NEVEN v NOLE [2024] DIFC ARB 010 — Interim relief and the limits of document production in arbitration (25 June 2024)

What was the nature of the dispute between Neven and Nole regarding the 2014 Shareholders Agreement and the USD 117m claim?

The dispute centers on a breach of contract claim arising from the 2014 Amended and Restated Shareholders Agreement (the "2014 SHA"). The Claimant, Neven, acting as trustee for two trusts, alleges that the Respondent, Nole, failed to make required periodic payments to Mr. Nishant, a former director of the Nole group, following his retirement in 2020. Under the 2014 SHA, Mr. Nishant was entitled to receive his "Cumulative Net Interest" (CNI) in the company through bi-annual installments over four years in exchange for ceding his shares. Neven, as the assignee of these interests, sought to recover amounts allegedly owed, with the total value of the underlying claim reaching approximately USD 117 million.

The core of the conflict involves the interpretation of Clause 3.8 and Clause 7.6 of the 2014 SHA, which govern the distribution of dividends and the payment of CNI to retired shareholders. Neven sought an injunction to prevent Nole from paying dividends to other parties and requested a broad disclosure order regarding Nole’s global assets, fearing that the Respondent was dissipating its wealth to avoid satisfying the eventual arbitral award. As noted in the Court’s reasoning:

Whilst the purpose of the submission was to demonstrate that its multi-billion-dollar assets are spread; and may not be as readily available for enforcement of an award as cash held in Dubai; the submission also clearly illustrated that the Defendant is and has been, an acquisitive conglomerate, in the ordinary course of its business and growth, with some of its major corporate assets located in jurisdictions where enforcement of an arbitration award, can be straightforward.

Which judge presided over the Neven v Nole [2024] DIFC ARB 010 hearing in the Arbitration Division?

Justice Andrew Moran presided over this matter in the DIFC Court of First Instance, Arbitration Division. The primary order refusing the Claimant’s application for an injunction and disclosure was issued on 7 June 2024, with the formal written reasons for that decision delivered subsequently on 25 June 2024.

What specific legal arguments did Neven and Nole advance regarding the necessity of interim relief?

Neven argued that the Court should exercise its powers under the RDC to grant an injunction preventing dividend payments and compel Nole to disclose its global asset register. The Claimant’s counsel contended that Nole’s multi-billion-dollar asset base was geographically dispersed, creating a risk that assets would be moved or dissipated, thereby frustrating the enforcement of any future arbitral award. Neven relied on the "relevant property" provisions of the RDC to justify a pre-emptive strike against the Respondent’s liquidity.

Conversely, Nole argued that there was no evidence of dissipation or bad faith, characterizing its corporate activities as standard business growth. Nole provided an undertaking not to pay dividends, which effectively neutralized the need for an injunction. Regarding the disclosure request, Nole argued that the Claimant failed to meet the threshold for such an intrusive order, as there was no credible material to support a freezing injunction. As the Court recorded:

Founding on that dictum, the Defendant submits that the Claimant’s reasons for the disclosure order, do not identify any credible material on which an application for a freezing order might be based (paragraph 29 (c) of its skeleton).

What was the precise jurisdictional question Justice Moran had to address regarding the Court’s role in an ongoing DIAC arbitration?

The Court had to determine whether it possessed the requisite justification to intervene in a dispute that was already subject to the mandatory arbitration mechanism established by the 2014 SHA. Specifically, the issue was whether the Claimant had demonstrated sufficient "urgency" to bypass the arbitral tribunal and seek interim measures directly from the DIFC Court. The Court had to balance its supportive role under the DIFC Arbitration Law with the principle that arbitral tribunals should generally be the primary forum for granting interim relief, unless the tribunal cannot be constituted in time or the risk of harm is immediate and irreparable.

How did Justice Moran apply the test for interim relief and asset disclosure in the context of the DIFC Arbitration Law?

