Dr. Lothar Ludwig Hardt and Hardt Trading F.Z.E. v DAMAC (DIFC) Company Limited et al [2009] DIFC CFI 036 (04 April 2010)


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You are here: BAILII >> Databases >> The Dubai International Financial Centre >> Dr. Lothar Ludwig Hardt and Hardt Trading F.Z.E. v DAMAC (DIFC) Company Limited et al [2009] DIFC CFI 036 (04 April 2010)
URL: http://www.bailii.org/ae/cases/DIFC/2010/cfi_036.html
Cite as: [2009] DIFC CFI 036, [2009] DIFC CFI 36

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

April 04, 2010 Court of First Instance -Judgments

Claim No: CFI 36/2009

THE JUDICIAL AUTHORITY OF THE DUBAI INTERNATIONAL FINANCIAL CENTRE

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

Ruler
of Dubai

IN THE COURT

Court
OF FIRST INSTANCE

BEFORE JUSTICE SIR ANTHONY COLMAN

Between

(1) Dr. Lothar Ludwig Hardt

(2) Hardt Trading F.Z.E.

Claimants

-v-

(1) DAMAC ( DIFC

DIFC
) Company Limited

(2) Hussain Ali Habib Sajwani

(3) Faisal Ali Habib Sajwani

(4) Sofyan Adnan Sami Khatib

(5) Peter Riddoch

Defendants

Hearing: 23 February 2010

Counsel: Ludmila Yamalova of Al Sayyah Advocates & Legal Consultants appeared for the Claimants.Hannah de Figueiredo of Simmons & Simmons appeared for the Defendants.

Judgment: 31 March 2010


JUDGMENT 


ORDER OF JUSTICE SIR JOHN CHADWICK MADE ON 26 JANUARY 2010

1. These proceedings are brought by the Claimants in respect of transactions which they entered into in and between 2007-2009 with various different companies in the DAMAC Group for the purchase of residential apartments and retail units in four separate property developments by DAMAC. There were in all 37 separate agreements. The developments concerned were Park Towers, Water's Edge, Wildflower and Ocean Heights. Of these developments only Park Towers was inside the DIFC.

2. It is alleged that, although the Claimants have paid to various DAMAC companies a total of AED 35,669,038.41 or US$9,705,860,79, the "Defendants have breached their contractual obligations to the Claimants because, among other things, they failed to deliver the properties timely and violated a series of UAE

UAE
, Dubai and DIFC Laws." (Particulars of Claim, para 107) The Particulars of Claim set out 22 separate causes of action. These include allegations of breach of contract by the Defendants under provisions of UAE (not DIFC) Law, breaches of various provisions of the UAE Civil Code, breaches of various provisions of UAE Law No.8 of 2007 concerning Guarantee Accounts of Real Estate Developments in the Emirate of Dubai, fraud in breach of the UAE Civil Transactions Law, as well as numerous breaches of the UAE Penal Code, including allegations of bribery, cheating in commercial transactions and breach of trust.

3. There are two causes of action under DIFC Laws. These involve allegations of breach of accounting and auditing regulations.

4. The claim seeks orders for the termination of all the contracts relating to all the developments and repayment of the monies said to have been paid by the Claimants together with damages in respect of sustained losses and lost profits, interest and costs.

5. I attach to this Judgment a copy of the Particulars of Claim. It will be seen at once that this document is totally unsatisfactory and insufficient as a DIFC Courts

DIFC Courts
pleading. It fails to do more than make bold and unparticularised allegations against the Defendants generally. It gives no factual explanation or particulars of what conduct by each separate Defendant
Defendant
is relied upon. It also seeks to introduce into the claims companies in the DAMAC Group which are not identified on the Claim Form.

6. The First Defendant is a DIFC DAMAC Group Company. It was not and is not alleged to have been a party to any of the contracts and the Particulars of Claim contain not a single allegation of conduct by it, as distinct from the other Defendants, relating to any of the contracts in question. According to the evidence, it had no dealings with the Claimants relating to these or any other contracts.

