CFI 036/2009 Dr. Lothar Ludwig Hardt and Hardt Trading F.Z.E. v DAMAC (DIFC) Company Limited et al

Transcription

1 1 von :21 Print CFI 036/2009 Dr. Lothar Ludwig Hardt and Hardt Trading F.Z.E. v DAMAC (DIFC) Company Limited et al Claim No: CFI 36/2009 THE JUDICIAL AUTHORITY OF THE DUBAI INTERNATIONAL FINANCIAL CENTRE In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai IN THE COURT OF FIRST INSTANCE BEFORE JUSTICE SIR ANTHONY COLMAN Between (1) Dr. Lothar Ludwig Hardt (2) Hardt Trading F.Z.E. Claimants -v- (1) DAMAC (DIFC) Company Limited (2) Hussain Ali Habib Sajwani (3) Faisal Ali Habib Sajwani (4) Sofyan Adnan Sami Khatib (5) Peter Riddoch Def endants ORDER OF JUSTICE SIR JOHN CHADWICK MADE ON 26 JANUARY 2010 Hearing: 23 February 2010 Counsel: Ludmila Yamalov a of Al Say y ah Adv ocates & Legal Consultants appeared f or the Claimants. Hannah de Figueiredo of Simmons & Simmons appeared f or the Def endants. Judgment: 31 March 2010 JUDGMENT 1. These proceedings are brought by the Claimants in respect of transactions which they entered into in and between with v arious dif f erent companies in the DAMAC Group f or the purchase of residential apartments and retail units in f our separate property dev elopments by DAMAC. There were in all 37 separate agreements. The dev elopments concerned were Park Towers, Water's Edge, Wildf lower and Ocean Heights. Of these dev elopments only Park Towers was inside the DIFC. 2. It is alleged that, although the Claimants hav e paid to v arious DAMAC companies a total of AED 35,669, or US$9,705,860,79, the "Def endants hav e breached their contractual obligations to the Claimants because, among other things, they f ailed to deliv er the properties timely and v iolated a series of UAE, Dubai and DIFC Laws." (Particulars of Claim, para 107) The Particulars of Claim set out 22 separate causes of action. These include allegations of breach of contract by the Def endants under prov isions of UAE (not DIFC) Law, breaches of v arious prov isions of the UAE Civ il Code, breaches of v arious prov isions of UAE Law No.8 of 2007 concerning Guarantee Accounts of Real Estate Dev elopments in the Emirate of Dubai, f raud in breach of the UAE Civ il Transactions Law, as well as numerous breaches of the UAE Penal Code, including allegations of bribery, cheating in commercial transactions and breach of trust. 3. There are two causes of action under DIFC Laws. These inv olv e allegations of breach of accounting and auditing regulations.

2 2 von :21 4. The claim seeks orders f or the termination of all the contracts relating to all the dev elopments and repay ment of the monies said to hav e been paid by the Claimants together with damages in respect of sustained losses and lost prof its, interest and costs. 5. I attach to this Judgment a copy of the Particulars of Claim. It will be seen at once that this document is totally unsatisf actory and insuf f icient as a DIFC Court pleading. It f ails to do more than make bold and unparticularised allegations against the Def endants generally. It giv es no f actual explanation or particulars of what conduct by each separate Def endant is relied upon. It also seeks to introduce into the claims companies in the DAMAC Group which are not identif ied on the Claim Form. 6. The First Def endant is a DIFC DAMAC Group Company. It was not and is not alleged to hav e been a party to any of the contracts and the Particulars of Claim contain not a single allegation of conduct by it, as distinct f rom the other Def endants, relating to any of the contracts in question. According to the ev idence, it had no dealings with the Claimants relating to these or any other contracts. 7. Against this background, the First Def endant has applied to strike out the claim against it under RDC 24.1 and and/or RDC It f urther applies f or an order under RDC 12.7 that this Court has no jurisdiction to hear the claim and that the Claim Form be set aside. 8. Af ter this application was made, the Claimant f ailed a cross-application seeking an order that the Court did hav e jurisdiction. This was a completely superf luous exercise which has gone simply to increase the costs. 9. In v iew of the limited time av ailable and the need f or the issues raised by these applications to be speedily resolv ed so that, if appropriate, the Claimant would take f orward the claim, I directed that the jurisdiction issues should be heard f irst. If the court concluded that it had no jurisdiction, the entire proceedings against the First Def endant would hav e to be set aside and the remaining questions as to summary dismissal of the claim and/or striking out could not arise. 