Claim No: CFI 099/2021
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
MOHAMMED SADIYYAH
Claimant
and
(1) KHATIB & ALAMI
(2) KHATIB & ALAMI PARTNERS PTD LTD
Defendants
ORDER WITH REASONS OF JUSTICE WAYNE MARTIN
| Hearing : | 10 May 2022 |
|---|---|
| Counsel : | Sarah Malik instructed by SOL International Ltd on behalf of the Claimant Tom Montagu-Smith QC instructed by Al Tamimi and Company on behalf of the Defendants |
| Judgment : | 14 June 2022 |
UPON reviewing the Defendants’ Application No. CFI-099-2021/1 dated 18 January 2022 contesting the DIFC Courts’ jurisdiction
AND UPON reviewing the Claimant’s evidence in answer to the Application dated 31 January 2022
AND UPON reviewing the Defendants’ evidence in reply dated 29 March 2022
AND UPON reviewing the Defendants’ Application No. CFI-099-2021/3 dated 30 March 2022 for permission to adduce expert evidence
AND UPON reviewing the Claimant’s and Defendants’ skeleton arguments dated 9 May 2022
AND UPON hearing Counsel for the Claimant and Counsel for the Defendants at a hearing on 10 May 2022
IT IS HEREBY ORDERED AND DECLARED THAT:
1. The Defendant’s application for permission to adduce expert evidence is granted.
2. Service has not been validly effected on either Defendant.
3. On the evidence currently before the Court, the Court has jurisdiction to entertain the claim pursuant to Article 5(A)(1)(b) of the JAL.
4. The parties have agreed that the courts of Beirut, Lebanon are to have jurisdiction to determine all disputes arising under the GSA to the exclusion of the jurisdiction of all other courts, including this Court and, on the evidence currently before this Court, there is no reason why the Court should decline to enforce that agreement and permit the proceedings commenced by the Claimant to continue in this Court.
5. The proceedings will be stayed until further order.
6. The Claimant shall pay the Defendants’ costs of the proceedings to date to be assessed by the Registrar if not agreed.
Issued by:
Ayesha Bin Kalban
Deputy Registrar
Date of issue: 14 June 2022
Time: 12pm
SCHEDULE OF REASONS
Summary
1. The Claimant, Mr Mohammed Sadiyyah, commenced proceedings in this Court claiming USD 10,940,815, being monies which he asserts the Defendants, Khatib & Alami and Khatib & Alami Partners Ptd Ltd, are obliged to pay him pursuant to a written agreement described as a “Global Settlement Agreement” (the “GSA”) executed by the parties on 18 April 2019. Following the purported service of the Claim Form, after entering an acknowledgement of service but before taking any other substantive step in the proceedings, the Defendants applied for orders setting aside the purported service of the claim form on each of them and for a declaration that this Court has no jurisdiction to try the claim, or in the alternative, if the Court has jurisdiction, for an order that the Court should not exercise that jurisdiction and that the proceedings should therefore dismissed.
2. The principal arguments advanced in support of the Defendants’ application are:
(a) Service was not validly effected on either Defendant;
(b) The claim does not come within any of the “gateways” to the jurisdiction of this Court under Article 5 of the Judicial Authority Law (“JAL”);1
(c) The parties have agreed, in the GSA, that the Courts of Beirut, Lebanon are to have jurisdiction to determine any disputes arising under the GSA to the exclusion of all other courts, including the DIFC Courts; and
(d) If, which is disputed, the Court has a discretion to decline to enforce the exclusive jurisdiction agreement, that discretion should not be exercised in the circumstances of this case.
3. For the reasons which follow, I have concluded that:
(a) Service has not yet been validly effected on either Defendant;
(b) On the evidence presently before the Court, the circumstances of the case fall within the jurisdiction conferred upon the Court under Article 5(A)(1)(b) of the JAL;
(c) The GSA, on its proper construction, contains a provision by which the parties have agreed that the Courts of Beirut, Lebanon have jurisdiction to determine disputes arising under the GSA to the exclusion of all other courts;
(d) Assuming that this Court has a discretion to decline to enforce the exclusive jurisdiction agreement, the Claimant has failed to establish the “strong case” required to justify the exercise of that discretion.
As this Court has jurisdiction, the proper course is to stay these proceedings indefinitely rather than dismiss them, against the contingency that events may occur which render it appropriate for this Court to exercise its jurisdiction. Obviously before the Court could do that the Claimant must effect valid service.
The Claim
4. The proceedings in this Court were commenced on 9 May 2022 when a Claim Form and Particulars of Claim (the “Particulars”) were filed. In the Particulars it is asserted that the Claimant is a Palestinian national residing in the Emirate of Sharjah, and that the First Defendant, Khatib & Alami, is a company registered in the Republic of Lebanon, and the Second Defendant, Khatib & Alami Partners Ptd Ltd is a company registered in Singapore.
5. In the Particulars the Claimant asserts that he was employed by both Defendants together, between 1972 and 2019, ultimately holding the position of General Manager and Executive Vice President of the business conducting operations in the UAE and other countries in the Middle East on behalf of the Defendants. The Claimant was said to be a shareholder in the Defendants.
6. The Claimant asserts that on 24 April 2017 he decided to retire and advised the executive committee managing the businesses of the Defendants of his intention to do so2. The Claimant asserts that he was asked by representatives of the Defendants to remain in his position until 30 April 2018.
7. The Claimant further asserts that on 18 April 2019 he and the Defendants signed the GSA, which obliged the Defendants to pay USD 12,097,439 for the purchase of his shares, plus USD 6,296,721 by way of profits due to the Claimant, both amounts to be paid in four instalments, together with AED 984,384 in final settlement of the Claimant’s employment entitlements.3
8. The Claimant asserts that after making some of the initial payments due under the GSA later than the dates specified for those payments, the Defendants have defaulted in the payment of the balance of monies due under the GSA4. The Claimant further asserts that by reason of the Defendants’ default, pursuant to cl.8.2 of the GSA all outstanding payments became immediately due and payable together with interest accruing at the rate of 12% per annum.5
9. The Claimant also relies upon communications from the Defendants which are said to constitute admissions that funds are due to the Claimant under the GSA.6
10. The Particulars also plead facts that are said to give rise to the jurisdiction of the Court under Art. 5(A)(1(b) of the JAL on the basis that the GSA was partly concluded and finalised within the DIFC.7The Particulars also include, quite inappropriately, extensive legal argument with respect to jurisdiction and annex, again inappropriately, a written opinion given by Mr Chehade Maalouf, a Lebanese lawyer, with respect to various aspects of the Lebanese legal system.
11. The assertions of fact which are said to confer jurisdiction upon the Court are best considered by reference to the evidence, rather than the pleading. The legal submissions, and Mr Maalouf’s opinion are best considered in the context of the legal issues relating to jurisdiction. Accordingly, the factual assertions and legal submissions relating to jurisdiction contained within the Particulars will be considered later in these reasons.
12. The Claimant asserts that the total amount remaining to be paid under the GSA is USD 10,940,815, together with interest at the rate of 12% per annum, a further amount totaling USD 3,504,081 at the time proceedings were commenced. In addition, the Claimant claims a further 7.125% per annum by way of interest on monies which he would have received and invested had the payments due under the GSA been made on the dates specified in that agreement – an amount totaling USD 2,080,548.26 at the time the proceedings were commenced. The Claimant seeks another USD 3,000,000 in respect of earnings he would have derived had he not been bound by the non-competition provisions of the GSA – relief to which he asserts an entitlement by reference to Lebanese law.8
13. The total amount claimed is a little under USD 20M, together with interest and costs.
The GSA
14. The GSA is dated 18 April 2019. The parties to the GSA are the Defendants, represented by Dr Najib Khatib, a Lebanese national, and the Claimant, a Palestinian national resident in Sharjah.
