On 25 January 2022, H.E. Justice Shamlan Al Sawalehi issued a decisive order in the DIFC Court of First Instance, dismissing both the Defendant’s application to set aside a default judgment and the Claimant’s cross-application to strike out that challenge. The dispute, involving Mibot and Mfast, centered on the enforceability of arbitration clauses within two sub-contract agreements for the 'Mruf' development in Jumeirah Village Circle. With AED 13,452,187 in liquidated damages and contra charges hanging in the balance, the Court refused to entertain the Defendant's argument that prior onshore proceedings constituted a waiver of the right to arbitrate.
For arbitration counsel and cross-border litigators, this decision serves as a critical reminder that the DIFC Courts will not lightly infer a waiver of arbitration rights based on conduct in parallel onshore proceedings. The ruling reinforces the principle that the validity of an arbitration agreement remains distinct from the procedural history of a dispute, and that a failure to challenge the existence of an arbitration agreement at the outset creates a high, often insurmountable, barrier for defendants seeking to set aside default judgments. By prioritizing the contractual autonomy of the parties over the Defendant's 'waiver' narrative, the Court has provided a clear roadmap for how it will treat attempts to relitigate the forum of a dispute after a default has been entered.
How Did the Dispute Between Mibot and Mfast Arise?
The genesis of the conflict between Mibot, a prominent real estate developer, and Mfast, an interior fit-out company, lies in the structural complexities of multi-tiered construction agreements and the jurisdictional friction that inevitably follows when parties fail to adhere to their agreed-upon dispute resolution mechanisms. The dispute centered on the execution of works for Mibot’s “Mruf” development in Jumeirah Village Circle, a project governed by two distinct but commercially intertwined sub-contracts: the Gypsum Contract and the Joinery Contract.
The architectural framework of the parties' legal relationship was inherently fragile, characterized by overlapping jurisdictional clauses that created an environment ripe for parallel proceedings. The Gypsum Contract, executed on 26 June 2016, was not initially a direct agreement between the Claimant and the Defendant. Rather, it was formed between Mfast and the project's main contractor, Mosla. It was only on 1 July 2017 that the contractual matrix shifted, when the parties executed a novation agreement whereby Mosla transferred its interest and obligations under the Gypsum Contract to Mibot.
This novation introduced the first layer of jurisdictional ambiguity. Clause 36 of the addendum to the underlying Gypsum Contract explicitly mandated that disputes be resolved by arbitration under the Arbitration Rules of the DIFC-LCIA Arbitration Centre. However, Clause 4.1 of the subsequent Novation Agreement stipulated that the Dubai Courts possessed exclusive jurisdiction over disputes arising from that specific novation document.
A similar contradiction plagued the Joinery Contract, which was executed directly between Mibot and Mfast on 8 February 2018. While Clause 4.14 of the Joinery Contract pointed to the exclusive jurisdiction of the Dubai Courts, Clause 1.1 of the same contract dictated that Mfast undertook to perform obligations arising from a suite of documents, explicitly including "Addendum No. 1 dated 1 July 2017." Crucially, Clause 12 of that incorporated Addendum required disputes to be resolved via DIFC-LCIA arbitration.
When the commercial relationship deteriorated, Mfast exploited these drafting inconsistencies. Rather than initiating arbitration in the DIFC—the expressly designated seat in both arbitration agreements—Mfast bypassed the arbitral mechanism entirely. On 18 March 2020, Mfast filed a civil action against Mibot before the Dubai Court, seeking AED 17,338,390.74 for alleged outstanding dues across both the Gypsum and Joinery Contracts.
Faced with an aggressive onshore litigation strategy, Mibot was forced into a defensive posture, filing a defence and a counterclaim for AED 8,463,413 in the Dubai Courts. However, Mibot simultaneously recognized the necessity of securing its jurisdictional rights under the arbitration agreements. It pivoted to the DIFC Courts, seeking declaratory relief to confirm the binding nature of the arbitration clauses. Because Mfast failed to acknowledge service in the DIFC proceedings, Mibot successfully obtained a default judgment.
The declarations secured by Mibot were precise and foundational to its strategy of compelling arbitration. As recorded by H.E. Justice Shamlan Al Sawalehi:
At [2] of the DIFC Default Judgment it was declared that “The arbitration clause contained in clause 36 of the Addendum in the First Sub-Contract Agreement dated 26 June 2016 [i.e. the Gypsum Contract] is binding on the Claimant and Defendant” and at [3] it was declared that “The arbitration clause contained in clause 12 of the Addendum in the Second Sub-Contract Agreement dated 8 February 2018 [i.e. the Joinery Contract] is binding on the Claimant and Defendant”.
22.
The financial stakes underpinning these jurisdictional maneuvers were substantial. Mibot was not merely seeking abstract declarations; it was laying the groundwork to enforce massive financial penalties against Mfast for project delays and breaches. The underlying substantive claims that Mibot intended to pursue in arbitration—and which it sought to protect via the DIFC Courts—were severe. Mibot's claim form explicitly detailed the financial exposure it sought to impose on the Defendant:
Ordering the Defendant to pay AED
13,452,187 comprising, namely: - AED 1,361,845 for liquidated damages under the Gypsum Contract; - AED 5,264,728 for liquidated damages under the Joinery Contract; - AED 2,041,136 for contra charges under the Joinery Contract; - AED 4,784,478 for loss of gross operating profit based on an indemnity under the Joinery Contract. d.
Furthermore, Mibot sought aggressive interim and protective measures to secure its position, requesting the DIFC Court to issue orders:
Declaring the Claimant’s entitlement and/or its assignee’s entitlement to encash the Performance Security for Gypsum and the Performance Security for Joinery and all orders to preserve the same and thereto; c.
Mfast’s subsequent application to set aside the DIFC Default Judgment rested on a singular, highly technical argument: waiver. Mfast contended that by filing a defence and counterclaim in the onshore Dubai Court proceedings, Mibot had unequivocally waived its right to rely on the DIFC-LCIA arbitration clauses. Mfast argued that the arbitration agreements were entirely absent from the onshore pleadings, suggesting an implied mutual abandonment of the arbitral forum.
This argument strikes at the heart of the DIFC Courts' pro-arbitration stance, echoing the jurisdictional battles seen in ARB-003-2013: Banyan Tree Corporate PTE Ltd v Meydan Group LLC [2013] DIFC ARB 003, where the courts rigorously defended the sanctity of arbitration agreements against onshore interference. In the present dispute, H.E. Justice Shamlan Al Sawalehi dismantled Mfast's waiver argument by exposing its logical flaw. The Court noted that Mfast has not challenged the validity of the Arbitration Agreements, but rather relied entirely on the premise of waiver.
The Court's analytical angle was sharp and unforgiving. To argue that a party has waived a right inherently requires acknowledging that the right exists and is legally valid. H.E. Justice Shamlan Al Sawalehi articulated this doctrinal boundary with precision:
Mfast has not challenged the validity of the Arbitration Agreements. Its primary position is that Mibot waived its right to invoke the Arbitration Agreements when it filed a defence and counterclaim in the Onshore Proceedings and advanced these cases to conclusion without invoking the Arbitration Agreements. In my view, Mibot waiving a right to invoke the Arbitration Agreements presupposes the Arbitration Agreements being valid and therefore, without more, binding.
By conceding the validity of the arbitration agreements to mount a waiver defense, Mfast inadvertently validated the very declarations Mibot had obtained in the default judgment. The DIFC Court's role in this specific application was not to determine whether Mibot's conduct onshore constituted a waiver that would bar the substantive arbitration—that is a matter of admissibility and jurisdiction for the arbitral tribunal itself to decide. The Court's role was strictly to determine whether the default judgment, which merely declared the agreements "binding," was wrongly entered.
