Interim Relief in the DIFC Courts: Recent Developments and Comparative Lessons Learned

Interim relief plays a vital role in legal proceedings by safeguarding the rights and interests of parties pending the final determination of disputes. The Dubai International Financial Centre (DIFC) Courts have established themselves as flexible and progressive institutions with a clear regime for granting such relief. This article explores the various forms of interim relief available in the DIFC Courts, analyses recent significant case law, and draws comparisons with the position in the courts of England and Wales.

The Framework for Interim Relief in the DIFC Courts

The DIFC Courts derive their powers to grant interim relief from multiple sources, including the DIFC Courts Law (Law No. 10 of 2004) and the Rules of the DIFC Courts (RDC). Article 32 of the DIFC Courts Law empowers the courts to make any interim order deemed necessary in the interest of justice. The RDC subsequently elaborates on specific forms of interim relief, such as freezing orders, injunctions and interim payments.

The fundamental purpose of interim relief is to prevent undue injustice or irreparable harm from befalling a party whilst a case progresses through the courts. Typically, an applicant must demonstrate that there is a triable issue, that damages would not constitute sufficient remedy, and that the balance of convenience favours granting the relief sought.

Recent Decisions on Common Forms of Interim Relief within the DIFC Courts

Injunctive Relief

In LXT Real Estate Broker LLC v. SIR Real Estate LLC [2023] DIFC CFI 050, Justice French confirmed that interim relief may be sought as a standalone proceeding, even where no final relief is contemplated. As stated in his judgment, “a claim for interim relief may be brought as a stand-alone proceeding as appears from Article 35(3) of the DIFC Law of Damages and Remedies”. The DIFC Courts have generally applied Lord Diplock’s requirements from American Cyanamid Co v Ethicon Ltd [1975] AC 396, namely that the claim is “not frivolous or vexatious; in other words, that there is a serious issue to be tried”, and that based on the available material, the applicant has a “real prospect of succeeding in his claim for a permanent injunction at trial”.

A transformative development emerged in Carmon Reestrutura-engenharia E Serviços Técnios Especiais, (Su) LDA v Antonio Joao Catete Lopes Cuenda [2024] DIFC CA 003. In this case, the DIFC Court of Appeal expanded its jurisdiction to grant injunctive relief in support of foreign proceedings, even where no direct nexus with the DIFC exists. This decision marked a departure from the more restrictive precedent established in Sandra Holding v. Saleh [2023] CA 003/2023. The Court elucidated that its recognition and enforcement jurisdiction inherently encompasses the power to issue protective measures, such as freezing orders, necessary to prevent frustration of prospective enforcement. This ruling represents a significant vindication of the DIFC Courts’ role as a hub for international dispute resolution, facilitated by their pragmatic approach to judicial assistance.

Freezing Orders

The case of Ithmar Capital Ltd v 8 Investment FZE [2008] DIFC CA 001 underscores the DIFC Courts’ approach to freezing orders. In this matter, the initial ruling granted Ithmar Capital Ltd an injunction preventing 8 Investment Inc from disposing of certain assets, with the aim of securing funds potentially owed to Ithmar. The Court of Appeal evaluated the appropriateness of this injunction by considering various factors, including the risk of asset dissipation and the balance of convenience between the parties. After thorough examination of the evidence and legal arguments, the appellate court upheld the injunction, concluding that the lower court had acted within its discretion and that the injunction was justified to protect Ithmar’s interests pending resolution of the underlying dispute.

Interim Payments

In Vannin Capital PCC plc v Al Khorafi [2014] DIFC CFI 036, the DIFC Courts examined key principles governing interim payment orders. The Court applied Part 24 of the DIFC Court Rules, which permits interim payments in circumstances where the defendant has admitted liability, where the claimant has obtained judgment for damages to be assessed, or where the claimant is likely to obtain a substantial monetary judgment. The Court emphasised the necessity of assessing whether the claimant had a reasonable prospect of success and whether the requested amount was proportionate and justified. It also weighed the balance of convenience, ensuring that an interim payment would not cause undue prejudice to the defendants. Additionally, the Court evaluated the sufficiency of security for repayment if required and maintained a cautious approach to avoid pre-judging the merits of the case. The decision effectively balanced fairness with the need to preserve parties’ positions pending a final judgment.