Justice Moran applied a strict test, emphasizing that the Court will only act in place of an arbitral tribunal where there is an urgent need to act because an imminent risk of dissipation of assets exists and a tribunal could not be constituted in time. The Court noted that the Claimant’s request for disclosure was essentially a "fishing expedition" intended to facilitate a future freezing order, rather than a response to an immediate, proven threat. The judge reasoned that without credible evidence of an intention to dissipate assets, the Court should not interfere with the Respondent’s ordinary business operations.

The Court’s reasoning regarding the scope of its powers is summarized as follows:

On the 7 June 2024, the Court made an order refusing the Claimant’s claim and application for orders of injunction and disclosure (the refusal of the former was upon an undertaking being given by the Defendant, mirroring precisely the injunction sought) and stated in doing so that its reasons for doing so, would follow.

Which specific DIFC statutes and RDC rules were central to the Court’s analysis in Neven v Nole?

The Court’s jurisdiction was primarily grounded in the DIFC Arbitration Law, specifically Articles 15 and 24, which outline the Court’s limited role in supporting arbitral proceedings. Procedurally, the application for interim relief was brought under RDC 25.1(7) and 25.1(9), which govern the Court’s power to grant injunctions and orders for the preservation of assets. Additionally, the Court referenced RDC 28.48 regarding the disclosure of information. The Court also acknowledged that the parties were in agreement that the dispute fell under the DIAC arbitration rules as per Decree 34 of 2021.

How did the Court utilize the cited precedents, such as Ithmar Capital and Bocimar, to evaluate the risk of dissipation?

The Court utilized Ithmar Capital Ltd v. 8 Investment FZE [2008] DIFC CA 001 to reiterate the stringent requirements for a freezing order, noting that the Claimant failed to provide the necessary evidence of a real risk of dissipation. Furthermore, the Court looked to Bocimar v. ETA [2015] DIFC CFI 008 to distinguish between standard commercial activity and "discreditable conduct" that would warrant judicial intervention. The Court also referenced JSC Mezhdunarodniy Promyshlenniy Bank v. Pugachev [2015] EWCA Civ 139 to highlight the high evidentiary bar required when seeking disclosure of assets, finding that the Claimant’s reliance on the "relevant property" rule was insufficient to overcome the lack of evidence regarding the Respondent’s intent to frustrate enforcement.

What was the final outcome of the application, and how did the Court address the issue of costs and the undertaking provided by Nole?

Justice Moran refused the Claimant’s application for both the injunction and the disclosure order. The refusal of the injunction was facilitated by the Respondent’s voluntary undertaking not to pay dividends, which the Court found sufficient to protect the Claimant’s position without the need for a formal court order. The application for disclosure was dismissed on the grounds that the Claimant failed to establish a credible basis for a freezing injunction, rendering the request for information premature and unjustified. No specific monetary relief was awarded to the Claimant, as the application was unsuccessful.

What are the wider implications of this ruling for practitioners navigating interim relief in DIFC-seated arbitrations?

This decision reinforces the DIFC Courts' policy of judicial restraint in arbitration-related matters. Practitioners must anticipate that the Court will not act as a "first-stop" for interim measures unless the urgency is extreme and the arbitral tribunal is unavailable. The ruling serves as a warning that requests for asset disclosure will be scrutinized heavily; claimants must provide concrete evidence of dissipation rather than relying on the Respondent’s general wealth or corporate structure. For further analysis on the high threshold for such relief, see the deep editorial analysis at: Neven v Nole [2024] DIFC ARB 010: The High Threshold for Interim Relief in the Shadow of Arbitration.

Practitioners should also review the related orders in this case family:
- NEVEN v NOLE [2024] DIFC ARB 010 — Interim relief and the limits of document production in arbitration (07 June 2024)
- NEVEN v NOLE [2024] DIFC ARB 010 — Balancing Interim Relief Costs (25 September 2024)

Where can I read the full judgment in Neven v Nole [2024] DIFC ARB 010?

The full judgment can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/arbitration/arb-0102024-neven-v-nole-1 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/arbitration/DIFC_ARB-010-2024_20240625.txt.

Cases referred to in this judgment:

Legislation referenced:

• DIFC Arbitration Law, Articles 15 and 24
• RDC 25.1 (7)
• RDC 25.7(2)
• RDC 28.48
• Decree 34 of 2021