 |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | |
The Dubai International Financial Centre |
||
|
You are here: BAILII >> Databases >> The Dubai International Financial Centre >> ARB 021/2022 Muhallam v Muhaf [2024] DIFC ARB 021 (28 August 2024) URL: http://www.bailii.org/ae/cases/DIFC/2024/DARB_021.html Cite as: [2024] DIFC ARB 21, [2024] DIFC ARB 021 |
||
[New search] [Help]
ARB 021/2022 Muhallam v Muhaf
August 28, 2024 Arbitration - Orders
Claim No. ARB 021/2022
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
MUHALLAM
Claimant
and
MUHAF
Defendant
ORDER WITH REASONS OF H.E. JUSTICE SHAMLAN AL SAWALEHI
UPON the Order of H.E. Justice Shamlan Al Sawalehi dated 19 January 2023 recognizing and enforcing a provisional award made by the tribunal in DIAC Arbitration No. 60 of 2022 on 16 November 2022 in favour of the Claimant, Muhallam (the “Claimant”) (the “Enforcement Order”)
AND UPON the Order of H.E. Justice Shamlan Al Sawalehi dated 19 September 2023 dismissing the Defendant’s Application No. ARB-021-2022/2 dated 7 July 2023 disputing the DIFC Court’s jurisdiction and seeking to set aside the Enforcement Order (the “Set Aside Application”)
AND UPON the Claimant’s Application No. ARB-021-2022/3 dated 7 December 2023 seeking the fixing of time within which acts ordered under the Enforcement Order are to be done pursuant to Rules 48.12 and 48.13 of the RDC (the “Fixing of Time Application”)
AND UPON the Order of H.E. Justice Shamlan Al Sawalehi dated 4 April 2024 granting the Claimant’s Fixing of Time Application whereby the Defendant was provided 14 days for compliance (the “Fixing of Time Order”).
AND UPON the Claimant’s Application No. ARB-021-2022/6 dated 8 May 2024 to find the Defendant guilty of contempt of court for non-compliance with the Enforcement Order and the Fixing of Time Order (the “Orders”) (the “Contempt Application”)
AND UPON the Claimant’s Application No. ARB-021-2022/7 dated 17 May 2024 for permission to be granted to issue a writ of sequestration against the property of the Defendant (the “Sequestration Application”)
AND UPON the Defendant’s Application No. ARB-021-2022/9 dated 10 June 2024 for an extension of time to file and serve responsive evidence by 14 June 2024 on the Claimant (the “Extension of Time Application”)
AND UPON the Defendant’s Application No. ARB-021-2022/11 dated 14 June 2024 for consolidation of application and directions (the “Consolidation Application”)
AND UPON hearing counsel for the Claimant and counsel for the Defendant at a hearing held on 25 June 2024 (the “Contempt Hearing”)
AND UPON hearing counsel for the Claimant and counsel for the Defendant at a hearing held on 2 July 2024 (the “Sequestration Hearing”)
IT IS HEREBY ORDERED THAT:
1. The Contempt Application is granted.
2. The Sequestration Application and permission to issue a writ of sequestration against the assets of the Defendant is granted.
3. The Defendant shall pay a fine of USD 100,000, payable within 21 days. Payment to the Court shall be effected by bank transfer to the DIFC Courts’ Bank Account at Emirates NBD.
4. The matter of the Defendant’s contempt shall be referred to the Attorney General of Dubai for his review and consideration of committal.
5. The Defendant shall pay the Claimant’s costs of the Contempt and Sequestration Applications, to be assessed by the Registrar, if not agreed.
