Court rules on malicious prosecution claims in DIFC proceedings

Background and Context

The High Court of Justice recently addressed a complex case involving claims of malicious prosecution in proceedings initiated in the Dubai International Financial Centre (DIFC). The case, presided over by Mr Justice Foxton, involved a series of claims brought by the Commercial Bank of Dubai PSC and several associated entities against multiple defendants, including individuals and corporate entities based in the UAE and beyond.

Claims and Legal Issues

The primary issue before the court was whether the defendants had maliciously prosecuted two sets of proceedings in the DIFC. The claimants argued that these proceedings were brought without reasonable cause and with malice, causing them significant financial and reputational harm. The case also touched upon the applicable law governing these claims, with arguments presented regarding the relevance of English, UAE, and DIFC law.

Applicable Law and Jurisdiction

One of the central legal questions was the determination of the applicable law under the Rome II Regulation. The claimants contended that the claims for malicious prosecution should be governed by UAE law due to the location of the alleged damage. However, the court ultimately concluded that the law of the DIFC was applicable, as the primary harm occurred within its jurisdiction when the proceedings were initiated.

Legal Costs and Consequential Losses

The court examined the nature of the losses claimed by the plaintiffs, which included legal fees incurred in various jurisdictions and alleged delays in recovering properties in England. Mr Justice Foxton noted that the legal costs were a form of mitigation rather than direct loss, and the primary invasion of the claimants' legal interests occurred at the place the proceedings were instituted.

Article 4 of Rome II Regulation

The court's analysis under Article 4 of the Rome II Regulation was pivotal in determining the applicable law. The judgment highlighted the importance of identifying the direct and immediate harm caused by the malicious prosecution, which was found to be inherently linked to the DIFC, where the proceedings were initiated.

Impact of DIFC Law Amendments

During the proceedings, a new legislative amendment in the DIFC was introduced, potentially altering the legal landscape regarding the recognition of malicious prosecution claims. This development, which occurred during the hearing, added complexity to the case, as it could impact the applicability of DIFC law to the claims in question.

Conclusion and Implications

Ultimately, the court concluded that the law applicable to the claims for malicious prosecution of the DIFC proceedings was DIFC law. This decision underscored the significance of the jurisdiction where the proceedings were initiated and the legal framework governing such claims. The judgment also highlighted the evolving nature of DIFC law and its implications for future cases involving similar legal issues.

Future Considerations

The case serves as a critical reference point for legal practitioners dealing with malicious prosecution claims and the application of Rome II Regulation in international disputes. The court's approach to determining the applicable law and its consideration of recent legislative changes in the DIFC provide valuable insights for future litigation involving cross-border legal proceedings.

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