Because Mfast's own argument relied on the agreements being valid, it had no real prospect of defending against a claim that sought a declaration of that exact validity. The Court further addressed Mfast's contention that the default judgment should be set aside because the claim had allegedly been satisfied or extinguished by the onshore proceedings. H.E. Justice Shamlan Al Sawalehi rejected this conflation of the substantive onshore claims with the specific declaratory relief sought in the DIFC:
It is Mfast’s case that the Arbitration Agreements were not so much as mentioned in the Onshore Proceedings, never mind invoked or otherwise put before the Dubai Courts. It necessarily follows, in my judgment, that the DIFC Claim, a claim for declarations that the Arbitration Agreements are binding, cannot have been satisfied before the DIFC Default Judgment was entered as such a claim had not previously been made.
The dispute between Mibot and Mfast thus serves as a rigorous examination of how the DIFC Courts handle the fallout from poorly drafted, multi-contract construction projects. When parties embed conflicting dispute resolution clauses across novation agreements and addendums, they invite the exact type of parallel litigation seen here. However, the DIFC Court's refusal to entertain the waiver argument as a mechanism to set aside a declaratory default judgment reinforces a critical doctrinal boundary. Much like the strict procedural adherence demanded in ARB-005-2014: Eava v Egan [2014] ARB 005, the Court demonstrated that it will not allow substantive defenses regarding the exercise of an arbitration right to invalidate the foundational existence of that right. The failure of Mfast to challenge the validity of the clauses directly, opting instead for a convoluted waiver defense, ultimately cemented the binding nature of the arbitration agreements and left the AED 13.4 million dispute firmly within the purview of the arbitral tribunal.
How Did the Case Move From Default Judgment to the Set Aside Application?
The procedural trajectory of Mibot v Mfast serves as a stark warning to onshore litigants who adopt the "ostrich approach" when served with proceedings in the Dubai International Financial Centre (DIFC). A persistent misconception among parties litigating in the parallel Dubai Courts is that ignoring a DIFC claim is a safe, or even strategically sound, method of protesting jurisdiction. The reality of the Rules of the DIFC Courts (RDC) is far less forgiving. By failing to acknowledge service, a defendant forfeits the procedural initiative, handing the claimant an uncontested path to a default judgment. Once that judgment is entered, the burden shifts dramatically. The defendant is no longer merely contesting jurisdiction; it must satisfy the stringent requirements of RDC Part 13 to set aside a binding court order, a hurdle that often proves insurmountable when the underlying legal logic of the claimant's case is sound.
The stakes driving this procedural brinkmanship were exceptionally high. The underlying dispute between the real estate developer, Mibot, and the interior fit-out company, Mfast, involved massive financial exposure across two distinct sub-contracts for the 'Mruf' development in Jumeirah Village Circle. Mibot was not merely seeking a theoretical ruling on dispute resolution mechanics; it was laying the groundwork to enforce substantial financial claims. The sheer scale of the exposure is evident in the remedies Mibot ultimately sought to protect, which included:
Ordering the Defendant to pay AED 13,452,187 comprising, namely: - AED 1,361,845 for liquidated damages under the Gypsum Contract; - AED 5,264,728 for liquidated damages under the Joinery Contract; - AED 2,041,136 for contra charges under the Joinery Contract; - AED 4,784,478 for loss of gross operating profit based on an indemnity under the Joinery Contract. d.
Faced with parallel onshore proceedings initiated by Mfast in March 2020, Mibot executed a classic jurisdictional counter-maneuver. Rather than immediately seeking an anti-suit injunction—a remedy that requires a high threshold of proof and urgent judicial intervention—Mibot filed a Part 8 claim in the DIFC Courts seeking simple, surgical declarations. Mibot asked the Court to declare that the arbitration agreements contained within the addenda to both the Gypsum Contract and the Joinery Contract were valid and binding.
When served with this claim, Mfast made a critical tactical error: it did nothing. Relying presumably on the fact that the onshore litigation was already underway, Mfast failed to file an Acknowledgment of Service within the strict 14-day window mandated by the RDC. In the DIFC, procedural lethargy is heavily penalized. Much like the strict adherence to timelines observed in Eava v Egan [2014] ARB 005, where the court demonstrated zero tolerance for procedural delays in arbitral challenges, the registry in Mibot v Mfast operated with mechanical efficiency. Because Mfast failed to engage, Mibot successfully applied for and obtained a judgment in default of acknowledgment of service dated 15 March 2021.
The resulting order gave Mibot exactly the jurisdictional weapon it sought. H.E. Justice Shamlan Al Sawalehi formalized the uncontested claim, cementing the status of the dispute resolution clauses:
At [2] of the DIFC Default Judgment it was declared that “The arbitration clause contained in clause 36 of the Addendum in the First Sub-Contract Agreement dated 26 June 2016 [i.e. the Gypsum Contract] is binding on the Claimant and Defendant” and at [3] it was declared that “The arbitration clause contained in clause 12 of the Addendum in the Second Sub-Contract Agreement dated 8 February 2018 [i.e. the Joinery Contract] is binding on the Claimant and Defendant”. 22.
The entry of this default judgment fundamentally altered the landscape of the dispute. Mfast was suddenly faced with a binding DIFC Court order declaring that the very contracts it was litigating onshore were subject to mandatory arbitration in the DIFC. Realizing the peril of this res judicata trap, Mfast finally engaged with the DIFC judicial machinery. On 18 April 2021, Mfast filed Application No. ARB-035-2020/1 dated 18 April 2021, seeking to set aside the default judgment.
To succeed under RDC Part 13, Mfast had to demonstrate that it had a "real prospect of successfully defending the claim." Mfast's primary argument was not that the arbitration agreements were forged, invalid at inception, or improperly incorporated. Instead, Mfast argued that the default judgment was wrongly entered because Mibot had allegedly waived its right to arbitrate by filing a defence and counterclaim in the parallel Dubai Courts proceedings.
Mibot did not wait passively for the set aside application to be heard. Recognizing that Mfast's waiver argument was legally flawed, Mibot launched a counter-offensive. On 3 May 2021, Mibot filed Application No. ARB-035-2020/2 dated 3 May 2021, seeking to strike out Mfast's set aside application entirely. Mibot argued that Mfast's application was an abuse of process and disclosed no reasonable grounds for setting aside the declarations.
This aggressive cross-application strategy culminated in a consolidated hearing on 3 October 2021, where H.E. Justice Shamlan Al Sawalehi was tasked with untangling the procedural knot. The Court's analysis of Mfast's waiver argument exposed the fatal logical flaw in attempting to defend against a declaratory judgment using post-contractual conduct.
H.E. Justice Al Sawalehi dismantled Mfast's position by drawing a sharp distinction between the validity of an arbitration agreement and the exercise of rights under it. The Court noted:
Mfast has not challenged the validity of the Arbitration Agreements. Its primary position is that Mibot waived its right to invoke the Arbitration Agreements when it filed a defence and counterclaim in the Onshore Proceedings and advanced these cases to conclusion without invoking the Arbitration Agreements. In my view, Mibot waiving a right to invoke the Arbitration Agreements presupposes the Arbitration Agreements being valid and therefore, without more, binding.
This reasoning is a masterclass in doctrinal precision. A waiver is, by definition, the voluntary relinquishment of a known right. If Mibot waived its right to arbitrate, it must have possessed that right in the first place. Therefore, the arbitration agreements must have been valid and binding at their inception. Because Mibot's original DIFC claim merely sought a declaration that the agreements were binding—not an order compelling arbitration or an anti-suit injunction halting the onshore proceedings—Mfast's waiver argument offered no defense to the specific relief granted in the default judgment. The declaration remained factually and legally accurate regardless of Mibot's subsequent conduct in the Dubai Courts.
