The Dubai International Financial Centre

Claim No: CFI 024/2010

Application 81/2010

THE JUDICIAL AUTHORITY OF THE DUBAI INTERNATIONAL FINANCIAL CENTRE

In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler

IN THE COURT

BEFORE DEPUTY CHIEF JUSTICE

BETWEEN

CORINTH PIPEWORKS S.A.

Claimant

and

BARCLAY'S BANK PLC

Defendant

Hearing: 17 January 2011

Counsel:  Michael Black QC (representing Ince & Co) for the ClaimantJames Abbott, Clifford Chance for the Defendant

Judgment: 8 February 2011

JUDGMENT

Introduction

1. This is an application by the Defendant under RDCRule 12.1for a declaration that this Court

2. The factual foundation for the application is as follows.

The Claimant is a Greek company which carries on business in Athens. By a purchase order dated 30 April 2009 the Claimant sold and delivered to Afras Limited ("Afras"), a company whose head office is at Jebel Ali, Dubai, four consignments of steel pipes. Invoices in respect of the purchase price amounted in value to US$34,668,868.26.

3. Afras is said to have paid to the Claimant no more than US$9,642,278, thereby leaving some US$24,198,231.25 outstanding, taking into account a credit of US$828,177. Afras had an account at the Defendant's branch at Jebel Ali, Dubai, outside the DIFC

4. In the course of the period 28 April 2010 to 16 June 2010 an employee of the Defendant bank at its Jebel Ali branch, one Joseph Figueredo, sent a number of emails to Radhakrishnan Nanda Kumar of Afras by which, it is alleged, Mr Figueredo represented on behalf of the Defendant bank that Afras had requested the Defendant to transfer funds to the Claimant to pay the outstanding amount due in respect of the purchase of pipes. It is alleged that the emails indicated and represented that payment could be made within a short time and that such emails were sent by the Defendant bank to Afras so that Mr Nanda Kumar could pass them on to the Claimant. It is further alleged that such representations were untrue.

5. It is also alleged that similar false representations were made orally by Mr Figueredo to representatives of the Claimant on 27 May, 6 June and 15 June 2010.

7. The Claimant alleges that the representations by Mr Figueredo were made with the intention of discouraging the Claimant from taking steps to recover the debts or to freeze or otherwise secure Afras's assets. It is the Claimant's case that, had such representations not been made, it would have taken steps as early as April 2010 to obtain security for its claim by freezing orders against Afras.

8. The Claimant puts forward its claim in deceit and negligence and/or unlawful conspiracy. As to the last, it is pleaded that Mr Figueredo conspired unlawfully with Afras and/or Mr Kumar to defraud the Claimant by means of the false representations. It is said that by reason of the Defendant bank's tortious conduct the Claimant is no longer able to recover full payment of the outstanding debt and/or the Claimant has lost the chance of recovering full payment.

9. The Claimant further claims multiple damages under Article 40(2) of the DIFC Law of Damages

11. The Defendant contends that this Court has no jurisdiction because the Claimant cannot bring itself within any of the heads of jurisdiction under Article 5(A) of Law No. 12 of 2004 ("Law No. 12). This provides as follows:

"The Court of First Instance:

(1) Without prejudice to paragraph 2 of this Article, the Court of First Instance shall have the exclusive jurisdiction over:

(a) civil or commercial cases and disputes involving the Centre or any of the Centre's Bodies or any of the Centre's Establishments.

(b) civil or commercial cases and disputes arising from or related to a contact that has been executed or a transaction that has been concluded, in whole or in part, in the Centre or an incident that has occurred in the Centre.

(c) objections filed against decisions made by the Centre's Bodies, which are subject to object in accordance with the Centre's Laws and Regulations.

(d) any application over which the Courts have jurisdiction in accordance with the Centre's Laws and Regulations;

(2) Parties may agree to submit to the jurisdiction of any other court in respect of the matters listed under paragraphs (a), (b) and (d) of this Article."

