Juris diction claims | Course Paper

CFI-032-2020

MS OXANA CHILDESCU

Claimant

-and-

(1) MR ANDREI-BOGDAN GHEORGHIU aka ANDREI MUNTEANU (2) MS

ILEANA MIHAELA BURCEA

(3) QUANTIQ CONSULTANCY SERVICES LIMITED

(4) GHEORGHE CEZAR CHIRIAC

(5) KRONIACO MANAGEMENT LIMITED

(6) XENOFON HADJIANTONIOU

(7) MAGNA CAPANES SL

(8) LEADER INC. LIMITED

(9) PINE BLOOM VENTURES LIMITED Defendants

JURISDICTION CLAIMS

2ND DEFENDANT

1. In support of her Application for an Order declaring that the Court does not have

jurisdiction to try the claim filed on 11 May 2020.

2. In relation to the balance of the further information requested, is necessary if

(which the Second Defendant disputes) the Claim is within the jurisdiction of

the Court, to enable the Second Defendant to know the case against her and

respond to it in her Defence (“Part 19 Issue”); and if (which the Second

Defendant disputes) the Claim is within the jurisdiction of the Court, the

proposed amendments to the Particulars of Claim (here together with the

original Particulars of Claim referred to as the Amended Particulars of Claim

(“APC”):

3. The Jurisdiction Issue is to be determined –

In relation to matters of fact, on the basis (assumed for the purposes of this

hearing only) that the Claimant can prove each allegation of primary fact alleged

in the pleadings; and

(b) In relation to matters of law, on the basis of the law as found by the Court.

The fact that an issue of law may be one of some complexity does not mean

that the Court should not resolve it at this stage.

4. The Court has (in Case CFI 074-2019) (“the previous proceedings”) considered

an ex parte Application by the Claimant for a reflexive Freezing Order based

on an Order (also obtained ex parte) of the District Court in Nicosia, Cyprus

(“the Cyprus proceedings”). Having heard argument on the matter, the Cyprus

Court ultimately determined that it had no jurisdiction to hear the claim, contrary

to the submissions of the Claimant in the previous proceedings.

5. The Cyprus Court also held that even if it had had jurisdiction, it would have

dismissed the Claimant’s claim because it relied, in her own case, on her own

illegal conduct – in particular, breaches of internationally formulated and agreed

anti-money laundering and tax compliance laws applicable in all of the

jurisdictions the subject of these proceedings which have counterparts in the

DIFC . The Claimant’s pleaded case expressly acknowledges that to have been

the purpose of the alleged Yacht contract. Her evidence is that the concealment

was deliberate on the part of both herself and her husband .

6. In its judgment arising from the inter partes hearing on 10 December 2019 this

Court accepted that the Cyprus Court had jurisdiction on the basis that the

Cyprus Court had, to that point, not decided to the contrary . The Second

Defendant has applied for leave to appeal from that decision on the basis that

the Cyprus Court did not have jurisdiction (as it itself held) but as at the present

date that application for leave to appeal has not been determined.

7. Should that Application be successful, the corresponding claims made against

the Second Defendant will necessarily have to be abandoned. The Second

Defendant respectfully submits that the Court should first consider the Third

Defendant’s Immediate Judgment Application and then consider the Second

Defendant’s Jurisdiction Application in relation to what remains of the

Claimant’s Claim.

8. Contrary to the requirements of the Rules of the DIFC Courts (“RDC”) Rule

7.34, the Amended Particulars of Claim do not set out the basis of the

Claimant’s contention that the Claim is within the jurisdiction of the Court. The

Claim Form simply asserts that jurisdiction arises under Dubai Law No. 12 of

2004 (the “Judicial Authority Law”) Articles 5A(1)(a), (b), (c) and (e). This Law

relevantly provides:

(1) The Court of First Instance shall have exclusive jurisdiction to hear and

determine

(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;

(d) Any claim or action over which the Courts have jurisdiction in accordance

with DIFC Laws and DIFC Regulations.

9. The jurisdiction of the DIFC Courts of First Instance is exclusively statutory. It

follows that whether the Court has jurisdiction in these proceedings involves an

exercise in interpreting Articles 5(A)(1)(a), (b), (c) and (e) of the Judicial

Authority Law (as amended) (JAL) and, to the extent (presently

unparticularised) that Article 5A(1)(e) is relied upon as engaging them, the

relevant provisions of the DIFC Courts Law (DCL), the RDC, and possibly the

Law of Contract, Law of Obligations, Law of Damages and Remedies and the

Trust Law in the present context . To establish jurisdiction the Particulars of

Claim must properly plead particularised allegations against each Defendant.

10. In the previous proceedings in this Court for a reflexive Freezing Order, Counsel

for the Claimant submitted64 that Articles 22(2) and 32(b) of the DIFC Courts

Law (“DCL”), together with RDC Rules 25.1 and 25.24 provided the necessary

jurisdiction. Article 24 of the DCL (the subject of the litigation in Akhmedova v.

Akhmedov and Straight Establishment), was not relied upon. At a later point it

was submitted that JAL Articles 5(A)(1)(b) and 5(A)(1)(c) provided for

jurisdiction66 and, additionally, that JAL Article 5(A)(1)(e) and RDC Rule 20.7

read together did so.