Mfast attempted a secondary line of attack, arguing that the default judgment should be set aside because the claim had already been satisfied or resolved through the onshore litigation. This argument fared no better. The Court observed that the specific relief sought in the DIFC—declarations regarding the arbitration clauses—had never been pleaded, debated, or adjudicated in the Dubai Courts. H.E. Justice Al Sawalehi firmly rejected the notion that the onshore proceedings somehow mooted the DIFC declaratory claim:
It is Mfast’s case that the Arbitration Agreements were not so much as mentioned in the Onshore Proceedings, never mind invoked or otherwise put before the Dubai Courts. It necessarily follows, in my judgment, that the DIFC Claim, a claim for declarations that the Arbitration Agreements are binding, cannot have been satisfied before the DIFC Default Judgment was entered as such a claim had not previously been made.
Ultimately, the procedural history of Mibot v Mfast illustrates the severe consequences of jurisdictional complacency. Had Mfast simply filed an Acknowledgment of Service and contested jurisdiction under RDC Part 12, it could have forced Mibot to prove its entitlement to the declarations in a contested, inter partes hearing. By ignoring the claim, Mfast allowed Mibot to secure a default judgment that fundamentally altered the burden of proof. When Mfast finally attempted to undo the damage, it found itself trapped by its own logic: arguing that Mibot waived the arbitration agreements inherently conceded that those agreements were valid, thereby validating the very default judgment Mfast sought to destroy.
The Court ultimately dismissed both the set aside application and the strike out application, ordering the parties to bear their own costs of the applications. While Mibot's strike out application failed technically, Mibot secured the ultimate victory: the preservation of its default judgment. The declarations remained intact, leaving Mfast bound by the DIFC Court's determination that the arbitration agreements were valid, a ruling that would cast a long shadow over any subsequent attempts to enforce the onshore judgments.
What Is the 'Waiver' Doctrine and Why Did It Fail Here?
In complex cross-border construction disputes, parallel proceedings are frequently weaponised to derail arbitral jurisdiction. When a party engages in litigation before a national court despite the existence of an arbitration clause, the opposing party will inevitably raise the doctrine of waiver. In commercial arbitration, waiver by election occurs when a party, fully aware of its right to arbitrate, unequivocally submits to the jurisdiction of a state court, thereby abandoning its arbitral rights. Mfast, facing a devastating default judgment in the DIFC Courts, deployed this exact doctrine as its primary shield.
The factual matrix provided fertile ground for a waiver argument. On 18 March 2020, Mfast initiated a civil action against Mibot before the Dubai Court seeking AED 17,338,390.74 for alleged outstanding dues under both the Gypsum Contract and the Joinery Contract. Rather than immediately contesting the Dubai Court's jurisdiction and invoking the DIFC-LCIA arbitration clauses contained in the addenda to those contracts, Mibot engaged with the onshore litigation. Mibot filed a substantive defence and advanced a counterclaim for AED 8,463,413 in damages.
To Mfast, this procedural conduct was the textbook definition of waiver. By actively participating in the onshore litigation and advancing a counterclaim to its conclusion without invoking the arbitration agreements, Mfast argued that Mibot had irrevocably elected to abandon its right to arbitrate. Consequently, Mfast contended that Mibot had no jurisdictional basis to subsequently approach the DIFC Courts to secure a default judgment.
However, H.E. Justice Shamlan Al Sawalehi dismantled this defence by drawing a sharp, uncompromising doctrinal distinction between the validity of an arbitration agreement and the invocation of that agreement. The Court identified a fundamental logical paradox in Mfast's position: to argue that a party has waived its right to arbitrate is to implicitly concede that a valid right to arbitrate existed in the first place.
Mfast has not challenged the validity of the Arbitration Agreements. Its primary position is that Mibot waived its right to invoke the Arbitration Agreements when it filed a defence and counterclaim in the Onshore Proceedings and advanced these cases to conclusion without invoking the Arbitration Agreements. In my view, Mibot waiving a right to invoke the Arbitration Agreements presupposes the Arbitration Agreements being valid and therefore, without more, binding.
This passage represents a critical jurisprudential pivot. Justice Al Sawalehi established that waiver is an affirmative defence against the exercise of a right, not a challenge to the existence of the underlying contract. Because Mfast relied exclusively on the waiver argument to set aside the default judgment, it inadvertently admitted that the arbitration clauses were legally sound and properly formed.
This distinction was fatal to Mfast's application because of the specific, bifurcated nature of the relief Mibot had sought and obtained in the DIFC Courts. Mibot was not merely asking the DIFC Court to compel arbitration or to stay the onshore proceedings. Instead, Mibot had strategically sought pure declaratory relief regarding the legal status of the contracts, alongside substantive monetary claims.
At [2] of the DIFC Default Judgment it was declared that “The arbitration clause contained in clause 36 of the Addendum in the First Sub-Contract Agreement dated 26 June 2016 [i.e. the Gypsum Contract] is binding on the Claimant and Defendant” and at [3] it was declared that “The arbitration clause contained in clause 12 of the Addendum in the Second Sub-Contract Agreement dated 8 February 2018 [i.e. the Joinery Contract] is binding on the Claimant and Defendant”.
22.
By framing the core of its jurisdictional claim as a request for declarations, Mibot insulated the judgment from the waiver defence. A claim for declarations that the Arbitration Agreements are binding asks the Court to confirm a state of legal fact—the existence of a valid contract. Mfast's failure to recognise this distinction proved disastrous. Under Part 24 of the Rules of the DIFC Courts (RDC), setting aside a default judgment requires the defendant to demonstrate a "real prospect of successfully defending the claim." Because Mfast did not challenge the validity of the agreements—arguing neither lack of capacity, fraud, nor improper incorporation—it had no viable defence against a claim that merely asked the Court to declare those agreements valid.
The Court further noted that the onshore proceedings could not have rendered the DIFC claim moot or satisfied, precisely because the specific declaratory relief sought in the DIFC had never been pleaded before the Dubai Courts.
It is Mfast’s case that the Arbitration Agreements were not so much as mentioned in the Onshore Proceedings, never mind invoked or otherwise put before the Dubai Courts. It necessarily follows, in my judgment, that the DIFC Claim, a claim for declarations that the Arbitration Agreements are binding, cannot have been satisfied before the DIFC Default Judgment was entered as such a claim had not previously been made.
This reasoning aligns with the DIFC Courts' broader protective stance toward arbitral jurisdiction, echoing principles seen in cases like Eava v Egan [2014] ARB 005, where the Court has historically taken a strict approach to procedural manoeuvres designed to circumvent the supervisory authority of the seat. The DIFC Courts consistently require parties to address the root validity of arbitration clauses rather than relying on tangential procedural arguments derived from parallel litigation.
The financial stakes underlying this procedural chess match were immense, elevating the importance of Mibot's declaratory strategy. The underlying dispute involved massive sums related to the 'Mruf' development, and the default judgment Mibot secured was not limited to abstract declarations. It included devastating financial orders against Mfast.
Ordering the Defendant to pay AED
13,452,187 comprising, namely: - AED 1,361,845 for liquidated damages under the Gypsum Contract; - AED 5,264,728 for liquidated damages under the Joinery Contract; - AED 2,041,136 for contra charges under the Joinery Contract; - AED 4,784,478 for loss of gross operating profit based on an indemnity under the Joinery Contract. d.
To secure and defend these sums, Mibot needed a definitive, unassailable ruling on the binding nature of the arbitration clauses. The strategy of seeking declaratory relief in the DIFC, the designated seat of the arbitration, provided an impenetrable jurisdictional anchor. Mibot's claim form was meticulously drafted to focus on protective relief that leveraged the DIFC Court's supervisory jurisdiction.
On the claim form, Mibot stated under the heading “Remedy Sought”:
The Claimant requests the Court to issue the following orders and/or judgment: a.
Declaring the Claimant’s entitlement and/or its assignee’s entitlement to encash the Performance Security for Gypsum and the Performance Security for Joinery and all orders to preserve the same and thereto; c.
By requesting the Court to declare its entitlement to encash the performance securities, Mibot forced Mfast into a corner. Mfast's waiver argument, focused entirely on the historical conduct in the onshore litigation, failed to engage with the specific, forward-looking remedies Mibot was seeking in the DIFC. Mfast was effectively arguing that Mibot's past conduct negated its future rights, without ever attacking the contractual foundation of those rights.