7. Against this background, the First Defendant has applied to strike out

Strike out
the claim against it under RDC24.1and24.11and/orRDC 4.16. It further applies for an order underRDC 12.7that this Court
Court
has no jurisdiction to hear the claim and that the Claim Form be set aside
Set aside
.

8. After this application was made, the Claimant

Claimant
failed a cross-application seeking an order that the Court did have jurisdiction. This was a completely superfluous exercise which has gone simply to increase the costs.

9. In view of the limited time available and the need for the issues raised by these applications to be speedily resolved so that, if appropriate, the Claimant would take forward the claim, I directed that the jurisdiction issues should be heard first. If the court concluded that it had no jurisdiction, the entire proceedings against the First Defendant would have to be set aside and the remaining questions as to summary dismissal of the claim and/or striking out could not arise.

10. Accordingly, argument was confined to the jurisdiction issues. Following the hearing, those representing the Claimants sent further submissions in writing to which I have had full regard.

11. The essence of the case advanced on behalf of the First Defendant can be shortly stated.

(1) The First Defendant was not a contracting party.
(2) Each contract contained a Governing Law and Jurisdiction
Jurisdiction
clause conferring exclusive jurisdiction on the Dubai Courts
Dubai Courts
as distinct from the DIFC Courts.
(3) There was in any event no jurisdiction under Article 5(A)(1) of DIFC Law No.12 of 2004.
(4) If there was such jurisdiction, the parties had contracted out of it.

The Issues

12. The issues to which the Defendants' jurisdiction application gives rise fell into two distinct categories.

13. First there are numerous issues which fall within what can be described as the procedural category. Those may be summarised as follows:

(i) Whether the Defendants' application was made within the time for such applications specified inRDC 12.4, namely 14 days after filing an Acknowledgement of Service

Service
.

(ii) If it was not made in time, whether this court should exercise its powers underRDC 4.2(1) to extend time retrospectively.
(iii) If (i) and (ii) are to be answered in the negative, what is the effect on the Courts' jurisdiction ofRDC 12.5by which it is provided that a defendant who has filed an Acknowledgement of Service fails to apply for a declaration of no jurisdiction within the time specified inRDC 12.4is to be treated as having accepted that the Court has jurisdiction to try the claim?
14. The second category of issues relates to substantive matters. These are as follows:
(i) Whether by the Governing Law and Jurisdiction clause in the contracts in issue, the Claimants and Defendants agreed that any legal action or proceeding with respect to each of those agreements should be subject to the exclusive jurisdiction of the Courts of Dubai as distinct from the DIFC Courts.
(ii) If the answer to (i) is No, whether, in respect of each of those causes of action identified in the pleadings, namely the Particulars of Claim, this Court has jurisdiction to hear the claim under Article 5 of Law No.12 of 2004.
Procedural Issues
(i)Was the Defendants' application under RDC 12.4 made within the Time Limit?

The relevant provisions of the RDC are as follows:

12.1 A defendant who wishes to -

(1) dispute the Court's jurisdiction to try the claim; or

(2) argue that the Court should not exercise its jurisdiction

may apply to the Court for an order declaring that it has no such jurisdiction or should not exercise any jurisdiction which it may have.

12.2 A defendant who wishes to make such an application must first file an acknowledgement of service in accordance with Part 11.

12.3 A defendant who files an acknowledgment of service does not, by doing so, lose any right that he may have to dispute the Court's jurisdiction.

12.4 An application under this Part must

(1) be made within 14 days after filing an acknowledgement of service; and

(2) be supported by evidence.

12.5 If the defendant

(1) files an acknowledgment of service; and

(2) does not make such an application within the period specified in Rule 12.4, he is to be treated as having accepted that the Court has jurisdiction to try the claim.

12.6 If the defendant files an acknowledgment of service indicating an intention to dispute the Court's jurisdiction, the claimant need not serve particulars of claim before the hearing of the application.

15. The relevant facts are these and are not disputed.

16. On 7 January 2010 the Defendants' solicitors filed their Acknowledgment of Service within time. Consequently the time for making an application for a declaration of no jurisdiction expired on 21 January 2010. That was a Thursday.

