In Allianz Risk Transfer AG (Dubai Branch) v Al Ain Ahlia Insurance Co PSJC (CFI 012/212), the DIFC Court of First Instance has for the first time considered jurisdictional issues in a reinsurance policy, asserting its jurisdiction in a dispute involving an international reinsurer’s DIFC branch and a UAE based insurance company.
The DIFC Courts are the common law based, English language courts within the UAE’s otherwise civil law legal system. The DIFC Courts started as a specialist forum servicing the Dubai International Financial Centre, but have undergone a transformation over the last few years through a series of legislative and judicial pronouncements. The effect has been to elevate the DIFC Courts into an international judicial forum available to deal with a wide range of international disputes. This particular judgment clarifies some aspects of competing jurisdiction between the DIFC Courts and other courts in the UAE.
The dispute concerned a contract of reinsurance entered into between Allianz (the claimant) and Al Ain Ahlia Insurance Company (the defendant) for damage to property and business interruption cover, for risks located in Egypt. The reinsurance policy contained neither a jurisdiction clause nor a governing law clause.
The defendant challenged the jurisdiction of the DIFC Courts, contending that the proper forum for determination of the dispute was the Abu Dhabi Courts for two reasons. Firstly, that the defendant is an Abu Dhabi domiciled entity and according to the UAE Civil Procedure Code, this gives jurisdiction to the Abu Dhabi Courts. Secondly, that the DIFC Courts should reject jurisdiction for the reasons of forum non conveniens in favour of the Abu Dhabi Courts, where the has defendant started parallel proceedings. The doctrine of forum non conveniens is a common law principle whereby a court may decline jurisdiction in a dispute if it considers that there is another forum available to the parties better suited to hear it.
The Court of First Instance of the DIFC Courts (the court) referred to Article 5 (A)(1) of Dubai Law No 12 of 2004, as amended, which provides that the DIFC Courts have jurisdiction over claims in which DIFC entities are parties. As the claimant is a foreign recognised company in the DIFC, the court considered that it had jurisdiction over it.
The court also relied on the previous DIFC Court of Appeal judgment in Corinth Pipeworks SA v Barclays Bank Plc (CA 002/2011). In that case it was held that once it is shown that one of the parties to a dispute is a DIFC Establishment, the DIFC Courts have exclusive jurisdiction over such a dispute regardless as to whether the underlying transaction is connected with the DIFC. Therefore, in the absence of a jurisdiction clause to the contrary, the court found that the dispute fell within its jurisdiction.
As to the forum non conveniens argument, the court decided that this doctrine applied only to international disputes where the claimant had a choice between two or more countries in which to bring an action against a defendant. It was not applicable, the court considered, at a national level where the two potential fora are both UAE courts and the legal framework exists within the UAE to regulate such conflicts of jurisdiction. In the UAE the power to resolve such conflicts lies with the Union Supreme Court after two conflicting judgments are obtained.
The judgment confirms that the DIFC Courts will accept jurisdiction where the claimant company has a branch in the DIFC, even if the defendant does not and even if the dispute is not otherwise linked to the DIFC. In this case the reinsurance contract was also signed in the DIFC, providing a further gateway to jurisdiction, but the basis of the court judgment is that even if the contract was not made in the DIFC, this would not have affected the result.
The judgment serves as a useful reminder when issuing policies to ensure that an appropriate law and jurisdiction clause is included. In this case, in the absence of a jurisdiction clause, it is possible that the Abu Dhabi Courts will also accept jurisdiction, which would lead to duplication of costs in two sets of proceedings and may eventually result in conflicting judgments between the two courts. Resolving this conflict would require an application to the Union Supreme Court, incurring further costs.