Daman Capital Properties Ltd v Oger Dubai LLC (Appeal Number 806/830 of 2017, Commercial)

Summary

The Dubai Court of Appeal has issued a judgment that may finally bring to a close a fiercely fought dispute which has been tried in both the DIFC and onshore Dubai Courts and was the inaugural case for the much debated Joint Judicial Tribunal (JJT)*.

Unless the Dubai Court of Cassation intervenes, the dispute originally arbitrated between Daman Capital Properties Limited (Daman) and Oger Dubai LLC (Oger) has potentially been resolved by the nullification of the arbitration award by the Dubai Court of Appeal.

Reference to the DIFC Courts below is to the common law Courts of the Dubai International Financial Centre. Reference to Dubai Courts (that consists of the Court of First Instance (CFI), Court of Appeal and Court of Cassation) is to the onshore civil law Courts in Dubai.

Background

The underlying contract between Daman and Oger included an arbitration clause that referred any dispute to the Conciliation and Arbitration Centre of Dubai Chamber of Commerce and Industry (the DCCICAC). The DCCICAC was a defunct body that had been replaced by the Dubai International Arbitration Centre (DIAC) in 2007.

Throughout the arbitration that took place under the DIAC Rules (and subsequent enforcement actions initiated by Oger to recover a £153 million award), Daman maintained a jurisdictional argument that the arbitration clause was defective.

Story of an onshore/offshore legal wrangle

  • On the day the arbitration award was issued, Daman applied to the Dubai CFI for an annulment of the award on various grounds including that the Tribunal lacked jurisdiction.
  • On 26 September 2015, on the application of Oger, the DIFC Court granted an ex-parte freezing injunction over Daman's assets.
  • On 30 December 2015 the DIFC Court issued an order which provided that if Daman did not provide security in respect of the satisfaction of the award, then the award would be deemed to stand as recognised.
  • On 27 January 2016, the Dubai CFI dismissed Daman's annulment application on the ground that it did not have jurisdiction to entertain it.
  • On 8 June 2016, the Dubai Court of Appeal dismissed Daman's appeal
  • On 16 June 2016, the DIFC Court ordered that Daman be wound up.
  • Daman referred the dispute to the (then) newly formed JJT on the basis that there was a conflict of jurisdiction between the DIFC and Dubai Courts about which was the competent court to determine the case.
  • On 19 December 2016, the JJT issued its ruling that it was a matter for the Dubai Courts and the case was remitted to the Dubai CFI.
  • On 29 March 2017, the CFI issued its judgment annulling the section of the award that awarded Oger £6m in legal costs but upheld the remainder.
  • In October 2017, the Dubai Court of Appeal nullified the underlying DIAC award in its entirety

An arbitration no-man's land

DCCICAC, which is the arbitral body the agreement refers to is defunct and was replaced by DIAC. According to the 2009 Decree approving DIAC's articles, the DIAC Rules would apply to "all disputes… even if disputing parties agree to apply the [DCCICAC Rules]."

However, a 2007 Decree (approving the Rules of DIAC) purported to supersede the rules of DCCICAC without expressly covering arbitration agreements that had referred to DCCICAC.

There is, therefore, a black hole period of approximately 30 months between the 2007 and 2009 Decrees where the DCCICAC did not exist, its rules were not in force, and there was no legislation in place to bring DCCICAC arbitrations into DIAC.

The contract between Daman and Oger was concluded on 23 July 2008 falling squarely within the 'no man's land' period referred to above.

Based on the above, the Dubai Court of Appeal found the arbitration clause to be invalid because, at the time of conclusion of the contracts, the referenced Arbitration Centre and the rules to be applied did not exist. Accordingly, the arbitration award should be revoked in its entirety.

Comment

The Court of Appeal's decision is unexpected for two reasons.

  • Firstly, Daman's jurisdictional challenge had failed on multiple occasions, including before the arbitration panel, and indeed, before the Court of Appeal prior to the matter being remitted to the Dubai Courts by the JJT.
  • Secondly, it appears that the Court of Appeal considered that there was a 'gap' which the 2009 Decree did not fill despite the fact that, to commentators in the region, this was precisely the scenario which the 2009 Decree was introduced to cover.

Oger has an option to refer the matter to the Court of Cassation and parties in the region eagerly await further developments given there are likely to be many contracts concluded in this 30 month period.

* The JJT is a committee formed of seven members - three from the DIFC Courts, three from the Dubai Courts and a presiding Chairman in the form of the Chief Justice of the Dubai Court of Cassation – whose brief is to rule on conflicts of jurisdiction between Dubai's two legal systems.