17. On that Thursday the Defendants' solicitor, Ms Hannah De Figueiredo, transmitted to the DIFC Courts Registry

Registry
by email an Application Notice and draft Order covering an application to strike out the claims underRDC 4.16, alternatively for judgment against the Claimants under RDC24.1and24.11and/or for a declaration of no jurisdiction underRDC 12.7. That email was transmitted at 15.59 on 21 January 2010.

18. Unfortunately, the email did not arrive on the Registry's apparatus until 0800 on Friday, 22 January 2010, on which day the Registry was closed.

19. On Sunday 24 January 2010, the first day on which the Registry was open after 21 January, at about 1600, the Defendants' solicitors filed with the Court Registry hard copies of the Application Notice, the draft Order and the evidence.

20. On the same day at 1655 the Defendants' solicitors sent by email to the Claimants' solicitors the Application Notice and the witness statement of Mr Patrick Joseph Doolan, Vice-President - Legal of the DAMAC Group of companies. Later that day, at 1730, the exhibits to that witness statement - some 1638 pages of contract documents in five lever-arch files - were served on the Claimants' solicitors.

21. Ms Ludmila Yamalova has submitted on behalf of the Claimants that the First Defendant's application was made out of time for it had not been filed until 1600 on 24 January 2010 and, alternatively, even if filing in hard copy within the time limit were not essential, there was a failure even to make the application by email in time. This was because, although the email of 21 January 2010 was transmitted at 1559 on 21 January, it was not received by the Registry until opening time on 24 January, the next working day and it was not served on the Claimants until that same day. Reliance is placed on the following rules in RDC, Part 3, Schedule:

2. A party should not use e-mail to take any step in a claim which requires a fee to be paid for that step. If a party sends by e-mail a document for which a fee is payable upon filing, the document will be treated as not having been filed.
5. Nothing in this schedule shall affect or otherwise alter any obligation on a party or his legal representative
Legal Representative
to file any document or bundle of documents with the Court or to serve any document or bundle of documents on any other party, but only the manner in which documents are filed with the Court.

15. Where a time limit applies, it remains the responsibility of the party to ensure that the document is filed in time. Parties are advised to allow for delays or downtime on their server or the servers used by the Court.

17. A document is not filed until the e-mail is received by the Court at the addressee's computer terminal, whatever time it is shown to have been sent.

19. If an e-mail is received after 4 p.m. it will be treated as having been received on the next day the Court office is open.

RDC 23.47 The timetable for heavy applications is as follows:

(1) evidence in support must be filed and served with the application;

(2) evidence in answer must be filed and served within 28 days thereafter;

(3) evidence in reply (if any) must be filed and served as soon as possible, and in any event within 14 days of service of the evidence in answer.

Discussion

22. It is provided byRDC 23.21as follows:

23.21 Where an application must be made within a specified time, it is so made if the application notice is received by the Court within that time.

23. It is to be observed that this last provision does not refer to filing of the Application Notice - a formal process including the delivery to the Registry of the hard copy notice and payment of the applicable court fee. This provision, therefore, could have been used in the present case and, because filing was not specified in RDC 12.15, the notice could properly have been transmitted by email in spite of Part 3, Schedule, paragraph 2. The applicability of the latter is clearly superseded byRDC 23.21. As to paragraph 2, I do not consider that this applies in a case where a time limit applies and a notice of application which attracts a fee is sent to the Registry by email. In such a case, that provision should be construed as referring to effective transmission of the email rather than filing in the formal sense.RDC 23.21would otherwise be deprived of its essential purpose.

24. Further, it is also reasonably clear, in my judgment, that paragraph 19 of the Schedule is superseded byRule 23.21in the case of an application having to be made within a time limit. The period of 14 days inRDC 12.4is thus not reduced to 4pm on the 14th day by RDC Schedule Para. 19.

25. Accordingly, in order to satisfy theRDC 12.5time limit the Defendants' solicitors' email had to be received by as distinct from filed at, the Registry by 1700 on 21 January 2010. The supporting evidence did not have to be included and it did not have to be served on the Claimants by that time, having regard toRDC 23.21. Specifically,RDC 23.47required no more than that the evidence must be filed when the application was filed and that the evidence must be served on the Claimant when the application was served on the Claimant.