15. In the preamble to the agreement, it is recited that the Defendants carried on business in a partnership, and the Claimant held shares which constituted 12.44% of the issued capital of the Defendants. It is further recited that pursuant to the Memorandum of Association of the Defendants, upon cessation of his employment the Claimant was under an obligation to surrender his shares in return for payment of their value together with outstanding undistributed profits.9It is further recited that the value of the Claimant’s shares in the Defendants assessed by reference to its audited financial statements was USD 12,097,439.10
16. The operative provisions of the GSA include provisions for the payment of the money due to the Claimant in respect of his shares in the Defendants in four equal instalments, the first to be paid upon the date of signature of the agreement, the second on 1 June 2019, the third on 1 April 2020 and the fourth on 1 October 2020.11
17. Clause 3 of the GSA concerns unpaid profits due to the Claimant in respect of his ownership of his shares in the Defendants for the years 2014, 2015, 2016 and 2017. The clause contains a provision for the payment of those unpaid profits by four instalments payable between 15 August 2019 and 25 September 2021.
18. Clause 4 of the GSA records the parties’ agreement that the Claimant will be paid a lump sum amount of AED 984,384 in final settlement of his employment entitlements.
19. Clause 5 of the GSA contains provisions relating to the completion of the transfer of the Claimant’s shares in the Defendants, and clause 6 contains the non-competition provisions referred to in the Particulars.
20. Other terms of the GSA provide for mutual discharges and releases, a prohibition upon assignment, confidentiality, authority, assent, amendment and severability.
21. Clause 18 of the GSA provides:
Governing Law and Jurisdiction
18.1 This agreement shall be governed by and construed in accordance with laws of Lebanon.
18.2 All disputes that may arise between the parties hereto related to the implementation and execution of this agreement shall be referred to and settled by the Courts in Beirut – Lebanon.
22. Clause 8.2 of the GSA provides:
8.2 In the event, the First Party shall fail to make any payments to the Second Party as herein agreed, such payment shall bear an interest at the rate of 12% per annum. If the failure of the First Party shall continue for more than 30 days, then all outstanding amounts shall become due and payable immediately and the Second Party shall have the right to seek recovery of the amounts due plus the agreed interest in addition to compensation by the legal process subject to Article 847-856 of the Lebanese Civil Trials (Procedures) Law.
23. Further, clause 14 purports to exclude any potential operation of the rule of contractual construction known in English law as contra proferentum. It provides:
This agreement shall be construed as if the Parties jointly prepared it, and any uncertainty or ambiguity shall not be interpreted against any one Party.
Has service been effected?
24. As already noted, the First Defendant is incorporated in Lebanon, and the Second Defendant is incorporated in Singapore. Consistently with its status as an international commercial court, the rules of the DIFC Courts do not require the prior leave of the Court in order to effectively serve court process outside the DIFC or the UAE. However, RDC 9.53-9.54 provide:
9.53 Given the international nature of the DIFC, permission to serve process outside the DIFC is not required, but it is the responsibility of the party serving process to ensure he complies with the rules regarding service of the place where he is seeking to effect service.
9.54 If the Claim Form is to be served out of the DIFC or Dubai, it may be served by any method permitted by the law of the place in which it is to be served.
25. The Claimant asserts that service has been effected on the First Defendant in Lebanon, and on the Second Defendant in Singapore. In order to assess the efficacy of such service, it is necessary to consider the laws of the places in which service was purportedly effected.
The First Defendant
26. Article 398 of the Lebanese Civil Procedure Code provides:
Service of process shall be made by a process server. Further, it may be served by police or gendarmerie officers or a clerk.
27. The Certificate of Service filed by the Claimant asserts that service upon the First Defendant was effected by courier delivery on 13 December 2021. As couriers are not amongst the categories of person authorised to effect service of process by the laws of Lebanon, service was not effected by a method permitted by the law of the place in which the document was purportedly served, for the purposes of RDC 9.53 and 9.54.
28. The Claimant relies on Article 413 of the Lebanese Code of Civil Procedure which provides, relevantly:
In case the service is directed towards a person residing in a foreign country, it shall be done using guaranteed mail with notice of arrival or via the Lebanese Embassy or Consulate in the said country, or pursuant to local rules of procedures.
29. The Claimant submits that this provision:
(a) Authorises service by courier; and
(b) Impliedly authorises service within Lebanon by such means.12
Each proposition is, with respect, demonstrably incorrect.
30. There is no reference to service by courier within Article 413. The only methods of service out of the jurisdiction of Lebanon contemplated by the Article are guaranteed mail with production of notice of receipt, service by agents of the Lebanese Government, or service in accordance with local rules of procedure. As already noted, the local rules of procedure in Lebanon do not authorise service by courier, and none of the other methods of service specified in Article 413 was attempted by the Claimant.
31. In any case Article 413 is plainly concerned with service outside Lebanon, not service within Lebanon. The proposition that some inference can be drawn from a provision relating to service outside Lebanon with respect to the effective methods of service within Lebanon is illogical. It also ignores Article 398 of the Lebanese Civil Procedure Code, which is set out above.
32. It is clear that the First Defendant has not been validly served.
The Second Defendant
33. Order 7 of the Rules of Court of Singapore provides, relevantly, that service of a document upon an entity other than a natural person may be effected by leaving the document or posting it to the registered or principal office of the entity, or, if none exists, the last known place of business or the solicitor’s address of the entity.
34. The notice of service relating to the Second Defendant asserts that service was effected by delivery of the documents by courier to the offices of Khatib & Alami International Pte Ltd, 111 Northbridge Road, #13-02 Peninsula Plaza, Singapore. Accordingly, service will have been validly effected if that is either the registered or principal office of the Second Defendant, or its last known place of business.
35. The Claimant relies upon a witness statement provided by Mr Mahmoud Abuwasel, the Managing Partner of Wasel & Wasel, a law firm representing the Claimant. According to Mr Abuwasel, he researched “Khatib & Alami Singapore” and found an address listed on the official website which was the address at which service was effected by courier delivery.
36. However, the Second Defendant is not “Khatib & Alami Singapore” or “Khatib and Alami International Pte Ltd”– rather, the Second Defendant is Khatib & Alami Partners Ptd Ltd. It is apparent from the exhibits to the statement of Mr Abuwasel that the address which he derived from his internet search was the address of Khatib & Alami International Pte Ltd.
37. Mr Abuwasel performed what he describes as a “cross check” of the address by searching for information relating to the Second Defendant on a website named “opengovsg”. It is apparent from the exhibit to his statement that on this website, the address of the Second Defendant was given as “111 Northbridge Road, #24-03 Peninsula Plaza, Singapore”. This is the only evidence of the address of the office of the Second Defendant, as the other address found by Mr Abuwasel relates to a different entity. The documents were served at the address of that entity, and not at the address of the Second Defendant. Of course, I do not overlook the fact that both addresses are within the same building. However, from the evidence it can be inferred that the different entities occupy different units on different floors in that building. Although it is possible that process delivered to one of those offices might have been redirected to the other office, there is no evidence that took place, and the likelihood of its occurrence is entirely speculative.
38. Under the law of Singapore, the question which must be addressed is whether service was effected by delivery of the relevant documents to the principal or registered office of the Second Defendant, or its last known place of business. As the evidence fails to establish that fact, it follows that service has not been validly effected on the Second Defendant.
Conclusion - service
39. For these reasons service has not been validly effected on either Defendant. However, that conclusion wouldn’t sustain the order for dismissal of the proceedings sought by the Defendants, as further attempts at service could no doubt be made. It is therefore necessary to consider and resolve the more substantial issues relating to jurisdiction raised by the Defendants’ application.
Substantive jurisdiction – Article 5(A)(1)(b)
40. The first jurisdictional issue is whether, irrespective of the terms of the GSA, the Claimant has established facts and circumstances which confer jurisdiction upon this Court. The only gateway to jurisdiction upon which the Claimant relies is Art. 5(A)(1)(b) of the JAL which provides:
(1) The Court of First Instance shall have exclusive jurisdiction to hear and determine:
…
(b) Civil or commercial claims and actions arising out of or relating to a contract or promised contract, whether partly or wholly concluded, finalised or performed within DIFC or will be performed or is supposed to be performed within DIFC pursuant to express or implied terms stipulated in the contract.