Issued by:
Delvin Sumo
Assistant Registrar
Date of issue: 28 August 2024
Time: 8amSCHEDULE OF REASONS
Background
1. By Application No. ARB-021-2022/6 dated 8 May 2024, Muhallam (the “Claimant”) sought an order for contempt of court (the “Contempt Application”) against Muhaf (the “Defendant”) for failure to comply with my Order dated 20 January 2023 (the “Enforcement Order”) for provision of (a) security in support of a proprietary injunction and asset disclosure and (b) a Freezing Order and ancillary relief; and a failure to further comply with my Order dated 4 April 2024 ("Fixing of Time Order") whereby the Defendant was ordered to comply with 6(a), 6(c), 6(d) and 6(k) of the Enforcement Order within 14 days of being served with the Fixing of Time Order (collectively the “Orders”).
2. By Application No. ARB-021-2022/7 dated 17 May 2024 the Claimant sought permission from the Court to issue a writ of sequestration against the Defendant’s property (the “Sequestration Application”) based on the Defendant’s same purported non-compliance with my Orders that underlie the Contempt Application.
3. A hearing was held on 25 June 2024 for the Contempt Application (the “Contempt Hearing”) and on 2 July 2024 a hearing was held for the Sequestration Application (the “Sequestration Hearing”). The following are my reasons for the Contempt Application and the Sequestration Application.
4. Cumulatively, the parties have filed twelve applications to date. Although not an exhaustive account of the procedural history, the following is a summary of what I consider to be most relevant in the context of the Contempt Application and the Sequestration Application.
5. The Enforcement Order was made on 19 January 2023 and served on the Defendant on 9 June 2023. The Defendant’s Application to Set Aside the Enforcement Order was dismissed on 7 July 2023 and the appeal of the Set Aside Order was dismissed by the DIFC Court of Appeal on 19 March 2024.
6. On 4 April 2024 the Claimant’s Application for a Fixing of Time Order was granted. On 8 May 2024 the Contempt Application was filed. On 28 May 2024, the Defendant’s lawyers wrote to the Registry stating that he ought to be permitted to file evidence in answer by 28 June 2024. On 29 May 2024, the Registry emailed the parties with my directions on the timelines for the Contempt Application whereby the Defendant was directed to file and serve his evidence in answer by 14 June 2024.
7. On 10 June 2024 the Defendant filed an application for an extension of time to file and serve responsive evidence by 14 June 2024 on the Claimant. On 11 June 2024 the Defendant sought to vacate the hearing dates for the Contempt Application and the Sequestration Application and consolidate the hearings. On 12 June 2024 the Registry communicated to the parties that the hearings would proceed on the timelines as communicated, while noting that the parties were at liberty to file any applications, as they deemed fit. On 14 June 2024, being the deadline for the Defendant to file his responsive evidence to the Contempt Application the Defendant instead of doing so, filed an Application for Consolidation and Directions (“Consolidation Application”) and again sought until 28 June 2024 to file his evidence in the Contempt Application.
8. The Claimant objected to the Consolidation Application noting, amongst others, that the Defendant was essentially seeking for an extension of time.
The Claim
9. The Claimant commenced the underlying arbitral proceedings against the Defendant and his business Nessim (“Nessim”) in respect of an alleged debt that is owed to the Claimant in the sum of USD 90,826,522. Further to an application for interim relief made by the Claimant to the arbitral tribunal, a Provisional Order on Interim Relief was made requiring the Defendant to provide security to the Claimant in cash or kind for USD 90,826,522.
10. The arbitral tribunal’s Provisional Order was the subject of the DIFC Courts Enforcement Order, and that Enforcement Order was the subject of the Fixing of Time Order. The Contempt Application and the Sequestration Application are based on the Defendant’s purported non-compliance with the Enforcement Order and the Fixing of Time Order.
11. In the interest of clarity, I have reproduced the relevant provisions of the Enforcement Order and the Fixing of Time Order that form the basis of the Contempt Application and the Sequestration Application.
12. The relevant provisions of the Enforcement Order for security in support of a proprietary injunction are as follows:
12.1 6(a) - the Defendant shall, subject to providing other security in a form and amount reasonably agreeable to the Claimant, pay the sum of USD 90,826,522 into a named account of the Claimant’s solicitors in Qatar (“Security Provision”).
