ARB 012/2023 (1) Novak (2) Nola (3) Nadim V (1) Norwood (2) Numair [2024] DIFC ARB 012 (29 August 2024)

Claim No: ARB 012/2023

IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

(1) NOVAK
(2) NOLA
(3) NADIM

Claimants/Respondents

and

(1) NORWOOD
(2) NUMAIR

Defendants/Applicants

ORDER WITH REASONS OF H.E. JUSTICE SHAMLAN AL SAWALEHI

UPON the issue of the final award in ICC Case No. Nelson (the “Award”)

AND UPON the Recognition and Enforcement Order dated 14 April 2023 in case number ARB-009-2023 (the “R&E Order”)

AND UPON the Set Aside Application filed by the Claimants on 20 June 2023 pursuant to the Rules of the DIFC Courts (the “RDC”) 43.54 to 43.56 (the “Set Aside Application”)

AND UPON review the First Witness Statement of Nader dated 20 June 2023 filed by the Claimants in support of the Application (the “W/S1 Nader”)

AND UPON review of the Respondent Witness Statement of Nikolai dated 15 September 2023 filed by the Defendants to oppose the Application (the “W/SR Nikolai”).

AND UPON review of the Expert Reports filed on 15 December 2023

AND UPON hearing counsel for the Claimant and counsel for the Defendant at an Application Hearing on 19 February 2024 (the “Hearing”)

AND UPON review of the additional filed evidence, statements and submissions

IT IS HEREBY ORDERED THAT

1. The Set Aside Application is rejected entirely.

2. The R&E Order and the Worldwide Freezing Order of Justice Sir Jeremy Cooke dated 12 May 2023 issued in Claim No. ARB-009-2023 shall be upheld.

3. The Claimants shall pay the costs of the Set Aside Application on the standard basis, to be assessed by the Registrar if not agreed.

Issued By:
Hayley Norton
Assistant Registrar
Date of issue: 29 August 2024
At: 8am

SCHEDULE OF REASONS

1. First, I will be clear in that I refer to the Arbitration Respondents as the “Claimants”, and the Arbitration Claimants as the “Respondents” in this order. This is to keep consistent the positions of the parties in this specific Application; not to confuse the positions of the parties in the Arbitration, the Award or the Order.

2. While the background to these proceedings and the factual background to the Arbitration has been considered to the extent that such history was recounted in the written submissions and the Hearing, I see no purpose in relaying such information here as the crux of the Application rests on the legitimacy of the Award in the DIFC jurisdiction rather than a rehash of the facts. Aside from the dispute regarding the methods of gathering evidence and the Tribunal’s findings of corruption, the background facts are largely agreed.

3. This Application is brought by the Claimants to set aside the Order issued 14 April 2023 pursuant to RDC 43.54 to 43.56. The Award was made in ICC Case No. Nelson (the “Arbitration”) in favour of the Defendants, who brought claims on its own behalf, and also, with the permission of the Tribunal, derivative claims for and on behalf of Numair who are the Second Defendant in these proceedings.

4. The Tribunal concluded that:

(a) The Naeem Decision had been procured by corruption; unlawful means conspiracy involving bribery and corruption of Naval state officials.

(b) The Nathan Award did not give rise to an issue estoppel in the Arbitration Proceedings.

5. The Tribunal awarded the following damages:

(a) To Numair:

i. In respect of the Naeem Decision Claim, USD 1,002.2 million.

ii. In respect of the Interest Overpayment Claim, USD 3.8 million.

ii. In respect of the Related Party Transactions Claim, USD 6 million.

(b) To Norwood:

i. In respect of the Call Option Claim, USD 129.2 million.

ii. In respect of the Norwood Interest Claim, USD 99.6 million.

6. The Award was recognised as binding and enforceable in the DIFC by the Order pursuant to Article 42(1) and Article 43(1) of the Arbitration Law (DIFC Law No.1 of 2008) and Article 24 of the DIFC Court Law No. 10 of 2004. This Recognition and Enforcement Order was granted on 14 April 2023 (the “R&E Order”).