The Court's ruling establishes a formidable precedent for future litigants in the DIFC. If a party wishes to resist a declaration that an arbitration agreement is binding, it must attack the validity of the agreement itself. Relying solely on the opposing party's conduct in parallel proceedings is legally insufficient to set aside a judgment confirming the contract's existence. Justice Al Sawalehi's logic dictates that waiving a right to invoke the Arbitration Agreements presupposes their validity. Therefore, a waiver argument cannot logically defeat a claim for a declaration of validity. It is a legal non sequitur.
Furthermore, the burden placed on a defendant seeking to overturn a default judgment is heavy. The Court expects a robust, substantive defence. Mfast was required to Produce such factual or legal arguments or evidence to rebut Mibot's claims, but by limiting its arsenal to the waiver doctrine, it left the core of Mibot's case unchallenged. The consequences of this strategic failure were absolute, leaving Mfast liable not only for the AED 13.4 million judgment sum but also exposed to further punitive financial orders, with the Court Ordering the Defendant to pay all costs associated with the Claimant's legal fees and expert expenses in the underlying proceedings.
This highlights a crucial strategic lesson for practitioners navigating the complex jurisdictional interface between the DIFC and onshore Dubai courts. When facing parallel proceedings, a party can still seek declaratory relief from the supervisory court at the seat of arbitration, provided the relief sought is distinct from the substantive issues being litigated elsewhere. Mibot's ability to demonstrate that Mfast lacked a real prospect of successfully defending the claim hinged entirely on this precise, surgical framing of its case. Mfast's strategy was fundamentally misaligned with the nature of Mibot's DIFC claim, effectively conceding the only issue that mattered for the purposes of the default judgment's survival.
How Did Justice Al Sawalehi Reach the Decision to Dismiss Both Applications?
The procedural battleground in Mibot v Mfast required the Dubai International Financial Centre (DIFC) Court of First Instance to navigate the strict threshold requirements of Part 14 of the Rules of the DIFC Courts (RDC). Mfast’s primary objective was to dismantle a judgment entered against it on 15 March 2021 in default of acknowledgment of service. To succeed in setting aside a default judgment, an applicant must demonstrate either that the judgment was wrongly entered—typically because the underlying claim had already been satisfied—or that the defendant possesses a real prospect of successfully defending the claim. H.E. Justice Shamlan Al Sawalehi’s analysis systematically dismantled Mfast’s position on both fronts, relying on a rigorous distinction between the substantive disputes litigated in parallel onshore proceedings and the narrow declaratory relief sought within the DIFC.
The financial stakes underpinning this jurisdictional tug-of-war were substantial. The underlying dispute arose from the "Mruf" development in Jumeirah Village Circle, governed by a complex web of agreements including the Gypsum Contract and the Joinery Contract. While Mfast had initiated a civil action against Mibot before the Dubai Court claiming over AED 17.3 million, Mibot’s strategic pivot to the DIFC Courts was designed to secure the arbitral jurisdiction for its own massive counter-claims. Mibot’s ultimate target, as articulated in its broader dispute strategy, involved:
Ordering the Defendant to pay AED
13,452,187 comprising, namely: - AED 1,361,845 for liquidated damages under the Gypsum Contract; - AED 5,264,728 for liquidated damages under the Joinery Contract; - AED 2,041,136 for contra charges under the Joinery Contract; - AED 4,784,478 for loss of gross operating profit based on an indemnity under the Joinery Contract. d.
To force these substantive financial claims into arbitration, Mibot first needed the DIFC Courts to confirm the binding nature of the arbitration clauses. The resulting default judgment provided exactly that foundational certainty.
At [2] of the DIFC Default Judgment it was declared that “The arbitration clause contained in clause 36 of the Addendum in the First Sub-Contract Agreement dated 26 June 2016 [i.e. the Gypsum Contract] is binding on the Claimant and Defendant” and at [3] it was declared that “The arbitration clause contained in clause 12 of the Addendum in the Second Sub-Contract Agreement dated 8 February 2018 [i.e. the Joinery Contract] is binding on the Claimant and Defendant”.
22.
Mfast’s first line of attack against this default judgment was the assertion that it had been wrongly entered. Mfast argued that because Mibot had fully participated in the onshore Dubai Courts proceedings—filing both a defense and a counterclaim without ever invoking the DIFC-LCIA arbitration clauses—the matters between the parties were already subject to active litigation. By Mfast's logic, the DIFC claim was effectively moot or superseded by the onshore litigation.
Justice Al Sawalehi rejected this conflation of substantive onshore litigation with DIFC declaratory relief. The Court drew a sharp boundary around the specific nature of the remedy Mibot sought in the DIFC. Mibot was not asking the DIFC Courts to adjudicate the AED 13.4 million in liquidated damages or contra charges; it was asking solely for a declaration of arbitral validity. Because the Dubai Courts had never been asked to rule on the validity of the arbitration agreements, the DIFC claim remained entirely unsatisfied at the time the default judgment was entered.
It is Mfast’s case that the Arbitration Agreements were not so much as mentioned in the Onshore Proceedings, never mind invoked or otherwise put before the Dubai Courts. It necessarily follows, in my judgment, that the DIFC Claim, a claim for declarations that the Arbitration Agreements are binding, cannot have been satisfied before the DIFC Default Judgment was entered as such a claim had not previously been made.
Having established that the claim for declarations that the Arbitration Agreements are binding was procedurally sound and unsatisfied, Justice Al Sawalehi turned to the second limb of the set-aside test: whether Mfast possessed a real prospect of successfully defending the claim. Here, the Court’s reasoning exposed a fatal logical paradox in Mfast’s defense strategy.
Mfast’s entire defense rested on the doctrine of waiver. It argued that Mibot’s active participation in the onshore proceedings constituted an irrevocable waiver of its right to arbitrate. However, Justice Al Sawalehi identified that arguing waiver inherently requires conceding the underlying validity of the right being waived. One cannot waive a nullity. By focusing exclusively on Mibot’s conduct in the Dubai Courts, Mfast failed to mount any substantive challenge to the formation, legality, or existence of the arbitration agreements themselves.
Mfast has not challenged the validity of the Arbitration Agreements. Its primary position is that Mibot waived its right to invoke the Arbitration Agreements when it filed a defence and counterclaim in the Onshore Proceedings and advanced these cases to conclusion without invoking the Arbitration Agreements. In my view, Mibot waiving a right to invoke the Arbitration Agreements presupposes the Arbitration Agreements being valid and therefore, without more, binding.
This formalist distinction between the validity of an arbitration agreement and the right to invoke it is a cornerstone of DIFC arbitral jurisprudence. Mibot’s claim was strictly for a declaration that the arbitration clause contained in clause 36 of the Addendum and its counterpart in the Joinery Contract were valid and binding. Because Mfast’s waiver argument presupposed that very validity, Mfast effectively admitted the core premise of Mibot’s DIFC claim. Consequently, Mfast had absolutely no prospect of successfully defending against the specific declaratory relief granted in the default judgment. The Court’s logic created an inescapable trap for the Defendant: to fight the arbitration on the grounds of waiver was to surrender the fight against the declaration of validity.
This rigorous protection of arbitral agreements aligns with the DIFC Courts' broader trajectory in handling parallel jurisdictional conflicts. Much like the dynamics explored in ARB-004-2022: Muzama v Mihanti [2022] DIFC ARB 004, where the limits of counterclaims and jurisdictional boundaries were severely tested, Mibot v Mfast reinforces that onshore litigation conduct does not automatically invalidate a DIFC-seated arbitration agreement. The DIFC Courts will fiercely protect the sanctity of the arbitral seat and the explicit contractual choices of the parties unless a direct, substantive challenge to the agreement's formation is sustained.