12. The Claimant submits that the Defendant is a "Centre's Establishment within the words of Article 5(A)(1)(a) of Law No.12. The essence of that submission is that the Defendant has a branch in the DIFC through which it carries on business in the DIFC and has been designated a recognised company

13. The Claimant argues that, no matter that it relies in no respect on any conduct of, or facts affecting, the Defendant's DIFC Branch and that its case is confined to allegations of tortious conduct by an employee of the Defendant's Jebel Ali Branch, which is outside the DIFC, this Court nevertheless has jurisdiction because the Defendant companyas a whole, and not just its DIFC Branch, has been designated a Licensed Centre Establishment and thereby a "Centre Establishment" within Article 5(A)(1) of Law No.12.

14. It is to be observed that the Claimant does not seek to found jurisdiction on any other head of Article 5(A)(1).

15. It is submitted on behalf of the Defendant Bank that the underlying purpose of Article 5(a)(1)(a) is to confer jurisdiction on this Court over claims brought by or against entities falling within the descriptions of those DIFC entities set out under Article 5(A)(1)(a) and that in this case the Claimant, as is common ground, not being a Centre Establishment, the claims are brought against the Defendant Bank on the basis of the conduct of employees at its Jebel Ali Branch and not of its DIFC Branch. Accordingly, the requirement that, for the purposes of establishing jurisdiction under Article 5(A)(1)(a), the Centre Establishment must be a party to the claim is not satisfied. An essential connecting factor between the Defendant and the claim is thus missing.

16. It is further argued on behalf of the Defendant Bank that if, contrary to its primary submission, this Court does have jurisdiction, it should apply the principles of forum non conveniens identified in the English Courts, specifically in the decision of the House of Lords inSpiliada Maritime Corporation v Consulex Ltd.[1981] AC 460 and stay these proceedings.

17. Mr Abbott, on behalf of the Defendant Bank submits that, by reference to Article 30(2) of Law No.10 of 2004 this Court should apply to jurisdiction disputes the principles of forum non conveniens. That Article provides as follows:

"The DIFC Courts

18. He argues that the Civil Courts of Dubai (as distinct from this Court) are clearly and distinctly shown to be the appropriate forum in the interests of justice and the parties.

19. In this connection it is submitted that the rules of substantive law applicable to the causes of action alleged by the Claimant must be those of the law

20. Further, the key witnesses — Mr Figueredo and Mr Nanda Kumar — are located in Dubai and not the DIFC, as are the documents, given that the Claimant has a branch in Dubai and the Jebel Ali Branch of the Defendant Bank is in Dubai. Further, in view of the allegation of conspiracy against Mr Nanda Kumar of Afras it was probable that by being in Dubai, he would be joined as a necessary party in proceedings already commenced by the Claimant in the Dubai Civil Courts. These other proceedings are as follows.

21. In Dubai Courts

22. Mr Abbott, on behalf of the Defendant Bank, draws attention to very substantial overlap of the facts relied on and likely to be relied on in the substantive proceedings already commenced in the Dubai Civil Court and the present proceedings in this Court and also to the fact that the Claimant has commenced those two distinct sets of proceedings in two separate jurisdictions. The existence of such parallel proceedings raised a significant risk of conflicting decisions on the same factual issues. Applying the decision of the English House of Lords inThe Abidin Dover[1984] AC 398, the Claimant had failed to establish that there was some personal or juridicial advantage that would be available to him only in the proceedings in the DIFC Courts that was of such importance that it would cause injustice to the Claimant were he to be deprived of it by imposing a stay or otherwise declining to exercise jurisdiction in this Court : see Lord Diplock at pages 411–412.

23. It is further submitted on behalf of the Defendant Bank that, although any trial of the issues raised by the claim against the Bank would be entirely an English language trial (both the oral evidence and most of the documents would be in English), the Dubai Civil Courts would be quite capable of dealing with this evidence through interpreters and translations.

24. Finally, Mr Abbott submits that it is relevant to consider the policy of the law of Dubai in creating the jurisdictional structure governing the respective scope of the jurisdiction of the DIFC Courts and the Dubai Civil Courts.

25. The scope of jurisdiction of the DIFC Courts is defined by Article 5(A) of Law No.12 and by Law No.10 of 2004 was intended not to encroach on the scope of jurisdiction of the Dubai Civil Courts. "Exclusive" jurisdiction having been conferred on the DIFC Courts in respect of those claims and disputes specified in Article 5(A), all of which were connected with the DIFC area, it could not have been the legislative intention that claims, such as that raised in these proceedings, which had absolutely no connection with the DIFC but which were most closely connected with non-DIFC Dubai could be litigated in this Court. Centre's Establishment in Article 5 (A)(1)(a) therefore had to be given a meaning consistent with that underlying consideration. Were it to be construed as referring to the entire corporate structure of a company located in DIFC but also extending to non-DIFC Dubai, and the places far distant from DIFC or Dubai, it would open the floodgates to litigation of claims wholly unconnected with DIFC, such as a claim by or against an international corporation in respect of its operations in, for example, India. That would be contrary to the legislative purpose of Article 5(A).