10. Accordingly, argument was conf ined to the jurisdiction issues. Following the hearing, those representing the Claimants sent f urther submissions in writing to which I hav e had f ull regard. 11. The essence of the case adv anced on behalf of the First Def endant can be shortly stated. The Issues (1) The First Def endant was not a contracting party. (2) Each contract contained a Gov erning Law and Jurisdiction clause conf erring exclusiv e jurisdiction on the Dubai Courts as distinct f rom the DIFC Courts. (3) There was in any ev ent no jurisdiction under Article 5(A)(1) of DIFC Law No.12 of (4) If there was such jurisdiction, the parties had contracted out of it. 12. The issues to which the Def endants' jurisdiction application giv es rise f ell into two distinct categories. 13. First there are numerous issues which f all within what can be described as the procedural category. Those may be summarised as f ollows: (i) Whether the Def endants' application was made within the time f or such applications specif ied in RDC 12.4, namely 14 day s af ter f iling an Acknowledgement of Serv ice. (ii) If it was not made in time, whether this court should exercise its powers under RDC 4.2 (1) to extend time retrospectiv ely. (iii) If (i) and (ii) are to be answered in the negativ e, what is the ef f ect on the Courts' jurisdiction of RDC 12.5 by which it is prov ided that a def endant who has f iled an Acknowledgement of Serv ice f ails to apply f or a declaration of no jurisdiction within the time specif ied in RDC 12.4 is to be treated as hav ing accepted that the Court has jurisdiction to try the claim? 14. The second category of issues relates to substantiv e matters. These are as f ollows: (i) Whether by the Gov erning Law and Jurisdiction clause in the contracts in issue, the Claimants and Def endants agreed that any legal action or proceeding with respect to each of those agreements should be subject to the

3 3 von :21 exclusiv e jurisdiction of the Courts of Dubai as distinct f rom the DIFC Courts. (ii) If the answer to (i) is No, whether, in respect of each of those causes of action identif ied in the pleadings, namely the Particulars of Claim, this Court has jurisdiction to hear the claim under Article 5 of Law No.12 of Procedural Issues (i) Was the Def endants' application under RDC 12.4 made within the Time Limit? The relev ant prov isions of the RDC are as f ollows: 12.1 A def endant who wishes to - (1) dispute the Court's jurisdiction to try the claim; or (2) argue that the Court should not exercise its jurisdiction may apply to the Court f or an order declaring that it has no such jurisdiction or should not exercise any jurisdiction which it may hav e A def endant who wishes to make such an application must f irst f ile an acknowledgement of serv ice in accordance with Part A def endant who f iles an acknowledgment of serv ice does not, by doing so, lose any right that he may hav e to dispute the Court's jurisdiction An application under this Part must (1) be made within 14 day s af ter f iling an acknowledgement of serv ice; and (2) be supported by ev idence If the def endant (1) f iles an acknowledgment of serv ice; and (2) does not make such an application within the period specif ied in Rule 12.4, he is to be treated as hav ing accepted that the Court has jurisdiction to try the claim If the def endant f iles an acknowledgment of serv ice indicating an intention to dispute the Court's jurisdiction, the claimant need not serv e particulars of claim bef ore the hearing of the application. 15. The relev ant f acts are these and are not disputed. 16. On 7 January 2010 the Def endants' solicitors f iled their Acknowledgment of Serv ice within time. Consequently the time f or making an application f or a declaration of no jurisdiction expired on 21 January That was a Thursday. 17. On that Thursday the Def endants' solicitor, Ms Hannah De Figueiredo, transmitted to the DIFC Court Registry by an Application Notice and draf t Order cov ering an application to strike out the claims under RDC 4.16, alternativ ely f or judgment against the Claimants under RDC 24.1 and and/or f or a declaration of no jurisdiction under RDC That was transmitted at on 21 January Unf ortunately, the did not arriv e on the Registry 's apparatus until 0800 on Friday, 22 January 2010, on which day the Registry was closed. 19. On Sunday 24 January 2010, the f irst day on which the Registry was open af ter 21 January, at about 1600, the Def endants' solicitors f iled with the Court Registry hard copies of the Application Notice, the draf t Order and the ev idence. 20. On the same day at 1655 the Def endants' solicitors sent by to the Claimants' solicitors the Application Notice and the witness statement of Mr Patrick Joseph Doolan, Vice-President - Legal of the DAMAC Group of companies. Later that day, at 1730, the exhibits to that witness statement - some 1638 pages of contract documents in f iv e lev er-arch f iles - were serv ed on the Claimants' solicitors. 21. Ms Ludmila Yamalov a has submitted on behalf of the Claimants that the First Def endant's application was made

