The DIFC Courts confirm their availability to grant interim Mareva or Freezing Orders in support of foreign claims

Andrew Stevens explains the practical implications of the DIFC Court of Appeal’s recent judgment in Carmon Reestrutura-Engenharia e Serviços Técnios Especiais, (SU) LDA v Antonio Joao Catete Lopes Cuenda [2024] DIFC CA 003 (26 November 2024) which overrules its own judgment from 6 September 2023 in Sandra Holding v Al Saleh [2023] DIFC CA 003. 

In Carmon, a Court of Appeal made up of Justices Robert French, Sir Peter Gross and Rene Le Miere has cemented the DIFC Courts’ intent and power to fulfil an important role in what Lord Neuberger[1] previously described as[2],

“the increasingly sophisticated world of international movement of goods, assets and money, and the formation of companies and the hiding of assets, [in which] the courts have to be astute to ensure that the law keeps pace with modern developments and is not flouted.”

In that context, the DIFC Court of Appeal decided that its express statutory jurisdiction to enforce a foreign judgment encompasses a power to grant orders – such as freezing or Mareva injunctions – to prevent the DIFC Courts’ enforcement jurisdiction and power from being thwarted in the future (see e.g. [194]).

This was held to be the case in the DIFC even though the relevant DIFC statutes do not expressly provide for such jurisdiction or power where no foreign judgment or final remedy has yet been obtained, unlike England where the Civil Jurisdiction and Judgments Act 1982 specifically creates such pre-emptive jurisdiction.

It was that lack of express statutory wording which led to differing answers in previous first instance judgments and in Sandra Holding to the question of what powers the DIFC Courts have to grant interim relief in relation to the risk of dissipation of assets across borders prior to a final judgment being granted by a foreign court.

In Sandra Holding, as recently as September 2023, it was decided that the DIFC Courts had no such jurisdiction or power.

In Carmon, the Justices have now made clear (see [204]) that in Sandra Holding the DIFC Court of Appeal had taken an unduly restrictive view of the DIFC Courts’ powers[3].

So what DIFC Court power is available to parties involved in commercial disputes with cross-border elements?

The judgment in Carmon tells us (see e.g. [152]-[156] and [202]) that the DIFC Courts have an implicit power to grant interim remedies – e.g. freezing or Mareva injunctions restraining a party from dealing with assets –

• whether assets are located in the jurisdiction or not,
• even when a cause of action does not at that time lie against the respondent within the DIFC Courts, and
• where foreign actions for a final remedy are
  • pending ([153]), or
  • arguably merely prospective (in light of the words in [202], “…whether or not there has been a claim for a final remedy of that kind…”, although Carmon is a case in which an action in Hong Kong was pending).

According to the ruling in Carmon, the DIFC Courts have similar powers to those of the English Courts, whether emanating expressly from the Civil Jurisdiction and Judgments Act 1982 or the Courts’ inherent powers according to the reasoning in Broad Idea International Ltd v Convoy Collateral Ltd [2021] UKPC (an appeal to the Privy Council from the BVI and the Court of Appeal of the Eastern Caribbean Supreme Court).

In essence, the DIFC Courts are sending a clear signal that they are available to assist in the important function of preventing fraud, and preventing unjustifiable asset dissipation.

For lawyers acting for claimants and victims of fraud, the judgment in Carmon will be a welcome signal of the availability of the DIFC Courts as a forum in which interim remedies might be sought to prevent the unjustified dissipation of assets, even during the pursuit of claims in other jurisdictions.

That is, at least, unless and until the scope of the DIFC Courts’ powers are restricted or refined by any further decision of the DIFC Court of Appeal, or by legislative change.

Finally, the judgment in Carmon does not lower the hurdles applicants need to clear in order to persuade the DIFC Courts to exercise the power at their discretion to grant such interim relief.  Furthermore, the Justices remind us that where no assets are in the DIFC, and ‘worldwide’ freezing relief is sought, the hurdle is even higher.  See e.g. [157] and [203].

[1] Linsen International Ltd v Humpuss Transportasi Kimia [2011] EWCA Civ 1042 [17]

[2] As cited in the Carmon judgment at [187]

[3] Although the result in that case – a refusal to grant a freezing order – was, the Justices in Carmon suggest, ultimately correct as the discretionary factors for the grant of an injunction would not have been met.

James Leabeater KC acted for the successful party before the DIFC Court of Appeal in Sandra Holding.

Andrew Stevens has acted as advocate in many cases involving injunction applications including (worldwide) freezing / Mareva, anti-suit and quia timet injunctions as well as in applications for injunctions in support of arbitration. Andrew has full DIFC rights of audience.

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James Leabeater KC

Call 1999 King's Counsel 2019

Andrew Stevens

Call 2007

Related practice areas

Offshore