Freezing Orders: DIFC Courts Expand Role in Global Asset Recovery with Landmark Decision
Freezing Orders: DIFC Courts Expand Role in Global Asset Recovery with Landmark Decision
17 février 2025
GlobalÉmirats arabes unis
GlobalÉmirats arabes unis
GlobalÉmirats arabes unis
Carmon Reestrutura-Engenharia E Serviços Técnios Especiais, (SU) LDA v Antonio Joao Catete Lopes Cuenda [2024] DIFC CA 003
Key Takeaways
Preserving Assets Across Borders: The DIFC Courts can issue freezing orders (“FOs”) in support of foreign proceedings, even where no foreign judgment has yet been obtained. This prevents assets from being dissipated before enforcement can take place.
Revision of Sandra Holding: Previously, per Sandra Holding, the DIFC required a foreign judgment before issuing FOs in support of foreign proceedings, if jurisdiction could not otherwise be established under Article 5(A) of the DIFC’s Judicial Authority Law (“JAL”).[1] The decision underscores the DIFC Courts’ commitment to facilitating international trade and asset recovery.
Alignment with Global Common Law Standards: The DIFC Courts have reinstated global common law principles, including Lord Leggatt’s enforcement principle from Broad Idea.[2] This principle allows courts to issue FOs to preserve assets for the enforcement of prospective foreign judgments, without interfering in foreign proceedings themselves.
Enhancing Global Competitiveness: The DIFC Court of First Instance’s decision to allow an appeal of its order upholding Sandra Holding, and the DIFC Court of Appeal’s willingness to depart from it, reflect a pragmatic and commercial approach. This decision enhances the DIFC’s status as a leading jurisdiction for international asset recovery, competing with hubs such as London, New York, and Singapore.
The Facts of the Case
The claimant (“C”), an Angolan construction company, claimed that its former senior officer (“D”) misappropriated over USD 20 million, transferring the funds to accounts worldwide, including two with a Dubai-based bank.
C obtained a proprietary injunction and a worldwide FO (“WFO”) from the High Court of Hong Kong over the misappropriated funds and their traceable proceeds, in support of proceedings issued in Hong Kong. However, the Dubai bank was not bound by the Hong Kong WFO, so C sought and obtained an ex parte WFO and disclosure order from the DIFC Courts, in support of the Hong Kong proceedings. This aimed to prevent dissipation of the DIFC-based funds and obtain account balances pending determination of those proceedings and enforcement of any judgment in them.
At the return hearing, D argued that the DIFC Courts lacked jurisdiction to grant such a WFO, relying on the DIFC Court of Appeal’s decision in Sandra Holding. That decision, amongst other things, held that the DIFC Courts could not issue FOs to support foreign proceedings unless there was already a foreign judgment enforceable in the DIFC (assuming that DIFC jurisdiction could not otherwise be established through one of the JAL gateways). Bound by that decision, the Judge set aside the WFO, but granted C permission to appeal.
C appealed, arguing that the DIFC Courts have jurisdiction to preserve assets in the DIFC at risk of dissipation, even where no foreign judgment yet exists, and the decision in Sandra Holding was wrongly decided.
The Decision
The DIFC Court of Appeal upheld C’s appeal and reinstated the WFO, confirming that the DIFC Courts have jurisdiction to issue FOs in support of anticipated foreign judgments. The Court gave the following reasons:
Statutory Powers: The DIFC Courts’ founding laws and procedural rules empower them to grant interim remedies such as FOs, ensuring that their enforcement jurisdiction is not frustrated.
International Alignment: The Court Lord followed Leggatt’s enforcement principle from Convoy Collateral, reinforcing the distinction between supporting local enforcement and adjudicating the foreign dispute.
Department from Sandra Holding: The Court found that Sandra Holding unduly restricted its power to issue FOs in support of foreign proceedings. It determined that this restriction was legally flawed, engaging its statutory powers as grounds for departure.
Conduit Role: The Court emphasised the DIFC’s role as a key bridge between international and onshore Dubai legal systems, providing practical asset protection tools in cross-border cases.
This decision reinforces the DIFC’s role in the global market for "litigation business", solidifying its reputation as a forward-thinking and efficient forum for international dispute resolution in a key financial hub.
[1](1) Sandra Holding Ltd (2) Nuri Musaed Al Saleh v (1) Fawzi Musaed Al Saleh (2) Ahmed Fawzi Al Saleh (3) Yasmine Fawzi Al Saleh (4) Farah El Merabi [2023] DIFC CA 003
Law No. 12 of 2004 in respect of the Judicial Authority at DIFC as amended
[2]Broad Idea International Ltd v Convoy Collateral Ltd (British Virgin Islands) [2021] UKPC 24.
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