Nader v Niles [2024] DIFC SCT 156 (06 August 2024)

Claim No. SCT 156/2024

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

In the name of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Ruler of Dubai

IN THE SMALL CLAIMS TRIBUNAL
BEFORE H.E. JUSTICE MAHA AL MHEIRI

BETWEEN

NADER

Claimant

and

NILES

Defendant

Hearing :	26 June 2024
Judgment :	6 August 2024

JUDGMENT OF H.E. JUSTICE MAHA AL MHEIRI

UPON this Claim being filed on 22 April 2024

AND UPON a Jurisdiction Hearing held before H.E. Justice Maha Al Mheiri on 26 June 2024, with the Claimant and the Defendant’s representative in attendance (the “Jurisdiction Hearing”)

AND UPON reading the submissions and evidence filed and recorded on the Court file

IT IS HEREBY ORDERED THAT:

1. The Defendant’s jurisdictional challenge is denied.

2. The DIFC Courts have jurisdiction to hear and determine this claim.

3. Each party shall bear their own costs.

Issued by:
Hayley Norton
SCT Judge and Assistant Registrar
Date of Issue: 6 August 2024
At: 11am

THE REASONS

The Parties

1. The Claimant is Nader (the “Claimant”), an individual who purchased an investment policy through the Defendant.

2. The Defendant is Niles (the “Defendant”), a company located in Dubai, UAE.

Background and the Preceding History

3. The Defendant introduced the Claimant to Nellie (“Nellie”) a third-party insurance company. On 14 July 2016, the Claimant purchased an insurance policy (the “Insurance Policy”) with Nellie. The Claimant invested $31,500 (“Investment”) in the policy between 19 July 2016 to 19 March 2018. The Claimant subsequently found that the policy was not appropriate for him, which led him to surrender the Insurance Policy and lose the entire invested amount.

4. The Claimant also discovered that the Defendant was not authorised to sell the policy at the time of the purchase, nor was it licensed to sell products in the DIFC.

5. On 22 April 2024, the Claimant filed a claim in the DIFC Courts’ Small Claims Tribunal (the “SCT”) which was later, amended on 14 May 2024, seeking the refund of the investment amount paid under the Insurance Policy plus damages.

6. On 29 April 2024, the Defendant acknowledged service intending to defend the Claim.

7. On 11 June 2024, the Defendant filed an application seeking to contest the jurisdiction of the DIFC Courts to hear this Claim (the “Jurisdictional Challenge”).

The Jurisdictional Challenge

8. The Defendant contested the DIFC Courts’ jurisdiction arguing that;

(a) The Claim Form should be struck out and the claim dismissed pursuant to RDC 4.16, as it is time barred and discloses no cause of action; and/or

(b) The Claim should be set aside or dismissed for want of jurisdiction

9. The Defendant purports that on 20 October 2015, the Claimant entered into a contract on the Defendant’s Terms of Business (the “ToB”):

(a) Stipulating the Defendant’s onshore Dubai address;

(b) Accepting that the Defendant is regulated by the UAE Insurance Authority;

(c) Agreeing that the Defendant’s role is limited to advising on third party products from highly regulated onshore centers.

10. The Claimant makes no reference at all in the Claim in the ToB, being the contract between the parties. Rather, the Claimant has attempted to ground jurisdiction pursuant to Article 5(A)(1)(b) of the Judicial Authority Law (the “JAL”) on the basis of the Insurance Policy. The Claimant alleges that meeting(s) in respect of the Insurance Policy and its signature took place in the DIFC. The Defendant relies solely on Article 5(A)(1)(b) of the JAL to ground jurisdiction. Article 5(A)(1)(b) provides the DIFC Courts will have jurisdiction to hear and determine:

“Civil or commercial claims and actions arising out of or relating to a contract or promised contract, whether partly or wholly concluded, finalised or performed within DIFC or will be performed or is supposed to be performed within DIFC pursuant to express or implied terms stipulated in the contract”

11. The Defendant submits that the meeting and signing of the Insurance Policy in the DIFC does not satisfy the conditions in Article 5(A)(1)(b) as the geographical location of the signature is irrelevant to the DIFC Courts’ jurisdiction. Consequently, meetings scheduled in the DIFC at the Claimant’s place of work and for the Claimant’s convenience, in circumstances where the Insurance Policy relates to the Claimant’s personal investment portfolio and is not otherwise related to the Claimant’s work in the DIFC, do not place these Proceedings within the jurisdiction of the DIFC Courts.

