Robinson Club GMBH v Zabeel Investments L.L.C. [2013] DIFC CFI 016 (28 November 2013)

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URL: http://www.bailii.org/ae/cases/DIFC/2013/cfi_016.html
Cite as: [2013] DIFC CFI 16, [2013] DIFC CFI 016

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Robinson Club GMBH v Zabeel Investments L.L.C. [2013] DIFC CFI 016

November 28, 2013 Court of First Instance -Judgments,Judgments

Claim No: CFI 016/2013

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

Court

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

Ruler
of Dubai

IN THE COURT

Court
OF FIRST INSTANCE

BEFORE JUSTICE SIR DAVID STEEL

Between

ROBINSON CLUB GMBH

Claimant

Claimant
/Appellant

and

ZABEEL INVESTMENTS LLC

Defendant

Defendant
/Respondent

Hearing: 29 August 2013

Counsel: Stuart Isaacs QC, Nicholas Fletcher And Charles Lilley (Berwin Leighton Paisner) for the Claimant/AppellantTom Montagu-Smith (Al Tamimi & Co LLP) for the Defendant/Respondent
Judgment: 25 November 2013


AMENDED JUDGMENT OF JUSTICE SIR DAVID STEEL


PURSUANTto Part36.40of the Rules of the DIFC Courts

DIFC Courts
, paragraph 6 of the Judgment is amended.

1.The Claimant seeks to set aside
Set aside
an Order dated 9 June 2013 of H.E Justice Omar al Muhairi. By that Order, the learned judge transferred an application by the Claimant contained in a Part 8 Claim Form for declarations as to the jurisdiction of the DIFC
DIFC
Courts in regard to ICC aribtration Award No 16958/CYK to a Special Judicial Committee established by the Ruler of Dubai by virtue of an Order dated 9 February 2011 (and amended on 22 June 2011).
2. The Claimant was the successful party in the arbitration proceedings to which the Defendant was the Respondent. The request for arbitration was issued on 22 February 2010. By an agreement evidenced by a letter dated 19 April 2010, the parties concurred that the seat of the arbitration should be the Dubai International Financial Centre (DIFC).
3. The arbitration hearing started on 29 November 2011 and concluded on 2 December 2011. The award was issued on 14 September 2012. The tribunal (made up of H.E Hanotiau, Prof. Dr. Ulrich Haas and Dr. Hadif Al Owais) ordered the Defendant to pay damages to the Claimant in the sum of €22,976,250 Euros for breach of the Defendant's obligations under a Hotel Management Agreement dated 25 January 2006 and a Technical Services Agreement dated 10 March 2006, together with interest and costs.
4. On the first day of the hearing, the Chairman of the tribunal had asked the parties what the status of an award rendered in the DIFC had as compared with an award rendered elsewhere in Dubai. He was informed that, since the seat was the DIFC, all proceedings in relation to an award (including recognition or challenge) would be brought to the DIFC Courts.
5. In fact on 9 February 2011, the Ruler of Dubai had issued an Order headed "Constitution of a Special Judicial Committee to Settle the Disputes Related to Zabeel Investments LLC." This Order as amended by a further Order dated 22 June 2011 contained (in translation) the following provisions:Article 2The Committee's jurisdiction shall be as follows:
(1) To hear and settle any claims or demands raised by or against:
a. the Respondent and its subsidiaries, including any claims for dissolution and liquidation.
b. Any person that has links to [the Respondent's] activities or assets, including its manager and all its staff and employees.

(2) The issuance of orders and of temporary and preliminary decisions, including the right to compel any person to perform an act or to refrain from performing an act or any other measures the Committee deems appropriate.

