Al Tamimi & Company Successful in Landmark ADGM Court of Appeal Decision

Al Tamimi & Company has acted for the successful appellants in a landmark ADGM Court of Appeal proceeding in which Article1(1) of the ADGM Application of English Law Regulations 2015 (the “Regulations”) was considered.  That Article states:

“The common law of England (including the principles and rules of equity), as it stands from time to time, shall apply and have legal force in, and form part of the law of the Abu Dhabi Global Market”.

The Common Law of England is the law declared by judges, derived from custom and precedent and can be contrasted to the law codified in statute. The defining characteristic of common law is that it arises as precedent.  The doctrine of binding precedent, whereby courts follow and apply the principles declared in previous cases decided by more senior courts is also known by the Latin expression “stare decisis”.

In AC Network Holding Limited & Ors v Polymath Ekar SPV & Ors [2023] ADGMCA 0002, the Court of Appeal observed that the rule which the Article lays down “lies at the heart of the system of law that was created for ADGM” and went on to distinguish the position in the ADGM with that in the Dubai International Financial Centre (the “DIFC”), noting that in the DIFC “Common law rules in various areas have been codified, and it is only if those rules or the laws of other relevant legal systems do not provide an answer that the laws of England and Wales are applied.”

The case concerned a start-up car sharing company.  The shareholders entered into an agreement which gave the majority shareholders the right to serve a drag-along notice requiring the minority to join in a sale of the share capital to a bona fide purchaser who made an offer on arm’s length terms.  The majority shareholders served a notice requiring the minority to sell their shares for a total of $1.

The trial judge, Justice William Stone SBS KC, concluded that the majority shareholders and the purchaser were both controlled by one of the defendants, that the purchaser was not bona fide and that the offer was not made on arm’s length terms.  However, although he held that the majority shareholders had acted in breach of the shareholders’ agreement, he dismissed the claim against the defendant for the tort of “unlawful means” conspiracy on the ground that he had relied on legal advice. In arriving at this conclusion, Justice William Stone SBS KC held that he was not bound as a matter of stare decisis or case law precedent by a decision of the English Court of Appeal in The Racing Partnership v Done Bros Ltd [2021] Ch 233, as he was not sitting as an English Court of First Instance Judge.  Justice Stone said that for the purposes of the Regulations, decisions of the English Court of Appeal are highly relevant, but that the Regulations did not justify the conclusion that his court was bound by the doctrine of precedent by a decision of the English Court of Appeal which Justice Stone ultimately declined to follow.

In its judgment the ADGM Court of Appeal (Lord David Hope CJ, Justice Kenneth Hayne and Justice Sir Peter Blanchard) disagreed with the learned trial judge and said that whilst it is true that ADGM Court judges “are not sitting as English judges…they are bound to apply the rule laid down by the Article.”

Lord Hope restated the importance of precedent in English law, which provides certainty and predictability.  This underlines the advantages of ADGM’s approach “are that English law has direct precedential value in the ADGM Courts, and that the body of precedent that it contains provides predictability to the law.”

It is for these reasons that this approach is particularly beneficial to the ADGM and the businesses and legal practitioners operating within it and this judgment is likely to enhance further the attractiveness of the ADGM Courts as a forum for dispute resolution.

The Al Tamimi & Company team was led by Partner, Rita Jaballah, and included Peter Wood, Senior Counsel, Muhammad Mahmood, Senior Associate, and Kareem Bessisso, Associate.

For further information please contact our International Disputes team.