4 4 von :21 out of time f or it had not been f iled until 1600 on 24 January 2010 and, alternativ ely, ev en if f iling in hard copy within the time limit were not essential, there was a f ailure ev en to make the application by in time. This was because, although the of 21 January 2010 was transmitted at 1559 on 21 January, it was not receiv ed by the Registry until opening time on 24 January, the next working day and it was not serv ed on the Claimants until that same day. Reliance is placed on the f ollowing rules in RDC, Part 3, Schedule: Discussion 2. A party should not use to take any step in a claim which requires a f ee to be paid f or that step. If a party sends by a document f or which a f ee is pay able upon f iling, the document will be treated as not hav ing been f iled. 5. Nothing in this schedule shall af f ect or otherwise alter any obligation on a party or his legal representativ e to f ile any document or bundle of documents with the Court or to serv e any document or bundle of documents on any other party, but only the manner in which documents are f iled with the Court. 15. Where a time limit applies, it remains the responsibility of the party to ensure that the document is f iled in time. Parties are adv ised to allow f or delay s or downtime on their serv er or the serv ers used by the Court. 17. A document is not f iled until the is receiv ed by the Court at the addressee's computer terminal, whatev er time it is shown to hav e been sent. 19. If an is receiv ed af ter 4 p.m. it will be treated as hav ing been receiv ed on the next day the Court of f ice is open. RDC The timetable f or heav y applications is as f ollows: (1) ev idence in support must be f iled and serv ed with the application; (2) ev idence in answer must be f iled and serv ed within 28 day s thereaf ter; (3) ev idence in reply (if any ) must be f iled and serv ed as soon as possible, and in any ev ent within 14 day s of serv ice of the ev idence in answer. 22. It is prov ided by RDC as f ollows: Where an application must be made within a specif ied time, it is so made if the application notice is receiv ed by the Court within that time. 23. It is to be observ ed that this last prov ision does not ref er to f iling of the Application Notice - a f ormal process including the deliv ery to the Registry of the hard copy notice and pay ment of the applicable court f ee. This prov ision, theref ore, could hav e been used in the present case and, because f iling was not specif ied in RDC 12.15, the notice could properly hav e been transmitted by in spite of Part 3, Schedule, paragraph 2. The applicability of the latter is clearly superseded by RDC As to paragraph 2, I do not consider that this applies in a case where a time limit applies and a notice of application which attracts a f ee is sent to the Registry by . In such a case, that prov ision should be construed as ref erring to ef f ectiv e transmission of the rather than f iling in the f ormal sense. RDC would otherwise be depriv ed of its essential purpose. 24. Further, it is also reasonably clear, in my judgment, that paragraph 19 of the Schedule is superseded by Rule in the case of an application hav ing to be made within a time limit. The period of 14 day s in RDC 12.4 is thus not reduced to 4pm on the 14th day by RDC Schedule Para Accordingly, in order to satisf y the RDC 12.5 time limit the Def endants' solicitors' had to be receiv ed by as distinct f rom f iled at, the Registry by 1700 on 21 January The supporting ev idence did not hav e to be included and it did not hav e to be serv ed on the Claimants by that time, hav ing regard to RDC Specif ically, RDC required no more than that the ev idence must be f iled when the application was f iled and that the ev idence must be serv ed on the Claimant when the application was serv ed on the Claimant. 26. There can be no doubt, theref ore, that the application f or a declaration of no-jurisdiction was not made within the time specif ied in RDC 12.5, f or the Def endants' solicitors' was not receiv ed at the Registry on 21 January Should an Order be made under RDC 4.2(1) retrospectively excluding time under RDC 12.5?