Article 3

All Dubai Courts
Dubai Courts
, including DIFC Courts, may not consider or resolve any applications or claims falling under the competence of the Committee as hereby determined. They shall all refrain from hearing all applications or claims submitted to them before the issuance hereof. All such applications and claims shall be accordingly referred to the Committee.
 6. Following publication of the award on 14 September 2012, the Claimant wrote to the Defendant on 5 October 2012 requesting full payment of the sums awarded. Unknown to the Claimant this promptly led to the commencement of proceedings on 7 October 2012 by the Defendant before the Zabeel Special Judicial Committee ("the Committee") seeking annulment of the award. The basis of this application was as follows:
a. Failure of the arbitrators to sign the reasons (as opposed to the award).
b. Failure of the arbitrators to sign the award jointly in the U.A.E.
c. Failure to secure signature of the arbitration agreement by a director of the Defendant.
d. Failure of the arbitrators to deliver the award within 5 days.
7. On 19 December 2012, the Claimant attempted to lodge an application with the DIFC Courts Registry
Registry
to obtain recognition and enforcement of the award. However, the Registrar
Registrar
declined to register the application by reason of the February Order as amended. The next day the Defendant's solicitors wrote to the Claimant's solicitors to inform them of the commencement of the annulment proceedings before the Zabeel Special Committee. This letter was accompanied by copies of the relevant Order and the amendment. The letter also gave notice that "these proceedings are in the process of being formally served through diplomatic channels" in Germany.
8. Service
Service
was effected by 20 March 2013 whereafter the proceedings before the Committee have been adjourned from time to time. In the meantime the present Part 8 Claim was issued on 4 June 2013 by the Claimant seeking a declaration that the DIFC Courts had exclusive jurisdiction in regard to any application to enforce or annul the award and requesting an order for enforcement. As already indicated the outcome was the Order of H.E Justice Omar Al Muhairi transferring the matter to the Committee subject to any application to set the order aside in or before 23 June 2013. The present application was in fact issued on 24 June 2013 but no point is taken in regard to the delay.
9. It is unquestionably a somewhat startling feature of the background to this dispute that the Claimant and its legal advisers were wholly unaware of the Order which had been made in February 2011 nearly a year after the parties had agreed the DIFC as the seat of the arbitration. However it is not entirely surprising since it appears to be common ground that neither the original Order nor its subsequent amendment in June 2011 was published in the Official
Official copy
Gazette of the U.A.E or otherwise.
10. By definition the Defendant was aware of the Order and, I believe it is accepted, so were at least some members of the Defendant's legal team. It is accordingly unfortunate that at the commencement of the hearing on 29 November 2011, when the Chairman of the tribunal sought an explanation of the status of any award as regards the DIFC, he was informed by Counsel on both sides that issues of recognition and enforcement were matters for the DIFC Courts in accordance with its Arbitration Law. There can be no doubt that when the Claimant's attempt to use the machinery of the DIFC Courts to enforce the award was rejected by the Registrar in the wake of production of the Order, the Claimant was indeed taken wholly by surprise.
11. The Claimant's dismay was however coloured by two complete misconceptions:
a. First, the Claimant contended that the Defendant's reliance on the terms of the Order was prompted by the DIFC Registry somehow "tipping off" the Defendant as to the existence of the Order and the use to which it could be deployed.
b. Second (perhaps in the alternative) the Claimant contended that the existence of the Order had been deliberately concealed so as "to induce the Claimant to persist in the arbitration": the theory being that in the event the Defendant lost the Zabeel Order would be relied upon to challenge the tribunal's jurisdiction to make any award.
12. Whilst it is certainly a pity that the true position was not outlined to the tribunal (and also to the Claimant) both those complaints are wholly unjustified:
a. As regards the timing of the Defendant's notification of their application to the Committee some 2 days after the rejection of enforcement proceedings by the DIFC Courts, the annulment proceedings had in fact been issued over 2 months earlier without any prompting by the DIFC Courts.
b. As regards the suggested ambush in regard to jurisdiction, the Order affords no basis for challenging the tribunal's entitlement to rule on the merits of the claim and issue an award nor is any such challenge made: the position is directly analogous to the jurisdiction of the Dubai World Tribunal
Tribunal
in relation to arbitration provisions: seeHedley International Emirates Contracting LLC v. Nakheel PJSC(DWT/0017/2011 22 June 2011).
13. The Claimant's irritation with the unexpected and unheralded invocation of the Order led to a vigorous application for the present hearing to be held in public despite the fact that it involved (as I held) an "arbitration claim" within the meaning of RDC43.2. Indeed almost half of the Claimant's skeleton was devoted to the topic. Having heard full argument on the topic, I ordered that the hearing be in public. It struck me that the issues were of general public importance particularly against the background of an Order that had not been published and was thus not readily in the public domain.
14. The first point taken by the Claimant is just that: they were unaware of the Order because it was not published and that lack of "public issuance" rendered the Order ineffective. I reject this submission. The decision of the Court
Court
of Cassation in Civil Appeal No. 219-2007 is determinative of this point. Laws include decrees or directives whether written or oral. Publication in the official Gazette is only an administrative step. All Orders come into force on the date of issuance. In that respect it should be noted that the DIFC Courts have on previous occasions enforced the same Order: seeGraff Gesellschaft Von Architekten v. Zabeel(CCFI 7 January 2013).
15. Secondly it was submitted that the application fell outside the terms of the Order. This in my judgment is not arguable. Art. 3 (as amended) prohibits the DIFC Courts from considering any applications within the competence of the Committee. That competence includes both the hearing of any claims against Zabeel and the issuance of orders compelling the performance of an act. A claim for enforcement of an award falls squarely within the language of the Order: see e.g. the scope of "claims" as set out inLimitless LLC v. Hedley International Contracting LLC(DNT 16 October 2012) para. 16.
16. It is to be noted that a very similar Order or Decree was issued in December 2009 in regard to the affairs of Amlak Finance. That Order was accompanied by an Explanatory Memorandum in regard to arbitration. The memorandum had the following comments as a matter of interpretation:
a. That arbitration proceedings fall outside the scope of the Decree and shall continue.
b. That by virtue of Art. 2, the committee "shall be empowered to endorse the arbitrator's awards or to nullify them".
17. Equally, in my judgment it is not arguable that the common ground established in the course of the arbitration that the DIFC Courts had jurisdiction over matters of enforcement constituted a submission to the DIFC Courts or a waiver of the prohibition in Art. 3 of the Order. The jurisdiction of the DIFC Courts cannot be extended by agreement so as to override the terms of the Order: seeHardt v. DAMAC (DIFC) Co. Ltd(CFI 036/2009, 31 March 2010). The further submissions by the Claimant by reference to principles of estoppel take the matter no further:
a. There was no representation of fact.
b. There was no reliance: I am unable to accept that the arbitration proceedings would not have been pursued if the Claimant had been aware or told of the Order.
18. Even if there was a common misunderstanding there is no basis upon which it can be contended that a promise or even an agreement not to invoke the provision of the Order accords jurisdiction on the DIFC to act in substitute for the Committee. The DIFC Courts would in such circumstances have had to take the point of its own motion.

Issued by:
Natasha Bakirci
Assistant Registrar
Date: 28 November 2013
At: 3pm





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URL: http://www.bailii.org/ae/cases/DIFC/2013/cfi_016.html