On 12 September 2023, H.E. Justice Shamlan Al Sawalehi delivered a decisive blow to procedural obfuscation in the DIFC Courts, dismissing Mirma’s attempt to leverage a counterclaim as a vehicle to challenge an arbitral award. The ruling, which followed a protracted salvage contract dispute between the Iraqi state-owned entity Mirma and the Dutch firm Mobal, effectively shuttered the door on attempts to bypass the strictures of the Arbitration Law. By rejecting the counterclaim application and the permission to appeal, the Court reinforced the primacy of the Part 8 procedure for arbitration claims.
For cross-border litigators and arbitration counsel, this case serves as a vital reminder that the DIFC Courts will not permit the procedural flexibility of the Rules of the DIFC Courts (RDC) to undermine the finality of arbitral awards. The decision clarifies the interplay between Article 44 of the Arbitration Law and the RDC, establishing that an application for recognition and enforcement cannot be hijacked by a counterclaim. As the DIFC continues to position itself as a premier seat for international arbitration, this ruling provides necessary certainty regarding the exhaustion of remedies and the high threshold for challenging awards on the grounds of public policy or jurisdictional excess.
How Did the Salvage Contract Dispute Between Mirma and Mobal Arise?
The genesis of the dispute between Mirma, an Iraqi state-owned entity operating under the Ministry of Oil, and the Dutch salvage firm Mobal exposes the profound structural vulnerabilities inherent in state-contracting. When commercial performance occurs within a highly militarised or sovereign-controlled environment, the boundary between contractual leverage and state coercion frequently blurs. The conflict originated from a 14 December 2013 agreement governed by Iraqi law, under which Mobal was contracted to recover and remove the wreck of an oil tanker, the Marcus (also referred to as the Mahrt in parallel filings), which had been bombed and sunk during the 1991 Gulf War.
The operational theatre for this salvage operation was far from a standard commercial maritime environment. The wreck was situated within a strict marine exclusion zone established around a critical Iraqi oil terminal. Movement within this zone was not merely a matter of port authority clearance; it required explicit permission from the Iraqi Navy. This geographical and jurisdictional reality embedded a latent risk into the contract: Mobal’s ability to perform, and crucially, its ability to demobilise its assets, was entirely contingent upon the goodwill of the sovereign apparatus that owned its counterparty.
The initial fracture in the commercial relationship occurred in March 2014, when Mobal located a 70 ft wooden dhow within the wreck. The discovery of this unforeseen obstruction necessitated additional clearance work. Mobal executed the clearance but sought compensation beyond the original fixed contract price, treating the dhow as a variation or an unforeseen site condition. Mirma resisted the claim, adopting a rigid interpretation of the contractual scope. This disagreement over the wooden dhow set the stage for a broader deterioration of trust, culminating in Mobal issuing a notice on 3 August 2015 that it was suspending work due to unresolved disputes, followed by a reduction of on-site personnel.
What began as a conventional construction and salvage dispute rapidly escalated into an exercise of sovereign force. On 18 August 2015, Mobal notified Mirma that its vessels were being prevented from departing the marine exclusion zone. The Iraqi Navy had effectively blockaded Mobal’s fleet, alongside two additional chartered vessels, preventing them from leaving the port.
Mirma later attempted to characterise this blockade as an independent military action, seeking to shield itself behind the Act of State doctrine. The argument posited that the detention of the vessels was a sovereign act of the Iraqi Navy, immune from commercial arbitral scrutiny. However, the arbitral tribunal pierced this sovereign veil, making a definitive factual finding that Mirma had actively caused the detention by instructing the Navy that Mobal’s vessels were not permitted to depart. The tribunal correctly identified this not as a sovereign military command, but as a commercial tort—a state-owned entity weaponising its relationship with the military to exert unlawful commercial pressure.
When Mirma subsequently challenged the arbitral award in the DIFC Courts, H.E. Justice Shamlan Al Sawalehi firmly rejected the attempt to re-litigate the nature of the blockade. The Court maintained the critical distinction between sovereign acts and commercial liabilities, refusing to allow the Act of State doctrine to serve as a blanket immunity for tortious interference in a commercial contract. The Court found that the "acts and circumstances" giving rise to the Award were Mirma’s failure to pay sums due under the Contract and its tortious liability for causing the detention of Mobal’s vessels.
The fallout from the blockade introduced a secondary layer of complexity involving allegations of corruption and public policy violations. Desperate to free its detained fleet and mitigate mounting commercial losses, Mobal engaged an Iraqi Member of Parliament to facilitate meetings with the Ministry of Oil. These lobbying efforts eventually succeeded, the blockade was lifted, and Mobal completed the salvage works by 30 June 2017. However, the engagement of the Iraqi MP triggered an investigation by the Dutch Public Prosecutor’s Office (DPPO) into potential bribery.
Mirma seized upon this DPPO investigation during the set-aside proceedings, arguing under Article 41(2)(b)(iii) of the Arbitration Law that enforcing the award would violate UAE public policy due to the alleged bribery. The DIFC Court’s handling of this argument provides a masterclass in the strict construction of public policy defences. The Court required a direct nexus between the alleged illegality and the arbitral award itself. It is insufficient for a contract to merely exist in the factual proximity of alleged corruption; the award must actively enforce or rely upon the corrupt act. Relying on established DIFC jurisprudence, the Court reinforced the high threshold required to trigger the public policy exception, noting that Egan v Eava [2013] DIFC ARB 002 (29 Jul 2015) indicated at [65] that an objecting party generally needs to show a public policy defence grounded in an “intrinsic characteristic of the award,” an “alleged procedural defect in the course of the arbitration,” or the “conduct of the arbitrators,” and that the mere presence of public policy concerns, however central, is insufficient.
By citing Eava v Egan, the Court cemented the doctrine that parallel criminal investigations—even those conducted by reputable European prosecutors—do not automatically invalidate an arbitral tribunal's findings on commercial liability. The tribunal had already compartmentalised the bribery allegations, agreeing to deal with them in a separate confidential award (the CC4 Award) precisely because of the ongoing DPPO investigation. The primary award, which compensated Mobal for the wooden dhow clearance and the tortious detention of its vessels, remained untainted by the lobbying efforts that occurred after the breach and the tort had already crystallised.
Mirma’s final line of attack focused on the tribunal’s jurisdiction, attempting to slice the arbitration agreement into artificially narrow segments. The original contract contained an ICC arbitration clause covering "any disputes concerning or arising from this Contract," with the seat originally in Amman, Jordan, before the parties agreed in January 2019 to shift the seat to the DIFC. Mirma argued that the tribunal exceeded the scope of the submission to arbitration by ruling on the wooden dhow claim and the tort claim regarding the vessel detention.
The DIFC Court dismantled this jurisdictional challenge by applying a commercially sensible interpretation of the arbitration agreement and the Terms of Reference. The Court noted that the ICC Rules do not require a hyper-formalistic approach to the admission of claims that naturally evolve from the core contractual matrix. The dispute over the dhow was fundamentally a dispute over the scope of works and variations under the contract. Similarly, the tort claim for the detention of the vessels was inextricably linked to Mobal's performance of the contract and Mirma's interference with that performance. This approach, the Court noted, accords with the language of the second limb of Article 41(2)(a)(iii), which is concerned with the area created by the terms of the submission to arbitration rather than the precise terms themselves.