While the dismissal of Mfast’s set-aside application was rooted in strict doctrinal logic, Justice Al Sawalehi’s handling of Mibot’s cross-application reveals a pragmatic approach to procedural economy. Mibot had applied to strike out Mfast’s set-aside application entirely. However, the Court opted to dismiss the strike-out application alongside the set-aside application. Once the Court determined that the set-aside application could be disposed of with reference to these key points regarding the lack of a real prospect of success, the strike-out mechanism became procedurally redundant. Adjudicating the set-aside application on its merits provided a cleaner, more definitive resolution than striking it out at a preliminary threshold.
The final, and perhaps most telling, element of Justice Al Sawalehi’s order lies in the allocation of costs. Despite Mibot emerging victorious by successfully defending its default judgment, the Court departed from the standard rule that costs follow the event. Instead, the Court ordered that the parties shall bear their own costs of the applications.
This discretionary costs order serves as a subtle judicial critique of the broader procedural maneuvering that necessitated the DIFC applications in the first place. Mibot’s strategy of actively litigating a defense and counterclaim in the onshore Dubai Courts, only to later pivot to the DIFC Courts for declaratory relief regarding arbitration, created a fragmented and highly inefficient multi-jurisdictional web. While Mibot was legally entitled to seek those declarations, its prior silence on the arbitration clauses during the onshore proceedings undeniably contributed to the jurisdictional confusion and the resulting satellite litigation.
By refusing to award costs to the successful party, Justice Al Sawalehi signaled that the DIFC Courts will not financially reward parties whose tactical litigation strategies unnecessarily complicate the resolution of disputes. This echoes the procedural discipline enforced in precedents such as ARB-005-2014: Eava v Egan [2014] ARB 005, where the Court demonstrated a low tolerance for parallel maneuvering that inflates costs and delays substantive justice. In Mibot v Mfast, the Court upheld the strict legal validity of the arbitration agreements while simultaneously penalizing the convoluted path taken to enforce them, striking a careful balance between doctrinal purity and procedural equity.
How Does the DIFC Approach Compare to English and Federal Courts?
The Dubai International Financial Centre (DIFC) Courts have consistently cultivated a jurisprudential environment that mirrors the pro-arbitration rigor of the English Commercial Court, while navigating the complex, multi-layered judicial landscape of the United Arab Emirates. The ruling in Mibot v Mfast [2022] DIFC ARB 035 provides a masterclass in how the DIFC Court protects the sanctity of arbitration agreements against procedural gamesmanship. By dissecting the distinction between the procedural waiver of a right to arbitrate a specific claim and the substantive validity of the arbitration agreement itself, H.E. Justice Shamlan Al Sawalehi aligned the DIFC’s approach with the foundational principles of the English Arbitration Act 1996, specifically the doctrine of competence-competence and the strict enforcement of party autonomy.
The dispute’s architecture is familiar to practitioners handling major UAE construction projects: multiple contracts, subsequent addenda, and conflicting jurisdiction clauses. The claimant, Mibot, is a real estate developer, while the defendant, Mfast, is an interior fit-out company. Their relationship was governed by a Gypsum Contract and a Joinery Contract. Crucially, while certain novation and base agreements pointed to the exclusive jurisdiction of the Dubai Courts, specific addenda contained DIFC-LCIA arbitration clauses. When the relationship broke down, Mfast filed a civil action against Mibot before the Dubai Court. Mibot engaged with those onshore proceedings, filing a defence and a counterclaim, before subsequently securing a default judgment in the DIFC Court declaring the arbitration agreements binding.
When Mfast asks the Court to set aside judgment, its primary weapon was the doctrine of waiver. Mfast argued that by participating in the onshore litigation to its conclusion without invoking the arbitration clauses, Mibot had irrevocably waived its right to arbitrate. In onshore UAE Federal Courts, applying the UAE Civil Procedure Law and the Federal Arbitration Law, failing to raise an arbitration agreement at the very first hearing is routinely fatal to the right to arbitrate that specific dispute. However, the DIFC Court, applying DIFC Law No. 1 of 2008 (the Arbitration Law), takes a more nuanced, English-style approach to the survival of the arbitration agreement.
H.E. Justice Shamlan Al Sawalehi dismantled the waiver argument by separating the procedural act of invocation from the substantive validity of the contract:
Mfast has not challenged the validity of the Arbitration Agreements. Its primary position is that Mibot waived its right to invoke the Arbitration Agreements when it filed a defence and counterclaim in the Onshore Proceedings and advanced these cases to conclusion without invoking the Arbitration Agreements. In my view, Mibot waiving a right to invoke the Arbitration Agreements presupposes the Arbitration Agreements being valid and therefore, without more, binding.
This reasoning is deeply rooted in the English law tradition. Under Section 9 of the English Arbitration Act 1996, a party may lose the right to stay court proceedings if they take a "step in the proceedings" to answer the substantive claim. However, losing the right to stay a specific court action does not automatically render the underlying arbitration agreement void or entirely inoperative for all purposes. The agreement remains a valid contract. By pointing out that a waiver presupposes validity, the DIFC Court prioritized the competence-competence principle—the tribunal's (and the supervisory court's) mandate to recognize the existence of the arbitration agreement independently of the parties' tactical maneuvers in foreign or parallel courts.
The DIFC Court’s focus on the 'binding' nature of the clause reflects a broader international trend in favor of party autonomy. Mibot did not seek an anti-suit injunction to halt the Dubai Court proceedings—a remedy that is historically fraught with constitutional friction between the onshore and offshore Dubai courts. Instead, Mibot sought declaratory relief regarding the contracts themselves. The default judgment secured by Mibot was highly specific, targeting the exact dispute resolution mechanisms agreed upon by the parties.
At [2] of the DIFC Default Judgment it was declared that “The arbitration clause contained in clause 36 of the Addendum in the First Sub-Contract Agreement dated 26 June 2016 [i.e. the Gypsum Contract] is binding on the Claimant and Defendant” and at [3] it was declared that “The arbitration clause contained in clause 12 of the Addendum in the Second Sub-Contract Agreement dated 8 February 2018 [i.e. the Joinery Contract] is binding on the Claimant and Defendant”.
The English High Court frequently utilizes declaratory relief under Section 32 of the Arbitration Act 1996 (or its inherent jurisdiction) to confirm the validity of an arbitration agreement, providing a shield against parallel litigation. The DIFC Court’s willingness to issue and uphold these declarations, despite the fact that Clause 4.1 of the Novation Agreement stipulates that the Dubai Court has exclusive jurisdiction, demonstrates a sophisticated application of contractual construction. Where general jurisdiction clauses clash with specific arbitration addenda, pro-arbitration jurisdictions like the DIFC and London will almost invariably give effect to the specific arbitration carve-out, presuming that commercial parties intended for their bespoke dispute resolution mechanism to govern.
Mfast’s attempt to use the onshore proceedings as a procedural obstruction to the DIFC declarations was firmly rejected. Mfast argued that because the arbitration agreements were never raised in the Dubai Courts—where Mfast claimed a sum of AED 17,338,390.74 for outstanding dues—the DIFC claim was somehow moot or already satisfied by the conclusion of the onshore litigation. The Court dismissed this conflation of the substantive financial dispute with the declaratory relief sought regarding the arbitration agreement's validity.
It is Mfast’s case that the Arbitration Agreements were not so much as mentioned in the Onshore Proceedings, never mind invoked or otherwise put before the Dubai Courts. It necessarily follows, in my judgment, that the DIFC Claim, a claim for declarations that the Arbitration Agreements are binding, cannot have been satisfied before the DIFC Default Judgment was entered as such a claim had not previously been made.
This strict separation of claims mirrors the English High Court's refusal to allow parties to evade arbitration agreements through creative pleading or by racing to a non-arbitral forum. The fact that Clause 36 of the addendum to the Gypsum Contract mandated DIFC-LCIA arbitration meant that the DIFC Court retained supervisory jurisdiction to declare that clause binding, regardless of what transpired onshore regarding the underlying financial claims. The declaratory relief regarding the arbitration agreement is a distinct cause of action, one that had not been adjudicated by the Dubai Courts.