7. The procedure to set aside an award under RDC 43.54 to 43.56 is:

“43.54

An application under Article 41 of the Arbitration Law to set aside an arbitral award must be made:

(1) within 3 months from the date on which the party making the application received the award; or

(2) if a request had been made under Article 40 of the Arbitration Law, within 3 months from the date on which that request was disposed of by the Arbitral Tribunal; or

(3) within such longer period as the parties to the arbitration agree in writing.

43.55

Where a party applies to set aside an arbitral award, the arbitration claim form must state:

(1) the grounds under Article 41(2) of the Arbitration Law on which the party alleges that the award should be set aside; and

(2) whether the Arbitral Tribunal requests that the setting aside proceedings be suspended under Article 41(4) of the Arbitration Law in order to give the Arbitral Tribunal an opportunity to resume the arbitral proceedings or to take such other action as may eliminate the grounds for setting aside.

43.56

The written evidence in support of the application must set out any evidence relied on by the party for the purpose of satisfying the Court:

(1) of the matters referred to in Article 41(2) of the Arbitration Law; and

(2) that the award should be set aside.”

8. Article 41(2) reads:

“… An arbitral award may be set aside by the DIFC Court only if:

(a) the party making the application furnishes proof that:…

(iii) the award deals with a dispute not contemplated by or not falling within the terms of the submission to Arbitration, or contains decisions on matters beyond the scope of the submission to Arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to Arbitration may be set aside; or …

(b) the DIFC Court finds that:

(i) the subject-matter of the dispute is not capable of settlement by arbitration under DIFC Law;

…

(iii) the award is in conflict with the public policy of the UAE.”

9. The Claimants accept that the threshold to set aside is a high one but submit that the circumstances therein are exceptional enough to surpass it.

10. As well as an order to set aside, the Claimants also seek that the R&E Order and the Worldwide Freezing Order of Justice Sir Jeremy Cooke dated 12 May 2023 be set aside, as it is unnecessary in the face of the Award being set aside.

11. Finally, the Claimants request an order that, if successful, the Defendants are jointly and severally liable for their costs of the application, to be assessed by the Registry if not agreed.

Claimant Submissions

12. I shall summarise and address the grounds separately, to follow the format of the Hearing. I accept that the Claimants present four grounds; a primary ground, and three grounds in the alternative; but the second and third grounds shall be consolidated as they both concern the evidence submitted by the same individual.

Act of State and Public Policy (Ground 1)

13. The act of state doctrine follows that national courts must not prosecute the validity of official acts from a foreign state within its own territory, unless that validity violates ‘international society’; public policy, as commonly understood. The Claimants to these proceedings objected to the Tribunal’s findings that the Naeem’s decision was procured improperly by Naval officials; the Tribunal awarded damages as compensation. This objection relied on the act of state principle.

14. The matter of public policy relating to the validity of the act of state principle forms the basis of the Claimants’ primary ground, pursuant to Articles 41(2)(a)(iii), 41(2)(b)(i) and 41(2)(b)(iii) of the Arbitration Law. The Claimants claim that the Tribunal acted in excess of its jurisdiction by determining matters that were not arbitrable and/or violated the public policy of the United Arab Emirates by failing to properly engage with and/or dismissing the Claimants’ jurisdictional objections on the basis of the act of state principle and thereafter proceeding to consider evidence and rule on Norwood’s allegations in relation to the decision of the Naval Naeem (the “Naeem Decision”).

15. The Claimants put forth that the act of state doctrine has been applied to arbitral tribunals to prevent them from taking jurisdiction over matters covered by the act of state doctrine by the English courts. They then assumed this doctrine to be part of the DIFC Law and therefore engage UAE public policy, pursuant to Article 8(2) of DIFC Law No. 3 of 2004 which permits reference to English Law where DIFC Law is silent.