12.2 6(c) - the Defendant shall provide, under a sworn affidavit, a complete account to the Claimant’s counsel of all amounts received by the Defendant pursuant to the Sale and Purchase Agreement dated 6 August 2018 (the “SPA” ), including: (i) the accounts in which such sums were received; (ii) any accounts to which such sums were subsequently transferred; (iii) any assets purchased by use of such sums; and (iv) any benefits accruing by use of such sums (“M&A Accounts Provision”).
12.3 6(d) - the Defendant shall also provide to the Claimants counsel, copies of contractual documents pertaining to the M&A transaction or SPA, including any amendments, variations, supplemental agreements, and evidence of receipt of all payments made under the M&A transaction or SPA (“M&A Documents Provision”).
13. The relevant Freezing and ancillary provisions in the Enforcement Order are as follows:
13.1 6(e) - the Defendant, whether by himself, or through his servants or agents or howsoever otherwise until further order by the Tribunal shall be and is hereby restrained from disposing of, dissipating, encumbering, dealing with or diminishing any of his assets, wherever they might be, and whether those assets are in his own name or beneficially held for him by others, up to the value of USD 90,826,522 (“Freezing Order”).
13.2 6(h) - clarifies that the order does not prohibit the Defendant from spending such sums as are reasonably necessary for legal advice and representation at the rate of USD 10,000 per week (such sums to be recorded by his legal counsel and kept available for the Tribunal) and USD 10,000 per week on legal advice and representation and USD 5,000 per week on his ordinary living expenses. But before spending any money, the Defendant must tell Claimant’s counsel where the money is to come from. The Defendant shall also account to the Claimant’s counsel every month for the amount of money spent under this paragraph (“Expenses Provision”).
13.3 6(i) - indicates that the order does not prohibit the Defendant from dealing with or disposing of any of his assets in the ordinary and proper course of business, provided that any disposals be at fair market value and the value of such disposals remain subject to this freezing order and their identity be disclosed to Claimant’s counsel. The Defendant shall account to Claimant’s counsel every month with respect to this exception.
14. Additionally, 6(k), being an ancillary relief to the Freezing Order, stipulates that the Defendant shall and is directed to disclose, under a sworn affidavit, to the Claimants counsel, full details of all his assets exceeding USD 10,000 in value, whether in his own name or not and whether solely or jointly owned and whether the Defendant is interested in them legally, beneficially or otherwise.
The Directions and Consolidation Application
15. As at the date of the Contempt Hearing, the Defendant had not filed any evidence in response to the Contempt Application. However, the Defendant’s counsel filed a skeleton argument in support of the Defendant’s Consolidation Application which was accompanied by an undated fourth witness statement of Muhammad Mahmood (“WSMM4”), senior associate at Al Tamimi & Company.
16. The Defendant’s submission was that the Contempt Application was not “ready to be heard”. This was apparently because the evidential position was not yet settled; there were significant issues of fact to be determined requiring cross examination and the consideration of financial information. On the evidence, except for summarizing the parties’ various applications, its procedural history, and a statement that additional time was essential to fully address the Applications, there was a notable dearth of details and/or explanations as to why the Defendant could not have addressed these matters within the stipulated timelines, or why the Court needed to provide additional time for the Defendant to respond.
17. Although the Defendant identified factual complexities generally as a basis for why the Contempt Application was not ready to be heard, a careful review of the materials reveals the purported complexities were to a large degree anticipatory in nature, including one that was based on the Defendant’s speculation of the Claimant’s anticipated rejection of an alternative offer of security that had been made after the deadline for compliance with the Fixing of Time Order had lapsed. In this regard, it is relevant to note that the offer of the alternative security having been made after the Fixing of Time Order deadline, even if found to be reasonable, is not a defense available to the Defendant in the Contempt Application – it merely goes to purging any contempt.
