What was the specific dispute between Hayri International and Hazim Telecom that necessitated an anti-suit injunction in ARB 010/2016?
The dispute arose from a breach of an arbitration agreement between Hayri International LLC and the two Hazim Telecom entities. The Claimant sought to enforce its rights under an agreement that mandated arbitration, but the Defendants initiated parallel litigation in Pakistan, effectively attempting to bypass the agreed-upon dispute resolution mechanism. The Claimant applied for an injunction to restrain these foreign proceedings, asserting that the DIFC was the contractually designated seat of arbitration.
The stakes involved not only the underlying commercial conflict but also the integrity of the arbitration agreement itself. By initiating proceedings in Pakistan, the Defendants sought to undermine the Claimant’s right to a neutral, contractually mandated forum. Justice Sir Jeremy Cooke addressed the necessity of the intervention, noting the Defendants' failure to comply with their contractual obligations:
I am also asked to deal with issues of costs. In my judgment, it is right that indemnity costs should be awarded, both because the conduct in question amounts to a breach of the agreement to arbitrate in bringing proceedings in Pakistan and reasonable costs incurred would be recoverable as a matter of damages for breach of that obligation and by analogy are therefore recoverable as a matter of costs.
The deep editorial analysis of this case is at: Hayri International v Hazim Telecom [2016] DIFC ARB 010: The Anti-Suit Injunction as a Shield Against Procedural Sabotage
Which judge presided over the return date hearing for the injunction against Hazim Telecom in the DIFC Arbitration Division?
The matter was heard by Justice Sir Jeremy Cooke in the DIFC Court of First Instance, Arbitration Division. The hearing took place on 9 March 2017, following an earlier ex parte injunction granted by the same judge on 25 February 2017.
How did Tom Montagu-Smith QC and the Defendants’ counsel frame their respective positions regarding the DIFC seat and the validity of the injunction?
Tom Montagu-Smith QC, representing Hayri International, argued that the arbitration clause clearly established the DIFC as the seat of arbitration and incorporated the DIFC-LCIA rules. He maintained that the Defendants’ initiation of proceedings in Pakistan constituted a clear breach of the arbitration agreement, justifying the Court’s intervention through both negative and mandatory injunctions.
The Defendants, while initially appearing through local counsel to request an adjournment, ultimately failed to present substantive arguments at the return date hearing. Instead, they submitted a letter claiming insufficient time to prepare and alleging that the Court had a "closed mind." Justice Sir Jeremy Cooke rejected these assertions, noting that the Defendants had been granted adequate time to instruct specialist counsel, particularly given that the legal principles surrounding anti-suit injunctions are well-established in commercial practice.
What was the precise doctrinal question Justice Sir Jeremy Cooke had to resolve regarding the interpretation of the "Rules of Arbitration of the DIFC"?
The Court had to determine whether the phrase "Rules of Arbitration of the DIFC" in the parties' agreement constituted a reference to the DIFC-LCIA Rules or merely a general reference to DIFC law. This was a jurisdictional threshold issue; if the DIFC-LCIA rules were incorporated, it would solidify the conclusion that the DIFC was the intended seat of arbitration and that the DIFC-LCIA was the body responsible for administering the dispute.
How did Justice Sir Jeremy Cooke apply the test for determining the seat of arbitration and the incorporation of arbitration rules?
Justice Sir Jeremy Cooke applied a constructionist approach to the arbitration clause, looking at the agreement as a whole to discern the parties' intent. He emphasized that the reference to the DIFC selecting a third arbitrator was a critical indicator of the parties' intent to utilize the DIFC-LCIA framework. He reasoned that the interpretation of the clause must be commercially sensible:
To my mind the only sensible conclusion when looking at the clause as a whole is to say that the DIFC-LCIA rules are incorporated and that DIFC-LCIA is the body responsible for administration of the arbitration.
