The decision in Sandra Holdings created much debate when it was handed down on 6 September 2023. The decision was seen as a negative development for creditors who wished to utilise the DIFC Courts as part of an international enforcement strategy. It signalled a sharp turn in the previously pro-enforcement stance taken by the DIFC Courts, including in Lateef v Liela ARB 017/2020 (a case in which DWF had successfully obtained a DIFC worldwide freezing order in support of foreign proceedings).
On 26 November 2024, the DIFC CoA handed down the judgment in Carmon Reestrutura-engenharia E Serviços Técnios Especiais, (Su) LDA v Antonio Joao Catete Lopes Cuenda CA 003/2024. The case concerns a worldwide freezing order ("WFO"), which was initially granted against the respondent by the DIFC Court of First Instance ("CFI") on an ex parte basis before the CoA's decision in Sandra Holdings. The WFO was granted in support of proceedings against the respondent in Hong Kong. Following the publication of Sandra Holdings, the respondent applied to have the WFO set aside on jurisdictional grounds and was successful in doing so. None of the specific jurisdictional gateways specified in the Judicial Authority Law were found to be applicable to the facts of the case. Neither the respondent nor the bank whose accounts were the subject of the WFO were with the DIFC. Accordingly, the CFI applied the conclusion in Sandra Holdings that "there was no freestanding jurisdiction to grant freezing orders in support of the prospective enforcement of foreign proceedings in which judgment has not been entered" and set the WFO aside on jurisdictional grounds.
The appellant appealed the CFI judgment on the grounds that Sandra Holdings was incorrectly decided and that the DIFC Court had jurisdiction under the Court Law (DIFC Law No 10 of 2004) to make a freezing order in support of the prospective enforcement of a judgment in proceedings pending in a foreign court. The appellant argued that the DIFC Court should follow the influential judgment of the Privy Council in the BVI case of Convoy Collateral Ltd v Broad Idea International Ltd [2021] UKPC 24, which had been endorsed a number of times by the DIFC Courts prior to Sandra Holdings (including notably in Lateef). The CoA, in allowing the appeal, noted that the Court has the power to grant interim remedies under Part 25 of the Rules of the DIFC Court and that this power exists in order to prevent the Court's jurisdiction, including the jurisdiction to recognise and enforce foreign judgments, from being thwarted. The Court identified that this jurisdiction may be thwarted if a party to foreign proceedings dissipates its assets in advance of an apprehended judgment which might be capable of enforcement/recognition in the DIFC Courts. Accordingly, the DIFC Court has the power, and ancillary jurisdiction, to issue interim relief in such circumstances in order to prevent its jurisdiction from otherwise being thwarted.
The other issue that the CoA addressed was the extent to which it was capable of overturning its own judgments. Prior to the CoA's judgment in Carmon, it does not appear that any judgment of the DIFC CoA has been overturned. The Court determined that while the CoA will generally follow its own prior decisions, it may depart from them in limited circumstances. In identifying the appropriate considerations for departing from its own prior judgments, the Court was guided by the principles set out by the Australian High Court in John v Federal Commissioner of Taxation (1989) 166 CLR 417. Applying these principles to the present case, the CoA determined it appropriate to depart from the judgment in Sandra Holdings because: (i) that judgment was legally incorrect; (ii) it was not based upon a principle carefully worked out in a significant succession of cases; and (iii) departure from the judgment would not be disruptive (indeed, the Court noted that Sandra Holdings itself generated inconvenience by allowing the Court's jurisdiction to be thwarted).
Although the DIFC CoA unambiguously determined that it does have ancillary jurisdiction to issue interim injunctions in support of ongoing foreign proceedings, the Court added the important caveat that whether such relief should be granted and, if so, the scope of the relief, is always a matter for the discretion of the Court. In many cases, the Court observed, it would be appropriate that a freezing order in support of ongoing foreign proceedings should be limited to assets in Dubai. It will not always be appropriate for the Court to make a freezing order on a worldwide basis (although it is now clear that the DIFC Court does have the jurisdiction to do so if the Court deems it appropriate).
The judgment in Sandra Holdings was, in the Court's own words, "unduly restrictive". In our view, creditors will welcome this course correction by the DIFC Courts. It will shore up the lacuna created by Sandra Holdings whereby a foreign judgment might be capable of enforcement in the DIFC Courts, but it was not feasible to obtain interim relief from the DIFC Courts to protect a creditor's position prior to the issuance of the foreign judgment. The DIFC Court is now signalling to creditors that the Court will take steps to protect creditors' interests where it is appropriate and in the interests of justice to do so. The judgment also brings the DIFC Court back into step with several other common law jurisdictions who follow the principles of Broad Idea when it comes to permitting the granting of interim injunctions in aid of ongoing foreign proceedings.