18. Further and while the Defendant identified that he may wish to potentially cross examine the Claimant as to why he may have set his mind on rejecting any offer of security made, no explanation was provided as to why the Defendant could not have summoned the Claimant to be cross examined on this issue at the Contempt Hearing.
19. Regarding the request for consolidation, although the Defendant identified similarities in contested issues and disputed facts underlying both the Contempt Application and the Sequestration Application as a basis for seeking consolidation of those two applications, no explanations were provided, separate and apart from the applications being related in some manner to the Orders, as to why the other three applications being, an Interim Charging Order Application, the First Examination Application and the Second Examination Application needed to be consolidated and heard at the same time.
20. Similarly, while the Defendant submitted that “significant prejudice” may flow if the Consolidation Application was not granted no details were provided regarding what that might be. Not every linked application warrant consolidation. Indeed, the Defendant eventually withdrew the request to consolidate the three latter applications. In this regard even by the Defendant’s counsels own account at the Contempt Hearing that sequestration is not a stand-alone remedy and is a remedy that can be availed only once there has been a finding of contempt it stands to reason that the Contempt Hearing precedes the Sequestration Hearing.
21. It was further submitted that it is preferable that the DIFC Court does not pre-empt the arbitral tribunal’s decision on the same issue listed to be heard on 4 July 2024. Again, no satisfactory explanations were forthcoming as to why the DIFC Court should adjourn the Contempt Hearing, a matter that was not before the arbitral tribunal. Relevantly, as the Claimant pointed out, the arbitral tribunal itself had dismissed the Defendant’s application for a Stay of the Enforcement Order, indicating the arbitral tribunal’s recognition that the Contempt Hearing was distinct and independent of its processes.
22. Lastly, although the Defendant was aware that the hearing listed for 25 June 2024, was primarily to address the Contempt Application, after oral submissions were concluded on the Consolidation Application Defendant’s counsel informed the Court that he did not have instructions to address the merits of the Contempt Application resulting in the Defendant’s counsel’s unanticipated departure part-way into the Contempt Hearing.
23. In my view, none of the arguments advanced by the Defendant disclose a reasonable basis for granting the Consolidation Application.
The Contempt Application
24. In order to establish contempt by breach of an order of the Court, it is ordinarily necessary to show that the person concerned knew of the terms of the order, acted in a manner which involved the breach of it and knew of the facts that made their conduct a breach.
Service of the Orders and Knowledge thereof
25. As previously noted, the Defendant did not file any evidence in response to the Contempt Application, nor was the case advanced on behalf of the Defendant that he lacked knowledge of the terms of the Orders. It is not, and cannot be, disputed that the Defendant had notice of the existence of the Orders or knowledge of its specific terms.
26. The Enforcement Order was personally served upon the Defendant on 9 June 2023, which Enforcement Order the Defendant sought to set aside. The set aside application was dismissed on 19 September 2023, which the Defendant sought permission to appeal on 10 October 2023. The DIFC Court of Appeal dismissed the Appeal. In addition, the Defendant addressed his purported compliance with the terms of the Enforcement Order in response to the Fixing of Time Application filed by the Claimant on 7 December 2023.
27. I am satisfied that the foregoing, combined with the Defendant’s series of communications with the Registry including on 28 May 2024 stating that he ought to be permitted to file evidence in answer to the Contempt Application by 28 June 2024 undoubtedly demonstrate that Defendant knew of the terms of the Order and his right to file answer in evidence to the Contempt Application.
28. At the time of the Contempt Hearing, the Defendant had not filed any evidence in answer refuting the Claimant’s position purporting his non-compliance with the Orders. The following terms of the Orders are the subject of the purported non-compliance.
The Security Provision - 6(a) of the Enforcement Order
29. A key disputed issue between the parties is whether the Defendant’s 19 April 2024 offer to assign a vendor loan stated to be valued at approximately USD 130 million payable by Nessim to Muhaf (“Muhaf”) (the “Muhaf Loan”) as security constitutes adequate compliance of the Security Provision of the Enforcement Orders and if the Claimant’s rejection of the Muhaf Loan Assignment offer is (un)reasonable.