5 5 von : There was no f ormal notice of application by the Def endants f or any such order. In the ordinary way there can be no doubt that such an application should be issued and serv ed on the opposing party. That course enables the latter to assemble ev idence and to f ormulate submissions which it might not otherwise hav e the opportunity of doing. Howev er, there may be cases where, within the scope of the Ov erriding Objectiv e, such an order might be made without the issue of an application, prov ided that can be done f airly and without injustice to any party. 28. In the present case, although the Def endants' application was transmitted by at on 21 January, it was not receiv ed by the Registry by 1700 or at any time on that day. The warning as to the unreliability of serv ices in Dubai contained in the Schedule to RDC 3, paragraph 15 was, theref ore, f ully v indicated. The in question took ov er 16 hours to arriv e, a period of delay totally deplorable in a territory which sets itself up as hav ing ev ery modern communication f acility f or commercial purposes. 29. It is objected on behalf of the Claimants that the Def endants' solicitors really had only themselv es to blame in leav ing their application almost to the last minute of the last day. Ev en on the next working day - Sunday, 24 January they did not get round to f iling this application until about 1600 and only at 1730 on that day did they complete serv ice of all the ev idence on the Claimants' solicitors. It was thus their practice to cut ev ery procedural step v ery f ine indeed. 30. In my judgment, it would be unacceptably disproportionate in all the circumstances were the application f or a retrospectiv e extension of time, although not adv anced bef ore the hearing, now to be ref used. It was not wholly unreasonable f or the Def endants' solicitors to assume that this would be receiv ed by the Registry by 1700 on 21 January. While it is a matter to be taken into account against an extension of time, I am not persuaded that the other procedural delay s were suf f iciently serious or reprehensible to warrant depriv ing them of the v alidity of their application as to jurisdiction. Nor, in my v iew, has it been demonstrated on behalf of the Claimants that any material on unf airness or injustice to them has f lowed f rom the absence of notice of the application f or an extension of time. 31. I, theref ore, conclude that time f or making the application, f or f iling it and the accompany ing ev idence and serv ing the application and ev idence on the Claimant be retrospectiv ely extended to on 24 January The Effect in Law of RDC In case I am wrong in exercising my discretion under RDC 4.2(1) in f av our of an extension of time, it is necessary to consider precisely what is the ef f ect in Law of a Def endants' omission to apply f or a declaration of no jurisdiction under RDC The key question is whether the ef f ect is to prev ent that party f rom challenging the Courts' jurisdiction to hear the claim in any respect or whether it has a more limited impact. 33. In my judgment, the ef f ect of RDC 12.5 is analogous to that of a submission to the jurisdiction. It is in substance a deemed submission. As such, its ef f ect is essentially a consensual acceptance of such jurisdiction as the Court has under such legal instruments as def ine its jurisdiction. Howev er, such consensual submission to the Courts' jurisdiction cannot extend the scope of that jurisdiction bey ond that accorded by such national laws as conf er jurisdiction on the Court. Thus, f or example, where the proceedings may not hav e been properly serv ed on the Def endants or where the parties are bound by a f oreign exclusiv e jurisdiction clause, an omission to comply with RDC 12.5 would preclude the Def endants f rom rely ing on def ectiv e serv ice or the terms of the jurisdiction clause as a bar to the Courts' jurisdiction and a ground f or obtaining a declaration of no jurisdiction. In both such examples the Court would hav e had jurisdiction were it not f or the procedural def ect or the binding jurisdiction clause, arising in the particular case. 34. Now it must be said that I raised this matter with counsel at the outset of the hearing and it was not a point that had prev iously been ref erred to in exchanges between the parties or in any way relied upon by the Def endants. 35. Although, remarkably, there is no note as to this principle in the English Civ il Procedure White Book in relation to the same rule in CPR 11(5), there is a usef ul summary of the concept in Dicey Morris + Collins, Conf licts of Law, 14th Edition, para: which states: "The principle of submission can giv e the court jurisdiction only to the extent of remov ing objections thereto which are purely personal to the party submitting, as f or example, that he has not been duly serv ed with process. Submission cannot giv e the court jurisdiction to entertain proceedings which in itself lies bey ond the competence or authority of the court." 36. Under RDC 4.11 where the Court proposes to take a point on its own initiativ e, notice should be giv en to both parties in adv ance. This is a salutary prov ision aimed at av oiding surprise and at giv ing the parties the opportunity