The ruling establishes a formidable precedent for contractors operating in the Middle East under state-sponsored agreements. It confirms that the DIFC Courts will not permit state entities to compartmentalise their commercial and sovereign identities to evade arbitral jurisdiction. When a state-owned company leverages military or sovereign assets to enforce a commercial blockade, the resulting damages are commercial torts, squarely within the remit of an international arbitral tribunal. Furthermore, the decision reinforces the finality of arbitral awards against procedural obfuscation, ensuring that public policy defences and jurisdictional challenges cannot be weaponised to delay the enforcement of legitimate commercial debts arising from complex, high-risk salvage operations.
How Did the Case Move From Ex Parte Application to Final Hearing?
The procedural architecture of Mirma v Mobal provides a masterclass in the complexities of managing parallel set-aside and enforcement applications within the same jurisdiction. When a high-stakes arbitration concludes, the losing party frequently races to the curial court to annul the award, while the prevailing party simultaneously moves to recognize and enforce it. In the Dubai International Financial Centre (DIFC), these competing imperatives often collide, forcing the judiciary to untangle overlapping claims, counterclaims, and adjournment requests. The trajectory of this dispute—from the initial filings to the definitive appellate dismissal—reveals how strictly the DIFC Courts police the boundaries of the Arbitration Law and the Rules of the DIFC Courts (RDC) to prevent procedural obfuscation.
The genesis of the parallel tracks lay in a protracted dispute over a salvage contract (the “Contract”) with Mobal, a Dutch firm engaged by the Iraqi state-owned entity Mirma to remove the wreck of the Marcus, an oil tanker sunk during the 1991 Gulf War. The operational reality of the salvage was fraught, culminating in the Iraqi Navy detaining Mobal’s fleet within a marine exclusion zone. Following an ICC arbitration seated in the DIFC, the tribunal issued a Main Award in November 2021 favoring Mobal. Predictably, the legal maneuvering commenced immediately. Mirma initiated proceedings (ARB-004-2022) to set aside the award, while Mobal filed a reciprocal action (ARB-005-2023) asking the Court of First Instance to recognise and enforce the Main Award in the DIFC.
Mirma sought to set aside the ICC award on jurisdictional and fairness grounds, deploying a scattergun approach that challenged both the tribunal’s mandate and the substantive public policy implications of the award. A primary contention was that the tribunal had improperly decided a matter not before it—specifically, a claim regarding the removal of a 70-foot wooden dhow discovered within the wreck. Furthermore, Mirma argued that enforcing the contract violated UAE public policy because the detention of the vessels by the Iraqi Navy engaged the Act of State doctrine, shielding the state-owned entity from liability for sovereign military actions.
H.E. Justice Shamlan Al Sawalehi, presiding over the Court of First Instance, systematically dismantled these set-aside arguments in his February 2023 judgment. Addressing the procedural fairness challenges under Article 41(2)(a)(ii) of the Arbitration Law, the judge drew a sharp distinction between a party's inability to present its own affirmative case and its mere dissatisfaction with how it was permitted to respond to an opponent's positioning.
There I explained that, according to my interpretation of Article 41(2)(a)(ii), the test is whether the applicant was “unable to present his case” (emphasis added), not whether the applicant was unable to present his position on another’s case.
Having failed to annul the Main Award, Mirma pivoted its strategy toward obstructing Mobal’s enforcement action. Mobal countered with an application for recognition and enforcement, securing an ex parte Recognition Order in March 2023. Mirma immediately applied to set aside that order, but recognizing the weakness of its position, simultaneously requested an adjournment of the enforcement proceedings pending its application for permission to appeal the set-aside dismissal.
The procedural complexity deepened when Mirma attempted a novel tactical maneuver: it sought permission to advance a counterclaim within Mobal's enforcement proceedings. The counterclaim aimed to enforce a separate, confidential award (the CC4 Award) issued in the same arbitration, under which Mirma had been awarded USD 37.7 million. By introducing the CC4 Award as a counterclaim, Mirma hoped to offset its liabilities under the Main Award and entangle the enforcement process in a web of competing financial obligations.
This maneuver required the Court to conduct a rigorous statutory interpretation of RDC Part 43, which governs arbitration claims. Mirma argued that because RDC 43.2(3)A defines "claim" broadly, the standard RDC provisions allowing counterclaims should apply to enforcement actions. H.E. Justice Shamlan Al Sawalehi rejected this conflation of Part 7 and Part 8 procedures. The Court emphasized that arbitration claims are fundamentally distinct from standard commercial litigation and are subject to strict procedural gateways.
RDC 43.3 provides that, “Except where RDC 43.4 or RDC 43.5 applies an arbitration claim must be started by the issue of an arbitration claim form in accordance with the Part 8 procedure.” RDC 43.4 and RDC 43.5 do not concern recognition and enforcement claims, and the RDC of course makes provision for the bringing of counterclaims in Part 8 claims, albeit that, unlike for Part 7 claims, the permission of the Court is required (RDC 8.37).
The Court reasoned that allowing a party to smuggle an independent enforcement action into an existing proceeding via a counterclaim would bypass the mandatory Part 8 claim form requirement. The specific provisions of Part 43 override the general counterclaim permissions found elsewhere in the RDC.
It follows, in my judgment, that an application for the recognition and enforcement of an award may not be pursued by way of counterclaim.
This strict procedural policing aligns with the DIFC Courts' broader jurisprudence, which consistently rejects attempts to use procedural mechanisms to delay or complicate the enforcement of arbitral awards. Much like the firm stance taken against parallel proceedings in ARB-005-2014: Eava v Egan [2014] ARB 005, the Court in Mirma v Mobal refused to allow the enforcement track to be derailed by ancillary claims that should properly be filed as independent actions.
Mirma’s parallel attempt to adjourn the enforcement proceedings under Article 44(2) of the Arbitration Law met a similar fate. Mirma argued that because it was seeking permission to appeal the set-aside dismissal, the Court should suspend enforcement. The Court analyzed the interplay between Article 44(1)(a)(v)—which allows refusal of enforcement if an award has been set aside or suspended by a competent authority—and the adjournment power in Article 44(2). H.E. Justice Shamlan Al Sawalehi concluded that these provisions cannot be engaged simultaneously in the manner Mirma proposed. Because the DIFC Court was the curial court and had already refused to set aside the award, there was no pending application before a different competent authority that would justify an adjournment.
Applying this to the present case, since the Main Award was made, there has never been a time, in my judgment, when Article 44(1)(a)(v) was engaged: the DIFC Courts, as the curial court, has not set aside or suspended that award.
The Court’s refusal to grant the adjournment or permit the counterclaim effectively closed the door on Mirma’s efforts at the First Instance level. The Permission Application to appeal the set-aside dismissal was rejected, as was the Counterclaim Application, leaving Mobal’s enforcement order intact.
However, the procedural saga did not end there. Mirma escalated the battle, renewing its applications for permission to appeal directly before the Court of Appeal. The appellate bench, comprising Chief Justice Wayne Martin, H.E. Deputy Chief Justice Ali Al Madhani, and Justice Robert French, convened in November 2024 to hear the consolidated applications. Mirma continued to press its jurisdictional and public policy arguments, insisting that the CFI had erred in its application of the Arbitration Law.
A central pillar of Mirma's appellate strategy was the assertion that the CFI had failed to properly apply the Act of State doctrine. Mirma contended that the Iraqi Navy's blockade was a sovereign act, and enforcing a contract that penalized Mirma for that blockade violated fundamental public policy under Article 41(2)(b)(iii). The Court of Appeal acknowledged that the Act of State doctrine is applicable as a matter of DIFC Law, having been recognized in previous jurisprudence. However, the appellate judges found that the doctrine was simply not engaged on the facts of the case. The arbitral tribunal had made specific factual findings that Mirma itself had instigated the detention by informing the Navy that Mobal’s vessels were not permitted to leave. Consequently, the liability arose from Mirma's contractual breaches and tortious interference, not from an unreviewable sovereign act of the Iraqi state.
