17 January 2019

KWM triumph results in a landmark judgment and enhancements to DIFC Court rules

KWM’s Dubai team led by Tim Taylor QC and Daniel Xu, have successfully defended a contempt of court application made against seven respondents, of whom four were KWM’s clients. Apart from vindicating our clients, the land-mark judgment gave rise to some practical improvements to DIFC Court rules and procedures as set out below.

Two important points of practice have arisen from the recent judgment of Justice Sir Richard Field in VIH Hotel Management Ltd v Assas Opco Limited & Ors [2017] ARB 005 as to the scope of the DIFC Courts’ contempt jurisdiction.

First, there is the need to adjust the form of penal notice found in Schedules A and B to Part 25 of the RDC (being a freezing order and search order respectively) to remove the reference to imprisonment (which will also bring it into line with the form of notice in committal applications found at Schedule A to Part 52 of the RDC). The current form of penal notice inaccurately implies that the DIFC Court has the power to imprison a party who knowingly helped a person subject to an injunction to breach that injunction. The penal notice should instead reflect that the Court has power to refer the matter to the Dubai Attorney General.

The specific change needed is to replace “IMPRISONED” in the penal notice with “REFERRED TO THE ATTORNEY GENERAL OF DUBAI”.

Second, when freezing orders, and in appropriate circumstances other forms of injunction or order, are made by the DIFC Courts, which are to operate outside the territorial bounds of the DIFC, including for example in “onshore” Dubai, then the parties preparing the order should include the Baltic proviso in paragraph 19 of the current standard form freezing order (found at Schedule A to Part 25 of the RDC, which omits the proviso).

A suitably adapted form of the Baltic proviso (as found in the Annex to Part 25 of the CPR) would be:

“[For worldwide injunction]
[●]. Assets located outside the DIFC
Nothing in this order shall, in respect of assets located outside the DIFC, prevent any third party from complying with –

(1) what it reasonably believes to be its obligations, contractual or otherwise, under the laws and obligations of the jurisdiction in which those assets are situated or under the proper law of any contract between itself and the Respondent; and

(2) any orders of the courts of that jurisdiction, provided that reasonable notice of any application for such an order is given to the Applicant’s legal representatives.”

For further information please contact the Middle East dispute resolution team.

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