26. There can be no doubt, therefore, that the application for a declaration of no-jurisdiction was not made within the time specified inRDC 12.5, for the Defendants' solicitors' email was not received at the Registry on 21 January 2010.

Should an Order be made under RDC 4.2(1) retrospectively excluding time under RDC 12.5?

27. There was no formal notice of application by the Defendants for any such order. In the ordinary way there can be no doubt that such an application should be issued and served on the opposing party. That course enables the latter to assemble evidence and to formulate submissions which it might not otherwise have the opportunity of doing. However, there may be cases where, within the scope of the Overriding Objective, such an order might be made without the issue of an application, provided that can be done fairly and without injustice to any party.

28. In the present case, although the Defendants' application was transmitted by email at 15.59 on 21 January, it was not received by the Registry by 1700 or at any time on that day. The warning as to the unreliability of email services in Dubai contained in the Schedule to RDC 3, paragraph 15 was, therefore, fully vindicated. The email in question took over 16 hours to arrive, a period of delay totally deplorable in a territory which sets itself up as having every modern communication facility for commercial purposes.

29. It is objected on behalf of the Claimants that the Defendants' solicitors really had only themselves to blame in leaving their application almost to the last minute of the last day. Even on the next working day - Sunday, 24 January 2010 - they did not get round to filing this application until about 1600 and only at 1730 on that day did they complete service of all the evidence on the Claimants' solicitors. It was thus their practice to cut every procedural step very fine indeed.

30. In my judgment, it would be unacceptably disproportionate in all the circumstances were the application for a retrospective extension of time, although not advanced before the hearing, now to be refused. It was not wholly unreasonable for the Defendants' solicitors to assume that this email would be received by the Registry by 1700 on 21 January. While it is a matter to be taken into account against an extension of time, I am not persuaded that the other procedural delays were sufficiently serious or reprehensible to warrant depriving them of the validity of their application as to jurisdiction. Nor, in my view, has it been demonstrated on behalf of the Claimants that any material on unfairness or injustice to them has flowed from the absence of notice of the application for an extension of time.

31. I, therefore, conclude that time for making the application, for filing it and the accompanying evidence and serving the application and evidence on the Claimant be retrospectively extended to 17.30 on 24 January 2010.

The Effect in Law of RDC 12.5

32. In case I am wrong in exercising my discretion underRDC 4.2(1) in favour of an extension of time, it is necessary to consider precisely what is the effect in Law of a Defendants' omission to apply for a declaration of no jurisdiction underRDC 12.5. The key question is whether the effect is to prevent that party from challenging the Courts' jurisdiction to hear the claim in any respect or whether it has a more limited impact.

33. In my judgment, the effect ofRDC 12.5is analogous to that of a submission to the jurisdiction. It is in substance a deemed submission. As such, its effect is essentially a consensual acceptance of such jurisdiction as the Court has under such legal instruments as define its jurisdiction. However, such consensual submission to the Courts' jurisdiction cannot extend the scope of that jurisdiction beyond that accorded by such national laws as confer jurisdiction on the Court. Thus, for example, where the proceedings may not have been properly served on the Defendants or where the parties are bound by a foreign exclusive jurisdiction clause, an omission to comply withRDC 12.5would preclude the Defendants from relying on defective service or the terms of the jurisdiction clause as a bar to the Courts' jurisdiction and a ground for obtaining a declaration of no jurisdiction. In both such examples the Court would have had jurisdiction were it not for the procedural defect or the binding jurisdiction clause, arising in the particular case.

34. Now it must be said that I raised this matter with counsel at the outset of the hearing and it was not a point that had previously been referred to in exchanges between the parties or in any way relied upon by the Defendants.

35. Although, remarkably, there is no note as to this principle in the English Civil Procedure White Book in relation to the same rule in CPR

CPR
11(5), there is a useful summary of the concept in Dicey Morris + Collins, Conflicts of Law, 14th Edition, para: 11-138 which states:

"The principle of submission can give the court jurisdiction only to the extent of removing objections thereto which are purely personal to the party submitting, as for example, that he has not been duly served with process. Submission cannot give the court jurisdiction to entertain proceedings which in itself lies beyond the competence or authority of the court."