16. The Claimants presented additional evidence to show that the DIFC Law does include the act of state doctrine. It is unnecessary to relay every case, precedent and judicial comment here, but it is important to note that on this point I concede. It is clear that the act of state doctrine exists in DIFC Law simply on the concept that the DIFC, as its own jurisdiction, is still bound by the public policy of the UAE and of international legal matters as a part of the UAE. The Claimants also rely on the UAE Federal Supreme Court Judgment No. 714 of 2017 on this point – explicitly stating that the act of state doctrine exists only as a natural confirmation subsequent to existing precedent from a higher court. I therefore agree that the act of state doctrine exists in DIFC Law as it does to the extent in English Law; not because the DIFC imports English Law where convenient, but because both jurisdictions are equally affected by the principle of the doctrine, given that each jurisdiction is just as sophisticated and permitted to non-interference as the other.

17. While the DIFC Courts are restricted to determining commercial disputes within its opt-in jurisdiction only, it does not make the jurisdiction immune to national and international principles of law where appropriate. I do not find whether the doctrine is included in DIFC Law as an issue; I am concerned with whether the boundary of the doctrine has been breached.

18. The Tribunal dismissed the Claimant’s objections for three reasons; insufficient evidence that the doctrine formed part of DIFC Law; the doctrine does not prevent inquiry into matters relating to unlawful act conspiracy; DIFC Law does not invoke the doctrine to prevent examination of questions of bribery.

19. The Claimants advance that the Tribunal’s findings “inter alios” can only be interpreted as making an express finding of an unlawful conspiracy that involved the Claimants and Naval officials specifically, therefore passing judgement on the validity of another state’s acts which goes beyond the jurisdiction of the Tribunal. Several cases were presented concerning international conceptualisation of the act of state doctrine to show that the doctrine encompasses all emanations of the state – this would include state officials acting on behalf of the authority of the state.

20. The UAE public policy matter is specifically engaged because the act of state doctrine, as agreed by the UAE experts, forms part of DIFC Law as UAE public policy. Therefore, if the doctrine is offended, public policy is offended, and as DIFC Law encompasses UAE public policy by way of subjugation, DIFC Law would then have been breached and the Order would have to be set aside.

21. The Claimants in this Application submit that the Order recognising and enforcing the Award is therefore a grave error in violation of UAE public policy as the Tribunal were acting outside their jurisdiction, and so the Order should be set aside.

Hearsay Evidence and Public Policy (Grounds 2 and 3)

22. The Claimants submit, further or in the alternative, pursuant to Article 41(2)(b)(iii) of the Arbitration Law, that the Tribunal also improperly considered hearsay evidence in their determination of the Award.

23. The Claimants alleged – both in the Arbitration and in the Hearing – that the methods used by the Defendants to gather evidence to show that the Claimants colluded with former Naval officials and Naeem officials made that evidence inadmissible. Therefore, the Tribunal was not permitted to include that evidence in their determination, which they did, rendering the Award unenforceable.

24. The Claimants specifically referred to evidence collected by Mr Nivan and Nisham, who they allege took material without consent in breach of his confidentiality obligations and other legal obligations, which is in breach of both UAE and Naval public policy.

25. The methods used, verified by Mr Nivan’s testimony, included gathering intel from former Naval government officials, former and current (at the material time) Novak employees and former Naeem officials. The former Naeem officials, who offered information voluntarily, were paid for their time, and Nisham afforded one source a business class air ticket as the source was to collect records and surrender them within a 3-day turnaround. The Claimants allege that “collect” is a euphemism for taking material without consent.

26. The Claimants at the Arbitration opposed to the admissibility of Mr Nivan’s evidence due to the unlawful methods used to obtain the evidence, unreliability due to hearsay and double hearsay, and the unjustifiable redaction of the testimony. The Defendants responded that Mr Nivan’s evidence was “relatively inconsequential” and so issue with the methods used to obtain the evidence was irrelevant as they did not rely on any of his statements to the purpose of establishing the case on bribery or corruption; the Defendants left it to the discretion of the Tribunal to attribute the appropriate weight to the evidence in findings of fact.

27. The Tribunal asserted consistently that their determination was made without reference to or reliance on Mr Nivan’s anonymous hearsay evidence, but the Claimants put forward extracts from the Final Award that quote evidence drawn from Mr Nivan’s testimony and cross examination. Therefore, the Claimants assert that the Tribunal consciously relied on hearsay and double hearsay evidence in their determination.