6 6 von :21 of challenging the Courts'. In the present case, I directed on 21 February 2010 that on 23 February the hearing could not be conf ined to procedural directions as to the f uture conduct of the jurisdiction application but would be the hearing of f ull argument on that application. This should not hav e taken either party by surprise since they had prev iously been expressly warned in the course of communications with the Registry that I might direct that a f ull hearing should take place on the date earmarked f or this case in the Courts' diary. 37. Theref ore, when in the course of the hearing I raised f or the f irst time the legal ef f ect of an omission to make an application under RDC 12-5, those appearing f or the parties were required to address what ought to hav e been in the f oref ront of their preparations f or the hearing. Had either solicitor considered the point, it would at once hav e become obv ious that, ev en if, by the omission to make the application on time, there were a deemed submission to the Courts' jurisdiction, the ef f ect of that submission could not possibly be to conf er on the Court a jurisdiction which, as a matter of law under Article 5 of Law No.12 of 2004, it nev er had. So ev en if the Def endant were precluded f rom pursuing its application, the Court itself would be bound to raise the point. 38. Equally, if the Court did so, there could be no answer to it. The ef f ect would necessarily be that it would open to the Court to satisf y itself as to its own jurisdiction regardless of the Gov erning Law and Jurisdiction Clause. 39. In v iew of my conclusion that, as a matter of procedure, it remains open to the Def endants to challenge the Courts' jurisdiction, it is f irst necessary to consider the ef f ect of the Gov erning Law and Jurisdiction Clause. The Governing Law and Jurisdiction Clause 40. This clause prov ides as f ollows: This Agreement is made in the English language and the rights of the Parties hereunder shall be gov erned by the Laws of the United Arab Emirates and the Laws of Dubai and the Parties agree that any legal action or proceedings with respect to this Agreement shall be subject to the exclusiv e jurisdiction of the Courts of Dubai, United Arab Emirates. 41. The same clause appears in all those contracts the subject of these proceedings. Those contracts were entered into on dates beginning on 11 January 2007 (Ocean Heights) and ending with another Ocean Heights unit on 24 June Of the f iv e building dev elopments the subject of these contracts only one - Park Towers - was located in the DIFC. The remaining f our were located in the non-difc area of Dubai. The contracts relating to Park Towers were entered into on 18 February The wording of the clause being the same in all contracts, any submission that it is to be construed as conf erring jurisdiction on this Court must either inv olv e that it is to be inf erred that the mutual intention was to conf er such jurisdiction on the DIFC Court in all the contracts - cov ering both non-difc properties - and DIFC properties or that in the contract relating to Park Towers the same clause should be giv en a dif f erent meaning to that in the other contracts. 43. There are, howev er, two problems with this approach to construction. 44. First, the imposition of DIFC Law on a contract f or the sale of non-difc realty would be highly improbable, particularly hav ing regard to what is common ground, namely that none of those contracts were entered into in the area of the DIFC and none were required to be executed in the DIFC. 45. Second, at the time when the earlier contracts - Ocean Heights, Lotus Residence, Wild Flower and Park Towers - were entered into, there was in place no land law in the DIFC other than Dubai Law. Until DIFC Law No.4 of 2007 came into f orce in June 2007, Dubai Land Law applied in DIFC. As f rom the coming into f orce of that Law, the basis of land tenure in the DIFC changed. Section 10 prov ided: "Subject to any other prov ision of this Law, f reehold ownership of real property gov erned by this Law carries with it the same rights and obligations as ownership of an estate in f ee simple under the principles of English Common law and equity." 46. Hencef orth the sy stem of land tenure was closely similar to English Land Law. The DIFC Court was accorded specif ic jurisdiction with regard to specif ic matters set out in the Law. These include, f or example, the f ields of mortgages, easements, the Insurance Fund and execution against Land. These specif ic ref erences to Court jurisdiction would come within Art. 5 (A) (1) (d) of the Law No.12 of 2004: - the DIFC Court of First Instance shall hav e the exclusiv e jurisdiction ov er: "any application ov er which the (DIFC) Courts hav e jurisdiction in accordance with the centre's Laws

