3VB counsel team successfully act for Dubai Islamic Bank PJSC in jurisdiction challenge in the ADGM Courts

Ewan McQuater QC, David Quest QC and Nathaniel Bird, instructed by Eversheds Sutherland (International) LLP, successfully acted for Dubai Islamic Bank PJSC in relation to the administration in the Abu Dhabi Global Market Courts of the operating companies of the NMC Group, the largest private healthcare provider in the UAE. DIB, which was a major lender to the NMC Group prior to its entry in administration, is engaged in a dispute with the joint administrators of the NMC Group as to the validity and characterisation of the security taken by DIB for its lending.

Following a three-day hearing on jurisdiction in May 2021 before Justice Sir Andrew Smith, DIB succeeded in having the joint administrators’ attempt to determine these issues by way of an application for directions under section 95(7) of the ADGM Insolvency Regulations 2015, the equivalent of Schedule B1, paragraph 63 of the Insolvency Act 1986, dismissed. The Court held that it had no jurisdiction under this provision to make binding determinations of the pre-insolvency rights and obligations of third parties. Sir Andrew Smith’s decision on this issue will be of significant interest to insolvency practitioners in England & Wales and other common law jurisdictions whose insolvency legislation contains similar provisions.

DIB further succeeded in obtaining a partial stay of a parallel claim brought in the ADGM Courts by the NMC Group companies and the joint administrators in favour of arbitration pursuant to section 16(1) of the Arbitration Regulations 2015 (the equivalent of section 9 of the Arbitration Act 1996) and, in respect of the claim brought by one NMC company, in favour of litigation in the Dubai courts pursuant to an exclusive jurisdiction agreement. Sir Andrew Smith’s judgment contains important findings as to the ability of parties to opt out of the jurisdiction of the ADGM Courts pursuant to Article 13(9) of the ADGM’s Founding Law and as to the effect of jurisdiction clauses as between courts of the Emirates following the decision of the DIFC Court of Appeal in Investment Group v Standard Chartered Bank, which will be of significant interest to practitioners in the region.

Sir Andrew Smith’s judgment may be viewed here.