30. A related dispute between the parties pertain to the sum of the security currently owed to the Claimant, which the Orders stipulate as being USD 90,826,522, and/or whether a USD 7 million the Defendant is supposed to have paid the Claimant is deductible such that the sum currently owing to the Claimant should be USD 83,826,522. In the absence of a variation of the Order, for current purposes, the sum of the security owed remains that which was stipulated in the Enforcement Order.
31. It appears to be common ground that the terms of the Orders obligate the Defendant to make either an outright payment in the sum of USD 90,826,522 into an account held by International Law Chambers LLC to the order of the Tribunal or alternatively provide other security in a form and amount that is reasonably agreeable to the Claimant. From the outset, the Defendant took the position that he is unable to comply with the payment obligation due to a lack of liquid funds. On 19 April 2024, on the eve of the deadline for complying with the Fixing of Time Order, the Defendant offered to assign the Muhaf Loan to the Claimant as security. According to the Defendant Muhaf is a company which is wholly owned and controlled by the Defendant. Nessim is the Second Respondent in the underlying arbitration. Muhaf is said to hold 65% of the shares in Nessim with the remaining 35% said to be held by an Abu Dhabi fund called Nawaz.
32. The Defendant made another offer of security to the Claimant on 22 June 2024, which offer having been made after the lapse of the deadline for complying with the Fixing of Time Order cannot constitute a defence for the purported breach of the Orders which is the subject of this Contempt Application – the Defendant’s second offer of security, even if deemed to be in a form that ought reasonably to be agreeable to the Claimant, merely goes to purging any contempt.
33. My review of the Court record reveals that the assignment of the Muhaf Loan was previously contemplated by the parties as part of their settlement discussions that commenced well before the filing of the Contempt Application. While the parties’ positions regarding the reasons for the breakdown of settlement negotiations differ, concerns regarding the feasibility of the Muhaf Loan’s legal assignment to the Claimant, perhaps amongst others, appears to have been a likely factor.
34. On 23 April 2024 the Claimant rejected the Defendant’s offer of the Muhaf Loan assignment. Based on the Claimant’s evidence its reasons for rejecting the Muhaf Loan assignment appear to be threefold: First, the Defendant’s inability to confirm that the necessary approvals for the assignment of the Muhaf Loan had been obtained. Second, the lack of certainty about when the Muhaf Loan becomes “due and payable” combined with the absence of a repayment plan and prior multiple extensions that had been granted for the loan repayment. Third, the lack of visibility of Nessim’s liability and ability to repay the Muhaf Loan including the absence of confirmation that Nessim had the necessary resources to repay the Muhaf Loan.
35. On 29 April 2024, the Defendant responded to the Claimant stating that he is capable of assigning the Muhaf Loan and, to the extent required, will secure all necessary consents and approvals for the Muhaf Loan’s legal assignment; asserting that the Claimant was aware of Nessim’s financial standing, and pointing to Nessim’s 2024 EBIDTA which according to it exceeded USD 50 million and asking the Claimant to reconsider the Muhaf Loan assignment.
36. On 30 April 2024 the Claimant wrote to the Defendant, amongst others, expressing its continued concerns about the Defendant’s ability to secure necessary approvals for the Muhaf Loan assignment, particularly considering the Defendant’s past inability to do so and in light of the Defendant’s lack of confirmation as to whether he was the sole decision-making authority in Muhaf and whether Muhaf would be bound by his acts. Further, the Claimant expressed that having not received any confirmation from the Defendant that Nessim had the necessary resources to repay the Muhaf Loan, the EBIDTA did not assuage the Claimant’s concerns about Nessim’s liquidity to service the Muhaf Loan, particularly since the EBITDA is merely a measure of profitability for investors; and its concern regarding the continuing lack of clarity pertaining to the payment terms of the Muhaf Loan.