The Court of Appeal eventually dismissed the renewed permission applications in January 2025. The appellate bench systematically reviewed the five grounds of appeal—ranging from the scope of the arbitration submission regarding the wooden dhow to the procedural fairness of the tribunal's evidentiary rulings—and found no reasonable prospect of success on any front. The dismissal echoed the appellate intolerance for relitigating arbitral merits disguised as jurisdictional challenges, a theme prominently featured in ARB-027-2024: ARB 027/2024 Nalani v Netty.
By definitively shutting down the parallel tracks of set-aside appeals and enforcement counterclaims, the DIFC Courts reinforced the primacy of finality in arbitration. The procedural journey of Mirma v Mobal demonstrates that while the RDC provides mechanisms for challenging awards, those mechanisms cannot be weaponized to create endless loops of litigation. The strict interpretation of Part 43 ensures that an application for the recognition and enforcement of an award may not be pursued by way of counterclaim, preserving the streamlined Part 8 procedure designed specifically to support, rather than hinder, the arbitral process.
Why Did the Court Reject the Counterclaim Strategy?
The tactical deployment of counterclaims in enforcement proceedings often serves a dual purpose for award debtors: it introduces a competing financial narrative to offset the primary liability, and it complicates the procedural timeline, effectively delaying the execution of the original award. In the protracted dispute between Mirma and Mobal, the Iraqi state-owned entity attempted precisely this maneuver. Facing the imminent enforcement of the Main Award in ARB-005-2023, Mirma sought to introduce a separate arbitral award—the CC4 Award, rendered in the same underlying arbitration proceedings—by way of a counterclaim. The objective was clear: entangle the enforcement of Mobal’s Main Award with Mirma’s own enforcement action, thereby creating a set-off dynamic within a single procedural vehicle.
H.E. Justice Shamlan Al Sawalehi dismantled this strategy through a rigorous, textualist application of the Rules of the DIFC Courts (RDC). The Court’s analysis hinged on the fundamental architectural differences between standard commercial litigation under Part 7 and the bespoke, streamlined procedures governing arbitration claims under Part 43. By strictly interpreting the procedural gateways, the Court established a definitive boundary: recognition and enforcement actions cannot be smuggled into existing proceedings via counterclaim. They demand their own originating process.
The procedural history reveals that five applications have ensued from the initial judgments in ARB-004-2022 and ARB-005-2023. Among these, Mirma’s application for permission to advance a counterclaim represented the most aggressive attempt to reshape the litigation landscape. To succeed, Mirma needed the Court to accept that the general provisions of the RDC, which permit counterclaims in Part 8 proceedings subject to judicial permission under RDC 8.37, applied equally to arbitration claims governed by Part 43.
The Court began its deconstruction of Mirma’s argument by categorising the nature of the relief sought. Enforcing the CC4 Award was not a mere ancillary request; it was a distinct statutory action. H.E. Justice Shamlan Al Sawalehi anchored this classification in the explicit definitions provided by the RDC:
That is explained by RDC 43.2(3)A: “DIFC-ARB Claims mean: (a) any application to the Court under the Arbitration Law,” and included in the list of 13 items one finds, at subparagraph (a)(xii), applications “for recognition or enforcement of an arbitral award under Article 42 of the Arbitration Law.” An application for recognition and enforcement of the CC4 Award is therefore an “arbitration claim” for the purposes of Part 43 of the RDC.
Once the enforcement of the CC4 Award was firmly classified as an "arbitration claim," it became subject to the strict procedural mandates of Part 43. The central pillar of the Court’s reasoning rested on RDC 43.3, which dictates how such claims must be initiated. The rule leaves no room for procedural ambiguity, requiring that arbitration claims commence with a specific originating document. The Court acknowledged the theoretical availability of counterclaims in standard Part 8 proceedings but drew a sharp distinction for arbitration matters:
RDC 43.3 provides that, “Except where RDC 43.4 or RDC 43.5 applies an arbitration claim must be started by the issue of an arbitration claim form in accordance with the Part 8 procedure.” RDC 43.4 and RDC 43.5 do not concern recognition and enforcement claims, and the RDC of course makes provision for the bringing of counterclaims in Part 8 claims, albeit that, unlike for Part 7 claims, the permission of the Court is required (RDC 8.37).
The critical interpretive leap required the Court to determine whether the word "claim" in RDC 43.3 encompassed counterclaims. If "claim" only meant the primary action initiated by a claimant, Mirma might have argued that a counterclaim was exempt from the requirement to issue a fresh Part 8 claim form. However, H.E. Justice Shamlan Al Sawalehi foreclosed this loophole by examining the broader definitional framework of the RDC. He concluded that the procedural burden applies symmetrically to any party seeking an arbitral remedy:
The equivalent term in RDC 43.3, however, is “claim.” As explained by RDC 43.2(3)A, “claim” here effectively means “claim to remedy,” and so it applies equally to both claims and counterclaims. The consequence of this, in my judgment, is that the RDC requires that each arbitration claim, other than those falling within RDC 43.4 or RDC 43.5, start its life in a claim form.
This interpretation effectively neutralises the tactical advantage of the counterclaim. By requiring a separate Part 8 claim form, the Court ensures that every enforcement action is subjected to its own distinct judicial scrutiny, complete with the requisite filing fees, service requirements, and procedural timelines. It prevents a respondent from hijacking an existing, mature enforcement proceeding to litigate a separate award. The specific provisions of Part 43 act as a lex specialis, overriding the general procedural permissions found elsewhere in the rules. The Court articulated this preemption unequivocally:
But, in my judgment, the counterclaim provisions are not incorporated into the procedure for arbitration claims because there is a specific provision in Part 43 to the contrary, being RDC 43.3 itself.
68.
The doctrinal consequence of this ruling is absolute. Practitioners operating within the DIFC cannot rely on the procedural economy of a counterclaim when dealing with arbitral awards. The Court’s ruling strips away the procedural flexibility that characterizes standard commercial litigation under Part 7, imposing a rigid, formalistic requirement designed to protect the integrity and speed of arbitration enforcement. The finality of the Court’s position was stated without qualification:
It follows, in my judgment, that an application for the recognition and enforcement of an award may not be pursued by way of counterclaim.
69.
To reinforce this structural interpretation, H.E. Justice Shamlan Al Sawalehi engaged in a counterfactual analysis of the RDC’s drafting history. If the drafters of the rules had intended to permit the enforcement of arbitral awards via counterclaim, they possessed the legislative vocabulary to do so explicitly. The absence of such enabling language in Part 43 is not an oversight; it is a deliberate architectural choice designed to segregate distinct arbitral claims. The Court noted:
That would have been the place for the RDC to provide, say, that an application under Article 42 of the Arbitration Law (for the recognition and enforcement of an arbitral award) which is advanced as a counterclaim must, should or may be made by Application Notice in the proceedings in accordance with RDC Part 8 or Part 21.
The rejection of the counterclaim strategy in Mirma v Mobal aligns with a broader jurisprudential trend within the DIFC Courts, which consistently prioritises procedural hygiene and the rapid enforcement of arbitral awards over the tactical conveniences sought by litigating parties. Much like the strict jurisdictional boundaries established in ARB-003-2013: Banyan Tree Corporate PTE Ltd v Meydan Group LLC, where the Court refused to allow procedural technicalities to defeat enforcement, the ruling here ensures that the Part 8 mechanism remains an unpolluted conduit for realising arbitral debts.