41. There is no provision within the GSA relating to performance of its terms within the DIFC, nor is there any evidence that any of the obligations imposed by the GSA were to be performed or supposed to be performed within the DIFC. Accordingly, the question is whether there is evidence which establishes that the GSA was “partly or wholly concluded or finalised” within the DIFC. As there is no evidence that any party to the contract signed the document within the DIFC, that question comes down to the question of whether the evidence establishes that the GSA was partly negotiated within the DIFC.
42. The Defendants submit, correctly, that there is no express reference to contractual negotiations in Art. 5(A)(1)(b). They submit that the focus should be upon the place at which the contract was concluded or finalised. They submit that the word “partly” should not be applied to the conclusion or finalisation of a contract, and that in the original Arabic text, on its proper construction, the word “partly” only relates to contractual performance.
43. However, the Defendants appropriately accept that I am bound by the decision of the Court of Appeal in Al Khorafi v Bank Sarasin-Alpen (ME) Limited13and must therefore reject their submission which they reserve against the contingency of an appeal from this decision.
44. InAl Khorafia Court of Appeal observed:
The purpose of Article 5(A)(1)(b) is to bring within the exclusive jurisdiction of the DIFC Courts claims arising out of or relating to a contract or to the negotiation for a contract where the connecting factor is that the contract or intended contract had been wholly entered into or partly entered into in the sense of negotiated or had been wholly or partly agreed upon or wholly or partly performed by conduct or an event which had taken place within the DIFC. The essence of the provision is that the court is given jurisdiction where there has been relevant activity with regard to the contract or related to it within the DIFC.14
45. The Defendants accept that I am bound to apply this principle, but submit that I should do so in the context of the facts of Al Khorafi, where it was expressly found that a number of the individuals who “played an essential part in negotiating and finalising the contracts required to complete the contractual structure necessary”15performed those functions within the DIFC. They submit that those circumstances stand in stark contrast to the circumstances of this case, in which, if there was any contractual negotiation conducted by anybody within the DIFC (which the Defendants dispute) it was at best ephemeral or insignificant. In order to evaluate that submission, it is necessary to turn to the evidence.
46. The Claimant has provided two witness statements in support of his assertion that the Court has jurisdiction pursuant to Art. 5(A)(1)(b). In his first statement he states that in March 2018 Mr Faisal Alami, the Executive Vice-President of Finance at Khatib & Alami, provided him with a draft settlement agreement related to his retirement. According to the Claimant, after he made preliminary comments with respect to the draft agreement, Mr Alami advised him that Al Tamimi & Co lawyers would negotiate and finalise the agreement.
47. On 12 April 2018 the Claimant received an email from an assistant to Mr Al Tamimi, the senior partner of the firm, requesting that he confirm an appointment with Mr Al Tamimi on 23 April 2018 at the firm’s offices in the DIFC.16
48. In his second statement the Claimant asserts that he attended the meeting with Mr Al Tamimi on 23 April and discussed the draft document which had been prepared setting out the terms upon which would sever his relationship with the Defendants. He exhibits an email dated 23 April 2018 from another assistant to Mr Al Tamimi attaching “the slightly amended discharge letter for your review”. That email bears the address of the firm’s offices in the DIFC.
49. The attachment to that email is also exhibited to the Claimant’s second statement. It is a document which, when translated into English, is approximately 1.5 pages in length. It is headed “Clearance and Discharge”. It deals with the value of his shares in the Defendants, entitlements to unpaid profits and his employment entitlements. It also includes a non-competition provision. In other words, it contains provisions which correspond substantively to the longer and more complex document which became the GSA.
50. In his first statement Mr Sadiyyah asserts that he was referred to Mr Al Tamimi by the Defendants. However, direct negotiations between the Claimant and the Defendants broke down on 11 June 2018. By email dated 11 June 2018, Mr Faisal Alami advised the Claimant that the Defendants had engaged Mr Fady Ghanem from Tamimi & Co to act on their behalf to negotiate a settlement with the Claimant or legal counsel designated by him. Upon receipt of that email, later that day the Claimant sent an email to Mr Al Tamimi’s personal assistant in the following terms:
I want to check with you about Mr Fady Ghannoum (sic Ghanem) if he is with Tamimi & Co. I would like to schedule a meeting with him. Khatib and Alami inform me that they have appointed him to negotiate with me a settlement. As you are aware I have consulted with Mr Essam (Tamimi) earlier on the subject.
51. I infer from the terms of this email that in fact the Claimant considered that Mr Al Tamimi had been advising him, rather than the Defendants, when they met in April 2018. However, as the Claimant proceeded to meet with Mr Ghanem, knowing that he was acting on behalf of the Defendants, and, in due course, to engage other legal representation to act on his behalf in the negotiations with Mr Ghanem, it should also be inferred that the Claimant had no objection to Tamimi & Co acting on behalf of the Defendants, notwithstanding his earlier contact with Mr Al Tamimi.
52. In his first witness statement the Claimant asserts that he met with Mr Ghanem in June 2018 at “the Al Tamimi offices in the Maze Tower in the DIFC”. However, it is common ground that Al Tamimi’s offices in the Maze Tower are not in fact within the DIFC, but are in Dubai outside the DIFC. The question of whether the Claimant may have believed that the offices were within the DIFC is irrelevant to the proper application of Art. 5(A)(1)(b).
53. The Claimant’s written submissions proceed on the same erroneous basis, asserting that emails sent by Mr Ghanem with respect to the negotiations of the GSA were sent from an office within the DIFC. However, it is clear that those assertions are incorrect.
54. In due course the Claimant engaged Mr Maroun Matar, of the firm Dar Al Huqooq legal consultants to represent him in the negotiations relating to the terms of the GSA. The offices of that firm are within Dubai, outside the DIFC.
55. The evidence establishes that during the latter half of 2018 negotiations took place at times between the Claimant and the Defendants, and at other times through their legal representatives. It is clear that none of those persons were in the DIFC, or operating from the DIFC at the time those negotiations took place.
56. However, as the negotiations continued into 2019, it seems that Mr Al Tamimi came back into the picture and on 14 February 2019, and again on 28 February 2019, Mr Al Tamimi sent emails to the Claimant’s lawyer which contained detailed assertions with respect to the negotiations which were taking place. Each of those emails showed Mr Al Tamimi’s address as the offices of the firm within the DIFC – that is, on the 6th floor of Building 4.
57. The Claimant asserts that on 4 April 2019 he met with Mr Al Tamimi and Mr Ghanem at the offices of Al Tamimi in the DIFC in order to “finalise the pending issues pertaining to the settlement agreement”.17According to the Claimant:
We conducted the main negotiations at the Al Tamimi offices in the DIFC until we finally came to a resolve. I conceded a few matters that were in dispute between us …18
58. This evidence is confirmed by Mr Ghanem’s second witness statement, in which he observes that the Claimant’s lawyer was also present at the meeting in Al Tamimi’s DIFC offices on 4 April 2019. According to Mr Ghanem:
At this stage, the terms of the Global Settlement Agreement had already been substantially negotiated and agreed between the parties. What was discussed at this meeting were the two remaining issues of Mr Sadiyyah’s non-compete duration, and the related client list.19
59. However, it seems that the matters that were resolved at the meeting on 4 April 2019 were significant, as the emails exchanged thereafter show that the drafting process was substantially completed following that meeting. As Mr Ghanem observes, on 10 and 14 April 2019, Mr Al Tamimi and the Claimant’s lawyer exchanged further drafts of the agreement. The evidence does not establish whether Mr Al Tamimi was working from the DIFC offices of his firm at the time those emails were sent. Mr Ghanem states that Mr Tamimi told him that he could not recall where he was working at that time. However, no witness statement has been provided by Mr Al Tamimi, and in the absence of such a statement, there is a fair inference to the effect that Mr Tamimi was working from the DIFC offices of his firm, given that the meetings which he had with the Claimant took place in those offices, and those offices were shown as his address on the emails from him which are in evidence.