Read the judgement here
On 26 November 2024, the DIFC CoA handed down the judgment in Carmon Reestrutura-engenharia E Serviços Técnios Especiais, (Su) LDA v Antonio Joao Catete Lopes Cuenda CA 003/2024. The case concerns a worldwide freezing order ("WFO"), which was initially granted against the respondent by the DIFC Court of First Instance ("CFI") on an ex parte basis before the CoA's decision in Sandra Holdings. The WFO was granted in support of proceedings against the respondent in Hong Kong. Following the publication of Sandra Holdings, the respondent applied to have the WFO set aside on jurisdictional grounds and was successful in doing so. None of the specific jurisdictional gateways specified in the Judicial Authority Law were found to be applicable to the facts of the case. Neither the respondent nor the bank whose accounts were the subject of the WFO were with the DIFC. Accordingly, the CFI applied the conclusion in Sandra Holdings that "there was no freestanding jurisdiction to grant freezing orders in support of the prospective enforcement of foreign proceedings in which judgment has not been entered" and set the WFO aside on jurisdictional grounds.
The appellant appealed the CFI judgment on the grounds that Sandra Holdings was incorrectly decided and that the DIFC Court had jurisdiction under the Court Law (DIFC Law No 10 of 2004) to make a freezing order in support of the prospective enforcement of a judgment in proceedings pending in a foreign court. The appellant argued that the DIFC Court should follow the influential judgment of the Privy Council in the BVI case of Convoy Collateral Ltd v Broad Idea International Ltd [2021] UKPC 24, which had been endorsed a number of times by the DIFC Courts prior to Sandra Holdings (including notably in Lateef). The CoA, in allowing the appeal, noted that the Court has the power to grant interim remedies under Part 25 of the Rules of the DIFC Court and that this power exists in order to prevent the Court's jurisdiction, including the jurisdiction to recognise and enforce foreign judgments, from being thwarted. The Court identified that this jurisdiction may be thwarted if a party to foreign proceedings dissipates its assets in advance of an apprehended judgment which might be capable of enforcement/recognition in the DIFC Courts. Accordingly, the DIFC Court has the power, and ancillary jurisdiction, to issue interim relief in such circumstances in order to prevent its jurisdiction from otherwise being thwarted.
The other issue that the CoA addressed was the extent to which it was capable of overturning its own judgments. Prior to the CoA's judgment in Carmon, it does not appear that any judgment of the DIFC CoA has been overturned. The Court determined that while the CoA will generally follow its own prior decisions, it may depart from them in limited circumstances. In identifying the appropriate considerations for departing from its own prior judgments, the Court was guided by the principles set out by the Australian High Court in John v Federal Commissioner of Taxation (1989) 166 CLR 417. Applying these principles to the present case, the CoA determined it appropriate to depart from the judgment in Sandra Holdings because: (i) that judgment was legally incorrect; (ii) it was not based upon a principle carefully worked out in a significant succession of cases; and (iii) departure from the judgment would not be disruptive (indeed, the Court noted that Sandra Holdings itself generated inconvenience by allowing the Court's jurisdiction to be thwarted).
Although the DIFC CoA unambiguously determined that it does have ancillary jurisdiction to issue interim injunctions in support of ongoing foreign proceedings, the Court added the important caveat that whether such relief should be granted and, if so, the scope of the relief, is always a matter for the discretion of the Court. In many cases, the Court observed, it would be appropriate that a freezing order in support of ongoing foreign proceedings should be limited to assets in Dubai. It will not always be appropriate for the Court to make a freezing order on a worldwide basis (although it is now clear that the DIFC Court does have the jurisdiction to do so if the Court deems it appropriate).
The judgment in Sandra Holdings was, in the Court's own words, "unduly restrictive". In our view, creditors will welcome this course correction by the DIFC Courts. It will shore up the lacuna created by Sandra Holdings whereby a foreign judgment might be capable of enforcement in the DIFC Courts, but it was not feasible to obtain interim relief from the DIFC Courts to protect a creditor's position prior to the issuance of the foreign judgment. The DIFC Court is now signalling to creditors that the Court will take steps to protect creditors' interests where it is appropriate and in the interests of justice to do so. The judgment also brings the DIFC Court back into step with several other common law jurisdictions who follow the principles of Broad Idea when it comes to permitting the granting of interim injunctions in aid of ongoing foreign proceedings.
Read the judgement here