37. In the same correspondence to the Defendant, the Claimant identified as an alternative and agreeable form of security six assets that was said to have been purchased by the Defendant from the monies received under the M&A and inquired as to the Defendant’s willingness to provide security over those assets.
38. By letter dated 1 May 2024 the Defendant responded to the Claimant essentially restating that he is capable of assigning the Muhaf Loan and did not wish to engage further on the issue; reiterated his statement in the 19 April 2024 letter that he will secure all necessary consents and approvals for the Muhaf Loan’s legal assignment; and dismissing the Claimant’s proposal for security over the alternative assets identified as “excessive” and “unnecessary.”
39. Separate and apart from the Defendant’s lack of response and/or confirmation addressing certain concerns raised in the Claimant’s communications, namely as to whether the Defendant was the sole decision-maker for Muhaf and Muhaf would be bound by his acts, confirmation of Nessim’s liquidity and liability, and lack of clarity regarding the repayment plan, what is perhaps most striking is that the Defendant’s position regarding the perfection of the Muhaf Loan assignment and any repayment of the Muhaf Loan appears highly speculative and contingent on the prospective realization of several factors which may or may not materialize.
40. Leaving aside the value of the Muhaf Loan and even if the Muhaf Loan had not been indefinitely suspended and remained payable, it is not disputed by the Defendant that repayment has been deferred on multiple instances with no firm timelines forthcoming regarding its repayment. Further, the Muhaf Loan repayment also appears to be contingent on not only the profitability, but also on the working capital requirements of Nanette’s (“Nanette”), said to be a wholly owned subsidiary of Nessim. Additionally, repayment of the loan appears to be further contingent on a proposed deal for the sale of 80% of Nanette to a potential buyer, Nancy , being finalized.
41. Given the nearly 1.5 years since the potential assignment of the Muhaf Loan to the Claimant was initially contemplated, it is not insignificant, in my view, that the Defendant continued, as at the deadline for complying with the Orders, to be unable to confirm that the necessary consents and approvals had been obtained to legally assign the Muhaf Loan to the Claimant, or confirm a repayment plan, or furnish satisfactory evidence of Nessim’s ability to repay the loan as of the deadline date for complying with the Orders.
42. In the foregoing circumstance, the Defendant’s mere persistently insistent claims of his ability to assign the loan, or that his offer of the Muhaf Loan Assignment is compliant with the security provision of the Orders lacks substance and, in my view, objectively unreasonable and inadequate to be compliant with the Orders.
43. The Defendant’s stated position on the viability and adequacy of the Muhaf Loan also appears to me to be inconsistent and at odds with the position taken at the Fixing of Time Hearing on 4 April 2024 that the Defendant did not have cash or free assets to comply with the Security Provision of the Enforcement Order.
44. This is particularly so in light of the alternative six assets the Claimant identified as being an agreeable form of security which the Defendant without providing any reasons cursorily dismissed out of hand as being “excessive” and “unnecessary”.
45. It is no answer, and quite frankly somewhat troubling to the Court, the position taken by Defendant’s counsel during the Contempt Hearing that the Court “happily need not decide” on the adequacy of the Muhaf Loan security offered by the Defendant because the same issue was to be heard in short order and a decision forthcoming from the arbitral tribunal. This not only fails to appreciate the distinctness between the arbitral process and contempt proceeding before this Court but also demonstrates a troubling disregard for a contempt of court proceedings before this Court.
46. Based on the foregoing, and having carefully considered the overall circumstances and the available evidence, including the Defendant’s position at the Fixing of Time Hearing that he did not have cash or free assets available to comply with the Security Provision of the Enforcement Order, I am satisfied that the Claimant has discharged his burden of demonstrating that the Defendant’s 19 April 2024 offer of the Muhaf Loan assignment to the Claimant is inadequate to comply with the Security Provision of the Orders and the Defendant is in breach of 6(a) of the Enforcement Order.
