This order marks the finality of the Claimant’s unsuccessful attempts to strike out the Defendant’s counterclaim, reinforcing the high threshold required for such applications under the Rules of the DIFC Courts (RDC).
What was the nature of the dispute between Five Real Estate Development and Reem Emirates Aluminum in TCD 009/2020?
The litigation concerns a construction dispute between Five Real Estate Development LLC (the Claimant) and Reem Emirates Aluminum LLC (the Defendant). The core of the current procedural impasse involved the Claimant’s persistent efforts to strike out the Defendant’s counterclaim, which arose during the course of the main proceedings. The Claimant sought to have the counterclaim dismissed summarily, arguing that it lacked legal merit.
The court’s refusal to strike out the counterclaim led to a series of procedural challenges, including an initial application for permission to appeal and a subsequent "Second Permission Application." The dispute highlights the tension between summary disposal mechanisms and the right of a party to have its substantive claims heard at trial. As noted in the court's reasoning:
The refusal of the strike out application did not amount to a ruling that the Defendant’s counterclaim was bound to succeed, it was simply a ruling that it was not bound to fail.
This distinction underscores that the court’s refusal to strike out is not a validation of the counterclaim's merits, but merely a recognition that the claim is not "bound to fail." Further context on the procedural history of this case can be found in FIVE REAL ESTATE DEVELOPMENT v REEM EMIRATES ALUMINIUM [2021] DIFC TCD 009 — Dismissal of strike-out application regarding FIDIC determination (31 May 2021).
Which judge presided over the Second Permission Application in TCD 009/2020?
The Second Permission Application was heard by Justice Lord Angus Glennie in the Court of First Instance of the DIFC Courts. The order was issued on 25 October 2021, following the Claimant's filing of the application on 8 September 2021 and the subsequent exchange of written submissions between the parties.
What arguments did Five Real Estate Development and Reem Emirates Aluminum advance regarding the strike-out application?
The Claimant, Five Real Estate Development, argued that the Defendant’s counterclaim was legally deficient and should be struck out. When the initial strike-out application was refused by Justice Sir Richard Field, the Claimant sought permission to appeal, asserting that the appeal had a real prospect of success. In its Second Permission Application, the Claimant further contended that the appeal raised issues of public importance regarding the status of an engineer’s determination under FIDIC construction contracts.
Conversely, the Defendant, Reem Emirates Aluminum, maintained that the counterclaim was well-founded and that the Claimant’s attempt to strike it out was an improper use of summary procedures. The Defendant argued that the Claimant’s grievances were matters to be addressed during the trial as part of the defense to the counterclaim, rather than through a strike-out application. The court ultimately agreed with the Defendant, noting:
The arguments advanced by the Claimant in support of its strike out application remain available to it, for what they are worth, in its defence to the counterclaim.
What was the precise legal question Justice Lord Angus Glennie had to answer regarding the Second Permission Application?
The primary legal question before Justice Lord Angus Glennie was whether the Claimant had satisfied the criteria for granting permission to appeal under RDC 44.19. Specifically, the Court had to determine:
Has the Claimant shown that the appeal would have a real prospect of success?
Furthermore, the Court had to evaluate whether there existed any "compelling reason" for the appeal to be heard, particularly in light of the Claimant's assertion that the case involved significant points of principle regarding FIDIC-based engineer determinations.
How did Justice Lord Angus Glennie apply the test for permission to appeal in this case?
Justice Lord Angus Glennie applied a rigorous two-fold test. First, he assessed whether the appeal had a "real prospect of success." Reviewing the detailed reasoning provided by Justice Sir Richard Field in both the original Order Under Appeal and the subsequent Refusal Order, Justice Glennie concluded that the Claimant’s arguments were unarguable. He stated:
The proposed appeal is unarguable. It has no prospect of success.
Second, the Court addressed the "compelling reason" threshold. The Claimant attempted to elevate the dispute to one of public importance concerning FIDIC contracts. Justice Glennie rejected this, clarifying that the underlying order did not establish any new legal principle regarding engineer’s certificates. He reasoned that the order merely determined that the counterclaim was not "bound to fail." Consequently, the Court found no basis to grant permission, as the Claimant had failed to meet either limb of the RDC 44.19 test.
Which specific RDC rules and legal standards governed the strike-out application?
The strike-out application was governed by RDC 4.16, which sets the standard for when a court may strike out a statement of case. As the Court explained:
To succeed on that application, it would have had to show that the Defendant had no reasonable grounds for bringing the counterclaim (RDC 4.16).
This rule imposes a high burden on the applicant, requiring them to demonstrate that the claim is "bound to fail."
Additionally, the application for permission to appeal was governed by RDC 44.19, which dictates that permission may only be granted if the court considers that the appeal would have a real prospect of success or if there is some other compelling reason for the appeal to be heard. The procedural history also involved RDC 44.9, which allows for a second application for permission to appeal to be made to the Court of Appeal (or in this instance, the relevant judicial authority) after an initial refusal.
How did the Court distinguish the role of a strike-out application from a preliminary issue hearing?
The Court emphasized that the Claimant had chosen the wrong procedural vehicle to resolve its dispute with the Defendant’s counterclaim. Justice Glennie noted that the Claimant could have requested the court to decide a "preliminary issue," which would have allowed for a full canvassing of the rival arguments. Instead, the Claimant persisted with a strike-out application, which is a summary procedure not designed for complex, fact-intensive disputes. By choosing the strike-out route, the Claimant faced a much higher hurdle than it would have in a preliminary issue hearing.
What was the final disposition and the order regarding costs in TCD 009/2020?
Justice Lord Angus Glennie dismissed the Second Permission Application in its entirety, effectively ending the Claimant's attempt to appeal the refusal to strike out the counterclaim. Regarding the costs of the application, the Court ordered:
The Claimant shall pay the Defendant’s costs of the Second Permission Application to be assessed by the Registrar on the standard basis, if not agreed.
What are the wider implications of this ruling for practitioners in the DIFC Technology and Construction Division?
This decision serves as a stern reminder of the high threshold required to succeed in a strike-out application under RDC 4.16. Practitioners should be wary of using strike-out applications as a substitute for a trial or a properly constituted preliminary issue hearing. The ruling clarifies that a refusal to strike out does not constitute a substantive ruling on the merits of a claim, but merely confirms that the claim is not "bound to fail." Furthermore, the case underscores that the DIFC Courts will not grant permission to appeal based on alleged "public importance" regarding FIDIC contracts unless the order under appeal actually decides a substantive point of principle.
Where can I read the full judgment in Five Real Estate Development v Reem Emirates Aluminum [2021] DIFC TCD 009?
The full text of the order is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/technology-and-construction-division/tcd-009-2020-five-real-estate-development-llc-v-reem-emirates-aluminum-llc
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| Five Real Estate Development v Reem Emirates Aluminum | TCD 009/2020 | The Order Under Appeal refusing the Claimant’s application to strike out the Defendant’s counterclaim. |
Legislation referenced:
- Rules of the DIFC Courts (RDC) 4.16
- Rules of the DIFC Courts (RDC) 44.9
- Rules of the DIFC Courts (RDC) 44.19