Anti-Suit Injunctions

The case of Ledger v Leeor [2022] DIFC ARB 016 involved an application by the Claimant, Ledger, for an ex parte interim anti-suit injunction from the DIFC Courts to restrain the Defendant, Leeor, from proceeding with a case in the Dubai Courts of First Instance (Case Number 001 of 2022). Ledger contended that the DIFC Courts had jurisdiction based on an exclusive jurisdiction clause, referencing the precedent established in Emirates NBD Bank & ors v KBBO CPG Investment LLC & ors [2020] CFI-045, where an anti-suit injunction was granted against proceedings in the local Dubai Courts. Justice Michael Black, presiding over the DIFC Court, considered Ledger’s application and the relevant legal principles, including the requirement to demonstrate a high degree of probability that the DIFC was the appropriate forum for the dispute. The Court granted the interim anti-suit injunction, restraining Leeor from continuing the proceedings in the Dubai Courts until further order. Nevertheless, the DIFC Court of Appeal has emphasised that anti-suit injunctive relief is ordinarily more difficult to obtain in the DIFC Court than a stay in the foreign court.

Key Principles Developing from the Judgments

The DIFC Courts’ approach to interim relief stands at the intersection of principles of equity, proportionality and justice. Recent cases have focused on the following key elements:

• Serious question to be tried: Applicants are required to demonstrate a prima facie case.
• Sufficiency of damages: The court considers whether an award of damages would constitute an adequate remedy.
• Balance of convenience: The court assesses the relative injury to the parties from either granting or refusing the relief.
• Undertaking in damages: Applicants are typically required to provide an undertaking to compensate against any wrongfully granted interim relief.

Comparative Analysis with England and Wales

The DIFC Courts’ approach to interim relief mirrors many practices in England and Wales, largely due to the influence of English common law principles. However, there are notable nuances and differences worth exploring.

Freezing Orders

In England and Wales, worldwide freezing orders (WFOs) are granted under Section 37 of the Senior Courts Act 1981, which empowers the court to grant an injunction “in all cases in which it appears to be just and convenient to do so”. As confirmed in dos Santos v Unitel SA [2024] EWCA Civ 1109, the court must be satisfied of three distinct elements:

• First, the applicant must establish a “good arguable case” on the merits. The Court of Appeal has definitively clarified that this test follows the formulation in The Niedersachsen [1983] 2 Lloyd’s Rep 600: “one which is more than barely capable of serious argument, but not necessarily one which the judge considers would have a better than 50 per cent chance of success”. Sir Julian Flaux rejected the suggestion that the three-limb test from Brownlie used for jurisdictional gateways should apply to freezing orders. Lord Justice Popplewell added that this threshold is effectively equivalent to the “serious issue to be tried” test used for other interim injunctions, stating that a claim “which is more than merely arguable and carries some degree of conviction is no different in substance from one which is more than barely capable of serious argument”.
• Second, the applicant must demonstrate a real risk, judged objectively, that a future judgment would not be met because of an unjustified dissipation of assets.
• Third, it must be just and convenient in all the circumstances to grant the freezing order. This element derives directly from Section 37 and requires careful consideration of whether the invasive nature of the relief is appropriate.

Unlike ordinary interim injunctions, WFOs are not granted based on a balance of convenience test. As explained by the Privy Council in Broad Idea International v Convoy Collateral [2021] UKPC 24, the interest protected by a freezing injunction is “the (usually prospective) right to enforce through the court’s process a judgment or order for the payment of a sum of money”. This distinction impacts how courts approach costs orders in WFO applications, with unsuccessful respondents typically ordered to pay costs rather than having costs reserved until trial.

The Court of Appeal’s decision in dos Santos provides welcome clarity and brings English law in line with approaches adopted across Commonwealth jurisdictions including Australia, New Zealand, Singapore, Hong Kong, and the British Virgin Islands, where the Niedersachsen test has been consistently applied.

Anti-Suit Injunctions

The English courts have historically taken a restrictive approach to anti-suit injunctions, particularly under the influence of European Union jurisprudence before Brexit. This cautious stance was exemplified in Turner v Grovit [2004] ECR I-03565 and Allianz v West Tankers [2009] ECR I-00663, where the Court of Justice of the European Union (CJEU) held that anti-suit injunctions were incompatible with the Brussels regime’s principle of mutual trust among Member States. Consequently, the English courts were precluded from restraining proceedings in EU courts, even where a contractual jurisdiction clause was in play.