Furthermore, the decision resonates with the Court's intolerance for procedural obstruction, a theme heavily explored in ARB-027-2024: ARB 027/2024 Nalani v Netty. By mandating that Mirma file a separate Part 8 claim for the CC4 Award, the Court prevented the conflation of two distinct legal realities. Mobal’s right to enforce the Main Award was insulated from the collateral noise of Mirma’s competing claims. The Court ultimately ordered that the Counterclaim Application is dismissed, and further directed that Mirma bear the financial consequences of this failed tactical gambit, ordering it to pay the costs of the Counterclaim Application on the standard basis.
The requirement to initiate arbitration claims via a dedicated Part 8 claim form serves a vital gatekeeping function. It ensures that the Court’s docket is not cluttered with nested, interdependent applications that obscure the primary mandate of the Arbitration Law: the swift recognition of binding awards. When a party attempts to bypass this gateway, as Mirma did, the Court will rely on the explicit text of RDC 43.3 to restore procedural order. The dismissal of the counterclaim application, alongside the fact that the Court also dismissed the Permission Application regarding the appeal of the Main Award, underscores a judicial philosophy that heavily penalises attempts to artificially prolong the lifespan of an arbitral dispute. Practitioners must now operate under the clear directive that cross-claims in arbitration enforcement require their own independent procedural footing, entirely separate from the primary enforcement action they seek to offset.
How Does Article 44 of the Arbitration Law Govern Finality?
The architecture of the DIFC Arbitration Law is designed to insulate arbitral awards from endless procedural collateral attacks, establishing a clear demarcation between legitimate challenges and abusive delay tactics. In the protracted dispute between Mirma and Mobal, the boundaries of this statutory protection were severely tested. Following the issuance of the Main Award on 2 November 2021, Mirma initiated proceedings to set aside the decision. On 8 February 2023, H.E. Justice Shamlan Al Sawalehi decisively dismissed that claim, affirming the award's validity. Shortly thereafter, on 20 March 2023, the Court granted Mobal’s application to recognise and enforce the Main Award within the DIFC.
Faced with an enforceable judgment debt, Mirma deployed a multi-pronged strategy to stall execution. Central to this effort was an application aimed at setting aside the Recognition Order, coupled with a request to adjourn the application until the conclusion of its pending appeal against the February 2023 dismissal. Mirma’s legal maneuvering relied heavily on a creative, albeit flawed, interpretation of Article 44 of the DIFC Arbitration Law, attempting to weaponise the provisions governing the refusal of recognition to manufacture a de facto stay of execution.
Article 44(1)(a)(v) permits the DIFC Courts to refuse recognition or enforcement of an arbitral award if the party against whom it is invoked proves that the award "has not yet become binding on the parties or has been set aside or suspended by a Court of the State or country in which, or under the law of which, that award was made." Mirma advanced the position that the mere existence of an appeal against the dismissal of its set-aside application meant the Main Award was effectively suspended or lacked finality. H.E. Justice Al Sawalehi dismantled this proposition by adhering to a strict, literal reading of the statute. The curial court—in this instance, the DIFC Courts—had already spoken. The award had not been set aside; it had been upheld. The filing of an appeal does not retroactively unbind an award nor does it trigger a statutory suspension under the Arbitration Law.
Applying this to the present case, since the Main Award was made, there has never been a time, in my judgment, when Article 44(1)(a)(v) was engaged: the DIFC Courts, as the curial court, has not set aside or suspended that award.
This ruling clarifies a critical temporal and jurisdictional threshold. Article 44(1)(a)(v) is not a mechanism for anticipating future appellate outcomes. It requires an existing, affirmative order from the curial court setting aside or suspending the award. Absent such an order, the enforcement court must treat the award as binding and enforceable. The DIFC Courts refuse to allow the appellate process to serve as an automatic injunction against enforcement, a stance that aligns with the pro-enforcement philosophy underpinning the New York Convention and the DIFC Arbitration Law.
Having failed to establish that the award was suspended, Mirma pivoted to Article 44(2), seeking an adjournment of the enforcement proceedings. Article 44(2) provides that if an application for setting aside or suspension of an award has been made to a competent court, the court where recognition or enforcement is sought may, if it considers it proper, adjourn its decision. Mirma argued that its pending appeal constituted such an application, thereby justifying a pause in enforcement.
H.E. Justice Al Sawalehi rejected this expansive reading, narrowing the scope of the adjournment power to specific procedural contexts. The Court determined that the discretion to adjourn is inextricably linked to an undetermined application under Article 44(1).
Moreover, the adjournment available under Article 44(2) relates to and appears to be contingent upon a pending “decision” of the DIFC Courts, that is—I think it is clear—a decision whether to refuse to recognise and enforce the relevant award under Article 44(1).
The logic here is structurally sound. Article 44(2) is designed to manage the friction between parallel proceedings—specifically, when a set-aside application is pending before the curial court while enforcement is simultaneously sought in the DIFC. However, in Mirma v Mobal, the set-aside application had already been conclusively determined at the first instance. The DIFC Courts were no longer waiting to make a primary decision on the award's validity; that decision had been rendered in February 2023. An appeal against that decision does not resurrect the original set-aside application for the purposes of Article 44(2). To hold otherwise would grant award debtors an indefinite license to delay enforcement through successive layers of appellate review, a scenario the DIFC Courts have consistently sought to prevent, as seen in the strict procedural boundaries enforced in ARB-027-2024: ARB 027/2024 Nalani v Netty.
The most profound doctrinal contribution of H.E. Justice Al Sawalehi’s judgment lies in his articulation of how the DIFC Arbitration Law internalises the doctrine of res judicata. Mirma’s attempt to resist enforcement relied on recycling the same arguments it had deployed—and lost—in its set-aside application. In common law jurisdictions, such an approach is typically defeated by invoking issue estoppel or the rule in Henderson v Henderson, preventing a party from re-litigating matters that were, or should have been, decided in earlier proceedings.
However, the Court found that it did not need to rely on external common law principles to bar Mirma’s repetitive claims. The statutory framework of the Arbitration Law itself provides the necessary shield.
The policy underpinning res judicata is given effect, in my judgment, in Article 44 of the Arbitration Law itself.
By embedding the policy of finality directly into the statute, the DIFC Courts elevate res judicata from a procedural common law defense to a substantive statutory mandate within the arbitration context. Article 44(3) explicitly restricts the grounds upon which a party can resist enforcement. When the DIFC Courts act as both the curial court and the enforcement court, a prior dismissal of a set-aside application under Article 41 definitively resolves the validity of the award. The debtor cannot subsequently invoke the mirror-image grounds under Article 44(1)(a) to block enforcement.
In my judgment, Article 44(3) would therefore clearly bar Mirma from making the Set Aside Application insofar as it is made under Article 44(1)(a), which is to say in relation to Grounds 1 to 3 and 5 of the application, even without direct recourse to principles of res judicata.
This statutory bar is absolute. It strips the award debtor of the ability to demand a "second bite at the apple" before the enforcement judge. Once the curial court has adjudicated the Article 41 challenge, those specific procedural and substantive complaints are extinguished. They cannot be resurrected under the guise of an Article 44 defense. This interpretation fortifies the finality of arbitral awards in the DIFC, ensuring that the transition from curial review to enforcement is a one-way street, not a revolving door of repetitive litigation.