60. Significantly, by 10 April 2019, negotiations had reached the point at which the agreement was sufficiently “finalised” or “concluded” such that Mr Al Tamimi was able to send to the Claimant’s legal representative an email attaching a version of the GSA for execution by the parties. The email states, on its face, that it was sent from Mr Al Tamimi’s office in the DIFC.
Analysis
61. The fact that the first meeting between the Claimant and Mr Al Tamimi took place in the DIFC is not of particular significance to the jurisdictional issue because that meeting did not involve any negotiation of the agreement. To the contrary, as I have observed, on the better view of the evidence it appears to have been an occasion upon which Mr Al Tamimi provided advice to the Claimant with respect to the proposed agreement. However, the provision of that advice could not be characterised as a negotiation or as contributing to the conclusion that the GSA was partly or wholly concluded or finalised within the DIFC, nor is there any support for that proposition provided by the negotiations which took part in the latter part of 2018, all of which appear to have been conducted by persons located outside the DIFC.
62. However, the position changed in early 2019, when Mr Al Tamimi re-entered the picture and became an active participant in the negotiations, and indeed in the critical negotiations which resulted in agreement in principle being reached at the meeting on 4 April 2019. Significantly, it is common ground that this meeting took place in the DIFC. Further, the communications relating to the finalization and execution of the GSA following that meeting appear to have gone to and from Mr Al Tamimi at his office in the DIDC. Based on the principle enunciated by the Court in Al Khorafi, those negotiations, and their significance, provide the requisite connection between the agreement the subject of these proceedings and the DIFC in order to establish this Court’s jurisdiction under Art. 5(A)(1)(b).
63. However, as I have noted, the evidence relating to these issues is limited in a number of respects, including, significantly, the absence of any direct evidence from Mr Al Tamimi. None of the witnesses have been cross-examined on their evidence, which has not been subjected to the same degree of scrutiny as would be the case if this were a live issue at a trial. It is therefore appropriate to qualify this conclusion with the observation that it is made on the basis of the evidence presently before the court, so as to leave open the possibility that a different conclusion might be reached if different evidence were adduced at a trial of the substantive issues. However, this qualification should not be seen as an invitation to either party to re-open this issue on an interlocutory basis.
64. For these reasons, at least on the evidence as it currently stands, these proceedings fall within the gateway to jurisdiction provided by Art. 5(A)(1)(b) of the JAL. It follows that it is necessary to consider and determine whether this Court should decline to exercise that jurisdiction because of the parties’ agreement to confer jurisdiction upon the courts of Beirut, Lebanon by the express terms of the GSA.
The jurisdiction agreement
65. There are two provisions in Art. 5 of the JAL which are relevant to the issues arising from the jurisdiction agreement within the GSA. They are:
5(A)(2) The Court of First Instance may hear and determine any civil or commercial claims or actions where the parties agree in writing to file such claim or action with it whether before or after the dispute arises, provided that such agreement is made pursuant to specific, clear and express provisions.
(3) The Court of First Instance may hear and determine any civil or commercial or action falling within its jurisdiction if the parties agree in writing to submit to the jurisdiction of another court over the claim or action but such court dismisses such claim or action for lack of jurisdiction.
66. Jurisdiction agreements falling within subparagraph (2) above are commonly referred to as “opt-in agreements”, whereas agreements falling within the scope of subparagraph (3) above are commonly referred to as “opt-out agreements”.
67. Agreements in the former category are expressly qualified by the requirement that they must be “made pursuant to specific, clear and express provisions”. Although agreements falling within the latter category are not subject to the same express qualification, there is authority for the proposition that an opt out agreement should satisfy the same requirements as an opt in agreement.
68. However, it is difficult to see what practical effect the requirement that an agreement be “made pursuant to specific, clear and express provisions” has, in relation to either an opt in or an opt out agreement. In that regard I respectfully agree with the observations made by Justice Sir Jeremy Cooke in Sunteck Lifestyles Limited v Al Tamimi Company Limited and Anor.[2017] DIFC CFI-048." data-toggle="tooltip" data-placement="top">20
69. In that case the Judge observed:
At the end of the day, it would be nonsensical to conclude that the parties had agreed to the jurisdiction of the DIFC Courts, as opposed to the onshore courts but that the words were not sufficiently “specific, clear or express” to amount to an agreement for the purposes of Article 5(A)(2) of the amended JAL, with the result that the matter would have to be determined in the onshore courts. … Once the clause has been construed the Court reaches its conclusion which in itself means that the words used are specific enough, clear enough and express enough for that conclusion to be reached. … If the parties have agreed to the jurisdiction of the DIFC Courts, on the proper construction of the jurisdiction clause, the agreement is,ex hypothesi, sufficiently specific, clear and express.21
70. I respectfully agree with these observations, which correctly focus attention upon the proper construction of the words used by the parties in their agreement with respect to jurisdiction.
Jurisdiction agreements – general legal principles
71. As noted above, the GSA expressly provides that it “shall be governed by and construed in accordance with laws of Lebanon”.22However, neither party has made any attempt to adduce evidence with respect to the laws of Lebanon relating to the construction of contracts in general, or jurisdiction agreements in particular. Rather, the submissions of the parties appear to proceed on the assumption that the clause specifying the application of the laws of Lebanon to the construction of the GSA does not exist, and that the construction and effect of the jurisdiction agreement in the GSA should be determined by the application of principles of English law. In the circumstances, the Court is left with no practical alternative other than to proceed upon the assumption adopted by both parties, notwithstanding its apparent conflict with the express provisions of the GSA.
72. Under English law, agreements by which parties identify a particular court which is to have jurisdiction to resolve disputes arising under that agreement may be broadly categorised as falling within one or other of two classes – namely, the class where the jurisdiction is to be exclusive of the jurisdiction of all other courts, and the class in which the jurisdiction of the nominated court is not to exclude the jurisdiction of other courts. The distinction between the two classes is succinctly explained in Joseph,Jurisdiction and Arbitration Agreements and their Enforcement:23
An exclusive jurisdiction agreement gives rise to the mutual right and obligation to refer disputes that fall within the scope of the clause to the identified court. This is to be contrasted with a non-exclusive jurisdiction agreement, which is an agreement by one or more contracting parties to submit to the jurisdiction of one or more identified courts. A non-exclusive jurisdiction agreement does not create a contractual obligation to bring proceedings in the identified court or courts.