26. Mr Michael Black QC, on behalf of the Claimant, submits that the Defendant's submissions fail to distinguish between the nature of the different jurisdictional requirements under Article 5(A)(1). Thus, the requirement under (a) is concerned only with the personal characteristics of either party to the proceedings : the Centre, any of the Centre's Bodies and any of the Centre's Establishments. By contrast the requirements under (b) are concerned only with the characteristics of the cause of action or dispute, namely the place where the Contract or transaction in question was entered into, where the contract was performed or where the incident occurred. In each case the relevant location must be the DIFC. Accordingly, it is argued that the Defendant's submissions are an attempt to introduce into the requirement set out in (a) a geographical qualification applicable only to the requirements for subject-matter jurisdiction under (b).

27. It is further said in support of the Claimant's submission on the effect of Article 5(a)(1)(a) that, subject to an important exception, the application of the principles of forum non conveniens would normally prevent litigation in the DIFC Courts of claims by or against parties of the kind described in sub-paragraph (a) where the subject-matter of the dispute was unconnected with the DIFC and where the Courts of another place were clearly and distinctly the appropriate forum for the disposal of that dispute. Accordingly, the "floodgate" argument advanced on behalf of the Defendant Bank was misplaced because, although the scope of this Court's jurisdiction would be theoretically geographically extensive, in practice it would not normally be exercised.

28. The exception to the applicability of the forum non conveniens principle, which Mr Black strongly emphasised, was that the DIFC Courts would be precluded from staying proceedings in those cases where the alternative forum was the Dubai Civil Court. This was the consequence of the legislative allocation of jurisdiction within the Emirate whereby under the judicial authority law

Discussion

29. There can be no doubt that the argument advanced on behalf of the Claimant would, if correct, have potentially far-reaching consequences. Many members of the legal professional conversant with the DIFC and its Courts would assume that, given that the purpose of the Court was to provide a dispute resolution facility for the DIFC and with regard to transactions associated or connected with it or the commercial enterprises carrying on trade within the DIFC, an international company with a branch licensed to carry on business in the DIFC would be confined to bringing claims within the DIFC Courts in respect of disputes connected with the business of that branch in the DIFC. The suggestion that an international company incorporated and having its head office in, say, the United States or the United Kingdom, but with a branch registered and licensed to do business in the DIFC, could start proceedings in the DIFC Courts or could be sued in that Court in respect of a claim wholly unconnected with the DIFC or the business of its DIFC branch would, on the face of it seem distinctly improbable. Were that so, the scope of jurisdiction of the DIFC Courts would have an international dimension which had not hitherto been generally perceived.

30. The legislative basis of the jurisdiction of the DIFC Courts differs fundamentally from that applicable to the English Commercial Court which in most other respects substantially contributes to both the substantive legal regime and the procedural framework of the DIFC Courts. Specifically, extra-territorial jurisdiction is not derived from a discretionary framework of the kind found in CPR

31. By contrast, in the DIFC Courts, service on a defendant outside the jurisdiction does not require permission and can be effected anywhere in the world provided always that the claimant can bring himself within Article 5(A)(1) of Law No.12. It is then open to the defendant upon whom service has been effected to challenge the jurisdiction and apply to set aside

32. It is to be observed that Article 5(A)(1) is comprised of four distinct kinds of connecting factor for jurisdictional purposes.

33. First, — in (a) — the connecting factor is defined by reference to a description of the party involved in the dispute who, on clear authority in this court, must be a party to the proceedings in question : seeDhir v Waterfront Property Investment LtdCFI 011/2009, per Hwang DCJ at paragraph 64. Three kinds of party are identified — the Centre, any of the Centre's Bodies, any of the Centre's Establishments.

34. Secondly, — in (b) the — connecting factor is defined by reference to the nature of the substance or subject-matter of the dispute.