7 7 von :21 and Regulations." 47. So the position was that until June 2007 when Law No.4 of 2007 came into ef f ect there were no such Laws and Regulations of the DIFC which conf erred on the DIFC Courts any jurisdiction ov er DIFC land. Until that time the only jurisdiction which the DIFC Courts might hav e must be f ounded, if possible, on Article 5(A) (1) (a) or (b) of Law No.12 of In these circumstances it is, in my judgment, inconceiv able as a matter of inf erence that the parties would enter into a contract f or the sale of realty in either DIFC or non-difc Dubai up to June 2007 in which they agreed that the contract should be gov erned by the Laws of the DIFC and that "any legal action or proceedings with respect to this Agreement" should be subject to the exclusiv e jurisdiction of the Courts of the DIFC. 49. Further, the contracts contain nothing to indicate that the parties by using the words "Laws of Dubai" and "Courts of Dubai" were employ ing a specially -agreed meaning that conf ined the Laws to DIFC Laws and conf ined the Courts to DIFC Courts. Great though Dr Hardt's prof essed enthusiasm f or English Law and Courts, and theref ore DIFC Courts, might be, unless he can address cogent ev idence of an agreement that the words of the clause should hav e a specially conf ined meaning, they must be giv en their natural meaning. The "Courts of Dubai" would not be taken by any one f amiliar with the relativ e jurisdiction of the Dubai and DIFC Courts and to the circumstances in which these agreements were entered into as ref erring to the DIFC Courts. 50. In reaching this conclusion, I hav e taken f ully into account with regard to the contracts f or the sale of Park Towers - the only property located in the DIFC - the v arious ref erences in that contract to "The Master Dev eloper," which is def ined as the DIFC Authority, and "the Master Plan", i.e. the DIFC Plan. The ref erences to registration of the purchasers' title at the Land Registry, def ined as the DIFC Land Registry "to be established", present a closer link with the DIFC Courts. Howev er, against this are ref erences in clause 2.2 and 10.1 to the f ormation of a management association pursuant to Article 1197 (1) of the Civ il Code of the UAE. In short, these particular contracts do not contain prov isions which compel departure f rom the natural meaning of the "Laws of Dubai" or the "Courts of Dubai". 51. This conclusion leads to the f ollowing consequence. If, by reason of f acts f alling within Article 5 (A) (1) (a) or (b), the DIFC Courts could hav e jurisdiction ov er these proceedings, the parties hav e contracted out of that jurisdiction and into the jurisdiction of the non-difc Dubai Courts. This they were perf ectly entitled to do under Article 5 (a) (2) of Law No.12 of "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." Accordingly, whatev er might hav e been the position under Article 5 (A) (1) (a) or (b), the parties hav e contracted out of the jurisdiction of the DIFC Courts under each of the many contracts entered into, including the Park Towers contracts and the DIFC Courts hav e no jurisdiction. Further Arguments 52. The question whether the DIFC Courts might hav e jurisdiction would arise f or decision on the present application if (i) on its proper construction the Gov erning Law and Jurisdiction Clause, contrary to my decision, purported to conf er jurisdiction on the DIFC Courts or (ii) if, again contrary to my decision, there should be an extension of time f or making the strike-out application under RDC The analy sis necessary f or this issue is to ascertain whether in respect of any of the contracts, the f acts pleaded in the Particulars of Claim f all within the scope of the jurisdiction of the DIFC Courts identif ied in Article 5(A) (1) of Law No.12 of The Claim Form identif ied the First Def endant, and the only corporate def endant, as DAMAC (DIFC) Company Limited. All other def endants are personal def endants: "Claimants bring this legal action against Def endants in connection with a real estate dispute between the parties ("Claim"). Claimants hav e inv ested approximately USD 9,705, ("Total Inv estment") into f iv e (5) of Def endants' real estate projects in Dubai, U.A.E., which are: Park Towers (DIFC). Water's Edge, Lotus Residences, Wildf lower and Ocean Heights (collectiv ely "Properties"). As of today, Def endants hav e not deliv ered any of the Properties and hav e not complied with any of their contractual obligations to Claimants. Furthermore, Def endants hav e committed a series of v iolations of U.A.E., Dubai and DIFC Laws in connection with the Properties, such as enticement and