36. UnderRDC 4.11where the Court proposes to take a point on its own initiative, notice should be given to both parties in advance. This is a salutary provision aimed at avoiding surprise and at giving the parties the opportunity of challenging the Courts'. In the present case, I directed on 21 February 2010 that on 23 February the hearing could not be confined to procedural directions as to the future conduct of the jurisdiction application but would be the hearing of full argument on that application. This should not have taken either party by surprise since they had previously been expressly warned in the course of communications with the Registry that I might direct that a full hearing should take place on the date earmarked for this case in the Courts' diary.

37. Therefore, when in the course of the hearing I raised for the first time the legal effect of an omission to make an application under RDC 12-5, those appearing for the parties were required to address what ought to have been in the forefront of their preparations for the hearing. Had either solicitor considered the point, it would at once have become obvious that, even if, by the omission to make the application on time, there were a deemed submission to the Courts' jurisdiction, the effect of that submission could not possibly be to confer on the Court a jurisdiction which, as a matter of law under Article 5 of Law No.12 of 2004, it never had. So even if the Defendant were precluded from pursuing its application, the Court itself would be bound to raise the point.

38. Equally, if the Court did so, there could be no answer to it. The effect would necessarily be that it would open to the Court to satisfy itself as to its own jurisdiction regardless of the Governing Law and Jurisdiction Clause.

39. In view of my conclusion that, as a matter of procedure, it remains open to the Defendants to challenge the Courts' jurisdiction, it is first necessary to consider the effect of the Governing Law and Jurisdiction Clause.

The Governing Law and Jurisdiction Clause

40. This clause provides as follows:

This Agreement is made in the English language and the rights of the Parties hereunder shall be governed by the Laws of the United Arab Emirates and the Laws of Dubai and the Parties agree that any legal action or proceedings with respect to this Agreement shall be subject to the exclusive jurisdiction of the Courts of Dubai, United Arab Emirates.

41. The same clause appears in all those contracts the subject of these proceedings. Those contracts were entered into on dates beginning on 11 January 2007 (Ocean Heights) and ending with another Ocean Heights unit on 24 June 2007. Of the five building developments the subject of these contracts only one - Park Towers - was located in the DIFC. The remaining four were located in the non-DIFC area of Dubai. The contracts relating to Park Towers were entered into on 18 February 2007.

42. The wording of the clause being the same in all contracts, any submission that it is to be construed as conferring jurisdiction on this Court must either involve that it is to be inferred that the mutual intention was to confer such jurisdiction on the DIFC Courts in all the contracts - covering both non-DIFC properties - and DIFC properties or that in the contract relating to Park Towers the same clause should be given a different meaning to that in the other contracts.

43. There are, however, two problems with this approach to construction.

44. First, the imposition of DIFC Law on a contract for the sale of non-DIFC realty would be highly improbable, particularly having regard to what is common ground, namely that none of those contracts were entered into in the area of the DIFC and none were required to be executed in the DIFC.
45. Second, at the time when the earlier contracts - Ocean Heights, Lotus Residence, Wild Flower and Park Towers - were entered into, there was in place no land law in the DIFC other than Dubai Law. Until DIFC Law No.4 of 2007 came into force in June 2007, Dubai Land Law applied in DIFC. As from the coming into force of that Law, the basis of land tenure in the DIFC changed. Section 10 provided:

"Subject to any other provision of this Law, freehold ownership of real property governed by this Law carries with it the same rights and obligations as ownership of an estate in fee simple under the principles of English Common law and equity."

46. Henceforth the system of land tenure was closely similar to English Land Law. The DIFC Courts was accorded specific jurisdiction with regard to specific matters set out in the Law. These include, for example, the fields of mortgages, easements, the Insurance Fund and execution against Land. These specific references to Court jurisdiction would come within Art. 5 (A) (1) (d) of the Law No.12 of 2004: - the DIFC Courts of First Instance shall have the exclusive jurisdiction over:

"any application over which the (DIFC) Courts have jurisdiction in accordance with the centre

The Centre
's Laws and Regulations."