Mirma’s final procedural gambit involved seeking permission to advance a counterclaim within the enforcement proceedings. Mirma sought to introduce the CC4 Award—a separate arbitral decision arising from the same underlying salvage dispute—as a counterclaim to offset Mobal’s enforcement of the Main Award. This tactic, if successful, would have entangled the clean enforcement of the Main Award in a complex web of competing liabilities, effectively undermining the finality that Article 44 seeks to protect.
The Court’s dismissal of the Counterclaim Application rested on a rigorous application of the Rules of the DIFC Courts (RDC) Part 43, which governs arbitration claims. H.E. Justice Al Sawalehi ruled that the RDC does not permit an application for the recognition and enforcement of an award to be pursued by way of a counterclaim within existing enforcement proceedings.
It follows, in my judgment, that an application for the recognition and enforcement of an award may not be pursued by way of counterclaim.
The procedural strictures of RDC 43.3 require that an arbitration claim—including a claim to enforce an award like CC4—must be commenced by issuing a distinct arbitration claim form under the Part 8 procedure. The counterclaim provisions found elsewhere in the RDC are expressly excluded from Part 43 to preserve the streamlined, summary nature of enforcement actions. By rejecting the counterclaim mechanism, the Court prevented Mirma from bypassing the formal initiation requirements and shielded the Main Award's enforcement from collateral contamination. This strict adherence to procedural form over procedural convenience echoes the DIFC Courts' historical intolerance for parallel arbitral challenges that threaten to derail enforcement timelines, a principle firmly established in ARB-005-2014: Eava v Egan [2014] ARB 005.
Ultimately, the adjudication of Mirma v Mobal serves as a definitive treatise on the limits of Article 44. The provision is a carefully calibrated mechanism for safeguarding due process, not a statutory loophole for perpetual delay. By confirming that Article 44(1)(a)(v) requires an actual set-aside order, that Article 44(2) adjournments are contingent on pending primary decisions, and that the statute itself codifies res judicata, H.E. Justice Al Sawalehi has reinforced the unyielding finality of arbitral awards within the DIFC jurisdiction.
How Did Justice Al Sawalehi Address the Public Policy and Jurisdiction Grounds?
The architecture of the DIFC Arbitration Law is designed to insulate arbitral awards from merit-based appeals, reserving the set-aside mechanism for fundamental defects in jurisdiction or procedural fairness. In challenging the award, Mirma deployed a dual-pronged strategy under Article 41 of the DIFC Arbitration Law, attacking the tribunal’s jurisdiction over specific claims and invoking the public policy exception to render the underlying contract unenforceable. H.E. Justice Shamlan Al Sawalehi’s dismissal of these grounds provides a masterclass in the strict construction of set-aside provisions, reinforcing the principle that the DIFC Courts will not permit public policy or jurisdictional technicalities to serve as a backdoor for appellate review.
The factual matrix of the dispute provided fertile ground for Mirma’s public policy challenge. Mobal had been contracted to recover and remove the wreck of an oil tanker that had sunk during the 1991 Gulf War. The salvage operation was located within a highly sensitive marine exclusion zone controlled by the Iraqi Navy. When disputes arose over the scope of work and compensation, Mobal suspended its operations. In response, the Iraqi Navy detained Mobal’s fleet, preventing the vessels from leaving the port. To resolve the blockade, Mobal engaged an Iraqi Member of Parliament to lobby the Ministry of Oil. Mirma seized upon this engagement, alleging that Mobal had bribed the parliamentarian to secure the release of the vessels and favorable contractual terms.
Mirma argued that these actions violated UAE public policy, thereby triggering Article 41(2)(b)(iii) of the Arbitration Law and rendering the entire salvage contract—and any award derived from it—unenforceable. The argument rested on the premise that corruption collateral to the performance of a contract infects the core agreement, stripping the tribunal of the authority to enforce its terms. Justice Al Sawalehi systematically dismantled this proposition. The Court drew a sharp doctrinal line between the existence of illicit acts surrounding a commercial relationship and the legal enforceability of the underlying contract itself. For a public policy defense to succeed on the basis of illegality, the illegality must be inextricably linked to the formation or the core performance of the contract, rather than existing as a collateral mechanism to resolve a subsequent dispute.
In my judgment, C has not established that the connection between the Contract and the bribery is such that the Contract should be rendered unenforceable and the Award set aside.
By isolating the alleged bribery from the contractual obligations, the Court maintained a high threshold for public policy defenses. The ruling aligns with the broader trajectory of DIFC jurisprudence, which consistently demands that public policy objections target the award's intrinsic nature rather than the peripheral conduct of the parties. Justice Al Sawalehi anchored his reasoning in established precedent, explicitly referencing the foundational principles that govern the intersection of public policy and arbitral finality.
In Egan v Eava [2013] DIFC ARB 002 (29 Jul 2015), it was indicated at [65] that the objecting party would generally need to show that a public policy defence was grounded in some “intrinsic characteristic of the award,” “an alleged procedural defect in the course of the arbitration” or the “conduct of the arbitrators.” In my judgment, it is not enough that public policy concerns are present in a case, however central the position those concerns might assume.
This strict interpretation echoes the judicial philosophy observed in Eava v Egan [2014] ARB 005, where the DIFC Courts similarly restricted the scope of public policy to prevent parties from weaponizing the doctrine to delay enforcement. The mere presence of serious allegations—even those involving corruption—does not automatically trigger the public policy exception if the arbitral tribunal has appropriately managed the claims. In the present dispute, the tribunal had not ignored the bribery allegations; rather, it had sequestered them due to an ongoing criminal investigation by the Dutch Public Prosecutor’s Office. The tribunal's procedural management of the issue demonstrated a robust handling of the dispute that the Court was unwilling to second-guess.
The Tribunal had also agreed to deal with CC4 at the time in a separate confidential award because of the ongoing investigation in the Netherlands. Under the CC4 Award, Mirma was awarded USD 37.7 million plus interest and costs.
Having failed to invalidate the award on public policy grounds, Mirma pivoted to a jurisdictional attack under Article 41(2)(a)(iii), arguing that the tribunal had exceeded the scope of its submission. The primary target of this challenge was the tribunal's decision to award compensation to Mobal for the clearance of a 70-foot wooden dhow discovered within the wreck of the oil tanker. Mirma contended that because the dhow was not explicitly mentioned in the initial Terms of Reference, the tribunal lacked the jurisdictional mandate to adjudicate the claim.
Justice Al Sawalehi rejected this formalistic approach to arbitral jurisdiction. The Court emphasized that the "submission to arbitration" is not a static concept frozen at the moment the Terms of Reference are signed. Instead, it is a dynamic jurisdictional envelope defined by the broad language of the arbitration agreement—which covered "any disputes concerning or arising from this Contract"—and the evolving nature of the claims presented during the proceedings. To restrict a tribunal strictly to the initial pleadings would paralyze complex construction and salvage arbitrations, where unforeseen site conditions routinely generate new heads of claim.
This approach accords, in my judgment, with the language of the second limb of Article 41(2)(a)(iii) which, as I explained above, is concerned with the area created by the terms of the submission to arbitration rather than the precise terms themselves.
The Court further noted that institutional rules, such as the ICC Rules governing the arbitration, provide tribunals with the necessary procedural flexibility to admit new claims, provided that due process is maintained. The absence of a rigid, codified procedure for authorizing new claims does not equate to a lack of jurisdiction.
Further he stated “[i]t is noteworthy in this regard, in my judgment, the rule and the ICC Rules 2012 generally do not appear to stipulate how the tribunal might authorise the making of a new claim.