28. The Claimants submit, both in this Application and the Arbitration, that Mr Nivan’s investigation involved unlawful conduct in the UAE and Navaid– bribing former Naeem officials and Novak employees to provide information to Nisham’s investigation, and the making of unauthorised disclosures of confidential information. On this matter, the Tribunal did not admit to the importance of Mr Nivan’s evidence and downplayed the significance it made to their direction and failed to rule on its inadmissibility. The Naval Law experts, engaged by the Claimants, agreed that former and current (at the material time) government and Naeem employees retained an obligation of confidentiality, and to breach that obligation was to contravene Article 437 of Navaid’s Penal Code, and so carries a criminal offence.

29. The Claimants’ UAE Law expert found the same; the UAE criminal law provisions (Article 432 of the UAE Criminal Code), which are of a public policy nature, prohibit disclosure of non-public information obtained during the course of employment – this information is described as “secret”. Therefore, the offence to public policy pursuant to Article 41(2)(b)(iii) of the DIFC Arbitration Law was agreed by the UAE and Naval Law experts.

Nathan Award (Ground 4)

30. Finally, the Claimants submit that the Tribunal’s reliance on the Nathan Award in the Final Award is contrary to public policy has the Nathan Award was annulled and remains annulled by the Nazir Court of Cassation. Additionally, the Tribunal relied on the Nathan Award despite purporting to make its own finding as to unlawful means conspiracy.

Defendants’ Submissions

31. The Defendants made clear in the Hearing that this Application is brought to evade responsibility rather than highlight a miscarriage of justice. The Defendants rely on the Tribunal describing their findings as “overwhelmingly” in the Defendants’ favour as the evidence against the Claimants was “striking and damning”. My concern is to evaluate whether there is a public policy offence if the Award is permitted to be enforced in the DIFC jurisdiction only, and so on this point my focus will be on the Defence’s response to the specific submissions presented by the Claimants, and not a summary of the Defence’s perception of the Claimant’s intentions.

Act of State and Public Policy

32. On this, the Defendants’ position has remained in line with the findings of the Tribunal as they have carried the same points of submission from the Arbitration. The Defendants object that the act of state doctrine is part of DIFC Law; they cite a misinterpretation of the waterfall provisions in Article 8 of DIFC Law No. 3 and a misplaced reliance on DIFC precedent. Given that I have already accepted that the act of state doctrine does exist in DIFC Law, I will refer only to the alternative submissions presented as to why the doctrine was not offended.

33. The Defendants rely on the “Kirkpatrick limitation”, which disapplies the act of state doctrine in circumstances where there is a requirement for a foreign government to impute foreign officials of unlawful acts in the performance of official duties.

34. The Defendants relied on case precedent, substantially (Banyan Tree Corporate Pte Ltd v Meydan Group LLC [2013] DIFC ARB 003, to stress that “public policy” arguments can only be effectively applied if the Award contradicts the “essential morality” and “basic principles” of public and economic life in the UAE and internationally as a standard; the threshold for this is not only very subjective, but so high that it is almost inaccessible unless affected in extreme circumstances. The act of state ground falls severely short of this threshold as the subject matter coincidentally disclosed unlawful acts, which is distinct from adjudicating on the validity or lawfulness of an executive act.

35. The Defendants submitted that in the Arbitration there was no requirement for the Tribunal to determine the validity or lawfulness of the Naeem Decision. The Defendants specifically requested an evaluation of whether there was conspiracy to procure, intention to injure, corruption and consequential loss. This isolated commentary to the actions surrounding the Naeem decision, and not the content of the Naeem decision itself. The Defendants advanced this point by evidencing that the Naeem decision was still in effect, post-Award. The Defendants quoted the following from the Award; “[it was not] necessary for it to determine whether the Naeem would have issued the Naeem Decision if the Respondents had not bribed the Naeem …satisfied that the evidence justifies the inference that the Naeem would not have issued the Naeem Decision had the Respondents not bribed the Naeem”.