73. Applying the dubious assumption that the proper construction of the jurisdiction agreement in the GSA should be determined by the application of principles of English law, those principles are relatively well settled and enunciated in well-known decisions such asArnold v Britton,[2015] AC 1619." data-toggle="tooltip" data-placement="top">24andMarks & Spencer Plc v BNP Paribas Securities.[2015] UKSC 72." data-toggle="tooltip" data-placement="top">25The principles are sufficiently well-known to require no elaboration in these reasons. It is sufficient to observe that the principles include the following:
• The task of the Court is to identify the objective intention of the parties by reference to the words which they have used, and the subjective intentions of the parties will generally be irrelevant in the absence of a claim for rectification;
• The objective intention of the parties will be ascertained by reference to the meaning which a reasonable person having all the background knowledge which would have been available to the parties would have drawn from the words; and
• The meaning of the words is to be assessed in their documentary, factual and commercial context.26
74. Continuing with the same dubious assumption with respect to the applicability of English law, particular legal principles underpinning the proper construction of jurisdiction agreements have been suggested. So, the author of Joseph contends:
In each case the courts will construe the contract and look for words giving rise to a transitive obligation – in other words, the positive obligation to refer disputes as opposed to the intransitive obligation of a party to consent or submit to the jurisdiction. This can sometimes be inferred by use of the expression “shall”. It is not necessary for the parties to use the expression “exclusive jurisdiction”; this would amount to an inappropriate surrender to formalism. …
Where parties agree to submit disputes to an identified court or submit disputes to the jurisdiction of such a court then, as a matter of construction, an English court is likely to conclude that an exclusive jurisdiction agreement has been effected.27
75. A number of cases are cited in support of these propositions, includingStandard Steamship Owners Protection & Indemnity Association (Bemuda) Ltd v Gann;28British Aerospace v Dee Howard;29andContinental Bank NA v Aekos.30
76. In the latter case the Court approved a passage from the 12th ed of Dicey & Morris, The Conflict of Laws to the effect that the question is “simply whether on its true construction the clause obliges the parties to resort to the relevant jurisdiction, irrespective of whether the word ‘exclusive’ is used.”31The Court went on to observe:
In our judgment it would be a surrender to formalism to require a jurisdiction clause to provide in express terms that the chosen court is to be the exclusive forum.32
77. However, the Court went on to express doubt with respect to the significance of the distinctiondrawn by the author of Joseph between clauses which are to be construed in a transitive sense and clauses which are to be construed in an intransitive sense.33
78.Doubthas also been cast upon the significance of this distinction in the most recent edition of Dicey & Morris.34Referring to the cases cited in Joseph, the authors observe:
By contrast, an occasionally used rule of construction, that a clause is exclusive if transitive in form (ie the parties submit disputes), but non-exclusive if intransitive ie the parties submit (themselves), would appear to have practically nothing to recommend it.35
79. In thefootnoterelating to that proposition, the authors observe:
Not least because if the parties submit, they only do so for the purpose of having disputes resolved, with the result that the distinction may be grammatical but is practically illusory. The suggestion that the parties drafting the contract, who may not have had English as their first or second language, were alert to this supposed rule is not credible.36
80. However, although the authors of the texts to which I have referred disagree on the significance of the distinction between the transitive and the intransitive form, they agree that “the true question is whether on its proper construction the clause obliges the party to resort to the relevant jurisdiction, irrespective of whether the word “exclusive” is used”.37Further, as Senior Counsel for the Defendants pointed out in oral argument,38the effect of diminishing, or abandoning the distinction between the transitive and intransitive form is to broaden the range of exclusive agreements by including those which adopt the intransitive form, provided that, on their proper construction, they impose an obligation on the parties to resort to the specified jurisdiction.
81. As the critical question is whether the words used in the jurisdiction agreement convey to a reasonable reader the meaning that the parties are obliged to submit their disputes to a particular court, the use of imperative language in the relevant clause will be of particular significance. So, in the cases cited by Joseph and referred to above, the use of the word “shall” has consistently resulted in the court construing the relevant agreement as an agreement to the effect that the identified court will have jurisdiction to the exclusion of all other courts.
82. The words which the parties have used in cl. 18.2 of the GSA are unequivocally imperative in character. The clause expressly applies to “all disputes that may arise”, and prescribes that those disputes “shall be referred to and settled by the Courts in Beirut- Lebanon”. On the dubious assumption that the principles of English law to which I have referred apply to the proper construction of this provision, there can be little doubt that it obliges the parties to submit any and all disputes that may arise under the GSA to the jurisdiction of the courts in Beirut, Lebanon, to the exclusion of all other courts.
83. The Claimant made no serious attempt to challenge the application of these legal principles to the words used in cl. 18.2 in either written or oral submissions, apart from referring to the passages in Dicey & Morris which I have set out above. Moreover, as I have observed, the doubt which those passages cast upon the significance of the distinction between the transitive and intransitive form of jurisdiction agreements serves only to expand the potential range of agreements conferring exclusive jurisdiction upon the specified court and does not assist the Claimant’s argument. However, the Claimant raised three matters in an attempt to resist the conclusion that the parties have agreed that the courts of Beirut are to have exclusive jurisdiction to determine any disputes arising under the GSA.
84. First, the Claimant observes, correctly it seems, that the proposition that cl. 18.2 confers exclusive jurisdiction upon the courts of Beirut was not advanced on behalf of the Defendants in the earlier communications between the parties. However, that observation is irrelevant to the proper construction of the clause under the principles of English law which the parties have assumed for the purposes of their argument.
85. Second, the Claimant asserts, in both his statements, that he believed that the effect of the clause was to confer non-exclusive jurisdiction on the courts of Beirut. However, he does not refer to or identify any statement, written or oral made by or on behalf of the Defendants which gave rise to that understanding. Rather, he attributes his belief to the course of negotiations between the parties, which is the third matter raised on behalf of the Claimant, and to which I will shortly refer.
86. Under the principles of English law which the parties have assumed for the purposes of their competing contentions, the Claimant’s subjective belief as to the effect of the clause is irrelevant. It could be relevant if the Claimant was advancing a claim for rectification of the GSA, and there was evidence to the effect that the Defendants held the same belief, and one or other of the parties had expressed that belief to the other, but the Claimant does not advance an argument along those lines. Accordingly, the Claimant’s assertions with respect to his subjective beliefs do not advance his argument.
87. Third, it is submitted that an inference can properly be drawn from the course of the negotiations relating to the jurisdiction agreement, and in particular, an earlier draft of the agreement produced by Mr Ghanem on 7 July 2018 in which it was proposed that the parties expressly agree “to submit to the exclusive jurisdiction of the courts of DIFC”. The Claimant asserts that when the clause was redrafted to refer to the courts of Beirut, without describing the jurisdiction of those courts as “exclusive” he understood that the clause was conferring non-exclusive jurisdiction upon those courts. On behalf of the Claimant it is submitted that, irrespective of his subjective intention, an inference to that effect can be drawn which can be used as an aid to the construction of the clause.
88. I have already referred to the irrelevance of the Claimant’s subjective beliefs. No principle of law or authority has been cited on behalf of the Claimant to support the proposition that the previous draft of the GSA can be used as an aid to the construction of the executed version in the manner for which the Claimant’s counsel contend. There is some authority for the proposition that where the parties have expressly rejected a particular form of words in the course of their negotiations, evidence of that fact is admissible in relation to a purported construction of the words actually used which would have the effect which the parties expressly rejected. However, that is not this case.
89. It is clear from the authorities to which reference has been made above that the express inclusion of the word “exclusive” is not an essential element of a clause which can be construed as having the effect of conferring exclusive jurisdiction on a court. The authorities establish that the objective intention of the parties can be derived from the use of imperative language which obliges the parties to submit any and all disputes to the identified court, in the absence of the express description of the jurisdiction as “exclusive”. That is precisely what these parties have done in the words they have used in clause 18.2 of the GSA.
90. In those circumstances, the fact that the word “exclusive” was used in an earlier draft, but not used in the later draft is, at best, ambivalent. While it might be argued that the omission of the word from a later draft supports the inference for which the Claimant contends, it might also be argued that the inclusion of the word in the earlier draft connotes that the parties were always contemplating that their agreement would identify the particular court which was to have exclusive jurisdiction for the resolution of their disputes, and all that changed between the drafts was the identification of that court. Given the ambivalent effect of the change in the use of language, neither the facts nor any identified principle in English law support the Claimant’s contention.
Exclusive jurisdiction - conclusion
91. For these reasons there can be little doubt that cl. 18.2 of the GSA contains an agreement which obliges the parties to submit all disputes arising in connection with the GSA to the jurisdiction of the courts of Beirut, Lebanon to the exclusion of all other courts, including the DIFC Courts.
Should the Court decline to enforce the exclusive jurisdiction agreement?