11. Dealing with these in order:

(a) DCL Articles 22(2) and 32(b) simply confer power on the Court to grant

injunctions. If, as was suggested, these were a source of jurisdiction it

would follow that the Court had jurisdiction in any matter in which an

injunction was sought. The power to take a flexible approach in

formulating effective ancillary orders should be kept separate from the

question of jurisdiction;

(b) RDC Rule 25.1 is to similar effect. It presupposes the existence of

jurisdiction and sets out the Court’s powers when jurisdiction exists. RDC

Rule 25.24 is procedural – it simply requires the Part 8 procedure to be

used. Nor can it be said that Rule 25.24 by necessary implication confers

jurisdiction: the most obvious instance of a case where jurisdiction will

exist without the need for recourse to Rule 25.24 is where a licensed DIFC

establishment is a party;

(c) Insofar as reliance is placed on JAL Articles 5(A)(1)(b) and 5(A)(1)(c),

whether or not a claim is within the jurisdiction of the Court is determined

by the claim itself: the fact that some other claim within jurisdiction might

be made does not make an existing claim within jurisdiction. This claim

has mutated significantly since it was originally advanced in Cyprus, where

it was not a claim “arising out of or relating to a contract or promised

contract”71 or a claim “arising out of or relating to any incident or

transaction which has been wholly or partly performed within the DIFC and

is related to DIFC activities”;

(d) It is not at all clear how RDC Rule 20.7 can be a basis for jurisdiction. The

Second Defendant is already a party to the proceedings. But even if the

addition of a party might cure any lack of jurisdiction, the Court would need

to exercise its powers under that Rule and jurisdiction will not exist until it

has done so73;

(e) The Law of Damages and Remedies so far as contracts are concerned is

limited in its operation to contracts to which the DIFC Law of Contract

applies74 and so far as torts are concerned applies to breaches of

obligations under the DIFC Law of Obligations . Neither of these Laws

enlarges the jurisdiction conferred by the Judicial Authority Law.

(f) The Trust Law has its own jurisdictional rules. It applies to DIFC Trusts

(which are created by written instrument ) and foreign trusts in limited

circumstances .

12. Where, as here, the question of jurisdiction is solely one of law, the Court

should decide it rather than treat it as a question of whether or not there is a

good arguable case . As previously submitted, disputed matters of fact are

usually not resolved as part of a challenge to jurisdiction and the Second

Defendant does not suggest this to be a case where they should be,

notwithstanding the substantial changes in position on the part of the Claimant

in these proceedings, the previous proceedings, and the Cyprus proceedings.

13. The Claimant’s contractual claims are therefore fundamentally, and fatally,

flawed and as pleaded cannot give rise to jurisdiction. To the extent any

conclusion is to be drawn in relation to these matters from the alleged subjects

of the alleged contracts they relate to matters wholly outside the DIFC: the

management and control of assets (be they company shares or the underlying

assets of those companies) wholly outside the DIFC.

14. The claim for breach of fiduciary duty is wholly dependent upon the agency

relationship and fiduciary duties alleged to arise under the alleged contracts –

see the opening words of paragraph [20] and paragraphs [41] and [59] of the

Amended Particulars of Claim. No facts have been pleaded which would bring

the claim within the jurisdiction of the Court for the same reason as applies in

the case of the contractual claims on which the fiduciary duty claims are

dependent.

15. The alternative basis of the claims for breach of trust in the case of the Spanish

Property says that the trust arose “in the premises”88 and in the case of the

Yacht, while not using that term, follows the same format of setting out the

contractual history and then alleging that the result is a trust . To the extent that

reliance is placed on the alleged contracts, the above observations (paragraphs

44 to 48) apply. To the extent that reliance is placed solely on the contractual

history (which itself is pleaded in a wholly defective manner and cannot give

rise to jurisdiction for the reasons set out above, and as underlined by the

submissions made in relation to the Part 19 Request), nothing is pleaded which

supports the existence of a trust in either case. As to this:

a. The Claimant’s case in relation to the Yacht (with which the Second

Defendant concurs on this point) is that Querious paid full value for the

shares in Finpar Invest which it exchanged for the shares in EYL, the

company which owned the Yacht , which had an equivalent value ; and

b. The Claimant’s present case93 in relation to the Spanish Property is that

she beneficially owned (and has always owned) the Ninth Defendant , the

ultimate holding company of the Fifth Defendant, so any benefit to the Fifth

Defendant arising from the property exchange is perfectly explicable. Nor is

any benefit alleged. In any event such benefit could only be quantified for the

purposes of the claim if it were alleged that the Fifth Defendant, which owned

the assets mentioned in paragraph 23 of the Amended Particulars of Claim,

held them in trust for her (which is not alleged) or acquired them at an

undervalue from her (or possibly entities under her control) (which also is not

alleged).

16. Nor is it alleged that it was a term of the alleged contracts that the First to Fourth

Defendants are alleged to have entered into that they would procure that such

a trust be created . In any event the consequence of such a term in the each of

the contracts would not be the creation of a trust arrangement binding on any

party other than the parties to the alleged contracts, and so could not be any

basis for jurisdiction over the Second Defendant.

17. Nor does the Trust Law provide an alternative basis of jurisdiction by reason of

Article 5(A)(1)(e) of the Judicial Authority Law. As noted, the Amended

Particulars of Claim do not allege the existence of a DIFC Trust and, in addition

to the legal impossibility of there being a foreign trust, the requirements of

Article 19 of the Trust Law have not been alleged to have been met even if

there were a foreign trust (which also is not alleged).

18. This claim asserts (contrary to foundational principles of company law) that a

shareholder has a right to immediate possession of company assets and

ownership thereof. Any claim which might be made in relation to wrongful sale

must be made by EYL which is not a party to these proceedings. To the extent

that the existence of a trust is relied upon as giving the Claimant rights as