to hear the matter despite the existence of a foreign jurisdiction clause, suggesting that the criteria for declining jurisdiction should mirror the principles of forum non conveniens.

Conversely, Tom Montagu-Smith QC, representing the Defendants, mounted a two-pronged attack. First, he challenged the procedural validity of the service of process, arguing that the methods used did not comply with the laws of the place of service. Second, he argued that the GSA contained an exclusive jurisdiction clause favoring the courts of Beirut, Lebanon. He maintained that this clause was binding and that the DIFC Court should decline to exercise any jurisdiction it might otherwise have, as the parties had contractually agreed to exclude all other fora.

Did the DIFC Court have to determine whether it possessed jurisdiction under Article 5(A)(1)(b) of the JAL before addressing the stay application?

Yes. The court was required to address the jurisdictional "gateway" issue as a threshold matter. Even though the Defendants argued that the GSA’s exclusive jurisdiction clause ousted the court's authority, Justice Martin first had to establish whether the DIFC Court had the power to hear the case at all under the Judicial Authority Law (JAL). The doctrinal issue was whether the specific conduct of the parties—namely, the negotiations of the GSA occurring within the DIFC—was sufficient to trigger the court's jurisdiction under Article 5(A)(1)(b), which concerns contracts performed or entered into within the DIFC.

How did Justice Wayne Martin apply the Al Khorafi principle to determine the existence of DIFC jurisdiction?

Justice Martin examined the factual nexus between the GSA negotiations and the DIFC. He concluded that the negotiations were sufficiently significant to establish a connection to the DIFC, thereby satisfying the requirements of the JAL. He applied the test established in Al Khorafi v Bank Sarasin-Alpen, which emphasizes that the location and substance of negotiations can serve as a jurisdictional anchor.

As the court reasoned:

Based on the principle enunciated by the Court in Al Khorafi, those negotiations, and their significance, provide the requisite connection between the agreement the subject of these proceedings and th

Consequently, the court affirmed its jurisdiction, noting:

On the evidence currently before the Court, the Court has jurisdiction to entertain the claim pursuant to Article 5(A)(1)(b) of the JAL.

Which specific statutes and rules were central to the court’s analysis of jurisdiction and service?

The court’s analysis was primarily grounded in Article 5 of the Judicial Authority Law (JAL). Specifically, Article 5(A)(1)(b) was the focal point for establishing the court's jurisdiction based on the location of the contract negotiations. Furthermore, the court addressed the validity of service under RDC 9.53, which governs the requirements for service of process. The court also referenced the principles of contractual interpretation established in Arnold v Britton and Marks & Spencer Plc v BNP Paribas Securities to determine the scope and exclusivity of the jurisdiction clause contained within the GSA.

How did the court utilize the cited precedents to address the enforcement of the exclusive jurisdiction clause?

The court utilized Al Khorafi v Bank Sarasin-Alpen to confirm that the DIFC Court has the power to hear cases with a sufficient nexus, even if the parties have agreed to a foreign forum. However, it distinguished this from the question of whether that power should be exercised. By citing Standard Steamship Owners Protection & Indemnity Association (Bermuda) Ltd v Gann, the court reinforced the principle that where parties have entered into an exclusive jurisdiction agreement, the court will generally hold them to their bargain unless there is a "strong case" to the contrary. The court found that the Claimant failed to meet this high threshold, leading to the decision to stay the proceedings.

What was the final disposition of the case and the orders made regarding costs?

The court ultimately stayed the proceedings, effectively preventing the Claimant from pursuing the claim in the DIFC while the exclusive jurisdiction agreement in favor of the courts of Beirut, Lebanon remained in effect. The court also granted the Defendants' application to adduce expert evidence and ruled that service had not been validly effected. Regarding costs, the court ordered the Claimant to bear the financial burden of the proceedings to date.

As stated in the order:

The Claimant shall pay the Defendants’ costs of the proceedings to date to be assessed by the Registrar if not agreed.

The court also clarified the nature of the stay:

As this Court has jurisdiction, the proper course is to stay these proceedings indefinitely rather than dismiss them, against the contingency that events may occur which render it appropriate for this Court to exercise its jurisdiction.

How does this ruling influence the practice of litigating Global Settlement Agreements in the DIFC?

This case serves as a critical reminder that establishing a jurisdictional gateway under Article 5(A)(1)(b) is only the first step in DIFC litigation. Practitioners must anticipate that the court will strictly enforce exclusive jurisdiction clauses in settlement agreements, regardless of where negotiations occurred. Litigants seeking to bypass such clauses face a high burden of proof to demonstrate why the court should exercise its discretion to hear the case. Furthermore, the case highlights the necessity of ensuring strict compliance with service of process rules, as the court will not hesitate to invalidate service that does not adhere to the laws of the place of service.

Where can I read the full judgment in Mohammed Sadiyyah v (1) Khatib & Alami (2) Khatib & Alami Partners Ptd Ltd [2021] DIFC CFI 099?

The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/mohammed-sadiyyah-v-1-khatib-alami-2-khatib-alami-partners-ptd-ltd-2021-difc-cfi-099

Cases referred to in this judgment:

Legislation referenced:

• Article 5(A)(1)(b) of the Judicial Authority Law (JAL)
• Article 5(A)(2) of the Judicial Authority Law (JAL)
• Article 5(A)(3) of the Judicial Authority Law (JAL)
• RDC 9.53 (Service of Process)