92. In AlKhorafi, dealing with a submission that the Court should not enforce an exclusive jurisdiction agreement, the Court of Appeal observed:
The proper approach to this in English law, subject to minor modifications was laid down 42 years ago by Brandon J inThe Eleftheria.39His judgment was approved and adopted by the House of Lords inDonohue v Armco.[2002] 1 Lloyds Rep 425." data-toggle="tooltip" data-placement="top">40
The overriding principle is that the English courts will give effect to a foreign jurisdiction clause unless “strong cause” can be shown why effect should not be given to it. At page 242 the principle was stated in the following passage:
The principles established by the authorities can, I think, be summarised as follows:
(i) Where plaintiffs sue in England in breach of an agreement to refer disputes to a foreign court, and the defendants apply for a stay, the English court, assuming the claim to be otherwise within its jurisdiction, is not bound to grant a stay but has a discretion whether to do so or not. (ii) The discretion should be exercised by granting a stay unless strong cause for not doing so is shown. (iii) The burden of proving such strong cause is on the plaintiffs. (iv) In exercising its discretion, the court should take into account all the circumstances of the particular case. (v) In particular, but without prejudice to (iv), the following matters where they arise, may properly be regarded:
(a) in what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign courts;
(b) whether the law of the foreign court applies and, if so, whether it differs from English law in any material respects;
(c) with what country either party is connected, and how closely;
(d) whether the defendants genuinely desire trial in the foreign courts, or are only seeking procedural advantages;
(e) whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would – (i) be deprived of security for that claim, (ii) be unable to enforce any judgment obtained, (iii) be faced with a time bar not applicable in England, or (iv) for political, racial, religious or other reasons be unlikely to get a fair trial.
It is right to add that in subsequent decisions the ‘strong cause’ hurdle for not enforcing a foreign jurisdiction clause has been set at a high level. The underlying approach can be summarised by saying that the parties should be kept to their bargain unless to do so would or might cause some serious injustice to one party or the other or both. Thus, in The Eleftheria itself, Brandon J declined to enforce the foreign jurisdiction clause mainly because of the plaintiffs declared intention to join in the pending English proceedings a party who was not bound by the clause, thereby giving rise to the risk of inconsistent findings as between two parties against whom the claims were brought.41
93. In AlKhorafithe Court of Appeal exercised its discretion to decline to enforce the exclusive jurisdiction agreement on the ground that if there were separate trials in DIFC and Switzerland there would unquestionably be a significant risk of inconsistent findings.
94. The Defendants submit that Al Khorafi was wrongly decided and should not be followed. However, they accept that I am bound to apply the principles enunciated in that decision and make the submission, without elaboration, in order to preserve their rights should there be an appeal from my decision.
95. The Defendants submit that the decision in Al Khorafi is not inconsistent with recognition by the DIFC Courts of the importance of enforcing exclusive jurisdiction agreements. So in Barclays Bank v Suhail[2021] DIFC CA003 (10 February 2021)." data-toggle="tooltip" data-placement="top">42the Court of Appeal held that a judgment obtained in another jurisdiction in breach of an exclusive jurisdiction agreement in favour of the DIFC Courts should not be recognised and enforced in the DIFC. The Defendants submit that exclusive jurisdiction agreements in favour of foreign courts should be given equivalent recognition and respect by DIFC Courts. I accept that submission.
96. The Defendants further submit that, consistently with this approach, the cases recognise that “overwhelming, or at least very strong reasons” must be shown before a Court will depart from the general principle upholding the parties to their contractual choice of jurisdiction. So, inAntec International Ltd v Biosafety USA Inc2006 EWHC 47." data-toggle="tooltip" data-placement="top">43the Court observed:
Although, in the exercise of its discretion, the court is entitled to have regard to all the circumstances of the case, the general rule is that the parties will be held to their contractual choice of English jurisdiction unless there are overwhelming, or at least very strong, reasons for departing from this rule.44
97. The Defendants also submit, and the Claimant accepts45that the circumstances that were foreseeable by the parties at the time the agreement was entered into are excluded from consideration when the Court assesses whether very strong reasons have been shown for allowing the parties to depart from their bargain. As the Court observed inAntec:
Such overwhelming or very strong reasons do not include factors of convenience that were foreseeable at the time the contract was entered into (save in exceptional circumstances involving the interests of justice); and it is not appropriate to embark upon a standardSpiliadabalancing exercise. The defendant has to point to some factor which it could not have foreseen at the time the contract was concluded. Even if there is an unforeseeable factor or a party can point to some other reason which, in the interests of justice, points to another forum, this does not automatically lead to the conclusion that the court should exercise its discretion to release a party from its contractual bargain.46
98. Notwithstanding the reference to factors commonly cited in the consideration offorum non conveniensinThe Eleftheria, cited inAl Khorafi, other cases establish that those factors are of limited relevance where the parties have agreed that a particular court should have the exclusive jurisdiction to determine their disputes. This principle is recognized in the passage fromAnteccited above, and by the texts – so, for example, inJosephit is observed:
… in the field of jurisdiction agreements, theforum non conveniensdiscretion has become highly circumscribed by precedent and the Brussels I Regulation Recast. Special considerations apply and the principles set out in the House of Lords inSpiliada[1987] AC 460." data-toggle="tooltip" data-placement="top">47are of limited relevance. As is discussed in this chapter, the traditional view is that English courts will keep the parties to their bargain on jurisdiction unless strong reason is shown.48
99. The same author observes:
At common law, notwithstanding the general discretion to stay proceedings or decline jurisdiction, the English courts will uphold a jurisdiction agreement and keep the parties to their bargain unless strong cause or strong reason is shown why this should not be so. The requirement of showing strong cause or strong reason has been interpreted as requiring something which would be ‘overwhelming’. … The policy of keeping parties to their bargain has in the past been applied equally to jurisdiction agreements in favour of a foreign court and in favour of the English courts. … The agreement on jurisdiction itself places the burden of persuasion on the party that seeks either to establish or to avoid its terms. … Strong cause, however, must be shown to override such an agreement.49
100.Josephalso observes:
The strong cause or reason test has been applied consistently over the last 40 years and has been expressly endorsed in the House of Lords in Donohue v Armco.50
101. Further, it is significant to an international court such as this that:
The strong cause test ‘or close equivalent’ has also been applied widely in common law countries. As Lord Bingham noted in Donohue v Armco, a similar approach has been adopted in the United States, Canada, Australia and New Zealand. The Courts in Singapore, Hong Kong and Malaysia have also adopted a similar approach. The differences, such as they are, are mainly found in the application of the principle to the particular circumstances and the willingness or otherwise of judges to find strong cause by reference to the particular exigencies of the case.51
102. The distinction between conventional forum non conveniens factors and considerations relevant to the exercise of a discretion to not enforce a jurisdiction agreement are emphasised in the following passage from Joseph:
His Honour Judge Chambers QC in JP Morgan Securities Asia Private Ltd v Malaysian Newsprint Industries SDN BHD considered, rightly, it is suggested, that the court was ‘not concerned’ with that minute evaluation of the witnesses, documents, law and locality that characterises the standard forum non conveniens disputes. … A comparison between the general attributes of the different venues ought not be undertaken. Outside the realm of jurisdiction clauses, matters such as the recovery of costs, or court delay are frequently taken into account. With choice of court agreements however, it would be an exceptional case which would permit courts to take into account factors such as costs or delay in the chosen forum. Except in a very rare or exceptional case a party cannot be heard to complain of these types of features in the courts that the parties by contract have chosen … Mr Justice Collins (as he then was) in Bass Capital Funding Corp v Medfinco Ltd after reviewing this line of authority (which applies equally to exclusive and non-exclusive jurisdiction clauses) summarised the point by stating that the traditional forum non conveniens factors will have little or no role to play in overriding a choice of jurisdiction, particularly where it is to be inferred that the parties have chosen a neutral forum.52
It should be noted that in this case it cannot be said that Beirut, Lebanon is a neutral forum.