47. So the position was that until June 2007 when Law No.4 of 2007 came into effect there were no such Laws and Regulations of the DIFC which conferred on the DIFC Courts any jurisdiction over DIFC land. Until that time the only jurisdiction which the DIFC Courts might have must be founded, if possible, on Article 5(A) (1) (a) or (b) of Law No.12 of 2004.

48. In these circumstances it is, in my judgment, inconceivable as a matter of inference that the parties would enter into a contract for the sale of realty in either DIFC or non-DIFC Dubai up to June 2007 in which they agreed that the contract should be governed by the Laws of the DIFC and that "any legal action or proceedings with respect to this Agreement" should be subject to the exclusive jurisdiction of the Courts of the DIFC.

49. Further, the contracts contain nothing to indicate that the parties by using the words "Laws of Dubai" and "Courts of Dubai" were employing a specially-agreed meaning that confined the Laws to DIFC Laws and confined the Courts to DIFC Courts. Great though Dr Hardt's professed enthusiasm for English Law and Courts, and therefore DIFC Courts, might be, unless he can address cogent evidence of an agreement that the words of the clause should have a specially confined meaning, they must be given their natural meaning. The "Courts of Dubai" would not be taken by anyone familiar with the relative jurisdiction of the Dubai and DIFC Courts and to the circumstances in which these agreements were entered into as referring to the DIFC Courts.

50. In reaching this conclusion, I have taken fully into account with regard to the contracts for the sale of Park Towers - the only property located in the DIFC - the various references in that contract to "The Master Developer," which is defined as the DIFC Authority, and "the Master Plan", i.e. the DIFC Plan. The references to registration of the purchasers' title at the Land Registry, defined as the DIFC Land Registry "to be established", present a closer link with the DIFC Courts. However, against this are references in clause 2.2 and 10.1 to the formation of a management association pursuant to Article 1197 (1) of the Civil Code of the UAE. In short, these particular contracts do not contain provisions which compel departure from the natural meaning of the "Laws of Dubai" or the "Courts of Dubai".

51. This conclusion leads to the following consequence. If, by reason of facts falling within Article 5 (A) (1) (a) or (b), the DIFC Courts could have jurisdiction over these proceedings, the parties have contracted out of that jurisdiction and into the jurisdiction of the non-DIFC Dubai Courts. This they were perfectly entitled to do under Article 5 (a) (2) of Law No.12 of 2004.

"Parties may agree to submit to the jurisdiction of any other court in respect of the matters listed under paragraphs (a), (b) and (d) of this Article."

Accordingly, whatever might have been the position under Article 5 (A) (1) (a) or (b), the parties have contracted out of the jurisdiction of the DIFC Courts under each of the many contracts entered into, including the Park Towers contracts and the DIFC Courts have no jurisdiction.

Further Arguments

52. The question whether the DIFC Courts might have jurisdiction would arise for decision on the present application if (i) on its proper construction the Governing Law and Jurisdiction Clause, contrary to my decision, purported to confer jurisdiction on the DIFC Courts or (ii) if, again contrary to my decision, there should be an extension of time for making the strike-out application underRDC 12.5

53. The analysis necessary for this issue is to ascertain whether in respect of any of the contracts, the facts pleaded in the Particulars of Claim fall within the scope of the jurisdiction of the DIFC Courts identified in Article 5(A) (1) of Law No.12 of 2004.

54. The Claim Form identified the First Defendant, and the only corporate defendant, as DAMAC (DIFC) Company Limited. All other defendants are personal defendants:

"Claimants bring this legal action against Defendants in connection with a real estate dispute between the parties ("Claim"). Claimants have invested approximately USD 9,705,860.79 ("Total Investment") into five (5) of Defendants' real estate projects in Dubai, U.A.E., which are: Park Towers (DIFC). Water's Edge, Lotus Residences, Wildflower and Ocean Heights (collectively "Properties").

As of today, Defendants have not delivered any of the Properties and have not complied with any of their contractual obligations to Claimants. Furthermore, Defendants have committed a series of violations of U.A.E., Dubai and DIFC Laws in connection with the Properties, such as enticement and unfairness, illegal sale, failure to obtain necessary approvals, failure to commence construction timely, failure to timely register developer and obtain necessary licenses, mismanagement of escrow funds and violation of trust account regulations, unfair contracts of adhesion, fraud and deception, failure to comply with the DIFC Companies Law and the DIFC Companies Regulations, illegal competition, bribery, trickery, breach of trust, cheating in commercial transactions, money laundering and accomplice liability.

