This clarificatory ruling by Justice Sir Jeremy Cooke confirms the finality of the DIFC Court’s determination regarding the seat of arbitration and the binding nature of the DIFC-LCIA Rules in the dispute between Hayri International and Hazim Telecom.
What was the nature of the dispute between Hayri International and Hazim Telecom in ARB 010/2016 and why was an anti-suit injunction required?
The dispute centered on the parties' conflicting interpretations of their arbitration agreement, which led to parallel proceedings. Hayri International sought to enforce arbitration within the DIFC, while the Defendants, Hazim Telecom Private Limited and Hazim Telecom Limited, initiated proceedings in Pakistan in an attempt to circumvent the agreed-upon forum. The DIFC Court was tasked with determining whether the DIFC was the seat of the arbitration and whether the parties were bound by the DIFC-LCIA Rules.
The necessity for an anti-suit injunction arose from the Defendants' persistent efforts to delay the substantive resolution of the dispute. As noted in the Court's findings:
I also found in paragraph 5, on overwhelming evidence, that the Defendant had been taking every opportunity to delay the hearing of the substantive dispute, with the commencement of proceedings in Pakistan in breach of what is now accepted to be an agreement to arbitrate and a series of adjournments obtained by them to prevent any hearing of the justification for the proceedings and the interim orders made which were in due course discharged.
This case is part of a series of orders protecting the seat of arbitration. Further details on the procedural history can be found 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 clarificatory ruling in ARB 010/2016 and in which division was it heard?
The ruling was issued by Justice Sir Jeremy Cooke, sitting in the Arbitration Division of the DIFC Court of First Instance. The clarificatory order was issued on 23 May 2017, following previous judgments and orders delivered on 25 February 2017 and 9 March 2017.
What were the respective positions of Hayri International and the Hazim Telecom entities regarding the seat of arbitration?
Hayri International maintained that the parties had entered into a binding agreement to arbitrate under the DIFC-LCIA Rules, with the DIFC serving as the seat. Conversely, the Hazim Telecom entities sought to challenge this, initially attempting to pursue proceedings in Pakistan and later failing to participate in the 9 March 2017 hearing despite having legal representation present.
The Defendants' strategy involved requesting additional time to argue against the injunctions. As the Court observed:
On the return date for the anti- suit injunction in the DIFC, of which the Defendant had ample notice, it was submitted that more time was needed to put forward the Defendant’s case in relation to the grant of the injunction some 10 days earlier.
The Court ultimately rejected these delay tactics, noting that the Defendants had been given ample opportunity to present their case regarding the construction of the arbitration agreement.
What was the precise legal question Justice Sir Jeremy Cooke had to answer regarding the finality of the DIFC seat determination?
The Court was required to determine whether its previous orders, specifically those dated 25 February and 9 March 2017, constituted a final and conclusive determination that the DIFC was the seat of arbitration and that the parties were bound by the DIFC-LCIA Rules. The parties sought clarification on whether the Court’s findings were merely interlocutory or if they represented a final adjudication on the jurisdictional issue of the seat, thereby precluding further challenges in other forums.
How did Justice Sir Jeremy Cooke apply the test for interlocutory and final injunctions to the facts of ARB 010/2016?
Justice Cooke’s reasoning focused on the transition from an interim, ex parte injunction to a final, permanent order. He emphasized that the Court had already applied the necessary tests to establish the high probability of the Claimant’s success.
The terms of the judgment make it clear at paragraph 2 that I applied the test for interlocutory injunctions and held that there was a high probability of success for the Claimant in showing that DIFC was the seat of the agreed arbitration and that the rules to be applied to it were those of DIFC-LCIA.
Furthermore, the judge clarified that the hearing on 9 March 2017 was treated as the trial of the action for the injunction. By failing to participate in that hearing, the Defendants effectively allowed the Court to reach a conclusive determination on the seat and the governing rules. The Court reasoned that its conclusion was "the only sensible conclusion" based on the contractual language, rendering the decision final.
Which specific DIFC-LCIA Rules and jurisdictional doctrines were applied by the Court in this ruling?
The Court relied on its inherent jurisdiction to protect the seat of arbitration through anti-suit injunctions. While the Court referenced the possibility of exercising a "supportive" versus "supervisory" jurisdiction, it clarified that the primary basis for the injunction was the finding that the DIFC was the seat.
Although at paragraph 3 of the judgment I referred to the possibility of the Court exercising a supportive, as opposed to a supervisory, jurisdiction in making an anti-suit injunction, it is also clear that the basis of the injunction granted was that DIFC was the probable seat of the arbitration.
The Court also addressed the incorporation of the DIFC-LCIA Rules, determining that the contract provided for only one form of arbitration, thereby excluding ad hoc arbitration as a valid alternative.
How did the Court distinguish the nature of the anti-suit injunction granted in this case from previous interim measures?
The Court clarified that the injunction granted on 9 March 2017 was not merely a temporary measure but a final order. It explicitly prohibited the Defendants from pursuing the Pakistan proceedings or any other forum.
It was a final order which provided that the Defendant was not to pursue the Pakistan proceedings nor “any other proceedings relating to the Dispute in any court, tribunal or other dispute resolution forum other than arbitration in the DIFC or related proceedings in the DIFC Court.”
By confirming this as a final order, the Court ensured that the Defendants could not relitigate the issue of the seat in other jurisdictions, effectively closing the door on the procedural sabotage that had characterized the earlier stages of the dispute.
What was the final disposition of the Court in ARB 010/2016 regarding costs and the enforcement of the injunction?
The Court confirmed that the final injunction remained in force and that the Defendants were liable for costs. The ruling underscored that the previous orders were not merely procedural but carried substantive weight regarding the parties' obligations.
Those orders made by the Court provided for costs to be paid by the Defendant and for interim payment of sums less than those claimed.
The Court’s clarificatory ruling served to solidify these orders, ensuring that the Defendants were fully aware that the DIFC seat determination was final and binding.
What are the wider implications of this ruling for practitioners dealing with anti-suit injunctions in the DIFC?
This ruling reinforces the DIFC Court’s robust stance on protecting the seat of arbitration. Practitioners must anticipate that once the Court determines the seat of arbitration, it will not tolerate attempts to relitigate that issue in foreign courts. The case serves as a warning that failure to participate in hearings—even when legal counsel is present—will not prevent the Court from issuing final, binding orders.
For further analysis on how this case impacts arbitration strategy, see the deep editorial analysis: Hayri International v Hazim Telecom [2016] DIFC ARB 010: The Anti-Suit Injunction as a Shield Against Procedural Sabotage.
Where can I read the full judgment in Hayri International v Hazim Telecom [2017] DIFC ARB 010?
The full judgment can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/arbitration/arb-010-2016-hayri-international-llc-v-1-hazim-telecom-private-limited-2-hazim-telecom-limited or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/arbitration/DIFC_ARB-010-2016_20170523.txt.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | The Court relied on its own previous judgments in this matter (25 Feb 2017 and 9 March 2017) to clarify the finality of the seat determination. |
Legislation referenced:
- DIFC-LCIA Arbitration Rules
- DIFC Court Rules (RDC) regarding injunctions and costs