From Cold to Bold: DIFC Court of Appeal Warms Up to Freezing Orders in Support of Pending Foreign Judgments

Unlike the English Courts, which are expressly authorised to grant injunctions in support of prospective foreign judgments, the DIFC Courts do not have the same clear authority under the Judicial Authority Law or the DIFC Court Law.

This absence of specific wording was the deciding factor in Sandra Holding Ltd v Al Saleh,¹ where the DIFC Court of Appeal ruled that the Courts lack jurisdiction to grant freezing orders in support of a pending judgment of a foreign court. This was seen as a major setback for creditors and international litigants who relied on the DIFC Courts to prevent the dissipation of assets.

However, in a recent significant decision of Carmon v Cuenda² the DIFC Court of Appeal unanimously found that Sandra Holding was wrongly decided and held that the Courts have an implicit jurisdiction to grant such remedies. This sends a clear message that the DIFC Courts have jurisdiction to assist creditors and prevent the wrongful dissipation of assets.

A PURPOSIVE APPROACH

In Sandra Holding, the DIFC Court of Appeal ruled that it lacked jurisdiction to grant interim relief in support of any pending judgment of a foreign court because:

• in the absence of any nexus to the DIFC, the only jurisdictional gateway that is potentially available is Article 5(A)(1)(e) of the Judicial Authority Law, which confers exclusive jurisdiction to the DIFC Court of First Instance for any claim or action over which such jurisdiction is "in accordance with DIFC Laws and DIFC Regulations";
• while Article 24 of the DIFC Court Law confirms the Court's jurisdiction to ratify any judgment, order or award of any recognised foreign court, the Court of Appeal held that such provision was "not a source of jurisdiction where there is no judgment or award to ratify"; and
• similarly, while certain provisions of the Rules of the DIFC Courts ("RDC") confer powers on the Court of First Instance to grant interim remedies in support of foreign proceedings, those provisions of the RDC were not sources of jurisdiction themselves.

In Carmon v Cuenda, the Court found this approach to be unduly restrictive and added:

"If a defendant in proceedings in a foreign court, whose judgment could be enforced in the DIFC, were to dissipate its assets to defeat execution of an apprehended judgment in the foreign jurisdiction and in the other jurisdiction in which the foreign judgment might be enforced, that would be a step which would render the jurisdiction and powers of an enforcing court nugatory".

Applying this purposive approach, the Court went on to state that the express statutory jurisdiction to enforce a foreign judgment under Article 24 of the DIFC Court Law "must encompass, if only by implication, the grant of power necessary to prevent that jurisdiction from being thwarted".³ Likewise, the broad powers under RDC 25.24(1) to grant interim relief in relation to proceedings which "…will take place outside the DIFC", was taken to mean that the Court is empowered to ensure that such express jurisdiction is effective.⁴

CONCLUSION

While the discretionary nature of freezing orders remains unchanged, creditors and international litigants can be reassured that worldwide freezing orders are now (once again) obtainable from DIFC Courts in support of pending foreign judgments. This decision reaffirms the DIFC Courts' commitment to support international trade and strengthens their role in litigants' international enforcement strategies.

1      [2023] DIFC CA 003

2      [2024] DIFC CA 003.

3      [194].

4      [156] and [202].