Remedy Sought:

Refund of Claimants' Total Investment, in the amount of USD 9,705,860.79.

Damages

Damages
and lost profits caused by Defendants' breach of contract and other violations of U.A.E., Dubai and DIFC laws.

Interest accrued on Claimants' Total Investment, damages and lost profits.

Costs of proceedings including legal representatives' charges under Parts 38-40 of the DIFC Courts Rules.

Any other remedy to which Claimants are entitled pursuant to Part 17.13 of the DIFC Courts Rules."

55. The Particulars of Claim stated at paragraph 8:

"Defendants are DAMAC (DIFC) Company Limited with all of its subsidiaries and affiliates including but not limited to DAMAC Properties and DAMAC Holdings."

56. This was a mis-description of the corporate party to the proceedings which was and only was DAMAC (DIFC) Company Limited as identified in the Claim Form. The composite reference to the other two DAMAC entities and to unidentified "subsidiaries and affiliates" does not have the effect of making them parties to the action. The First Defendant is not stated to be sued in a representative capacity and there is no apparent pleaded basis for its having such capacity.

57. In paragraph 30 of the Particulars of Claim it is pleaded that this Court has jurisdiction over the claim pursuant to Law No.12 of 2004, Article 5 (A) (1) and Article 3 of the 2009 Protocol of Jurisdiction between the DIFC Courts and the Dubai Courts.

58. I interpose that since the 2009 Protocol expressly neither increases nor reduces the scope of the jurisdiction of the DIFC Courts as identified by the applicable legislation, in particular Law No.12 of 2004, the only relevant question is whether the relevant facts of the claim are within any of the heads of Article 5 (A) (1). In the event of any inconsistency between the Protocol and that Article the latter must prevail.

59. The salient facts are as follows

(a) The First Defendant, although incorporated in the DIFC, was not a party to any of the contracts the subject of these proceedings, even those relating to Park Towers, the only property within the DIFC.
(b) None of the contracts was entered into in the DIFC.
(c) Apart from Park Towers, none of the properties was located within the DIFC.
(d) The only contracts which involved performance within the DIFC were those relating to Park Towers by reason of the location of that property.
(e) No allegation or breach of contract or duty is made specifically against the First Defendant.

(f) Against this background it is argued on behalf of the Claimants that there is jurisdiction under Article 5 (A) (1) (a) on the grounds that both the Claimants and First Defendant are "Centre's Establishments" who are parties to these proceedings. The Claimants are said to be one of "Centre's Establishments" who are parties to these proceedings. The Claimants are said to be one of "Centre's Establishments" on the grounds that Dr Hardt and his company had been given permission by the DIFC to purchase property (Park Towers) in the DIFC. This is unarguable. By DIFC Law No.8 of 2004 a licensed centre establishment is "any entity licensed registered or otherwise authorised to carry on financial and banking business including those activities and businesses referred to in Article 9 - - - -." There is no evidence that the First or Second Claimant is a Centre Establishment licensed or otherwise within Law No. 9 of 2004.

(g) Secondly, by contrast, the First Defendant would appear to be one of the Centre's Establishments. It is located in the DIFC and, on the evidence of Mr Doolan, is a financial investment company whose activities primarily involve arranging credit and advising on financial products. It is said that it has never had any involvement in property sales or developments whereas the Particulars of Claim refer to breaches of contract and duty by "the Defendants" or by DAMAC, they contain not a single allegation of fact or law specifically directed to the First Defendant. It is located in the DIFC, and on the evidence of Mr Doolan, is a financial investment company whose activities primarily involve arranging credit and advising on financial products. It is said that it has never had any involvement in property sales or developments. Whereas the Particulars of Claim refer to breaches of contract and duty by "the Defendants" or by DAMAC, they contain not a single allegation of fact or law specifically directed to the First Defendant.

