Court orders inquiry into damages following wrongful freezing order

Court Orders Inquiry into Damages Following Wrongful Freezing Order

The Court of Appeal has set aside a Worldwide Freezing Order (WFO) initially granted against the assets of Nuri Musaed Al Saleh and others. The order, which was originally issued on 10 November 2021, was overturned on 6 September 2023, leading to a subsequent inquiry into damages suffered by the defendants due to the order.

The WFO was initially granted on an ex parte basis, meaning that it was issued without the defendants being present to argue their case. It was later continued following a hearing on 25 November 2021. The order included a cross-undertaking in damages, a standard provision allowing for compensation if the order was found to have caused loss to the defendants.

The defendants, who were unsuccessful in their initial attempts to set aside the WFO, appealed to the Court of Appeal. The appeal was successful, with the Court of Appeal finding that the DIFC Courts lacked jurisdiction over the matter. This decision paved the way for the current inquiry into damages.

During the proceedings, evidence was presented that the WFO had caused significant financial burdens on the defendants. They incurred substantial legal expenses in France and Massachusetts, USA, as they sought to counteract the enforcement of the WFO in those jurisdictions. The defendants argued that these actions were ultimately unsuccessful and that they should be compensated for the incurred costs.

The court, guided by the principles established in the English Court of Appeal case Yukong Line Limited v Rendsburg Investments Corporation, determined that an inquiry into damages was justified. This decision was based on the premise that the WFO was wrongly granted, and the court lacked jurisdiction to issue it initially.

Justice Lord Angus Glennie, presiding over the application hearing on 26 February 2025, ordered that the defendants file a detailed claim outlining the damages by 26 March 2025. The claim must be supported by evidence previously submitted in affidavits and witness statements.

The respondents, Sandra Holdings Ltd and Nuri Musaed Al Saleh, were notified of the requirement to respond to the claim within 28 days of service. The court will subsequently schedule a hearing to assess the damages.

The case highlights the importance of jurisdictional accuracy and the potential financial consequences of wrongful legal orders. It serves as a reminder of the courts' discretion in ordering inquiries into damages and the necessity of a prima facie case of loss.

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