The trajectory of the DIFC Courts asserting their jurisdiction to protect arbitration agreements is well-documented. The foundational principles established in cases like ARB-003-2013: Banyan Tree Corporate PTE Ltd v Meydan Group LLC [2013] DIFC ARB 003 cemented the DIFC's role as a conduit jurisdiction, willing to enforce awards even without a geographic nexus to the financial centre. Mibot v Mfast represents the necessary corollary to that doctrine: the DIFC Court will not only enforce the output of an arbitration (the award) but will fiercely protect the input (the arbitration agreement itself) through declaratory relief, even when the parties are simultaneously entangled in onshore litigation.
By dismissing Mfast’s application to set aside the default judgment, the DIFC Court reinforced that a failure to challenge the validity of an arbitration agreement leaves a defendant with no real prospect of defending a claim for a declaration that the agreement is binding. Simultaneously, by dismissing Mibot’s cross-application to strike out Mfast’s challenge, the Court maintained procedural fairness, ensuring that the set-aside application was heard and dismissed on its legal merits rather than being summarily ejected. This balanced, analytically rigorous approach ensures that the DIFC remains a premier, predictable seat for international arbitration, operating with the same doctrinal clarity and pro-arbitration commerciality expected of the English Commercial Court.
Which Earlier DIFC Cases Frame This Decision?
H.E. Justice Shamlan Al Sawalehi’s order in Mibot v Mfast [2022] DIFC ARB 035 does not exist in a doctrinal vacuum. Rather, it represents the latest fortification of a jurisdictional shield that the Dubai International Financial Centre (DIFC) Courts have meticulously constructed over the past decade. The decision sits squarely within a lineage of jurisprudence that treats the arbitration agreement not merely as a contractual term, but as a sacrosanct jurisdictional mandate. When parties select the DIFC as their arbitral seat, the Court assumes a supervisory duty to protect that forum from collateral attacks, implied waivers, and the corrosive effects of parallel onshore litigation.
The foundational principles governing this protective stance were established in Banyan Tree Corporate Pte Ltd v Meydan Group LLC [2013] DIFC ARB 003. In Banyan Tree, the DIFC Court confirmed its willingness to act as a robust conduit jurisdiction, enforcing arbitration agreements and awards even when the underlying assets or parallel disputes were situated onshore in Dubai. That landmark ruling sent a clear message to the international commercial community: the DIFC is a pro-arbitration hub, and attempts to evade valid arbitration agreements through jurisdictional maneuvering will face severe judicial skepticism. Mibot v Mfast builds directly upon this foundation, addressing a more insidious form of evasion—the argument that participation in parallel onshore proceedings constitutes an implied waiver of the right to arbitrate in the DIFC.
The factual matrix of Mibot provided fertile ground for such jurisdictional skirmishing. The dispute arose from two distinct agreements concerning the "Mruf" development in Jumeirah Village Circle: the Gypsum Contract and the Joinery Contract. Complicating matters, a novation agreement dated 1 July 2017, by which the main contractor transferred its interest and obligations to Mibot, contained a clause stipulating the exclusive jurisdiction of the Dubai Courts. However, the specific addenda governing the works contained clear DIFC-LCIA arbitration clauses.
When relations broke down, Mfast initiated civil action before the Dubai Court on 18 March 2020, claiming AED 17,338,390.74 for alleged outstanding dues. Forced to defend itself onshore, Mibot filed a defence and counterclaimed a sum of AED 8,463,413 in damages. Mfast subsequently weaponized Mibot's defensive participation in the Dubai Courts, arguing before the DIFC Court that Mibot had waived its right to rely on the DIFC-LCIA arbitration clauses.
Justice Al Sawalehi’s rejection of this waiver argument is a masterclass in doctrinal precision. He identified a fatal logical flaw in Mfast's position: one cannot waive a right that does not validly exist. By arguing that Mibot had waived its right to arbitrate, Mfast inadvertently conceded the underlying validity of the arbitration agreements themselves. The Court articulated this trap with devastating clarity:
Mfast has not challenged the validity of the Arbitration Agreements. Its primary position is that Mibot waived its right to invoke the Arbitration Agreements when it filed a defence and counterclaim in the Onshore Proceedings and advanced these cases to conclusion without invoking the Arbitration Agreements. In my view, Mibot waiving a right to invoke the Arbitration Agreements presupposes the Arbitration Agreements being valid and therefore, without more, binding.
This reasoning reinforces a critical tenet of DIFC arbitration law: the Court will not allow parties to use parallel proceedings to undermine the seat of arbitration. The mere existence of an onshore dispute, even one advanced to conclusion, does not automatically extinguish the supervisory jurisdiction of the DIFC Courts over a valid, DIFC-seated arbitration agreement. Waiver of an arbitration clause requires an unequivocal, intentional abandonment of the arbitral forum, not merely defensive participation in a parallel suit initiated by the counterparty.
Mibot’s procedural strategy in the DIFC was equally calculated. Rather than seeking an anti-suit injunction to halt the Dubai Court proceedings—a move that often triggers complex jurisdictional friction—Mibot sought declaratory relief. It asked the DIFC Court to formally declare that the arbitration clauses in the respective addenda were binding. When Mfast failed to acknowledge service, Mibot secured a default judgment entered against it on 15 March 2021. The declarations granted by the Court were absolute and unambiguous:
At [2] of the DIFC Default Judgment it was declared that “The arbitration clause contained in clause 36 of the Addendum in the First Sub-Contract Agreement dated 26 June 2016 [i.e. the Gypsum Contract] is binding on the Claimant and Defendant” and at [3] it was declared that “The arbitration clause contained in clause 12 of the Addendum in the Second Sub-Contract Agreement dated 8 February 2018 [i.e. the Joinery Contract] is binding on the Claimant and Defendant”.
22.
Mfast’s subsequent application to set aside this default judgment brings the analysis to another crucial pillar of DIFC jurisprudence: the Court’s profound intolerance for procedural obstruction. The stance taken by Justice Al Sawalehi is entirely consistent with the high bar set in cases like ARB-005-2014: Eava v Egan [2014] ARB 005. In Eava v Egan, the DIFC Court demonstrated that it will not entertain tactical delays or unmeritorious challenges designed solely to derail arbitral enforcement. A party seeking to set aside a default judgment in the context of an arbitration claim must demonstrate a real prospect of successfully defending the claim.
In Mibot, Mfast failed to meet this standard because its defense was fundamentally misdirected. Instead of attacking the root validity of the arbitration agreements—perhaps by arguing that the novation agreement superseded the addenda—Mfast relied entirely on the waiver argument and the assertion that the declarations were somehow moot because the arbitration agreements were never mentioned in the Dubai Courts. Justice Al Sawalehi dismantled this defense, pointing out the logical impossibility of satisfying a claim for declaratory relief in a forum where the issue was never even raised:
It is Mfast’s case that the Arbitration Agreements were not so much as mentioned in the Onshore Proceedings, never mind invoked or otherwise put before the Dubai Courts. It necessarily follows, in my judgment, that the DIFC Claim, a claim for declarations that the Arbitration Agreements are binding, cannot have been satisfied before the DIFC Default Judgment was entered as such a claim had not previously been made.
The financial stakes underpinning these procedural maneuvers were immense, further justifying the Court's strict adherence to the agreed arbitral forum. Mibot was pursuing substantial sums across multiple heads of claim, seeking orders that would compel Mfast to make significant payouts. The specific financial remedies sought highlight the gravity of the underlying commercial dispute:
Ordering the Defendant to pay AED
13,452,187 comprising, namely: - AED 1,361,845 for liquidated damages under the Gypsum Contract; - AED 5,264,728 for liquidated damages under the Joinery Contract; - AED 2,041,136 for contra charges under the Joinery Contract; - AED 4,784,478 for loss of gross operating profit based on an indemnity under the Joinery Contract. d.