M&A Accounts Provision – 6(c) of the Enforcement Order
47. The Claimant’s evidence is that as of the deadline for complying with the Fixing Time Order the Defendant was non-compliant with 6(c) by virtue of having failed to provide the relevant account information for the account to which sums were subsequently transferred. This is notwithstanding the Defendant having stated in his 13 July 2023 letter to the arbitral tribunal that he was compiling the relevant account information in an affidavit to be provided to the Claimant.
48. A review of the Court record corroborates the Claimant’s account that the Defendant’s affidavit dated 11 October 2023 while confirming certain information provided in the 13 July 2023 letter, namely that it had provided the names of the entities to which the received sums were subsequently transferred, is silent as to which accounts it was subsequently transferred and provides no further disclosure on the issue. Further, the Defendant has not provided any reasons explaining the failure to adduce such evidence, in answer to the Contempt Application.
49. I am satisfied that the Claimant has established the Defendant’s non-compliance with this provision of the Enforcement Order.
M&A Documents Provision – 6(d) of the Enforcement Order
50. The Claimant’s evidence is that the Defendant is non-compliant with the requirement to provide copies evidencing the receipt of all payments made under the M&A transaction or SPA, including evidence of receipt of interest on the USD 100 million Muhaf Loan given by Muhaf to Nessim.
51. A review of the Court record corroborates the lack of receipts furnished as described by the Claimant, and while the Defendant states the amount of interest purportedly received, no corroborating receipts were furnished. The Defendant has also failed to provide any reasons explaining the failure to furnish the receipts in answer to the Contempt Application.
Freezing Order - 6(e) of the Enforcement Order
52. The Claimant’s evidence is that the Defendant failed to disclose the value and type of assets he transferred from a Julius Baer (“JB”) Account when he terminated and closed the JB account on 21 November 2023 and failed to disclose to which accounts those assets were transferred. Further that the Defendant without informing the Claimant made credit card payments and transferred USD 900,000 from his DIB Account to his JB Account in non-compliance with the requirement to account to the Claimant regarding exceptions to the freezing order.
53. A review of the Court record indicates that the Defendant except for noting that the USD 900,000 transfer had been made for the purpose of paying the Claimant, has not provided any reasons explaining the failure to provide an account to the Claimant regarding exceptions to the freezing order, in answer to the Contempt Application.
54. I am satisfied that the Claimant has established the Defendant’s non-compliance with this provision of the Enforcement Order.
Expense Provision - 6(h) of the Enforcement Order
55. The Claimant’s evidence is that the Defendant failed to disclose information pertaining to the source of funds prior to spending any money and also failed to furnish a monthly account for the amount of money spent.
56. A review of the Court record confirms that the last accounting of expenditure provided by the Defendant was in a letter dated 11 October 2023 to the tribunal providing non-itemized legal fees paid between July and October 2023 and indicates the payments originate from the same source identified in the 13 July 2023 letter. The Defendant has not provided any reasons explaining the failure to adduce any evidence on this issue, in answer to the Contempt Application. I am satisfied that the Claimant has established the Defendant’s non-compliance with this provision of the Enforcement Order.
Ancillary Asset Disclosure – 6(k) of the Enforcement Order
57. The Claimant’s evidence is that the Defendant failed to disclose details of all his assets exceeding USD 10,000 in value. Despite stating in the 13 July 2023 letter that he was in the process of preparing an affidavit containing that information, the Defendant’s affidavit of 11 October 2023 failed to disclose any information about such assets
58. A review of the Court record corroborates the lack of the asset disclosure in the Defendant’s 11 October 2023 affidavit as described by the Claimant. Further, the Defendant has not provided any reasons explaining the failure to adduce any evidence on this issue, in answer to the Contempt Application. I am satisfied that the Claimant has established the Defendant’s non-compliance with this provision of the Enforcement Order.