103. The degree of likelihood of injustice which must be established by a plaintiff seeking to avoid the consequences of entering into a jurisdiction agreement was considered by the Privy Council inAK Investment CJSC v Krygz Mobil Tel Ltd.[2011] UKPC 7; [2012] 1 WLR 1804." data-toggle="tooltip" data-placement="top">53The Board referred to decisions in which the criterion which must be satisfied was described as “the fact, if established objectively by cogent evidence, that the plaintiff will not obtain justice in the foreign jurisdiction”54and other decisions in which reference was made to theriskthat justice will not be done in the foreign jurisdiction. Their Lordships concluded that:
The better view is that, depending on the circumstances as a whole, the burden can be satisfied by showing that there is a real risk that justice will not be obtained in the foreign court by reason of incompetence of lack of independence or corruption. Of course, if it can shown that justice “will not” be obtained that will weigh more heavily in the exercise of the discretion in the light of all other circumstances.55
104. Their Lordships also observed that:
Comity requires that the court be extremely cautious before deciding that there is a risk that justice will not be done in the foreign country by the foreign court, and that is why cogent evidence is required. But, … there is no principle that the court may not rule.56
105. A similar observation was made by the Court of Appeal of England and Wales inDeripaska v Cherney.[2009] EWCA Civ 849." data-toggle="tooltip" data-placement="top">57Moore-Bick LJ observed:
Allegations of a kind that impugn the integrity of the institutions of a friendly foreign state should neither be made nor entertained lightly, but must be distinctly alleged and supported by positive and cogent evidence.58
Has the Claimant established strong reasons for not enforcing the jurisdiction agreement?
106. The Claimant’s skeleton argument proceeds upon the assumption that, notwithstanding the jurisdiction agreement, and even if it is an exclusive jurisdiction agreement, the same criteria are applied to its enforcement as those which apply to the determination offorum non conveniens. The authorities to which I have referred establish that this assumption is erroneous. It is therefore unnecessary to address the detail of the argument that was advanced on the basis of this erroneous assumption.
107. It is however appropriate to note that submissions based upon the assumption that the legal advisors to the parties will be called to give evidence relating to the negotiations which preceded the GSA, and the assertion that all relevant documents are likely to be located in the DIFC or Dubai appear inconsistent with the Claimant’s contention that his claim is a claim for a quantified debt which has not been disputed. The Defendants have not adopted any position in relation to the merits of the claim against them in the proceedings before this Court, and of course if they had, it might be argued that they had acquiesced in the jurisdiction of the Court. It follows that there is presently no reasonable basis upon which any assessment can be made of the ambit of factual controversy in relation to the dispute, and therefore of the location of the witnesses and documents likely to be required in any proceedings.
108. It follows that, in the circumstances of this case, and consistently with the authorities, the only basis upon which the Court could decline to enforce the exclusive jurisdiction agreement would be if the Claimant has established, by cogent evidence, that there is a real risk that justice will not be obtained in the courts of Beirut, Lebanon.
109. That is an issue appropriately addressed by expert evidence. The following Rules of Court apply to such evidence:
31.5 Expert evidence should be the independent product of the expert uninfluenced by the pressures of litigation.
31.6 An expert should assist the court by providing objective, unbiased opinion on matters within his expertise, and should not assume the role of an advocate.
31.13 No party may call an expert or put in evidence an expert’s report without the court’s permission.
110. Expert evidence with respect to the current circumstances in Lebanon was placed before the Court from two sources. The first is a document entitled “Legal Opinion of the Attorney/Chehade Maalouf” (the “Maalouf Opinion”) and the second is the report of Najib Hage-Chahine (the “Hage-Chahine Report”).
111. The Maalouf Opinion was attached as an exhibit to the Particulars filed at the time these proceedings were commenced. That course was inappropriate for at least two reasons:
(a) Particulars of Claim should comprise pleadings, not evidence; and
(b) The opinion was produced to the Court before any application was made for permission in accordance with RDC 31.13.
112. The Defendants object to the receipt of the Maalouf Opinion in evidence on the ground that the Court has not granted permission. Notwithstanding that objection, the Claimant has made no application for permission pursuant to RDC 31.13, but has nevertheless persisted in relying upon the contents of the opinion. Put more bluntly, the Claimant has simply ignored the express requirements of the Rules of Court.
113. As the Claimant has made no application for permission to put the Maalouf Opinion into evidence, it is unnecessary to express any view on the likely outcome of such an application, if it had been made. It is however, pertinent to observe that if such an application had been made, the facts that:
(a) Mr Maalouf does not assert that his opinions are independent of the Claimant or the Claimant’s lawyers who instructed him;
(b) No evidence has been adduced to establish the independence of Mr Maalouf from the Claimant or the Claimant’s lawyers who instructed him, and the Defendants have raised questions with respect to that independence; and
(c) Mr Maalouf’s opinion does not contain the customary acknowledgement of his awareness of the overriding duty to assist the Court by providing objective unbiased evidence on matters within his expertise, and his understanding that this duty overrides any obligation he may have to the party from whom he received instructions;
would have been relevant to its outcome.
114. In these circumstances the persistent refusal of the Claimant’s legal representatives to acknowledge and comply with the Rules of Court with respect to expert evidence should not be endorsed by receiving the Maalouf Opinion in evidence. However, against the contingency that there may be an appeal from this decision I will express my views in relation to the relevant assertions contained within the Maalouf Opinion as if it had been received in evidence, essentially for the purpose of showing that it would have made no difference to my conclusion.
115. By contrast the Defendants have applied for permission to present the Hage-Chahine Report. That report contains the usual assertions of independence and impartiality, an express acknowledgement of the overriding duty to assist the Court, and the further express acknowledgement that this duty overrides any obligation to the party from whom instructions had been received. The author of the report is clearly appropriately qualified to express the opinions contained within the report. As there is no reason why permission to adduce the report should not be granted, permission was granted and the report is received in evidence.
116. Consistently with the authorities to which I have referred, when evaluating the evidence relating to the justice system in Lebanon, it is important to distinguish between matters which appear to be endemic to that system, and which were therefore either known to or at least foreseeable by the parties at the time they agreed to confer jurisdiction upon the courts of Lebanon in April 2019, and circumstances which have arisen since then, and which were not foreseeable by the parties.
117. There are two significant circumstances which could not have been foreseen by the parties in April 2019, namely:
(a) The major explosion which occurred in the Port of Beirut on 4 August 2020, which had significant political and economic repercussions; and
(b) The impact of the Covid-19 pandemic, which commenced in early 2020 and which persists.
118. The Maalouf Opinion, and the Claimant’s submissions based upon it are somewhat unstructured and non-specific. Doing the best one can to categorise the issues raised, they are appropriately considered under the following headings:
(a) Delay;
(b) Independence/corruption; and
(c) The prospect that the Claimant’s judgment might be satisfied by a payment or payments in Lebanese pounds calculated by reference to an official exchange rate which very significantly overvalues the true value of such currency.
Delay
119. The Maalouf Opinion is replete with descriptions of the difficult working conditions experienced by the judiciary in Lebanon. However, the only specific assertion with respect to the impact which those conditions have upon the time which it takes to finalise cases before the courts is found in the following passage:
Justice in Lebanon has historically suffered from sluggish trials some cases taking several decades to resolve … on average, trials last for three years in Beirut and four years and three months in the Mount Lebanon region. There (sic the) reasons behind that are many, some are old and others new, resulting directly from the current crisis that the country is going through, but the result is the same: lengthy trials that ultimately weaken the right to a fair trial.59
120. There is a later reference in the Maalouf Opinion to “creating an atmosphere of depression among judges, court staff and lawyers, which constitutes a real threat to justice in Lebanon, especially by extending the duration of trials without end”.60But this view is expressed in such general and subjective terms as to be of no real weight.
121. Two observations may be made in relation to the specific assertions made by Mr Maalouf with respect to delay. First, the delay to which he refers appears to have been endemic within the Lebanese justice system “historically”. It follows that the delay of which he speaks was a feature of that system at the time it was selected by the parties in April 2019. It follows that it is not a matter properly taken into account in assessing whether the Court should decline to enforce the jurisdiction agreement.