Faced with such liabilities, Mfast’s attempt to bypass the DIFC-LCIA arbitration in favor of onshore litigation was a calculated, high-stakes gamble. It was a gamble that ultimately failed to dislodge the DIFC Court's supervisory authority. Following the hearing on 3 October 2021, the Court dismissed both Mfast's Set Aside Application and Mibot's Strike Out Application, leaving the default judgment—and the binding declarations it contained—firmly intact.
The ruling in Mibot v Mfast serves as a stark reminder to commercial litigators operating in the UAE. The DIFC Courts view the arbitration agreement as a primary jurisdictional shield. Drawing on the pro-arbitration legacy of Banyan Tree and the strict procedural standards of Eava v Egan, the Court has made it unequivocally clear that parallel onshore proceedings cannot be used as a backdoor to invalidate a DIFC-seated arbitration clause. Unless a party is prepared to mount a direct, substantive challenge to the validity of the arbitration agreement itself, arguments of implied waiver based on onshore litigation will be swiftly and decisively rejected. The sanctity of the arbitral seat remains paramount.
What Does This Mean for Practitioners and Enforcement Strategies?
The procedural posture of Mibot v Mfast [2022] DIFC ARB 035 serves as a severe warning to practitioners navigating the complex jurisdictional interplay between onshore Dubai Courts and the offshore Dubai International Financial Centre (DIFC) Courts. The central tactical error committed by the Defendant, Mfast, was treating the DIFC Court proceedings as a secondary, perhaps even irrelevant, theater of dispute once onshore litigation had commenced. By failing to engage with the DIFC proceedings at the outset, Mfast allowed a judgment in default of acknowledgment of service to be entered against it. Overturning such a judgment requires satisfying a stringent legal threshold—specifically, demonstrating a real prospect of successfully defending the claim. Mfast’s subsequent attempt to meet this threshold exposed a fundamental misunderstanding of the difference between the waiver of a right to arbitrate and the inherent validity of an arbitration agreement.
When Mfast, an interior fit-out company, and Mibot, a real estate developer, found themselves in a dispute over the 'Mruf' development, the contractual matrix was already fractured. The relationship was governed by two distinct agreements: the Gypsum Contract and the Joinery Contract. Both contained addenda specifying that disputes must be resolved by arbitration under the Arbitration Rules of the DIFC-LCIA Arbitration Centre, with the DIFC designated as the seat. Despite these clear arbitration clauses, Mfast initiated proceedings onshore, having filed a civil action against Mibot before the Dubai Court. Mibot responded by filing a defence and a counterclaim in those onshore proceedings.
For many practitioners, Mibot’s active participation in the onshore litigation—filing substantive pleadings and advancing counterclaims—might appear to be a textbook example of submitting to the jurisdiction of the onshore courts and waiving the right to arbitrate. Mfast certainly believed so, anchoring its application to set aside the DIFC default judgment entirely on the premise that Mibot’s onshore conduct precluded it from seeking declaratory relief in the DIFC. However, H.E. Justice Shamlan Al Sawalehi dismantled this assumption by drawing a sharp doctrinal line between the procedural concept of waiver and the substantive concept of validity.
The Court’s reasoning demands close attention from any litigator drafting a jurisdictional challenge. To set aside a default judgment under the Rules of the DIFC Courts (RDC) Part 13, a defendant must show a real prospect of defending the specific claim brought by the claimant. Mibot’s claim in the DIFC was not for damages or specific performance under the construction contracts; it was a narrow, targeted claim for declarations that the Arbitration Agreements are binding. Therefore, to defend against this claim, Mfast had to prove that the arbitration agreements were not binding. Arguing that Mibot had waived its right to invoke them did not achieve this. As H.E. Justice Al Sawalehi articulated:
Mfast has not challenged the validity of the Arbitration Agreements. Its primary position is that Mibot waived its right to invoke the Arbitration Agreements when it filed a defence and counterclaim in the Onshore Proceedings and advanced these cases to conclusion without invoking the Arbitration Agreements. In my view, Mibot waiving a right to invoke the Arbitration Agreements presupposes the Arbitration Agreements being valid and therefore, without more, binding.
This distinction is paramount for enforcement strategies. A waiver is an election not to exercise a right; it is a shield that a party might raise if an opponent attempts to stay court proceedings in favor of arbitration. It does not, however, operate as a sword to sever the arbitration agreement from the underlying contract or render it void ab initio. By relying solely on the waiver argument, Mfast inadvertently conceded the very point Mibot sought to establish: that the arbitration agreements were, in fact, validly formed and legally existent. Because Mfast failed to attack the validity of the agreements—perhaps by alleging lack of capacity, fraud, or failure of condition precedent—it presented no viable defense to the declaratory relief sought.
Furthermore, the Court addressed the temporal and jurisdictional disconnect between the onshore and offshore proceedings. Mfast attempted to argue that the onshore litigation somehow absorbed or neutralized the DIFC claims. Yet, the specific relief Mibot sought in the DIFC had never been placed before the Dubai Courts. The DIFC Court refused to allow the mere existence of parallel onshore proceedings to act as a blanket nullification of its own supervisory jurisdiction over DIFC-seated arbitrations. The Court noted the logical impossibility of Mfast’s position:
It is Mfast’s case that the Arbitration Agreements were not so much as mentioned in the Onshore Proceedings, never mind invoked or otherwise put before the Dubai Courts. It necessarily follows, in my judgment, that the DIFC Claim, a claim for declarations that the Arbitration Agreements are binding, cannot have been satisfied before the DIFC Default Judgment was entered as such a claim had not previously been made.
This ruling reinforces a critical strategic imperative: practitioners must not assume that participation in onshore proceedings automatically waives the right to arbitrate in the DIFC, nor does it strip the DIFC Courts of their jurisdiction to issue declaratory relief regarding the arbitration agreement itself. The DIFC Courts have consistently protected their arbitral jurisdiction, a stance echoed in cases like ARB-005-2014: Eava v Egan [2014] ARB 005, where the Court demonstrated its intolerance for procedural maneuvering designed to bypass the agreed arbitral seat.
Mibot’s strategy of securing a default judgment for declaratory relief was highly effective. By moving swiftly in the DIFC while the onshore proceedings were ongoing, Mibot crystallized the legal status of the arbitration clauses. The resulting declarations were unequivocal:
At [2] of the DIFC Default Judgment it was declared that “The arbitration clause contained in clause 36 of the Addendum in the First Sub-Contract Agreement dated 26 June 2016 [i.e. the Gypsum Contract] is binding on the Claimant and Defendant” and at [3] it was declared that “The arbitration clause contained in clause 12 of the Addendum in the Second Sub-Contract Agreement dated 8 February 2018 [i.e. the Joinery Contract] is binding on the Claimant and Defendant”.
Armed with these declarations, Mibot secured a powerful tool for any future enforcement or jurisdictional battles. If Mfast attempts to enforce an onshore judgment that conflicts with the arbitration agreements, Mibot can present the DIFC Default Judgment as binding precedent regarding the parties' agreed dispute resolution mechanism. This aligns with the broader jurisprudential trajectory established in ARB-003-2013: Banyan Tree Corporate PTE Ltd v Meydan Group LLC [2013] DIFC ARB 003, which solidified the DIFC Courts' willingness to act as a robust conduit and supervisory authority, independent of parallel onshore complexities.
The ultimate dismissal of Mfast's challenge—where The Set Aside Application is dismissed—underscores the severe cost of procedural defaults. When served with DIFC Court proceedings, a party must acknowledge service and actively contest jurisdiction or the merits. Ignoring the claim under the mistaken belief that onshore proceedings provide a jurisdictional shield is a fatal error. Once a default judgment is entered, the burden shifts entirely to the defendant to prove a real prospect of success. As Mibot v Mfast illustrates, relying on procedural arguments like waiver, without attacking the substantive validity of the underlying agreements, will fail to meet that burden. Practitioners must treat the DIFC Court's jurisdiction with the utmost seriousness, recognizing that procedural missteps in this forum carry permanent, binding consequences that cannot be easily unwound by pointing to litigation elsewhere.