The Judge further relied on his earlier findings from the ex parte hearing, noting that the Claimant had demonstrated a high degree of probability that the DIFC was the seat. He stated:
I gave reasons at that time which have been transcribed in which I stated that in my judgment the Claimant could show to a high degree of probability that DIFC was the seat of arbitration.
Which specific statutes and RDC rules did the Court apply to govern the procedure and the issuance of the injunction?
The Court primarily relied on the DIFC Arbitration Law and the Rules of the DIFC Courts (RDC). Specifically, the Court referenced Part 43 of the RDC, which governs arbitration-related applications. Justice Sir Jeremy Cooke acknowledged an error in the initial order regarding the period for acknowledgment of service, noting that under Part 43, a 28-day period should have been allowed rather than the 14 days initially stipulated.
How did the Court utilize the precedent of the "high degree of probability" test in confirming the DIFC as the seat of arbitration?
Justice Sir Jeremy Cooke utilized the "high degree of probability" test to evaluate the strength of the Claimant's case regarding the seat of arbitration. He confirmed that the evidence presented at the ex parte stage remained compelling and that nothing had been submitted by the Defendants to undermine that conclusion. He noted:
I have seen nothing since then to persuade me that that was a wrong conclusion to make and that is the view that I hold on the basis of the submissions made to me and the form of words adopted.
By maintaining this standard, the Court ensured that the anti-suit injunction was supported by a robust jurisdictional foundation, effectively neutralizing the Defendants' attempts to challenge the seat through parallel litigation.
What was the final disposition of the Court, and how did it calculate the indemnity costs awarded to Hayri International?
The Court granted a final negative and mandatory injunction against the Defendants, restraining them from continuing the proceedings in Pakistan. Regarding costs, the Court awarded indemnity costs to the Claimant. The Judge noted that the standard for indemnity costs typically results in the recovery of approximately 80% of the claimed amount. Consequently, the Court ordered an interim payment of USD 65,000, acknowledging that the final figure would be adjusted based on the 80% recovery rule:
It is the general rule that an order for indemnity costs results in recovery of about 80% of the figure sought, which in this case would be a figure of approximately USD 72,000.
As there must be a little give in that, the figure I award by way of interim payment is USD 65,000.
What are the practical takeaways for practitioners regarding the use of anti-suit injunctions in the DIFC?
This judgment reinforces the DIFC Court’s proactive stance in protecting arbitration agreements where the DIFC is the seat. Practitioners should note that the Court will not tolerate procedural sabotage or attempts to delay proceedings through requests for excessive adjournments. The case confirms that the Court will interpret "Rules of Arbitration of the DIFC" as a reference to the DIFC-LCIA rules, providing clarity for future drafting. Litigants must anticipate that the Court will readily grant both negative and mandatory injunctions to prevent parallel foreign proceedings when the arbitration agreement is clear.
For further context on the procedural history of this case, see the following sibling orders:
- HAYRI INTERNATIONAL v HAZIM TELECOM [2016] DIFC ARB 010 — The Anti-Suit Injunction as a Shield Against Procedural Sabotage — order dated 2017-02-25
- HAYRI INTERNATIONAL v HAZIM TELECOM [2017] DIFC ARB 010 — The Anti-Suit Injunction as a Shield Against Procedural Sabotage — order dated 2017-02-28
- HAYRI INTERNATIONAL v HAZIM TELECOM [2017] DIFC ARB 010 — Clarifying the Finality of Anti-Suit Injunctions — order dated 2017-05-23
Where can I read the full judgment in Hayri International v Hazim Telecom [2016] DIFC ARB 010?
The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/arbitration/hayri-international-llc-v-1-hazim-telecom-private-limited-2-hazim-telecom-limited-2016-difc-arb-010
Cases referred to in this judgment:
N/A (The judgment focused on the interpretation of the specific arbitration clause and the Court's inherent powers to grant injunctions).
Legislation referenced:
- DIFC Arbitration Law
- Rules of the DIFC Courts (RDC), Part 43