8 8 von :21 unf airness, illegal sale, f ailure to obtain necessary approv als, f ailure to commence construction timely, f ailure to timely register dev eloper and obtain necessary licenses, mismanagement of escrow f unds and v iolation of trust account regulations, unf air contracts of adhesion, f raud and deception, f ailure to comply with the DIFC Companies Law and the DIFC Companies Regulations, illegal competition, bribery, trickery, breach of trust, cheating in commercial transactions, money laundering and accomplice liability. Remedy Sought: Ref und of Claimants' Total Inv estment, in the amount of USD 9,705, Damages and lost prof its caused by Def endants' breach of contract and other v iolations of U.A.E., Dubai and DIFC laws. Interest accrued on Claimants' Total Inv estment, damages and lost prof its. Costs of proceedings including legal representativ es' charges under Parts of the DIFC Court Rules. Any other remedy to which Claimants are entitled pursuant to Part of the DIFC Court Rules." 55. The Particulars of Claim stated at paragraph 8: "Def endants are DAMAC (DIFC) Company Limited with all of its subsidiaries and af f iliates including but not limited to DAMAC Properties and DAMAC Holdings." 56. This was a mis-description of the corporate party to the proceedings which was and only was DAMAC (DIFC) Company Limited as identif ied in the Claim Form. The composite ref erence to the other two DAMAC entities and to unidentif ied "subsidiaries and af f iliates" does not hav e the ef f ect of making them parties to the action. The First Def endant is not stated to be sued in a representativ e capacity and there is no apparent pleaded basis f or its hav ing such capacity. 57. In paragraph 30 of the Particulars of Claim it is pleaded that this Court has jurisdiction ov er the claim pursuant to Law No.12 of 2004, Article 5 (A) (1) and Article 3 of the 2009 Protocol of Jurisdiction between the DIFC Courts and the Dubai Courts. 58. I interpose that since the 2009 Protocol expressly neither increases nor reduces the scope of the jurisdiction of the DIFC Courts as identif ied by the applicable legislation, in particular Law No.12 of 2004, the only relev ant question is whether the relev ant f acts of the claim are within any of the heads of Article 5 (A) (1). In the ev ent of any inconsistency between the Protocol and that Article the latter must prev ail. 59. The salient f acts are as f ollows (a) The First Def endant, although incorporated in the DIFC, was not a party to any of the contracts the subject of these proceedings, ev en those relating to Park Towers, the only property within the DIFC. (b) None of the contracts was entered into in the DIFC. (c) Apart f rom Park Towers, none of the properties was located within the DIFC. (d) The only contracts which inv olv ed perf ormance within the DIFC were those relating to Park Towers by reason of the location of that property. (e) No allegation or breach of contract or duty is made specif ically against the First Def endant. (f ) Against this background it is argued on behalf of the Claimants that there is jurisdiction under Article 5 (A) (1) (a) on the grounds that both the Claimants and First Def endant are "Centre's Establishments" who are parties to these proceedings. The Claimants are said to be one of "Centre's Establishments" who are parties to these proceedings. The Claimants are said to be one of "Centre's Establishments" on the grounds that Dr Hardt and his company had been giv en permission by the DIFC to purchase property (Park Towers) in the DIFC. This is unarguable. By DIFC Law No.8 of 2004 a licensed centre establishment is "any entity licensed registered or otherwise authorised to carry on f inancial and banking business including those activ ities and businesses ref erred to in Article " There is no ev idence that the First or Second Claimant is a Centre Establishment

9 9 von :21 licensed or otherwise within Law No. 9 of (g) Secondly, by contrast, the First Def endant would appear to be one of the Centre's Establishments. It is located in the DIFC and, on the ev idence of Mr Doolan, is a f inancial inv estment company whose activ ities primarily inv olv e arranging credit and adv ising on f inancial products. It is said that it has nev er had any inv olv ement in property sales or dev elopments whereas the Particulars of Claim ref er to breaches of contract and duty by "the Def endants" or by DAMAC, they contain not a single allegation of f act or law specif ically directed to the First Def endant. It is located in the DIFC, and on the ev idence of Mr Doolan, is a f inancial inv estment company whose activ ities primarily inv olv e arranging credit and adv ising on f inancial products. It is said that it has nev er had any inv olv ement in property sales or dev elopments. Whereas the Particulars of Claim ref er to breaches of contract and duty by "the Def endants" or by DAMAC, they contain not a single allegation of f act or law specif ically directed to the First Def endant. 