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Abu Dhabi Global Market judgments (Court of Appeal)


You are here: BAILII >> Databases >> Abu Dhabi Global Market judgments (Court of Appeal) >> A30 & Ors v E30 & Ors [2025] ADGMCA 0003 (30 September 2025)
URL: https://www.bailii.org/ae/cases/ADGMCA/2025/3.html
Cite as: [2025] ADGMCA 3, [2025] ADGMCA 0003

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In the name of
His Highness Sheikh Mohamed bin Zayed Al Nahyan
President of the United Arab Emirates/ Ruler of the Emirate of Abu Dhabi

 

COURT OF APPEAL

BETWEEN

 

A30

First Appellant

B30

Second Appellant

C30

Third Appellant

D30

Fourth Appellant

 

and

 

E30

First Respondent

F30

Second Respondent

G30

Third Respondent

H30

Fourth Respondent

 

 

JUDGMENT

Chief Justice, Lord David Hope

Justice Kenneth Hayne

Justice Sir Nicholas Patten


 

Neutral Citation:

[2025] ADGMCA 0003

Before:

Chief Justice, Lord David Hope
Justice Kenneth Hayne
Justice Sir Nicholas Patten

Decision Date:

30 September 2025

Decision:

1.       The Appeal is allowed.

2.       Paragraphs 1 and 4 of the Order dated 28 September 2025 (re-issued 29 September 2025) be set aside and in their place there be a Freezing Injunction and Provision of Information Order.

3.       Further proceedings in this matter are remitted to Justice Sir Andrew Smith in the CFI Proceedings.

4.       Costs of the Injunction Application and the Appeal are reserved to the return date. 

5.       Liberty to apply

Hearing Date:

30 September 2025

Date of Order:

30 September 2025

Catchwords:

Article 25.3 of LCIA Rules.  Mandatory provisions of the law of the seat.  Whether not obtaining the tribunal's authorisation under Article 25.3 of the LCIA Rules constitutes a breach of contract in view of section 31(6) of the ADGM Arbitration Regulations 2015.  Whether just and convenient to make an order for worldwide freezing order.

Legislation and Other Authorities Cited:

ADGM Arbitration Regulations 2015

ADGM Courts, Civil Evidence, Judgments, Enforcement and Judicial Appointment Regulations 2015

Cases Cited:

A17 v B17 [2025] ADGMCFI-0001

Sky Property Holdings Ltd v Corporate Sky Business Center Ltd [2025] ADGM CFI-0021

Thane Investments Ltd v Tomlinson (No 1) [2003] EWCA Civ 1272

Lakatamia Shipping Co Lt v Moritimo [2019] EWCA Civ 2033

A v B [2007] 1 LLR 237

C v D [2007] EWHC 1541

Case Number:

ADGMCA-2025-002

Parties and Representation:

Mr. Nicholas Craig KC and Mr. James McWilliams of 3 Verulam Buildings for the Appellants, instructed by Hadef & Partners

No appearance for the Respondents as the appeal was heard without notice

 

JUDGMENT

1.             On Sunday, 28 September 2025, without notice to the Respondents, the Appellants made an urgent application to Justice Sir Andrew Smith for a worldwide freezing order against the Respondents.  The Judge refused the order, but he gave the Appellants permission to appeal.  This Court heard the without notice appeal on Tuesday, 30 September 2025.  At the end of the argument the Court allowed the appeal, with reasons to be given later, and made the order that the Appellants sought.  The following are our reasons for making the order.

Background 

2.             The question in this appeal is whether the Appellants, who are parties to an arbitration under the LCIA Arbitration Rules 2020 (the "LCIA Rules") which has its seat in the Abu Dhabi Global Market ("ADGM"), can obtain a worldwide freezing order under section 31 of the ADGM Arbitration Regulations 2015 (the "Arbitration Regulations") without having first obtained authorisation from the tribunal under article 25.3 of the LCIA Rules.  The Judge held that it would not be just for him to grant the application. As the tribunal had not given its authorisation under that article, the application was being made to him in breach of contract. The Appellants submit that, under the Arbitration Regulations as properly construed and applied, it was open to him to make the order.

3.             The dispute which has given rise to these proceedings arose out of arrangements for a development project (the "Development Project").  On the one hand there are the First and Second Respondents who, by way of a joint venture with Party A, entered into a construction contract with Party B.   On the other hand there are the Appellants who provided finance facilities in relation to the Development Project. Their involvement included the provision by the First Appellant, A30 ("A30"), of performance guarantees and retention guarantees on behalf of the Appellants to Party B. 

4.             The arrangements between the parties were governed by an overarching Common Terms of Agreement (the "CTA") under which the obligations of the First and Second Respondents were guaranteed by the Third and Fourth Respondents. The CTA was supported by an Assignment Agreement (the "AA") whereby the First and Second Respondents and Party A assigned to A30 rights and benefits and interests under agreements with Party B concerning the Development Project, and by a pledge agreement.  By cause 25.3 of the CTA, the Respondents were required to ensure that at all times and without limitation any amounts paid to them under the contract with Party B, together with insurance proceeds relating to the Development Project, were paid into a collection account with A30 ("the Collection Account") in the name of the joint venture.       

