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The Latest Legal & Regulatory updates impacting Arbitration and DIFC Litigation in the UAE

DIFC Court of First Instance Maintains Expansive Jurisdiction of DIFC Courts

The jurisdiction of the DIFC courts continues to expand. In a recent Order issued on 25 November 2022, Justice Sir Jeremy Cooke refused to vacate a worldwide freezing injunction against four defendants even though it was common ground that the defendants did not fall within the jurisdictional gateways contained in Article 5 of the Judicial Authority Law (No. 12 of 2004).

The Court of First Instance affirmed the judgment in Jones v. Jones CFI-043-2022 (12 September 2022) issued again by Justice Sir Jeremy Cooke and placed particular emphasis on Part 25.24 of the RDC, which provides for the granting of injunctions in support of foreign proceedings. According to Cooke J, this provision constitutes a “DIFC law or regulation” sufficient to confer jurisdiction for the purposes of Article 5 A (1)(e) of the Judicial Authority Law.

The recent decision raises important questions regarding the scope of the DIFC Court’s jurisdiction. The long-standing position at common law is that a court can only grant a freezing injunction against a party subject to its in personam jurisdiction.

Unless and until the position is reversed by the DIFC Court of Appeal, the DIFC Courts have a power to grant injunctions in support of foreign proceedings that greatly exceeds that conferred on courts in England and Wales. 

Arbitral Tribunal Recognises Estoppel by Convention as Forming Part of DIFC Law

In a significant recent award, a Tribunal appointed by the LCIA held that the doctrine of estoppel by convention forms part of DIFC law.

The underlying dispute concerned amounts claimed under unpaid invoices issued pursuant to contract for the provision of entertainment content to a broadcasting entity, spanning over seven years and governed by DIFC law.

After the content provider demanded payment of its long overdue invoices, the broadcasting entity terminated the contract.

The content provider then initiated arbitral proceedings, claiming sums due and owing for entertainment content already delivered, the invoices for which had been approved but not paid.

The broadcasting entity counterclaimed breach of contract and sought the return of sums already paid on the grounds that such content did not meet the content criteria set out in the contract.

It was common ground between the parties that the content delivered did not, strictly speaking, meet the contract criteria.

However, the content provider argued that the broadcasting entity should be barred (i.e., “estopped”) from arguing that any departure from the contract criteria (which was by “convention” tacitly accepted over seven years) can amount to a reason for non-payment and for counterclaiming amounts already paid.

The Tribunal was not persuaded that the breaches caused the broadcasting entity to suffer any losses, particularly in circumstances where no losses were properly quantified and the underlying content had already been gainfully used.

As such, the Tribunal held that the content provider was entitled to recover all outstanding sums under its unpaid invoices.

Significantly, the Tribunal also recognised that even though the doctrine of estoppel by convention is not expressly mentioned in any DIFC statute, it can nevertheless affect longstanding commercial relationships which are subject to DIFC law.

In this instance, the Tribunal held that parties had carried out the contract over many years and based on a common assumption.

As such, it was further held that, it would be unreasonable, many years after the fact, to depart from that common assumption and allow one party to claim damages for breach of contract.

The doctrine of estoppel by convention can be traced back to the speech of Lord Denning in Amalgamated Investment & Property Co Ltd v. Texas Commerce International Bank Ltd .

Overall, the recognition that the doctrine of estoppel by convention forms part of DIFC law should be welcomed by DIFC practitioners.

Those engaged in commerce know that few contracts will be perfectly performed and this is particularly so in contracts of a long duration.

The fact that a party can identify technical breaches of contact many years after the fact will not, in itself, operate as a defence to a claim for payment due and owing, when no timely objections were made at the time when the breaches were committed.

Abolition of the Dubai World Tribunal 

On 9 May 2022 the Ruler of Dubai issued Decree No. 20 of 2022, abolishing the Dubai World Tribunal. The Tribunal had been established in 2009 to deal with the financial position of Dubai World and its subsidiaries. Most existing Tribunal cases will now be transferred to the onshore courts. 

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