60. This total absence of any specif ic allegation against the First Def endant is, in my judgment, important. If a Claimant f ails to make any coherent allegation against a Centre Establishment, although the party may be joined as a def endant, he is not a party against whom the Claimant raises a case which can f ound a dispute. All he has done is put a name on a DIFC Courts' Claim Form and nothing else. In these circumstances, no dispute inv olv ing that def endant has been properly identif ied and the DIFC Courts do not hav e jurisdiction under Article 5 (A) (1) to do more than strike out the claim against that party. Where there is no f ormulated claim, there is nothing which engages the Courts' jurisdiction. 61. An argument has been adv anced that, on account of the DAMAC Group corporate structure of which the First Def endant was a part, the DIFC Courts hav e jurisdiction ov er claims against it ev en though the breaches of contract or torts were committed not by the First Def endant but by other companies in the DAMAC Group which were not Centre's Establishments. Reliance is placed on a prov ision in the 2009 Protocol which prov ides f or jurisdiction of the DIFC Courts ov er "any of the Centre's companies and branches of companies and establishments that are established or licensed to operate in the DIFC." It is argued that this prov ision conf ers jurisdiction on the DIFC Courts ov er each non-difc contracting party, by which a property was sold to the Claimants, such as Damac Properties Co. LLC, Damac Star Properties LLC, and Damac Group Properties LLC. It is said that these are all "branches" of the First Def endant which is a DIFC Centre Establishment. 62. This submission inv olv es a complete misunderstanding of the 2009 Protocol. 63. The ef f ect of the ref erence to "branches" is not to non-difc entities but to cov er those entities set up within the DIFC which are branches of companies and establishments which are established or licensed to operate within the DIFC. Branches located outside the DIFC are not cov ered. If that were the ef f ect of the Protocol it would be inconsistent with Article 5 (A) (1) (a) of Law No.12 of 2004 and would be of no ef f ect. 64. It is f urther argued that money said to hav e been paid by the Claimants to the seller companies pursuant to the v arious contracts has been the subject of inter-company transf ers within the DAMAC Group and that those transf ers hav e been made f rom inside the DIFC into the accounts of companies outside the DIFC. It is not specif ically alleged that the First Def endant was implicated in these transf ers and, if so, how such transf ers could giv e rise to a cause of action against that company. In short, there is no specif ic allegation that the First Def endant has been in any way "inv olv ed" in any breach of any of the contracts. 65. Amongst the many causes of action relied upon are allegations that by these intra-group corporate money transf ers, taking money out of the Park Towers contract and transf erring it outside DIFC to Damac Properties Co. LLC instead of pay ing such monies into a Park Towers escrow account amounts to an "incident" occurring within the DIFC within the meaning of Article 5 (A) (1) (b) of Law No.12. There is, howev er, nothing in the Particulars of Claim which alleges that the First Def endant was under a duty to receiv e such money or transf er it to an escrow account. Accordingly it is not alleged that the First Def endant was inv olv ed in the "incident" relied on. 66. The same can be said of the allegations of misrepresentation. There is no allegation that it was made by the First Def endant. 67. In these circumstances, it has not been demonstrated that this Court has jurisdiction ov er these claims v is-à-v is the First Def endant. That company appears to hav e been included in the Claim Form simply as a means of admittance to the jurisdiction of the DIFC Court, being a member of the DAMAC Group incorporated in the DIFC, notwithstanding that it had no connection with the Claimants or with any of the relev ant transactions. The arguments in support of jurisdiction adv anced by Ms Ludmila Yamalov a, on behalf of the Claimants, hav e inv olv ed an elaborate and robust attempt to make good suf f icient connection between the claims and the First Def endant to bring these claims within Article 5 (A) (1) (a), (b) or (d). Had it been necessary to decide this application on the basis

10 10 von :21 of those submissions, I should hav e concluded without hesitation that, howev er persuasiv ely those submissions are adv anced, they are completely without substance and that with regard to the First Def endant this Court has no jurisdiction with regard to any of the claims set out in the Particulars of Claim. Conclusion 68. The First Def endant is, theref ore, entitled to an order that the claim against it should be struck out f or want of jurisdiction. It is unnecessary to consider any other ground relied on f or striking out the claim. 69. It f ollows that the Claimants' cross-application af f irming the Courts' jurisdiction must be ref used. 70. Any f urther applications arising out of this Judgment can be presented by the Courts' v ideo conf erence f acilities. Justice Sir Anthony Colman Dated: 4 April 2010 At: 3pm Click here to download the Particulars of Claim in PDF format