12. Finally, the Defendant relies on RDC 4.16 to strike out the Claim for no disclosed cause of action, or for filing outside the limitation period.

Claims are Time-Barred

13. Article 38 of the DIFC Court Law provides in relation to limitations on proceedings in the DIFC that “subject to any other DIFC Law, a proceeding must not be commenced more than 6 years after the date of the events that give rise to the proceedings.”

14. The Defendant highlights that the limitation periods will begin to count from the point at which the Claimant’s cause of action ‘accrues’, which varies according to the nature of the action.

15. The Claimant’s alleged losses accrued by way of each of the 21 monthly payments to Nellie starting on 19 July 2016 and ending on 19 March 2018, in that each of the elements of the Defendant’s alleged causes of action had accrued. Accordingly, the limitation period in respect of the disputed Claims expired on 19 March 2024 or earlier. The Claimant therefore filed out of time on 22 April 2024.

Claimant’s Reply

16. The Claimant argues that the ToB establishes the contractual relationship between the parties, which does not include any jurisdiction clause. The Claimant rejects the Defendant’s argument to rely on the Defendant’s address on the ToB which is out of the DIFC.

17. The Claimant’s position is that every document supplied by the Defendant, including the ToB was signed within the DIFC and was, therefore, at least partly concluded within the DIFC, this also includes the Claimant signing of the ToB, and this was done in the DIFC.

18. The Claimant retorts that the Defendant was not licensed by either the UAE Central Bank or the UAE Insurance Authority for the provision of financial advice or financial services at the relevant time. It seems that the Defendant was licensed by the Central Bank only for the provision of Insurance Brokerage Services, as confirmed by the Defendant’s own website.

19. The Claimant refutes the Defendant’s statement that it was registered with the UAE Central Bank, it was not licensed to provide the services for which it had been engaged in terms of the ToB. It is also noted that the ToB refers only to being licensed by the UAE Insurance Authority and not by the Central Bank.

20. Further, the Claimant submits that the ToB was signed in the DIFC and all of the financial advice given by the Defendant was given in the DIFC.

21. The Claimant argues that the Defendant has never challenged the Claimant’s submissions that all meetings were conducted in the DIFC. The Claimant provided his Witness Statement and another from the receptionist of his workplace to confirm that every meeting between the Defendant and the Claimant took place in the DIFC. Therefore, all the financial advice provided by the Defendant was held in the DIFC.

22. In addition, the Claimant provided an email from the Defendant confirming that their meeting would take place at the Claimant’s office, which was in the DIFC.

Discussion

23. The Claimant is seeking to file a case against the Defendant and not Nellie, as it is not disputed by the parties that any claim made directly against Nellie would be subject to the jurisdiction of the Isle of Man.

24. I shall first answer the question of the time bar in relation to the Claim after which I shall address the issue of jurisdiction.

Claims are Time Barred

25. The Defendant appears to be suggesting that the limitation period in relation to the Claimant’s loss runs from the date of each payment under the Policy. In fact, it seems clear that the Claimant’s loss was only realised on the date of surrender. The surrender documents were submitted to the Defendant by letter dated 26 April 2018. This is the earliest date on which the limitation period could start as, by definition, the surrender could not happen before the documents were submitted. Accordingly, the Claimant has filed its Claim within the 6-year limitation period. The documents supplied by the Defendant include documents which were sent to the Claimant for completion by the Claimant. They were completed and issued to the Defendant on 26 April 2018 by email and delivery.

26. The Court reviewed the email sent to the Defendant as evidence and confirms that the surrender forms were completed and submitted to the Defendant on 26 April 2018, as detailed above. In addition to the email sent on 7 May 2018, Nellie sent an email to the Defendant, copying the Claimant, in which it states that they have “commenced the request” for surrender of the Policy. Therefore, the Claim was filed before the expiry of the 6 years limitation.