Mirma’s final jurisdictional challenge centered on the tribunal’s assessment of damages related to the detention of Mobal’s fleet. Mirma attempted to invoke the Act of State doctrine, arguing that the blockade was a sovereign act executed by the Iraqi Navy, and therefore immune from the tribunal's scrutiny. By framing the detention as an exercise of sovereign power, Mirma sought to remove the resulting tort claims from the commercial jurisdiction of the arbitration.
The Court, however, looked past the sovereign character of the Iraqi Navy and focused on the commercial conduct of Mirma itself. The tribunal had made a binding factual determination that Mirma had actively caused the detention by instructing the Navy to prevent the vessels from departing. Justice Al Sawalehi held that the tribunal was entirely within its rights to assess tortious liability for causing the detention. The liability did not stem from a sovereign decree, but from Mirma’s breach of its commercial obligations and its tortious interference with Mobal’s property. The Act of State doctrine cannot be utilized as a shield by a state-owned entity to escape liability for commercial misconduct that it directly instigated.
By systematically dismantling the public policy and jurisdictional challenges, Justice Al Sawalehi reaffirmed the DIFC Courts' commitment to arbitral autonomy. The judgment serves as a stark warning to parties seeking to leverage the set-aside provisions of the Arbitration Law as a mechanism for procedural obstruction. Whether attempting to inflate collateral bribery allegations into a public policy crisis, or seeking to artificially constrain the tribunal's jurisdiction through a hyper-literal reading of the Terms of Reference, such tactics will find no traction in the DIFC. The Court's rigorous application of Article 41 ensures that the finality of arbitral awards remains protected against creative, yet doctrinally hollow, legal maneuvering.
How Does the DIFC Approach Compare to English High Court Standards?
The DIFC Court of Appeal’s handling of the dispute between Mirma and Mobal provides a masterclass in the strict policing of arbitral boundaries, echoing the robust supervisory posture long championed by the English Commercial Court. When faced with a recalcitrant award debtor attempting to relitigate merits under the guise of procedural irregularity, Chief Justice Wayne Martin, H.E. Deputy Chief Justice Ali Al Madhani, and Justice Robert French delivered a unified rejection of such tactics. The appellate bench dismissed the application to set aside the arbitral award, cementing the jurisdiction's reputation as a hostile environment for dilatory enforcement defenses.
At the heart of the comparative analysis is the DIFC’s fidelity to the UNCITRAL Model Law, which mirrors the English Arbitration Act 1996 in its deference to the arbitral tribunal's factual findings. The dispute arose from a highly volatile factual matrix: a salvage contract to remove a bombed oil tanker from a marine exclusion zone established around an oil terminal. When the Iraqi Navy detained Mobal’s vessels, the resulting delays and costs spawned complex arbitration claims. Mirma sought to weaponize these complexities at the enforcement stage, introducing counterclaims and jurisdictional challenges that the tribunal had already addressed.
The jurisdictional foundation of the Court's authority is paramount. The parties' commercial relationship was governed by a contract that initially envisioned a different supervisory jurisdiction before ultimately anchoring in Dubai.
The Contract contained an ICC Arbitration Agreement covering “any disputes concerning or arising from this Contract.” The original agreed seat was Jordan.
However, the ultimate designation of the DIFC as the seat triggered the comprehensive application of the DIFC Arbitration Law No. 1 of 2008. The Court of Appeal was meticulous in establishing this statutory anchor, ensuring that the supervisory framework was clearly defined before addressing the substantive challenges.
The Arbitration Law DIFC Law No 1 of 2008 (“Arbitration Law”), by virtue of Article 3 of that Law, applies in the jurisdiction of the DIFC.
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By affirming the primacy of the seat, the Court aligns itself with the English High Court's standard, where the supervisory court acts as a shield for the arbitral process rather than a venue for a second bite at the substantive apple. Mirma’s strategy involved launching a collateral attack on the tribunal's handling of specific claims, notably the costs associated with clearing a 70-foot wooden dhow discovered within the wreck. The appellant attempted to frame the tribunal's assessment of these costs as a jurisdictional overreach. Mirma also contended that the learned Judge erred in dismissing its application to set aside the wooden dhow claim under the Arbitration Law, Article 41(2)(a)(iii), arguing the tribunal made an improper decision on a matter not before it or beyond the scope of the submission to arbitration (DIFC_ARB-004-2022_20250127.txt, para 22).
The English Commercial Court routinely penalizes parties who attempt to dress up substantive disagreements as jurisdictional overreach under Section 67 or serious irregularity under Section 68 of the 1996 Act. The DIFC Court of Appeal adopted an identical posture regarding Article 41 of the DIFC Arbitration Law. By Finding no reasonable prospect of success on these grounds, the appellate bench reinforced the high threshold required to disturb an award. The refusal to entertain the wooden dhow claim as a basis for set-aside demonstrates a sophisticated understanding of arbitral pleading standards, recognizing that tribunals must have the latitude to manage the disputes before them without constant fear of judicial second-guessing.
The procedural mechanics of challenging an award in the DIFC further mirror the stringent gatekeeping functions of the English appellate system. Mirma's attempt to escalate the dispute required navigating the strict rules governing appellate review, which are designed to filter out unmeritorious challenges before they consume significant judicial resources. The requirements and criteria for permission to appeal to the Court of Appeal are set out in Part 44 of the RDC (DIFC_ARB-004-2022_20250127.txt, para 23).
Under the Rules of the DIFC Courts (RDC) Part 44, an appellant must demonstrate a real prospect of success or a compelling reason for the appeal to be heard, a standard virtually identical to the English Civil Procedure Rules (CPR) Part 52. The Court of Appeal's rigorous application of this test signals a refusal to allow the appellate process to be utilized as a mechanism for delaying enforcement.
The treatment of counterclaims in enforcement proceedings further illustrates the alignment between DIFC and English standards. Mirma attempted to leverage allegations of corruption, specifically claiming that Mobal had bribed the Iraqi MP to lift the naval blockade. While allegations of bribery naturally trigger public policy scrutiny, the procedural vehicle chosen by Mirma—attempting to litigate this as a counterclaim during the enforcement phase—was fundamentally flawed.
Mirma's public policy arguments were systematically dismantled. The appellant sought to frame the tribunal's findings as fundamentally incompatible with the legal order of the forum, attempting to elevate a factual dispute over contract performance into a matter of state interest.
(4) In addition, the learned Judge erred in dismissing [Mirma’s] application to set aside the entire award under the Arbitration Law, Article 41(2)(b)(iii), for allowing [Mobal] to recover on the contract despite the violation of UAE public policy...
The English Commercial Court has long held that the public policy exception under the New York Convention (and its domestic equivalents) must be construed narrowly, applicable only where enforcement would shock the conscience of the court or violate fundamental notions of morality and justice. The DIFC Court of Appeal applies an equally restrictive interpretation to Article 41(2)(b)(iii). The mere allegation of illicit payments was insufficient to trigger a public policy set-aside when the arbitral tribunal had already evaluated the evidentiary record and issued its findings. The Court refused to set aside the Arbitral Award, preserving the tribunal's role as the primary fact-finder and rejecting the invitation to conduct a de novo review of the evidence.
Perhaps the most intellectually rigorous aspect of the comparative analysis lies in the Court's handling of the Act of State doctrine. In English law, the doctrine is a well-entrenched common law principle preventing courts from adjudicating the sovereign acts of foreign states within their own territory. Mirma sought to invoke the Iraqi Navy's detention of the vessels as an Act of State, theoretically immunizing Mirma from liability for the resulting delays and financial losses incurred by Mobal.
