The DIFC Court of First Instance has clarified the stringent limitations of RDC 25.1(12), ruling that interim injunctions cannot be used to secure future or contingent commission payments where no identifiable fund currently exists.
What was the nature of the dispute between Houlihan Lokey and SP International Property Developers regarding the 1.25% commission fee?
The dispute centered on a claim for a transaction fee arising from an engagement letter dated 29 August 2023. The Claimant, Houlihan Lokey (MEA Financial Advisory) Ltd (“HL”), alleged that it was entitled to a commission of 1.25% of the total amount committed by Dubai Islamic Bank (DIB) for the refinancing of the Defendant’s existing facilities. The Defendant, SP International Property Developers LLC (“SPI”), contested the entitlement, leading HL to seek an interim injunction to secure the disputed funds.
The core of the conflict involved the characterization of the commission as a debt versus a contingent future payment. HL sought to freeze or secure the funds at the point of the DIB transaction, while SPI argued that the underlying contractual conditions for the fee had not been met and that the court lacked the jurisdiction to grant such security over prospective assets. As noted in the court's findings:
(4) Pursuant to the cross-undertaking in damages given by the Claimant, there shall be an inquiry as to damages suffered by the Defendant as a result of the Interim Injunction Order.
The dispute highlights the high stakes for financial advisors operating in the DIFC, where the failure to secure a contractual fee can lead to significant litigation costs and potential liability for damages under cross-undertakings. Full judgment available here.
Which judge presided over the Return Date hearing for CFI 108/2025 in the DIFC Court of First Instance?
The matter was heard by H.E. Justice Rene Le Miere in the DIFC Court of First Instance. The Return Date hearing took place on 12 December 2025, with the final Order with Reasons issued on 19 December 2025.
What were the primary legal arguments advanced by Houlihan Lokey and SP International Property Developers?
Counsel for the Claimant, Mr. Craig KC, argued that the court should maintain the interim injunction to protect the integrity of the commission fee, asserting that the refinancing transaction with DIB represented a clear trigger for the payment under the Engagement Letter. HL contended that without the court’s intervention, the Defendant might dissipate the proceeds of the refinancing, rendering any future judgment for the commission effectively worthless.
Conversely, the Defendant argued that the injunction was improperly granted because the commission was a future, contingent payment rather than an existing, identifiable fund. SPI maintained that the requirements for a freezing order were not met, specifically citing a lack of evidence regarding any real risk of asset dissipation. SPI further argued that the injunction was causing severe commercial prejudice by obstructing the refinancing process with DIB, which was essential for the ongoing development of the Imperial Avenue project.
What was the precise jurisdictional question the court had to answer regarding the application of RDC 25.1(12)?
The court was required to determine whether RDC 25.1(12) provides a jurisdictional basis to secure a future or contingent debt that has not yet crystallized into an identifiable fund. Specifically, the court had to decide if the rule could be invoked to compel a party to pay into court an amount equivalent to a disputed commission fee that was tied to a transaction yet to be completed. The doctrinal issue was whether the "specified fund" requirement of the rule could be satisfied by a prospective payment, or if it strictly requires the existence of a segregated, identifiable asset at the time the order is sought.
How did Justice Le Miere apply the balance of convenience test in the context of the interim injunction?
Justice Le Miere emphasized that the court must assess the practical impact of an injunction on the commercial viability of the respondent’s operations. The judge found that the injunction had already significantly delayed the refinancing process, which was a critical commercial transaction for the Defendant. The court rejected the notion that the balance of convenience could be assessed based on hypothetical mitigation steps the respondent might take. As the court noted:
However, weighing all factors, including the practical impact of the injunction on the refinancing process and the absence of any agreed immediate mechanism to substitute alternative security, the Court concludes that the balance of convenience favours discharging the injunction.
Furthermore, the court clarified that the equitable jurisdiction to grant such relief is not triggered simply because a claimant fears that enforcement of a future judgment might be difficult. The court held that:
The equitable jurisdiction is not engaged merely because enforcement may be difficult or because the respondent has declined to provide voluntary security.
Which specific statutes and RDC rules were central to the court’s decision in CFI 108/2025?
The primary rule at issue was RDC 25.1(12), which governs the court's power to order a party to pay a specified fund into court. The court interpreted this rule as requiring an existing, identifiable fund at the time of the order. The court also relied on the general principles of equitable relief and the requirements for freezing orders, which necessitate evidence of a real risk of dissipation of assets.
How did the court utilize the cited precedents, including Vannin Capital PCC v Al Khorafi, in its reasoning?
The court cited Vannin Capital PCC v Al Khorafi [2015] DIFC CFI 036 to contextualize the principles of interim payments and the court's discretion in managing costs and security. While Vannin dealt with interim payment orders in the context of cost assessments, the court used the principles established therein to underscore the necessity of a clear, existing entitlement before the court exercises its discretionary powers to secure funds. The court also drew upon English authorities, such as Myers v Design Inc (International) Ltd and LLC Eurochem North-West v Société Générale S.A., to reinforce the standard that freezing orders and interim injunctions are "severe remedies" that should not be used to disrupt commercial transactions without compelling evidence of necessity and a clear legal basis.
What was the final disposition of the court, and what orders were made regarding damages and costs?
The court dismissed both the Continuation Application and the Freezing Order Application, and ordered the discharge of the Interim Injunction Order. Crucially, the court ordered an inquiry into the damages suffered by the Defendant due to the injunction, based on the Claimant’s cross-undertaking. Regarding costs, the court ruled:
(7) Costs: (a) The Defendant is the successful party on these applications. Subject to sub- paragraph 7(b), the Claimant shall pay the Defendant’s costs in accordance with the usual rule.
The inquiry into damages is to be conducted at or following the trial of the substantive claim, with case management directions to be determined at a future conference.
What are the wider implications of this judgment for practitioners in the DIFC?
This ruling serves as a stern warning to claimants seeking to use interim injunctions as a tactical tool to secure future or contingent debts. Practitioners must recognize that RDC 25.1(12) is not a shortcut to security for unliquidated or prospective claims. The judgment reinforces that the DIFC Courts will not allow interim relief to impede legitimate commercial transactions unless the claimant can demonstrate both a clear, existing fund and a genuine risk of dissipation. Future litigants must anticipate that seeking such orders without a solid evidentiary basis will likely result in the discharge of the injunction and the activation of the claimant’s cross-undertaking in damages.
Where can I read the full judgment in Houlihan Lokey v SP International Property Developers [2025] DIFC CFI 108?
The full judgment can be accessed via the DIFC Courts website here or through the CDN link here.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| Vannin Capital PCC v Al Khorafi | [2015] DIFC CFI 036 | Principles of interim payments and court discretion |
| Myers v Design Inc (International) Ltd | [2003] EWHC 103 (Ch) | Standard for severe equitable remedies |
| LLC Eurochem North-West v Société Générale S.A. | [2023] EWHC 2720 (Comm) | Standard for freezing orders and commercial impact |
Legislation referenced:
- RDC 25.1(12) (Interim injunctions/payment into court)