60. This total absence of any specific allegation against the First Defendant is, in my judgment, important. If a Claimant fails to make any coherent allegation against a Centre Establishment, although the party may be joined as a defendant, he is not a party against whom the Claimant raises a case which can found a dispute. All he has done is put a name on a DIFC Courts' Claim Form and nothing else. In these circumstances, no dispute involving that defendant has been properly identified and the DIFC Courts do not have jurisdiction under Article 5 (A) (1) to do more than strike out the claim against that party. Where there is no formulated claim, there is nothing which engages the Courts' jurisdiction.

61. An argument has been advanced that, on account of the DAMAC Group corporate structure of which the First Defendant was a part, the DIFC Courts have jurisdiction over claims against it even though the breaches of contract or torts were committed not by the First Defendant but by other companies in the DAMAC Group which were not Centre's Establishments. Reliance is placed on a provision in the 2009 Protocol which provides for jurisdiction of the DIFC Courts over "any of the Centre's companies and branches of companies and establishments that are established or licensed to operate in the DIFC." It is argued that this provision confers jurisdiction on the DIFC Courts over each non-DIFC contracting party, by which a property was sold to the Claimants, such as Damac Properties Co. LLC, Damac Star Properties LLC, and Damac Group Properties LLC. It is said that these are all "branches" of the First Defendant which is a DIFC Centre Establishment.

62. This submission involves a complete misunderstanding of the 2009 Protocol.

63. The effect of the reference to "branches" is not to non-DIFC entities but to cover those entities set upwithin the DIFCwhich are branches of companies and establishments which are established or licensed to operate within the DIFC. Branches located outside the DIFC are not covered. If that were the effect of the Protocol it would be inconsistent with Article 5 (A) (1) (a) of Law No.12 of 2004 and would be of no effect.

64. It is further argued that money said to have been paid by the Claimants to the seller companies pursuant to the various contracts has been the subject of inter-company transfers within the DAMAC Group and that those transfers have been made from inside the DIFC into the accounts of companies outside the DIFC. It is not specifically alleged that the First Defendant was implicated in these transfers and, if so, how such transfers could give rise to a cause of action against that company. In short, there is no specific allegation that the First Defendant has been in any way "involved" in any breach of any of the contracts.

65. Amongst the many causes of action relied upon are allegations that by these intra-group corporate money transfers, taking money out of the Park Towers contract and transferring it outside DIFC to Damac Properties Co. LLC instead of paying such monies into a Park Towers escrow account amounts to an "incident" occurring within the DIFC within the meaning of Article 5 (A) (1) (b) of Law No.12. There is, however, nothing in the Particulars of Claim which alleges that the First Defendant was under a duty to receive such money or transfer it to an escrow account. Accordingly it is not alleged that the First Defendant was involved in the "incident" relied on.

66. The same can be said of the allegations of misrepresentation. There is no allegation that it was made by the First Defendant.

67. In these circumstances, it has not been demonstrated that this Court has jurisdiction over these claims vis-à-vis the First Defendant. That company appears to have been included in the Claim Form simply as a means of admittance to the jurisdiction of the DIFC Courts, being a member of the DAMAC Group incorporated in the DIFC, notwithstanding that it had no connection with the Claimants or with any of the relevant transactions. The arguments in support of jurisdiction advanced by Ms Ludmila Yamalova, on behalf of the Claimants, have involved an elaborate and robust attempt to make good sufficient connection between the claims and the First Defendant to bring these claims within Article 5 (A) (1) (a), (b) or (d). Had it been necessary to decide this application on the basis of those submissions, I should have concluded without hesitation that, however persuasively those submissions are advanced, they are completely without substance and that with regard to the First Defendant this Court has no jurisdiction with regard to any of the claims set out in the Particulars of Claim.

Conclusion

68. The First Defendant is, therefore, entitled to an order that the claim against it should be struck out for want of jurisdiction. It is unnecessary to consider any other ground relied on for striking out the claim.

69. It follows that the Claimants' cross-application affirming the Courts' jurisdiction must be refused.

70. Any further applications arising out of this Judgment can be presented by the Courts' video conference facilities.

Justice Sir Anthony Colman

Dated: 4 April 2010

At: 3pm


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