What Issues Remain Unresolved?
While H.E. Justice Shamlan Al Sawalehi decisively disposed of the immediate procedural skirmish by refusing to set aside the default judgment, the broader question of how the DIFC Courts will handle increasingly complex multi-jurisdictional construction disputes remains open. The judgment leaves several substantive fault lines unaddressed, particularly regarding the mechanics of waiver, the strategic utility of anti-suit injunctions, and the chronic pathology of conflicting dispute resolution clauses in UAE construction contracts. By strictly confining the inquiry to whether the default judgment was wrongly entered, the Court deferred the inevitable collision between onshore litigation and offshore arbitration to a later date.
The most glaring unresolved issue is the substantive viability of Mfast’s waiver defense. Mfast’s primary argument for setting aside the default judgment was not that the arbitration agreements were inherently defective, but rather that Mibot had irrevocably waived its right to rely upon them. The factual basis for this assertion was compelling on its face: Mfast had filed a civil action against Mibot before the Dubai Court on 18 March 2020. Rather than immediately contesting jurisdiction and pointing to the DIFC-LCIA arbitration clauses, Mibot engaged with the onshore proceedings on the merits. Mibot not only filed a defense but actively escalated the onshore litigation, whereby Mibot counterclaimed a sum of AED 8,463,413 in damages under the very contracts that contained the arbitration agreements.
In many jurisdictions, advancing a substantive counterclaim in a non-arbitral forum constitutes a classic, unequivocal waiver of the right to arbitrate. However, Justice Al Sawalehi bypassed the substantive merits of the waiver argument through a highly technical, yet logically unassailable, procedural distinction:
Mfast has not challenged the validity of the Arbitration Agreements. Its primary position is that Mibot waived its right to invoke the Arbitration Agreements when it filed a defence and counterclaim in the Onshore Proceedings and advanced these cases to conclusion without invoking the Arbitration Agreements. In my view, Mibot waiving a right to invoke the Arbitration Agreements presupposes the Arbitration Agreements being valid and therefore, without more, binding.
By ruling that the act of arguing waiver inherently admits the underlying validity of the arbitration agreement, the Court insulated the default judgment—which merely declared the agreements valid and binding—from attack. Yet, this elegant logical sidestep merely postpones the reckoning. The interaction between onshore 'waiver' arguments and DIFC arbitration enforcement remains a fertile ground for future litigation. If Mibot now attempts to commence DIFC-LCIA arbitration to pursue its claims, Mfast will undoubtedly raise the exact same waiver argument before the arbitral tribunal. Should the tribunal reject the waiver defense and issue an award in Mibot’s favor, Mfast will inevitably resurrect the waiver argument at the enforcement stage before the DIFC Courts, arguing that enforcing an award where the right to arbitrate was waived violates public policy. The Court’s refusal to engage with the substantive mechanics of waiver in the context of parallel onshore proceedings leaves practitioners without clear guidance on how the DIFC Courts will ultimately balance active onshore litigation against the sanctity of a DIFC arbitral seat.
Closely tied to the waiver conundrum is the Court’s silence on the availability and utility of anti-suit injunctions in such fractured jurisdictional landscapes. When Mfast initiated the onshore proceedings, Mibot faced a strategic choice. It could have immediately applied to the DIFC Courts, as the supervisory court of the arbitral seat, for an anti-suit injunction to restrain Mfast from pursuing the Dubai Court litigation. Instead, Mibot chose to litigate onshore while simultaneously pursuing a claim for declarations that the Arbitration Agreements are binding in the DIFC Courts.
The Court noted the bizarre parallel tracks the parties had created, observing the complete disconnect between the two forums:
It is Mfast’s case that the Arbitration Agreements were not so much as mentioned in the Onshore Proceedings, never mind invoked or otherwise put before the Dubai Courts. It necessarily follows, in my judgment, that the DIFC Claim, a claim for declarations that the Arbitration Agreements are binding, cannot have been satisfied before the DIFC Default Judgment was entered as such a claim had not previously been made.
The Court did not fully explore the potential for future anti-suit injunctions in similar fact patterns. This passive coexistence of parallel proceedings stands in stark contrast to the robust, interventionist approach the DIFC Courts have historically taken to protect their supervisory jurisdiction. For instance, in Hayri International Llc v Hazim Telecom Private Limited, the DIFC Court demonstrated a clear willingness to deploy anti-suit injunctions to shield the DIFC seat from oppressive parallel litigation. In the present dispute, the absence of an anti-suit application allowed the onshore proceedings to advance to a stage where Mfast claimed a sum of AED 17,338,390.74 for alleged outstanding dues, creating a high risk of irreconcilable judgments. If the DIFC Courts are to maintain their status as a premier pro-arbitration jurisdiction, future jurisprudence must clarify whether a party that fails to seek an anti-suit injunction promptly, and instead engages with onshore proceedings, forfeits the protective umbrella of the DIFC supervisory courts.
Beyond the immediate procedural and jurisdictional tactics, the judgment exposes a chronic drafting pathology prevalent in the UAE construction sector. The root cause of the entire jurisdictional quagmire between Mibot and Mfast was the existence of deeply contradictory dispute resolution clauses scattered across a web of interconnected contracts, novations, and addendums. The contractual history is a masterclass in how not to draft dispute resolution provisions.
The original Gypsum Contract contained an addendum mandating DIFC-LCIA arbitration. However, when the parties executed the Novation Agreement to transfer the main contractor's interests to Mibot, they introduced a fatal contradiction: Clause 4.1 of the Novation Agreement stipulates that the Dubai Court has exclusive jurisdiction to hear any disputes arising from that agreement. The Joinery Contract suffered from a similar schizophrenic drafting approach. The base agreement explicitly stated that Clause 4.14 stipulates that the Dubai Court has exclusive jurisdiction, yet it simultaneously incorporated an addendum that required disputes to be resolved by DIFC-LCIA arbitration.
Despite these glaring contradictions, the DIFC Court ultimately affirmed the primacy of the arbitration addendums, issuing the following declarations in the default judgment:
At [2] of the DIFC Default Judgment it was declared that “The arbitration clause contained in clause 36 of the Addendum in the First Sub-Contract Agreement dated 26 June 2016 [i.e. the Gypsum Contract] is binding on the Claimant and Defendant” and at [3] it was declared that “The arbitration clause contained in clause 12 of the Addendum in the Second Sub-Contract Agreement dated 8 February 2018 [i.e. the Joinery Contract] is binding on the Claimant and Defendant”.
The long-term impact of this ruling on construction contract drafting in the UAE is yet to be seen. While arbitration practitioners may find comfort in the DIFC Court’s willingness to uphold arbitration clauses buried in addendums over exclusive jurisdiction clauses in the base contracts, the ruling inadvertently provides a roadmap for recalcitrant parties to exploit drafting ambiguities. Construction projects in the region frequently rely on standard form contracts heavily modified by bespoke particular conditions, novations, and multiple tiers of addendums. When drafters fail to sanitize the underlying jurisdiction clauses, they invite the exact type of parallel litigation seen here.
Until the DIFC Courts are presented with an opportunity to definitively rule on the hierarchy of conflicting jurisdiction clauses within a single contractual matrix—rather than merely refusing to set aside a default judgment on procedural grounds—parties will continue to weaponize these drafting errors. The Mibot litigation serves as a stark warning that securing a declaration of validity in the DIFC Courts is only the first step in a much longer, and highly uncertain, jurisdictional war. The ultimate resolution of the tension between onshore waiver, offshore enforcement, and the specter of the Joint Judicial Committee remains a critical frontier for DIFC jurisprudence.