In a judgment that aligns with the stance taken by the Dubai International Financial Centre (“<span class="news-text_medium">DIFC</span>”) Court of Appeal in Carmon, the Abu Dhabi Global Market (“<span class="news-text_medium">ADGM</span>”) Court of First Instance (“<span class="news-text_medium">ADGMCFI</span>”) has confirmed its jurisdiction to issue Worldwide Freezing Orders (“<span class="news-text_medium">WFOs</span>”). This authority extends not only to court litigation but also in support of foreign arbitral award enforcement under the 2015 ADGM Arbitration Regulations (as amended).
The ADGMCFI specifically ruled that the requirement of personal jurisdiction over the defendants or the need for service of proceedings does not limit its jurisdiction to grant a WFO. The court also clarified that it can issue a WFO even against individuals who are not directly involved in the applicant’s claim, judgment or potential judgment - this refers to the <span class="news-text_italic-underline">Chabra</span> jurisdiction. The ruling emphasises the court’s broad authority to support international arbitration enforcement, marking a significant development in the ADGM's approach to cross-border legal matters.
This ruling offers valuable clarity regarding the jurisdiction of the ADGM Courts to issue WFOs. In his judgment, Justice Sir Andrew Smith highlights the distinct features of the ADGM legal system and explains why certain principles of English law may not always apply to the ADGM Courts. The judgment’s endorsement of the DIFC Court of Appeal's decision in Carmon and the emphasis on the comity principle between the DIFC and ADGM Courts provides confidence to practitioners working across both jurisdictions.
For those considering where to enforce an arbitral award, the case reinforces the ADGM Courts' openness to granting WFOs even when neither party is based in the jurisdiction and without the requirement for service of proceedings, especially when the award debtor’s assets are located outside the ADGM. Additionally, the case provides valuable insights into the type of conduct the ADGM Courts may consider when issuing WFOs. This includes instances where the award debtor attempts to frustrate the payment of an award or where there is a risk of assets being concealed or their value diminished to hinder the award creditor’s ability to recover funds.
The case arose from an arbitration conducted under the London Court of International Arbitration Rules, involving a claimant company based in onshore Abu Dhabi and two Cypriot companies as the first and second respondents. The claimant was awarded in its favour against the respondents but the award remained completely unsatisfied as the time limit to challenge the award had expired. The claimant subsequently initiated proceedings against the respondents, including a third respondent incorporated in the ADGM, with all three respondents being part of the same corporate group.
Before the ADGM proceedings were initiated, the respondents attempted to block enforcement of the award by filing bankruptcy proceedings through a group company in Delaware. These proceedings were dismissed, as they were found to have been filed in bad faith. In the ADGM Court, the claimant successfully made an ex parte application for a WFO to freeze the respondents' assets. Simultaneously, the claimant applied for an order for the recognition and enforcement of the award, which was granted, subject to the respondents' application to set aside the award.
The respondents then made two applications that were the focus of Mr Justice Sir Andrew Smith's judgment:
The ADGMCFI dismissed both of the respondents’ applications in this case. Specifically, it rejected the respondents’ challenge to the WFO, reinforcing its earlier jurisprudence, including the case of <span class="news-text_italic-underline">Abu Dhabi Commercial Bank PJSC v Bavaguthu Raghuram Shetty [2021]</span> and the DIFC Court of Appeal decision in <span class="news-text_italic-underline">Carmon</span>.
The court confirmed that its jurisdiction to grant a WFO was derived from Article 13 of Law No. 4 of 2013 (the Founding Law), in conjunction with various sections of the ADGM Courts Regulations and the ADGM Court Procedure Rules. It emphasised that the jurisdiction to issue a WFO was an inherent power of the court, particularly in cases involving the recognition and enforcement of New York Convention arbitration awards under the Arbitration Regulations.
The court also highlighted key distinctions between the ADGM Courts and the English Courts. Unlike English courts, the ADGM Courts' jurisdiction is not contingent on personal jurisdiction over the defendants or the need for service of proceedings. Additionally, the real connecting link requirement between the subject matter and the jurisdiction did not apply in this case, as it was outside the scope of the UK <span class="news-text_italic-underline">Civil Jurisdiction and Judgments Act 1982</span>.
In issuing the WFO, the ADGMCFI followed the guidelines set out in <span class="news-text_italic-underline">Convoy Collateral Ltd v Broad Idea International Ltd [2021]</span>, confirming that the freezing order could be made if there was a judgment or order for a payment that could be enforced, if the respondent had assets and if there was a real risk of the respondent dissipating those assets.
The court's WFO included a restriction on the respondents' subsidiaries, preventing the disposal or devaluation of assets that could be used to satisfy the award. While not a common practice, this was justified by evidence showing that the respondents had transferred shares to avoid paying the award.
Moreover, the ADGMCFI invoked <span class="news-text_italic-underline">Chabra</span> jurisdiction, allowing the WFO to be issued against a person with no direct claim or judgment against them. The court clarified that to secure such an order, the applicant must demonstrate:
The court confirmed that <span class="news-text_italic-underline">Chabra</span> jurisdiction aligned with the Founding Law, as the WFO was issued to assist in enforcing the arbitral award, not as a judgment in the foreign jurisdiction. In relation to the respondents’ set-aside application, the ADGMCFI highlighted the claimant’s duty to make full and frank disclosure when applying for recognition or enforcement of an arbitral award.
The court noted that even if a failure to disclose did not automatically invoke public policy considerations under the Arbitration Regulations, the court retained the authority to set aside an improperly obtained order. Since the respondents did not prove the non-disclosure claim, the set-aside application was dismissed.
The ADGM Court of First Instance’s decision in <span class="news-text_italic-underline">A17 v B17, C17, and Others</span> underscores the broad jurisdictional authority of the ADGM Courts to grant WFOs, even in cases where personal jurisdiction over the defendants is absent and without the need for service of proceedings. This ruling clarifies the application of the <span class="news-text_italic-underline">Chabra</span> jurisdiction, allowing freezing orders to be issued against third parties without a direct claim, provided there is evidence of a real risk that assets will be dissipated to frustrate a potential judgment.
The court’s alignment with the DIFC Court of Appeal's reasoning and its emphasis on the comity principle between the ADGM and DIFC Courts reflects a coherent approach to cross-border dispute resolution in the UAE’s financial free zones. The case also highlights the importance of precise disclosure when seeking enforcement orders and the court's power to set aside orders if improper non-disclosure is proven.
This ruling marks a significant development in the ADGM's approach to international arbitration enforcement, reinforcing its role as a key player in global dispute resolution. The court’s decision ensures that arbitration creditors have effective recourse to protect their awards, even in complex cross-jurisdictional situations.