Rather than treating the Act of State doctrine as an alien concept imported wholesale from English common law, the DIFC Courts have systematically integrated it into the jurisdiction's own statutory fabric. The appellate bench endorsed the approach taken at the first instance, firmly anchoring the doctrine within the existing legislative framework.
Justice Sawalehi, in a decision delivered on 29 August 2024
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held that the Act of State doctrine is applicable as a matter of DIFC Law and is embraced in the Public Policy Ground in Article 41(2)(b)(iii) of the Arbitration Law.
By anchoring the doctrine within Article 41(2)(b)(iii), the Court achieved two critical objectives. First, it localized the legal standard, ensuring that the Act of State defense is evaluated through the prism of UAE public policy rather than relying exclusively on English precedents. Second, it subjected the defense to the strict procedural constraints of the Arbitration Law. The Court of Appeal ultimately determined that the doctrine, even if theoretically applicable, was not engaged on the facts of the case, as the tribunal had found Mirma factually responsible for instigating the naval detention. A party cannot manufacture a sovereign intervention and subsequently hide behind the Act of State doctrine to evade contractual liability.
This localized approach to complex international doctrines highlights the maturation of DIFC jurisprudence. The Court does not merely mimic the English High Court; it adapts international best practices to fit its specific legislative framework. The result is a highly predictable enforcement regime that prioritizes the supervisory role of the seat over tactical procedural challenges. This strict adherence to procedural boundaries echoes the DIFC's historical intolerance for parallel proceedings designed to frustrate enforcement, a doctrine well-established in precedents such as ARB-005-2014: Eava v Egan [2014] ARB 005. For cross-border practitioners, the message is unequivocal: the DIFC Courts will enforce arbitral awards with the same rigorous efficiency expected in London, and attempts to bypass the strictures of the Arbitration Law via creative counterclaims or imported common law defenses will face insurmountable judicial skepticism.
Which Earlier DIFC Cases Frame This Decision?
H.E. Justice Shamlan Al Sawalehi’s judgment in Muzama v Mihanti [2022] DIFC ARB 004 does not merely resolve a bilateral dispute over a delayed salvage operation; it actively maps the boundaries of the DIFC Courts' supervisory jurisdiction. By anchoring the dismissal of the set-aside application in established precedent, the Court reinforces the autonomy of the arbitral process and strictly limits the avenues available for judicial intervention. The Claimant’s strategy relied heavily on invoking public policy violations and procedural overreach to dismantle an ICC award. The Court’s systematic rejection of these arguments provides a masterclass in the application of the DIFC Arbitration Law, confirming the jurisdiction's status as a fiercely pro-arbitration seat.
The most aggressive vector of the Claimant’s attack involved allegations of bribery and corruption, deployed in an attempt to trigger a public policy annulment under Article 41(2)(b)(iii) of the DIFC Arbitration Law. The factual matrix included an investigation by the Dutch Public Prosecutor’s Office following the Defendant's engagement of an Iraqi member of parliament to resolve a naval blockade. The Claimant, an Iraqi state-owned entity, attempted to weaponize these background facts, arguing that enforcing the resulting arbitral award would violate fundamental public policy.
To defeat this expansive interpretation, Justice Al Sawalehi reached directly for the foundational authority on public policy challenges in the jurisdiction. The benchmark remains Egan v Eava, a precedent that strictly limits the deployment of public policy as a backdoor for merits review. As explored in ARB-005-2014: Eava v Egan [2014] ARB 005, the DIFC Courts demand a high threshold for such interventions. Justice Al Sawalehi explicitly framed his analysis around this standard, noting that in Egan v Eava [2013] DIFC ARB 002 (29 Jul 2015) at [65], it was indicated that a public policy defence generally needs to be grounded in some “intrinsic characteristic of the award,” “an alleged procedural defect in the course of the arbitration,” or the “conduct of the arbitrators.” He emphasized that it is not enough for public policy concerns to merely be present in a case, regardless of their centrality.
The distinction drawn here is critical for cross-border practitioners. The mere existence of a criminal investigation or allegations of illicit lobbying adjacent to the commercial relationship does not automatically infect the arbitral award. The public policy violation must be intrinsic to the award itself or the arbitral procedure. The Court demands a direct causal nexus between the alleged illegality and the relief granted by the tribunal. The Claimant failed to bridge this gap, leading the Court to conclude that C had not established that the connection between the Contract and the bribery was such that the Contract should be rendered unenforceable and the Award set aside [100].
By requiring the Claimant to establish that the connection between the underlying contract and the alleged bribery was severe enough to render the contract entirely unenforceable, the Court sets a formidable evidentiary bar. It prevents parties from using peripheral allegations of misconduct to escape their adjudicated commercial liabilities.
Beyond public policy, the Claimant mounted a jurisdictional challenge under Article 41(2)(a)(iii) of the DIFC Arbitration Law, arguing the tribunal exceeded its mandate. The dispute originally stemmed from a 2013 contract to recover and remove the wreck of an oil tanker situated within a marine exclusion zone. During the works, the Defendant located a 70-foot wooden dhow, leading to additional clearance costs. The Claimant argued that claims related to the dhow, and later tort claims for vessel detention, fell outside the strict wording of the Terms of Reference.
Justice Al Sawalehi rejected this formalistic constraint. The parties had deliberately agreed to change the seat to the DIFC in 2019, thereby submitting to the pro-arbitration supervisory ethos of the jurisdiction. The Court interpreted the scope of the submission to arbitration not as a rigid textual boundary, but as a broader commercial envelope, noting that this approach accorded with the language of the second limb of Article 41(2)(a)(iii), which is concerned with the area created by the terms of the submission to arbitration rather than the precise terms themselves [39].
The concept of the "area created" by the submission is a powerful jurisprudential tool. It prevents recalcitrant parties from using narrow interpretations of Terms of Reference to artificially truncate a tribunal's jurisdiction. If a dispute arises organically from the commercial relationship governed by the arbitration agreement, the DIFC Courts will presume the tribunal has the competence to adjudicate it. The Court explicitly noted the institutional context, observing: Further he stated “[i]t is noteworthy in this regard, in my judgment, the rule and the ICC Rules 2012 generally do not appear to stipulate how the tribunal might authorise the making of a new claim.
Because institutional rules often afford tribunals broad discretion to manage the evolution of claims, the supervisory court will not second-guess that case management unless it fundamentally breaches the parties' agreement. Consequently, the Court found that the tribunal acted entirely within its mandate, concluding that the submission to arbitration constituted more than
What Does This Mean for Practitioners and Enforcement Counsel?
Post-award litigation in the Dubai International Financial Centre (DIFC) is designed to be a streamlined, enforcement-friendly mechanism, not a forum for defeated parties to engineer a second bite at the arbitral apple. The protracted dispute between the Iraqi state-owned entity Mirma and the Dutch salvage firm Mobal serves as a definitive textbook on the boundaries of procedural maneuvering. By systematically dismantling Mirma’s attempts to conflate distinct arbitral awards, re-litigate jurisdictional boundaries, and stretch the public policy exception beyond its breaking point, the DIFC Courts have issued a stark warning against procedural overreach.
For enforcement counsel, the tactical takeaways are immediate and severe. The architecture of the Rules of the DIFC Courts (RDC) Part 43 strictly ring-fences recognition and enforcement proceedings. Attempts to introduce collateral disputes into this arena will face summary dismissal.