36. Additionally, the Defendants highlighted that the precedent relied on by the Claimants concerned corruption by state officials, which would have rightly offended the public policy of the jurisdiction they happened in. In the present case, the Defendants claim the Arbitration was about the Claimants’ corruption and the giving of bribes, not the receipt by state officials. On the “inter alios” submission by the Claimants, the Defendants respond that they misinterpreted this to refer to Naval officials, but nonetheless is irrelevant as even if there was a finding directed at Naval officials, this would not amount to a finding against the state which is required to offend the act of state doctrine. Even then, in the alternative if the doctrine was engaged, the Award would still be protected by the public policy exception.

37. Further, the Defendants submit that UAE public policy does not preclude a review of a foreign act of state such as that carried out by the Tribunal. The Defendants reject the Claimant’s position that enforcement of the Award would offend UAE public policy because the tribunal infringed the act of state doctrine, as such doctrine does not exist under UAE law, and if it does, it was not offended.

38. As I have already determined that the doctrine does exist in the DIFC as to the extent it exists in English law, I will only address the defence raised that the doctrine was not offended, and the Tribunal did not act contrary to UAE public policy.

39. During the cross examination of Mr Norris, a UAE legal expert who made a joint statement with Mr. Normand , an important point was raised to discuss the engagement of UAE public policy.

40. Mr Norris made clear that the general trend of the courts was to favour Awards even if an issue on public policy was raised, as public policy is a federal law matter (which the DIFC Courts are bound by) relating to public morals, not the rules of evidence.

41. It is of course contrary to the rules of evidence to obtain evidence via torture, duress or other criminal acts, but to engage and contravene public policy morals a criminal conviction would need to be obtained to confirm the violation of the rules. This would surpass the high threshold of public policy arguments. Additionally, even if the Tribunal has confirmed corruption, no crime on UAE soil has been proven, and the DIFC Courts are not at liberty to criminally convict. Therefore, I am inclined to agree that no actual offence to UAE public policy has been made.

Hearsay Evidence and Public Policy

42. The Claimants’ case is that the Tribunal failed to rule on the admissibility objection of Mr Nivan’s Hearsay Evidence, relied upon/was influenced by the evidence, and so rendered an Award contrary to public policy. The Defendants reject this for three reasons; the Tribunal decided the issue as a matter of weight only, there was no explicit reliance or influence, and even if there was no violation of UAE public policy occurred.

43. As the Defendants submitted, the Tribunal was entitled to decide the weight of Mr Nivan’s evidence pursuant to Article 26 of the DIFC Arbitration Law; this is a legitimate and well-established alternative to resolving issues in admissibility, particularly when the evidence was not used to address the core of the dispute. The Defendants also produced evidence to show that the Claimants recognised this right in the Arbitration as they did not seek to exclude Mr Nivan’s evidence before the start of the hearing, and so the Claimants’ position has essentially changed to challenge the Award, rather than address an actual procedural or legal error.

44. The Defendants also put forward and quoted relevant section of the Award to show that the Tribunal made explicit statements excluding the Hearsay Evidence, and exhaustively analysed other evidence in respect to the Naeem decision to make its conclusion. There would be no need to be ‘influenced’ by Mr Nivan’s evidence, as everything else already “overwhelmingly points to [the] conclusion [that] there was unlawful means conspiracy”, and so any allegations to that are an attempt to demerit the Award and not give rise to a legitimate ground of appeal and compel the Court to set aside the Award on assumptions and inferences only.

45. In the alternative, the Defendants submit that if the Tribunal had relied on the Hearsay Evidence, this would not be in conflict with UAE public policy, as rules of evidence do not concern public policy (as established previously), and hearsay evidence is permitted under the DIFC Court Rules 29.41, 29.47, 29.48, 29.101 – 29.110, which would not have been drafted if they offended UAE public policy.

46. On the Nisham’s evidence, the Defendants objects to the allegation that the Tribunal relied on any unlawfully obtained documents, as those obtained by Nisham only contributed a minor part of the evidentiary record available to the Tribunal, and the two documents in question (the Neda Invoice and Novak Spreadsheet) were not claimed to be obtained unlawfully at the arbitration.

47. The Claimants put forward that the origins of the Neda Invoice and Novak Spreadsheet, which showed legal fees for the amount of USD 1.5 million and a list of invoices confirming Neda had been paid in excess of USD 50 million in legal and consulting fees respectively, were unknown, but did not object to their authenticity during the arbitration, nor were any documents explaining these expenses produced upon the request of the Defendants.