Jurisdiction issue

27. In accordance with DIFC Law No. 10 of 2004, as a Tribunal of the DIFC Courts the SCT only has the power to hear and determine claims within the jurisdiction of the DIFC Courts. The Article 5 of the Judicial Authority Law (the “JAL”) lays out the various jurisdictional routes, as set out below:

“(1) …

(a) Civil or commercial claims and actions to which the DIFC or any DIFC Body, DIFC Establishment or Licensed DIFC Establishment is a party;

(b) Civil or commercial claims and actions arising out of or relating to a contract or promised contract, whether partly or wholly concluded, finalised or performed within DIFC or will be performed or is supposed to be performed within DIFC pursuant to express or implied terms stipulated in the contract;

(c) Civil or commercial claims and actions arising out of or relating to any incident or transaction which has been wholly or partly performed within DIFC and is related to DIFC activities; . . .

(e) Any claim or action over which the Courts have jurisdiction in accordance with DIFC Laws and DIFC Regulations. . .

(2) . . . civil or commercial claims or actions where the parties agree in writing to file such claim or action with [the DIFC Courts] whether before or after the dispute arises, provided that such agreement is made pursuant to specific, clear and express provisions.”

28. The question for the Court to determine is whether the parties have effectively opted in to the DIFC Courts’ jurisdiction. There are no substantial differences between the parties in relation to the general principles applicable to the resolution of a challenge to the jurisdiction of this Court. When jurisdiction is contested, as it has been by the application currently before the Court, the Claimant carries the burden of satisfying the Court that it has jurisdiction pursuant to one or other of the gateways to jurisdiction set out Article 5 of the JAL.

29. The Claimant can discharge this burden by establishing “a good arguable case” that the requirements of at least one of the gateways to jurisdiction are satisfied. The test of “good arguable case” derives from English law and has been explained in a number of recent English decisions in the following terms:

“For the purpose of determining an issue about jurisdiction, the traditional test has been whether the claimant had ‘the better of the argument’ on the facts going to jurisdiction. InBrownlie v Four Seasons Holdings Inc [2018] 1 WLR 192, para 7, this Court reformulated the effect of that test as follows:-

(i) that the claimant must supply a plausible evidential basis for the application of a relevant jurisdictional gateway;

(ii) that if there is an issue of fact about it, or some other reason for doubting whether it applies, the Court must take a view on the material available if it can reliably do so; but

(iii) the nature of the issue and the limitations of the material available at the interlocutory stage may be such that no reliable assessment can be made, in which case there is a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it.”

30. Pursuant to the JAL, the DIFC Courts can exercise its jurisdiction over a matter that is unrelated to the DIFC, should the parties “claims and actions arising out of or relating to a contract or promised contract, whether partly or wholly concluded, finalised or performed within DIFC”. Such a provision would allow the parties to ‘opt-in’ to the DIFC Courts’ jurisdiction, provided that the parties supply a plausible evidential basis for the application of the gateway.

31. As noted, it is common ground that each of the Claimant and Defendant are not a DIFC Establishment or a Licensed DIFC Establishment within the meaning of those expressions within the JAL, Gateway (1)(b).

32. The ambit of the gateway conferred by Article 5(A)(1)(b) was considered by the Court of Appeal in Al Khorafi where the Court observed:

“The purpose of Article 5(A)(1)(b) is to bring within the exclusive jurisdiction of the DIFC Courts claims arising out of or relating to a contract or to the negotiation of a contract where the connecting factor is that the contract or intended contract had been wholly or partly agreed upon or wholly or partly performed by conduct or an event which had taken place within the DIFC. The essence of the provision is that the court is given jurisdiction where there has been relevant activity with regard to the contract or related to it within the DIFC.”

33. The Defendant’s role was in introducing the Insurance Policy to the Claimant and advising on the terms of that policy. The role performed by the Defendant was the provision of financial advice on investments, as stated in the ToB, and presenting the Policy documents for signature which were all done from within the DIFC.

34. In addition, the ToB signed by the Claimant has no clear clause dealing with jurisdiction to set out the parties’ intention to resolve any arising dispute.

35. Upon reviewing the parties’ submissions, I agree with the Claimant’s submissions that an offer was presented by the Defendant to the Claimant and negotiated and entered into in the DIFC, in addition to the meetings that were conducted by way of update for the policy which satisfies the criteria in JAL Article 5(A)(1)(b).

36. Accordingly, the Defendant’s Jurisdictional Challenge is denied, the DIFC Courts have jurisdiction to hear the Claim.

37. Each party shall bear their own costs as to the Jurisdictional Challenge.

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Nader v Niles [2024] DIFC SCT 156