Shokat Mohammed Dalal v. United Arab Emirates

Case summary

At a glance

Parties: Shokat Mohammed Dalal v. United Arab Emirates (ICSID). The published document is a related English court judgment: The World LLC v. Shokat Mohammed Dalal
Case no.: ICSID Case No. ARB/19/10; English proceedings: [2019] EWHC 2993 (Comm), Case No. CL-2019-000126
Forum and rules: ICSID arbitration (Request for Arbitration of 28 March 2019); English High Court, Commercial Court
Treaty: UK–UAE BIT of 8 December 1992
Court: High Court of Justice of England and Wales, Business and Property Courts, Commercial Court (QBD): Mrs Justice Carr
Sector: Real estate development (World Islands Project, Dubai)
Outcome: On 13 November 2019 the High Court dismissed Mr Dalal's application to discharge a worldwide freezing order obtained by The World LLC. The published documents do not show the outcome of the ICSID arbitration.
Amount: Worldwide freezing order up to £34 million. In England, The World LLC sought AED 104,947,381.65 plus AED 47,324,766.02 interest (total AED 152,272,147.67; pleaded as £31,747,220.07).

The dispute

Mr Dalal, an individual resident in the United Kingdom, negotiated in 2007–2008 to buy plots in the World Islands Project off Dubai from The World LLC, a wholly owned subsidiary of Nakheel PJSC, and paid deposits. In 2012 the Special Tribunal Related to Dubai World (DWT) ordered World to repay AED 57,048,281 in deposits on three plots, finding no binding contract for them. In a later case the Dubai courts held that binding contracts existed for Plots D13 and D94 and ordered Mr Dalal to pay AED 152,151,369; the Court of Cassation upheld this on 21 June 2017. On 28 March 2019 Mr Dalal filed an ICSID claim against the UAE under the UK–UAE BIT. He alleged serious procedural irregularities, collusion and denial of due process in the Dubai proceedings. The only published document is a judgment of the English High Court in World's action to enforce the Dubai judgment in England. In it, Mr Dalal tried without success to discharge a worldwide freezing order.

Key holdings

World presented Mr Dalal's possible fraud defence fairly at the without-notice hearing of 5 April 2019. World relied on his November 2018 letter and his ICSID Request for Arbitration, which did not set out the fraud defence he now pleads. World still told the judge that a fraud defence might be raised. The court found no dishonesty by World or its lawyers. ¶¶ 62–74
Counsel did not fully explain that Plots D13 and D94 were entered in Mr Dalal's name only on the Interim Real Estate Register. This was not a material misrepresentation. World is a judgment creditor for a liquidated debt and has no duty to mitigate by reselling the plots. ¶¶ 81–84
World's evidence wrongly dated the transfer of the shares in Elliot UK. They passed first to Elliot Dubai on 9 December 2015, not directly to the Hong Kong company in 2017. The mistake was unfortunate but neither material nor dishonest. There was also no material non-disclosure about the Buncer Lane transfer, delay, or the possible defence under s.33(1)(c) of the Civil Jurisdiction and Judgments Act 1982. ¶¶ 95–103
On the fuller evidence there is solid evidence of an even greater risk of dissipation than Teare J found. The court relied on the transfer of 9 Buncer Lane for nil consideration, the share transfers ending with a company owned through a Belize foundation, the charge over Barcroft, the home-rights registration, and unexplained changes in Mr Dalal's finances. ¶¶ 110–118
The court rejected the argument that World lacked clean hands or had abused the process. The application to discharge the freezing order was dismissed, and the parties were invited to agree costs. ¶¶ 119–123

Procedural history

28 August 2012DWT judgment orders World to repay AED 57,048,281 to Mr Dalal for Plots D54, D55 and D103.
9 April 2015Dubai Court of First Instance orders Mr Dalal to pay AED 152,151,369 for Plots D13 and D94.
21 June 2017Dubai Court of Cassation dismisses Mr Dalal's final appeal (the Court of Appeal had dismissed his appeal on 17 January 2017).
6 November 2018Mr Dalal's lawyers write to the President of the UAE, threatening a claim under the BIT.
27 February 2019World issues proceedings in England to enforce the Dubai judgment.
28 March 2019Mr Dalal files an ICSID Request for Arbitration against the UAE under the UK–UAE BIT.
5 April 2019Teare J grants World a worldwide freezing order up to £34 million; Sir Michael Burton continues it on 3 May 2019.
13 November 2019Mrs Justice Carr dismisses Mr Dalal's application to discharge the freezing order.