48. The Claimants did object to weight being put on the aforementioned documents in the Tribunal’s deliberations, though they are more interested in the alleged bribery of former Naeem officials to obtain them. As established by the expert reports and cross examination in the Hearing, bribery of former officials is not a legal possibility nor a criminal offense.

49. To address the issue of breach of confidentiality, the Defendants respond that the Novak Letter could not amount to confidential information, as it was sent by Novak to the Naeem at the shareholders’ insistence and was partly drafted by Mr Norbert of Noa. Therefore, there could be no breach as the information contained therein was not the type of information that needed to be bound by employee confidentiality obligations, as it was not a “secret” pursuant to Article 432 of the UAE Criminal Code.

50. During the examination of Mr. Normand, there was an attempt to define “secret” by referring to the Egyptian Penal Code and their interpretation and application of such, but this essentially failed on the basis that it was not good practice to import another jurisdiction’s definition (particularly in a case where the Egyptian law was not relevant), but I am satisfied to adopt the natural meaning of “secret” within the context of corporate practice.

51. The Defendants presented that in order to amount to a “secret” that was then criminally breached, the use of the information disclosed by the Nisham’s sources to Nisham personnel in Navaid had to establish a territorial link under the UAE Criminal Code, which it did not. Article 432 requires an “instantaneous” offence that has to happen on UAE soil (in line with the UAE Law expert report) – on these facts, the alleged criminal acts started at an unknown time in Navaid and continued until the evidence was adduced in the Arbitration, but never actually within UAE jurisdiction.

52. The Defendants conclude that the methods used to gather the evidence could not be a crime in the UAE for former Naval public officials and employees of an Naval company in Navaid to disclose confidential information in Navaid. In any event there have also not been any criminal investigations or convictions.

53. Further, there was also no criminal activity in Navaid. Article 437 of the Naval Penal Code similarly criminalises sharing “secrets” and does not define this, but Nisham merely obtaining from former Naeem officials and Novak employees does not establish sharing “secrets” or information with a legitimate interest in confidentiality. Additionally, such protection by confidentiality does not exist where the information discloses a crime, either directly or indirectly – this was established by the Naval law experts.

54. The Defendants continued their submission by showing that the confidentiality obligations of employees in private companies, such as Novak , are further governed by the Labour Law No. 37 of 2015, the company’s internal regulations and the employee’s employment contract. These regulations seek to preserve the company’s commercial secrets via third parties, and so such information need not be protected against the company’s shareholders – on these facts, the latter occurred, as Nisham was acting for Novak’s shareholders: “each Shareholder [in Numair ] shall be provided with access to all the books, records, accounts, employees and other information kept by any entity within the Group [Norwood , Novak and their subsidiaries] which it may reasonably require provided such access shall not materially interfere with the operation of the Business. Each party shall be entitled to all material information on the operations of the Group, including monthly management accounts and operating statistics and other trading and financial information.”

55. The bribery offences (Article 307 of the Naval Penal Code) could only have been committed in respect of individuals who were Naeem employees at the time of their interactions with Nisham, not former. The offence does not apply to private sector employees (such as Novak employees) or former public officials, as agreed by the Naval Law Experts. As stated by the Claimants, Nisham’s Naeem sources were all former officials. Article 307 does not apply. Even if the Article did apply, as similarly stated above the Naval courts retain discretion as to the admissibility of the evidence, and so the Claimants cannot rely on this to adduce that UAE public policy would be breached as a result of a crime in Navaid where the courts may decide not to use the evidence obtained. There is no link in UAE Law that would contravene UAE public policy based on a crime in another jurisdiction.