122. Second, if (which is not clear) Mr Maalouf is referring to a period of three years in which to finalise cases in Beirut, that period could not be considered as inordinate. In this context the Defendants refer to Chellaram v Chellaram (no. 2),[2002] 3 All ER 17." data-toggle="tooltip" data-placement="top">61where a delay of between four and five years was not considered to be a factor properly taken into account in assessing whether England was the clearly appropriate forum.62
123. It follows that notwithstanding the evidence relating to a strike by some of the judiciary, and a strike by some of the members of the Bar Association of Lebanon, those matters do not appear to have had an impact upon delay to finalisation of cases which is relevant to the enforcement of the jurisdiction agreement.
124. The Hage-Chahine Report is supported by statistical data relating to the topic of delay. That data shows that between November 2019 and February 2022 the Court of Cassation Civil Chambers in Lebanon disposed of a higher number cases than were filed over that period – that is to say, notwithstanding the difficulties to which each of Mr Maalouf and Mr Hage-Chahine have referred, the Civil Court had a positive clearance rate, in the sense that it finalised more cases than it received.63
125. Significantly, Mr Hage-Chahine agrees with Mr Maalouf’s opinion that “on average trials last for three years in Beirut”.
126. In summary, the evidence establishes that:
(a) Delay in finalising cases in the courts of Beirut is not inordinate; and
(b) There has been no material increase in the time taken to finalise cases in the courts of Beirut since the parties agreed to confer jurisdiction upon those courts in April 2019.
Lack of independence/corruption
127. The Maalouf Opinion raises issues, expressed in very general terms, with respect to the independence of the judiciary in Lebanon from government interference, and the possibility of political intervention. Mr Hage-Chahine disagrees with the views expressed by Mr Maalouf on these topics, and refers to the various steps which have been taken to reinforce the independence of the judiciary in Lebanon.
128. Taking Mr Maalouf’s views at their highest, they do not assert any material change in relation to these features of the judicial system in Lebanon since the parties chose that system as the forum for the resolution of their disputes in April 2019. Further and in any event, on the evidence before the Court, there is no reason to believe that either executive government or political actors would have any reason to intervene or attempt to influence the outcome of proceedings brought by the Claimant against the Defendants in Lebanon.
129. Further, Mr Maalouf’s opinions lack the cogency required before this Court could appropriately make any findings with respect to the quality of the justice system in Lebanon, consistent with the principles of comity to which reference is made in the authorities.
The exchange rate issue
130. The GSA requires the Defendants to fulfil most of their financial obligations to the Claimant by making payments in US dollars. Mr Maalouf expresses the view that the courts in Lebanon would permit the Defendants to satisfy those obligations by paying the Claimant in Lebanese pounds, calculated by reference to an official exchange rate which values the Lebanese pound at an amount which is approximately 20 times greater than the rate which can be obtained in the marketplace. The Claimant submits that if required to proceed against the Defendants in the courts of Lebanon, the value of any judgment he receives in those courts is likely to be 95% less than the value of a judgment which he would obtain in this Court, denominated in US dollars.
131. If that proposition were made good, it would provide a strong reason for declining to enforce the jurisdiction agreement. Mr Maalouf does not suggest that there has been any change in this respect since the parties agreed that their disputes should be resolved by the courts of Lebanon in April 2019, but nevertheless the dramatic devaluation of the Lebanese pound since that time, and its consequences for the Claimant would constitute an exceptional circumstance which would justify this Court exercising a discretion to not enforce the jurisdiction agreement. However, Mr Hage-Chahine challenges Mr Maalouf’s opinion. In his report he provides a detailed and comprehensive analysis of the issues which arise under Lebanese law in relation to this topic by reference to statutory provisions and the decides cases, by contrast to the opinions by Mr Maalouf at a very generalised level.
132. In summary, Mr Hage-Chahine distinguishes between domestic contracts on the one hand and international contracts on the other. In relation to domestic contracts, in his view the law with respect to the question of whether a debtor may satisfy the debt by payment in Lebanese pounds instead of the currency nominated in the contract is unsettled. However, in relation to international contracts, in his view the law is entirely settled and not open to question, and is to the effect that obligations must be satisfied in the currency stipulated in the international contract. He cites two decisions of the Court of Cassation of Lebanon for that proposition, and those decisions are annexed to his report. Mr Hage-Chahine expresses the opinion that the courts of Lebanon would characterise the GSA as an international contract, for reasons which are explained fully in his report.
133. The Maalouf Opinion does not refer to the distinction between domestic and international contracts in relation to this issue, although it is clear from Mr Hage-Chahine’s report that this distinction is of considerable significance under the law of Lebanon. When the generality of the Maalouf Opinion is compared to the detailed reasoning and analysis contained within the Hage-Chahine Report, the opinions expressed in the latter report are compelling and must be accepted in preference to those expressed by Mr Maalouf.
134. Accordingly, the evidence fails to establish that the Claimant would suffer any disadvantage in terms of the currency in which judgment might be entered in his favour if he is required to comply with his agreement to submit any dispute arising under the GSA to the courts of Beirut for determination.
Conclusion in relation to enforcement of the jurisdiction agreement
135. For the reasons given, the Claimant has failed to establish strong reasons for this Court to exercise a discretion to fail to enforce the agreement by which he agreed that the courts of Beirut should have jurisdiction to determine all disputes arising under the GSA, to the exclusion of all other courts, including this Court. In particular, the Claimant has failed to adduce cogent evidence to establish that there is a real risk he would suffer injustice if required to abide by his agreement and pursue his claims against the Defendants in the courts of Beirut.
Overall conclusion and disposition
136. For the reasons given, it must be concluded that:
(a) The Claimant has not effected valid service of his claim on either Defendant;
(b) On the evidence presently before the Court, the Court has jurisdiction to entertain the claim pursuant to Article 5(A)(1)(b) of the JAL;
(c) However, by clause 18 of the GSA the parties have agreed that the courts of Beirut, Lebanon are to have jurisdiction to resolve any and all disputes arising under the GSA to the exclusion of the jurisdiction of all other courts, including the Courts of the DIFC; and
(d) The Claimant has failed to establish strong reasons why this Court should exercise any discretion which it may have to decline to enforce the exclusive jurisdiction agreement of the parties and permit proceedings brought in this Court to continue.
137. The Defendants seek orders dismissing these proceedings. However, it has been determined that the Court has substantive jurisdiction, and the deficiencies of service can no doubt be overcome if necessary. Further, it remains to be seen how the courts of Lebanon will respond if and when the Claimant commences proceedings in those courts. If those courts decline to exercise jurisdiction, Article 5(A)(3) of the JAL might be invoked, such that these proceedings could continue, subject to effective service. Further, it is possible that the current circumstances in Lebanon may change in the future, such that there may be good reasons for this Court declining to enforce the jurisdiction agreement. Accordingly, the proper disposition of these proceedings is to issue an indefinite stay, rather than to dismiss them. This course will also prevent any limitation issues arising, should it prove necessary and appropriate for the Claimant to invoke this Court’s jurisdiction at some time in the future.
Costs
138. On the evidence currently before the Court, these proceedings have been commenced in breach of cl. 18 of the GSA. That course was not justified and there is therefore no reason why the Claimant should not pay all the Defendants’ costs of the proceedings to date.
Orders
139. For these reasons the Court will:
(a) Declare that service has not been validly effected on either Defendant;
(b) Declare that on the evidence currently before the Court, the Court has jurisdiction to entertain the claim pursuant to Article 5(A)(1)(b) of the JAL;
(c) Declare that the parties have agreed that the courts of Beirut, Lebanon are to have jurisdiction to determine all disputes arising under the GSA to the exclusion of the jurisdiction of all other courts, including this Court and, on the evidence currently before this Court, there is no reason why the Court should decline to enforce that agreement and permit the proceedings commenced by the Claimant to continue in this Court;
(d) The proceedings will be stayed until further order; and
(e) The Claimant will pay the Defendants’ costs of the proceedings to date to be assessed by a registrar of the Court if not agreed.