5.             All the agreements were subject to an arbitration agreement which provided for LCIA references to a tribunal with a seat in Abu Dhabi.  In the case of the arbitration with which these proceedings are concerned, an agreement was later reached that the seat of the arbitration was to be ADGM. 

6.             In June 2021, following a demand made by Party B under the guarantees, the Abu Dhabi Judicial Department ("ADJD") Court of First Instance issued two payment orders in respect of them against A30.  Its appeals against those orders to the Court of Appeal and then to the Court of Cassation were dismissed.  The ADJD Execution Court then wrote to the Governor of the UAE Central Bank directing the seizure from A30's account in satisfaction of the sums due under the guarantees.  On 5 September 2021, A30 was told that its account had been debited by way of execution of the ADJD payment orders.  A30, having obtained payment from the other banks under counter guarantees, issued notices to the Respondents demanding reimbursement in respect of the sums that had been debited from their accounts by way of enforcement of the ADJD payment orders.

7.             The Respondents did not make any payments in response to these demands.  So on 23 September 2022 the Appellants brought arbitration proceedings under the LCIA Rules claiming payment, in answer to which defences have been served by the Respondents.  The Appellants then discovered that settlement discussions had been taking place between the Respondents and Party B of which they had not been informed.  A30 became concerned that anything paid to Party B might not be paid into the Collection Account as required by the CTA.  Its concern was not allayed by further enquiries, so the Appellants applied to the LCIA tribunal for interim relief.  The Respondents denied that there had been any breach of the CTA with regard to the remittance of funds, and the application for interim relief was refused by the Tribunal. 

8.             In April 2025, shortly after that refusal, the Appellants received evidence that a settlement had been concluded.  They returned to the Tribunal, again seeking interim relief.  On this occasion the Tribunal ordered that payments made by Party B in relation to the development contract and the Development Project be paid into the Collection Account.

9.             The Judge was told that A30 has recently learned that the Respondents are likely to receive, or may already have received, funds from the National Bank of Party C ("Party C Bank") under two guarantees provided by a subcontractor in relation to the Development Project. The Respondents' case in the arbitration is that in comparable circumstances such monies should be paid into the Collection Account.  But the Appellants put in evidence before the Judge a proposed instruction letter to Party C Bank calling for the Party C Bank payments to be made to accounts held at banks or other institutions in Bahrain and Turkey. 

10.         The Judge said that, quite apart from any questions as to whether such an instruction would be consistent with the Respondents' obligations under the CTA, there seemed to be no cogent reason why the monies should be paid into accounts outside the UAE unless it was to avoid those funds reaching the Collection Account.  These are the circumstances that have given rise to this appeal.  The Appellants seek a worldwide freezing order from the court to preserve assets that might otherwise be dissipated.  

Power to grant the order

11.         A worldwide freezing order is among the interim and conservatory orders that this Court may make under section 41 of the ADGM Courts, Civil Evidence, Judgments, Enforcement and Judicial Appointment Regulations 2015 for the reasons given by Sir Andrew Smith in A17 v B17 [2025] ADGMCFI-0001; see also Sky Property Holdings Ltd v Corporate Sky Business Center Ltd [2025] ADGM CFI-0021. For the same reason it may also make such an order under section 31 of the Arbitration Regulations where it is asked for in support of a reference to arbitration. 

12.         It is well settled that three requirements must be met for the Court to be able to grant such an order. They were described by Peter Gibson LJ in Thane Investments Ltd v Tomlinson (No 1) [2003] EWCA Civ 1272, para 21.  His words were approved in Lakatamia Shipping Co Lt v Moritimo [2019] EWCA Civ 2033, per Haddon-Cave LJ, para 33The applicant must show that there is a serious issue to be tried: Sky Property Holdings Ltd, per Sir Andrew Smith at para 21.  It has to be established that there is a real risk that a judgment or the award in an arbitration will be unsatisfied by the defendant's disposal of assets unless restrained by the court from disposing of them.  And it must be established that it would be just and convenient in all the circumstances for the Court to make the order.   

13.         The Judge was satisfied as to the first two of these requirements.  But he felt unable to say that it would be just to grant the order in this case. There were a number of points that troubled him in the course of the hearing.  He found a way around two of them.  But the crucial problem facing the Appellants' application, as he saw it, was that the Appellant banks in agreeing to an LCIA arbitration had agreed to subscribe to the LCIA Rules as they apply from time to time. 

14.         Article 25 of the LCIA Rules deals with interim and conservatory measures.  The provision in article 25 which led to the Judge's difficulty is to be found in article 25.3, which provides:

"A party may apply to a competent state court or other legal authority for interim or conservatory measures that the Arbitral Tribunal would have power to order under Article 25.1: (i) before the formation of the Arbitral Tribunal; and (ii) after the formation of the Arbitral Tribunal, in exceptional cases and with the Tribunal's authorisation until the final award...."