59. The Defendant’s non-compliance with the Proprietary Injunction was clear as of 4 April 2024 based upon which the Fixing of Time Order was issued. On 30 April 2024, the Claimant again rejected the assignment of the Muhaf Loan as a reasonable form of security and reminded the Defendant of his non-compliance, including his non-compliance with the provisions of the M&A Accounts Obligation and M&A Documents Obligation. The foregoing combined with the Defendant’s position during the Fixing of Time Hearing that he did not have cash or free assets to comply with the Security Provision of the Enforcement Order is also indicative that the Defendant knew or ought reasonably to have known of the inadequacy of the Muhaf Loan Assignment as a reasonable form of security when making the offer.
60. I am undoubtedly satisfied that the overall circumstances sufficiently demonstrate that the Defendant was aware of the facts that made his conduct a breach, yet failed to take reasonable steps to address the Claimant’s concerns and to become compliant with the Orders.
The Sequestration Application
61. In addition to the Contempt Application, the Claimant filed an application seeking the Court to grant permission to issue a writ of sequestration against the assets of the Defendant to enable the Defendant’s property to be seized and retained until the Defendant is compliant with the Orders.
62. It is not disputed that pursuant to RDC 48.8 this Court may permit a writ of sequestration to be used as a method of enforcement if a judgment/order requiring an act to be done within a certain period has not been complied with, or a judgment/order preventing an act from being done has been disobeyed.
63. It was debated by the parties as to whether a writ of sequestration is available as a standalone remedy to compel a defendant with an order of the court, or if the remedy is only ordered in contempt applications. While the Defendant’s counsel submitted that a writ of sequestration forms part of the law of contempt and the remedy is in practice only ordered in contempt applications, the Defendant’s counsel did not dispute that it cannot be a stand-alone remedy. This distinction is nonetheless moot, given the outcome of the contempt application.
64. Similarly, while there was some debate as to the applicable standard of proof to establish a breach of Orders in the context of granting a writ of sequestration, Defendant’s counsel, correctly in my view, did not contest that it was not the civil standard of balance of probabilities.
65. In the context of the sequestration application, the Defendant took the position that although the second offer of Muhaf shares as an alternative form of security was made outside the period imposed by the Fixing of Time Order, if the Court finds that it was a reasonable offer of security, any breach of the Enforcement Order has been remedied and the issuance of a writ of sequestration is not appropriate.
66. Based on the evidence adduced, including after reviewing the letter from Nessim’s representatives letter to the arbitral tribunal dated 24 June 2024, which the Court was referred to consider as a rebuttable to the Claimant’s concerns about the valuation of the Muhaf Shares, I am not satisfied that the second offer is objectively reasonable for the specific purpose of granting permission to issue a writ of sequestration. I agree with the Claimant that it does not take into account the Muhaf Loan. Further, notwithstanding the term sheet, the valuation of the Muhaf shares is not finalized and likely subject to change.
67. Finally, I disagree with the Defendant’s position that the issuance of a writ of sequestration is oppressive and abusive in respect of precisely the same alleged breaches where it has already sought to commit the Defendant for contempt. In my view, the Contempt Application and the Sequestration Application serve different purposes and to the extent the Claimant is non-compliant with the Orders, the writ of sequestration is a form of remedy that seeks to achieve compliance.
Conclusion
68. Pursuant to RDC 52.37.3, I impose a fine of USD 100,000 on the Defendant, payable within 21 days. Payment to the Court shall be effected by bank transfer to the DIFC Courts’ Bank Account at Emirates NBD.
69. Pursuant to RDC 52.37.1, having found the Defendant guilty of contempt of Court in failing to comply with the Orders and I refer the matter of his contempt to the Attorney General of Dubai for his review and consideration of committal.
70. Pursuant to RDC 48.8 permission to issue a writ of sequestration against the assets of the Defendant is granted.
71. The Defendant shall pay the Claimant’s costs of the Contempt and Sequestration Applications, to be assessed by the Registrar, if not agreed.