Since the UK’s departure from the EU, however, the constraints imposed by EU law no longer apply. The English courts have reaffirmed their willingness to grant anti-suit injunctions in a broader range of circumstances. In Enka Insaat v Chubb [2020] UKSC 38, the Supreme Court confirmed the English courts’ authority to issue anti-suit injunctions to uphold arbitration agreements, emphasising their role in maintaining the integrity of contractual dispute resolution mechanisms. Similarly, in Times Trading Corporation v National Bank of Fujairah [2020] EWHC 1078 (Comm), the High Court underscored that anti-suit relief remains available where a party acts unconscionably by pursuing foreign proceedings in breach of an exclusive jurisdiction clause.

By contrast, the DIFC Courts have been more proactive in granting anti-suit injunctions, unconstrained by the historical reluctance of the English courts. Given their broad jurisdictional remit and an approach rooted in common law principles, the DIFC Courts have demonstrated a greater willingness to intervene where foreign proceedings threaten contractual dispute resolution agreements or pose a risk of parallel litigation.

The post-Brexit landscape has reinforced the English courts’ ability to issue anti-suit injunctions, aligning them more closely with the approach taken by the DIFC Courts. Nonetheless, while the English courts have become more flexible, they continue to apply a rigorous test, requiring a clear breach of a jurisdiction or arbitration agreement, evidence of vexatious or oppressive conduct, or a compelling need to protect their own jurisdiction.

Ultimately, the divergence between the English and DIFC Courts reflects differing legal traditions and policy considerations. While the English courts remain cautious, their post-Brexit jurisprudence suggests a shift towards a more assertive stance in granting anti-suit injunctions, bringing them closer to the DIFC model.

Interim Payments

While both jurisdictions allow for interim payments, the threshold in England, set by Eagle Star Insurance Co. Ltd v. Karasiewicz [2002], is arguably higher. The readiness of the DIFC Courts to order interim payments in cases such as Vannin Capital PCC plc v Al Khorafi [2014] DIFC CFI 036 demonstrates their pragmatic approach to addressing immediate financial needs.

Security for Costs

Security for costs is available as of right in both jurisdictions. In England, it is given a statutory framework in the Civil Procedure Rules with specified scenarios in which it operates, including cases where the claimant is outside the jurisdiction. The DIFC Courts have followed a similarly framed approach but are particularly cognisant of their international clientele and the need to balance accessibility with the protection of defendants’ interests.

Commentary and Food for Thought

The DIFC Courts’ approach to interim relief exemplifies their commitment to providing a fair and efficient dispute resolution environment. Their decisions reflect a careful balancing act between protecting parties’ rights and avoiding undue interference in commercial activities.

The recent clarification in Carmon significantly expanded the jurisdictional scope of the DIFC Courts, establishing them as a “global guardian” of commercial justice. This decision, which permits the courts to issue protective measures in aid of foreign proceedings, aligns with the realities of today’s globalised economy, where the risk of asset dissipation transcends borders. The judgment also highlights the crucial role of judicial discretion in ensuring proportionality and preventing jurisdictional overreach.

As the DIFC Courts continue to evolve, they may consider adopting mechanisms similar to those in England and Wales, such as expedited interim relief for low-value claims. Such reforms would further enhance access and efficiency without compromising rigour or fairness.

Finally, the interaction between proceedings before the DIFC Courts and arbitration warrants consideration. As discussed in relation to Ledger v Leeor [2022] DIFC ARB 016, the courts’ willingness to enforce arbitration agreements demonstrates their arbitration-friendly stance. Nevertheless, caution is necessary to ensure that interim relief does not impinge upon arbitral autonomy.

Conclusion

Interim relief before the DIFC Courts represents a dynamic area of law in constant evolution. Recent decisions, such as Carmon showcase the courts’ development, flexibility, and unwavering commitment to the interests of justice. While similar in principle to the approach taken in England and Wales, the DIFC Courts’ practices are thoughtfully tailored to reflect their unique context. As this jurisdiction continues to mature, its practices are likely to both influence and be influenced by international legal developments, further cementing the DIFC Courts’ position as a premier forum for the resolution of commercial disputes.