15.         In this case the tribunal has been formed.  But none of the Appellants sought, and it has not given, its authorisation for the application that the Appellants are making to the court.  That, as the Judge saw it, created a problem to which he was unable to find an answer. By making this application without the tribunal's authorisation, the Appellants were acting in breach of article 25.3 and so in breach of their agreement to comply with the LCIA Rules.  It was put to him that a generous interpretation should be given to article 25.3 in order to avoid a lacuna in the rules which would prevent a party to an arbitration from seeking freezing relief and so undermine the effectiveness of the reference. He was unable to accept that argument.  He felt bound to conclude, with a good deal of regret, that it could not be just for the Court to grant an application made in breach of contract.

The law of the seat

16.         The Judge mentioned the agreement between the parties that the seat of the arbitration was to be the ADGM.  He did so only in passing as part of the narrative in paragraph 7 of his judgment.  But an agreement as to the seat of an arbitration is not just a formality.  It has important consequences.  It gives rise to the question to which Mr Nicholas Craig KC for the Appellants directed our attention in his short but helpful submissions in support of this appeal: what was the effect of that agreement? 

17.         Its effect is set out in sections 8 and 9 of the Arbitration Regulations.  Section 8 provides that Part 3 of the Arbitration Regulations shall apply to arbitrations where the seat of the arbitration is the ADGM. Section 9 distinguishes between provisions that are mandatory and non-mandatory. The mandatory provisions of Part 3 of the Arbitration Regulations are listed in Schedule 2.  They include section 31 which confers power on the Court to order interim measures.  Section 9 of the Arbitration Regulations provides that the mandatory provisions "have effect notwithstanding any agreement to the contrary".  

18.         Section 31 of the Arbitration Regulations provides as follows:

"(1) The existence of an arbitration agreement shall not preclude a party from applying to the Court, before or during the arbitral proceedings, for interim measures including in relation to the taking of evidence under section 48 or provisional or conservatory measures under this section.

(2) The Court shall have the same power of issuing any interim measure in relation to arbitration proceedings as it has in relation to proceedings in the Court.

...

(4) If the case is one of urgency, the Court may, on the application of a party or proposed party to the arbitral proceedings, make such order as it thinks necessary for the purpose of preserving assets.

...

(6) In any case, the Court shall act only if, or to the extent that, the arbitral tribunal, and any arbitral or other institution or person vested by the parties with power in that regard ... has no power or is unable for the time being to act effectively."

19.         The requirements of section 31(6) were met in this case.  As would often be the case, the application for a worldwide freezing order was made without notice to the parties sought to be enjoined by the order.  The matter was urgent, and giving notice of its making might cause the dissipation of assets which the application was designed to prevent.  The arbitral tribunal was unable to act effectively, because it could not grant interim measures unless the parties to whom those measures would be directed had been given notice of the application.     

20.         The answer to the question whether, as the tribunal had not given its authorisation, the application is in breach of contract is to be found by applying the mandatory provision that the law of the seat sets out in that section.  It must be given effect to notwithstanding any agreement to the contrary.

21.         We have much sympathy with the Judge in his inability to find a way round the problem within the wording of article 25.3.  In our view, however, the answer lies in the proposition that, while the parties were free to agree to arbitrate under the LCIA Rules, those rules are subject to the mandatory provisions of any applicable law.  Article 14 of the LCIA Rules sets out the general duties of the arbitral tribunal to be discharged at all times during the arbitration.  But article 14(2) recognises that where mandatory provisions are imposed, such as by the law of the seat of the arbitration, they must be applied.  It provides:

"The Arbitral Tribunal shall have the widest discretion to discharge these general duties, subject to the mandatory provisions of any applicable law... ." 

22.         It is a well-established principle of English law that the courts of the seat of the arbitration should have a supervisory jurisdiction.  An agreement as to the seat is analogous to an exclusive jurisdiction clause.  If the law of the seat imposes mandatory provisions, those provisions cannot be ousted by agreement between the parties: A v B [2007] 1 LLR 237 per Colman J at paras 111-112: see C v D [2007] EWHC 1541 per Cooke J at para 30. 

23.         It would be remarkable if the effect of the LICA Rules was to deny giving effect to provisions of that kind.  But the effect of article 14(2) is to preserve that principle.  A party who seeks to take advantage of a mandatory provision imposed by the seat without having done what article 25(3) requires cannot be said to be acting in breach of contract.           

 

Conclusion

24.         For these reasons we concluded that it would be just and convenient for the court to make the order that the Appellants sought.  The appeal was allowed, and a worldwide freezing order was made up to a value of USD 250,000,000.  As the undertakings that were required were being provided by A30 only, it was for its benefit only that the order was made.     

 

 

 

Issued by:

 

Linda Fitz-Alan
Registrar, ADGM Courts
7 October 2025


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URL: https://www.bailii.org/ae/cases/ADGMCA/2025/3.html