56. In the alternative, the Defendants provide that even if the Courts determine that the Tribunal relied on unlawfully obtained evidence, it was entitled to do so pursuant to Article 26(2) of the DIFC Arbitration Law, which gives the Tribunal broad powers to determine the weight and admissibility of evidence, and the 2020 IBA Rules Article 9(3) give the power to include unlawfully obtained evidence if one or more parties do not object: “The Arbitral Tribunal may, at the request of a Party or on its own motion, exclude evidence obtained illegally.”. As the Claimants did not raise this issue during the arbitration, and the Tribunal opted to not exclude the evidence, the Claimants cannot rely on their objection at this stage. The discretion of admissibility of and reliance on unlawfully obtained evidence is also a principle contained in DIFC and English Law, therefore DIFC-seated Tribunals acting in compliance with DIFC law on the admissibility of evidence cannot be in breach of UAE public policy.

57. To conclude on this submission, the Defendants state that the threshold for breach of public policy in relation to the Hearsay evidence has not been reached as the effect of reliance on the evidence on the Award is inconsequential. In accordance with the UNICITRAL rules, the determination would have to be different, whether wholly or partially. Given that in any of the alternatives the result would be the same, there is no to set aside the Award.

Nathan Award

58. The Defendants reject that the Tribunal violated the public policy of the UAE by relying on the set aside Nathan Award, because the Nathan Award did not form the basis of the Tribunal’s decision. The Tribunal dismissed Norwood’s argument that the Nathan Award gave rise to an issue estoppel in the arbitration proceedings. The Tribunal noted that while the findings in the Nathan Award were “highly probative given the similarity of the issues in the two cases”, it was not bound by them and made its “own finding” and “formed its own views on this issue”. The Tribunal noted that the Claimants made no effort … to address the factual detail of the Nash Loan claim” and drew adverse inferences based on Mr Nadim’s refusal to attend the hearing to give evidence in person and the Claimant’s failure to comply with the relevant document production orders; the Defendants position is that the Claimants actually oppose this deliberation, but do not have any basis to object it.

59. The Defendants submit that the Tribunal attribute corroborative value to the Nathan Award only, and their findings in respect of the Nash Loan stand regardless of whether or not the Nathan Award is set aside. Reliance on the Award would not have violated UAE public policy, as the determination would not have been different.

60. The Defendants submit that, as is a common theme, the Claimants did not adduce evidence showing that the Tribunal have violated UAE public policy, nor drawn the Court’s attention to exactly what public policy is supposed to have been offended. The Claimants’ position is unsupported and underdeveloped. In line with the examination of the UAE Law experts, DIFC Courts cannot pronounce on issues of UAE public policy without the assistance of expert evidence, of which the Claimants are lacking on this particular matter.

61. What is agreed by Mr Norris is that UAE law recognises the finality of arbitration awards as it is a signatory to the New York Convention, and DIFC Courts tend to uphold them - even in circumstances where it has been set aside in the courts of its seat pursuant to Article V.1.(e) of the Convention, reflected in Article 44(1)(a)(v) of the DIFC Arbitration Law. Therefore, the Tribunal’s reliance on a prior arbitration award, even it was subsequently set aside, cannot be a violation of UAE public policy.

62. The Defendants, in the alternative, rely on the precedent ofLachesis v Lacrosse [2021] DIFC CA 005 to show that if the Tribunal had relied on the Nathan Award, and had not been entitled to do so, this would at most amount to the assertion that the Tribunal erred in fact or law, but “neither errors of law nor errors of fact on the part of the Tribunal, if any there were, disclose a ground upon which the Award could be set aside; the Arbitration Law is based on the Model Law which does not permit such challenges”. Therefore, the Claimants’ claim fails irrespective of whether they are technically right for procedural reasons.

63. Finally and in the alternative, even if the DIFC Courts find that it is in violation of UAE public policy to enforce an Award that was made using the Nathan Award, as Norwood has appealed the Annulment Decision before the Nazir Cour de Cassation such determinations ought to be suspended in case the appeal is allowed and the Nathan Award would again have full force and effect in the country of its seat.

Discussion

Act of State Doctrine and Public Policy

64. As mentioned, I accept that the act of state doctrine exists in DIFC Law.

65. By the Claimants’ own admission, the Tribunal went beyond necessity in the Award to assert that no determination was made as to the validity of the Naeem Decision, but instead considered the acts of the Claimants in isolation in relation to the arbitrable matters at hand. Their findings, in my view, do not affect nor comment on the validity of the decision within Naval jurisdiction, and so that boundary set by the doctrine has not been breached by the Tribunal. Therefore, UAE public policy has not been offended.