The Prohibition on Counterclaims in Enforcement Proceedings
The most structurally significant aspect of H.E. Justice Shamlan Al Sawalehi’s ruling in the Court of First Instance (CFI) lies in his treatment of Mirma’s Counterclaim Application. Following the issuance of the Main Award, five applications have ensued across two related claims (ARB-004-2022 and ARB-005-2023). Among these, Mirma sought permission to advance a counterclaim for the enforcement of a separate, confidential arbitral award—the CC4 Award—which had granted Mirma USD 37.7 million plus interest and costs.
Mirma’s strategy was transparent: by introducing the CC4 Award as a counterclaim within Mobal’s enforcement action for the Main Award, Mirma aimed to offset its liabilities and complicate the execution of Mobal’s judgment. This tactic fundamentally misapprehends the procedural mechanics of RDC Part 43. Arbitration claims in the DIFC are governed by the Part 8 procedure, which is inherently unsuited for the sprawling, multi-issue litigation typical of Part 7 claims.
Justice Al Sawalehi engaged in a rigorous statutory interpretation of RDC 43.3, which mandates that an arbitration claim must be started by the issue of an arbitration claim form. Addressing the semantic argument over whether a "counterclaim" qualifies as a "claim" that can bypass this requirement, the Court was unequivocal:
The equivalent term in RDC 43.3, however, is “claim.” As explained by RDC 43.2(3)A, “claim” here effectively means “claim to remedy,” and so it applies equally to both claims and counterclaims. The consequence of this, in my judgment, is that the RDC requires that each arbitration claim, other than those falling within RDC 43.4 or RDC 43.5, start its life in a claim form.
By tethering the definition of a counterclaim to the strict origination requirements of Part 43, the CFI effectively closed the door on using counterclaims as a backdoor for parallel enforcement actions. The procedural hygiene of the DIFC Courts demands that each award be enforced via its own distinct Part 8 claim form. The Court’s conclusion left no room for ambiguity:
It follows, in my judgment, that an application for the recognition and enforcement of an award may not be pursued by way of counterclaim.
For practitioners, the directive is absolute: do not attempt to use counterclaims to challenge or offset enforcement. If a client holds a separate, favorable award arising from the same arbitration, it must be pursued through an independent Part 8 claim. Attempting to fuse the two will only result in adverse costs orders and wasted time, as Mirma discovered when its Counterclaim Application was dismissed with costs awarded to Mobal on the standard basis. This strict compartmentalization mirrors the Court's intolerance for procedural duplication seen in Mirifa v Mahur, where attempts to multiply proceedings to evade enforcement were similarly struck down.
Jurisdictional Objections Must Be Exhausted Early
The appellate phase of the dispute, heard by Chief Justice Wayne Martin, H.E. Deputy Chief Justice Ali Al Madhani, and Justice Robert French, further underscored the peril of reviving jurisdictional arguments at the enforcement stage. Mirma sought permission to appeal the CFI’s refusal to set aside the Main Award, relying heavily on arguments that the ICC Tribunal had exceeded its mandate.
The underlying facts involved a marine exclusion zone where Mobal was contracted to remove the wreck of the oil tanker Marcus. During the project, Mobal located a 70 ft wooden dhow within the wreck, leading to a dispute over clearance costs. Later, relations deteriorated to the point where the Iraqi Navy detained Mobals fleet, preventing the vessels from leaving the port. The Tribunal found that Mirma had orchestrated this detention, leading to a tort claim for the resulting losses.
Mirma argued before the DIFC Courts that the Tribunal lacked jurisdiction to assess the tort claim regarding the detention, and similarly lacked jurisdiction over the wooden dhow claim, asserting these fell outside the scope of the arbitration submission. The Court of Appeal dismissed these grounds entirely, finding no reasonable prospect of success. The ICC Arbitration Agreement broadly covered "any disputes concerning or arising from this Contract."
The lesson here is one of finality. Jurisdictional objections regarding the scope of the arbitration agreement must be raised and exhaustively litigated before the tribunal itself. Once a tribunal has interpreted a broad arbitration clause to encompass related tortious conduct—such as the wrongful detention of vessels performing the contract—the DIFC Courts will afford immense deference to that finding. Enforcement counsel cannot rely on Article 41(2)(a)(iii) of the Arbitration Law (decisions on matters beyond the scope of the submission) as a mechanism to appeal the tribunal's contractual interpretation. The supervisory jurisdiction of the DIFC Courts is not an appellate jurisdiction on the merits of the tribunal's jurisdictional competence, provided the tribunal's interpretation is rationally derived from the arbitration agreement.
The Narrow Gateway of Public Policy
Perhaps the most aggressive, and ultimately futile, aspect of Mirma’s post-award strategy was its reliance on the public policy exception under Article 41(2)(b)(iii) of the Arbitration Law. Mirma attempted to argue that enforcing the award violated UAE public policy due to alleged bribery and the invocation of the Act of State doctrine.
The factual matrix involved Mobal having engaged an Iraqi Member of Parliament to facilitate meetings with the Ministry of Oil to lift the naval blockade. Mirma alleged this constituted bribery intended to influence Mirma to agree to Mobal’s demands. The Tribunal had already heard and dismissed this counterclaim during the arbitration. Undeterred, Mirma attempted to repackage the dismissed bribery allegation as a public policy violation before the DIFC Courts.
Furthermore, Mirma attempted to shield its actions behind the Act of State doctrine, arguing that the detention of the vessels by the Iraqi Navy was a sovereign act immune from arbitral scrutiny. The Court of Appeal, referencing the CFI's earlier analysis, clarified the strict parameters of this defense within the DIFC's arbitral framework:
Justice Sawalehi, in a decision delivered on 29 August 2024 12 held that the Act of State doctrine is applicable as a matter of DIFC Law and is embraced in the Public Policy Ground in Article 41(2)(b)(iii) of the Arbitration Law.
However, recognizing that a doctrine exists is entirely different from finding it applicable to the facts at hand. The Court of Appeal held that the Act of State doctrine was simply not engaged in the present case. The Tribunal had made a factual finding that Mirma—a commercial entity, albeit state-owned—had brought about the detention by informing the Navy that the vessels were not permitted to leave. Direct control of an event does not necessarily equate to the exercise of state authority.
This distinction is critical for practitioners dealing with state-owned entities. A state-owned enterprise cannot breach a commercial contract, leverage state apparatus (like a navy) to enforce that breach, and then claim sovereign immunity or Act of State protections to evade arbitral liability.
More broadly, the dismissal of the public policy arguments reinforces a foundational tenet of DIFC arbitration jurisprudence: public policy arguments must be grounded in the award's intrinsic defects, not the merits of the underlying dispute. If a tribunal has heard evidence on bribery or corruption and dismissed the allegations on the facts, the supervisory court will not re-evaluate that evidence under the guise of protecting UAE public policy. The public policy exception is reserved for awards that, on their face, offend the fundamental legal or moral precepts of the jurisdiction, not for awards where the losing party simply disagrees with the tribunal's factual findings regarding alleged misconduct.
Ultimately, the Mirma v Mobal saga stands as a robust defense of arbitral finality. By strictly enforcing the procedural boundaries of RDC Part 43, refusing to entertain recycled jurisdictional challenges, and tightly constraining the public policy exception, the DIFC Courts have ensured that the jurisdiction remains a hostile environment for bad-faith delay tactics and procedural obfuscation. Enforcement counsel can proceed with confidence that valid awards will be recognized swiftly, provided they adhere strictly to the Part 8 machinery.