66. I also concede that the Kirkpatrick limitation applies here. The Tribunal’s decision was lawful as there was no direct determination on the effectiveness, validity or lawfulness of the Naeem decision – the Tribunal painstakingly avoided this subject – nor was there obiter comments on whether the decision ought to be upheld. The Tribunal kept their decision within the boundaries of their jurisdiction by making determinations on the Claimants’ acts leading up to the decision; this was inherent to the case and unavoidable, therefore triggering the limitation to the act of state doctrine. I have not been presented any compelling evidence to the contrary by the Claimants.

67. As previously stated, for there to be a violation of UAE public policy a crime (within the context or procedure of the Arbitration) would have had to be committed on UAE soil. It is not enough to allege misdemeanour to satisfy the public policy argument.

68. I concede with the Defendants on this submission.

Mr Nivan’s Evidence

69. I do not find that the Tribunal relied on Mr Nivan's evidence to reach their conclusion, nor do I find that if they had done or not done so, any alternative conclusion would have been reached. As well as their explicit statements excluding the evidence, I find that the evidence analysed was compelling enough to direct the Tribunal’s determination. Nonetheless, as the Claimants submit this on a public policy ground, even if Mr Nivan’s evidence was relied on, no breach of public policy could be found.

70. The Tribunal were rightly at liberty to use their discretion to determine the weight of Mr Nivan’s evidence, which they decided would be practically nil. Nonetheless, the Defendants have shown through extracts of the Award that the determination would have been the same irrespective of the weight given to Mr Nivan’s evidence, so the threshold to set aside on procedural errors/alternative determinations has not been met.

71. Hearsay evidence is permitted in the DIFC RDC, but irrespective of this the rules of evidence do not engage UAE public policy, which the Claimants have rested their whole Application on. Public policy is engaged where criminal activity has occurred, and no such activity has been shown to have occurred in the UAE on these facts.

72. I concede with the Defence on this point.

73. As for the Nisham’s evidence, I agree that the information delivered was not a “secret” pursuant to Article 432 of the UAE Criminal Code as Naeem shareholders and third parties were involved in the sharing of the information on the Novak Spreadsheet, Letter and Neda Invoice and so there was no employee (current or former) confidentiality obligation to breach. I also reserve comment on whether there was criminal activity in Navaid, but this is nonetheless irrelevant to my determination as I am concerned with UAE public policy which would be engaged if criminal acts occurred in the UAE, which the Claimants failed to prove happened, by territorial link or otherwise. Therefore, I concede with the Defendants on this point.

Nathan Award

74. In my view, the most compelling evidence to reject the Claimant’s position on this matter is theLachesis v Lacrosse [2021] DIFC CA 005 precedent. The DIFC Courts are not compelled to set aside Awards on errors of law or fact alone and given that the final determination of the Nazir Cour de Cassation has not yet been given at this material time, there is no need for me to consider this claim in my decision.

75. I concede with the Defendants on this submission.

Conclusion

76. The Claimants have failed to reach the threshold set by RDC.

77. The Claimants have not proven to this Court that the Tribunal acted beyond their jurisdiction and breached the act of state doctrine and UAE Public Policy when making the Award. The alternative submissions failed on a similar basis – no substantial proof was given to show that UAE public policy had been affected, let alone breached, by the Award (nor the subsequent enforcement of it in the DIFC).

78. The Defendants were not troubled with the burden of proof in this Application, and so while I concede with their position it is not a case of siding with the Defendants and determining right from wrong; instead, not enough has been shown to set aside the Order and annul the Award within the DIFC.

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You are here: BAILII >> Databases >> The Dubai International Financial Centre >> ARB 012/2023 (1) Novak (2) Nola (3) Nadim V (1) Norwood (2) Numair [2024] DIFC ARB 012 (29 August 2024) URL: http://www.bailii.org/ae/cases/DIFC/2024/DARB_012.html Cite as: [2024] DIFC ARB 12, [2024] DIFC ARB 012

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ARB 012/2023 (1) Novak (2) Nola (3) Nadim V (1) Norwood (2) Numair