DIFC court says Damas case under its jurisdiction

The DIFC Court has jurisdiction over the $22 million (Dh80.74m) breach of contract case filed against Damas by Amwal Al Khaleej, the court ruled yesterday.

Amwal is asking the court for Damas to send back the 22 million shares it sold to Damas or for the Abdullah brothers to pay the full sum of $22,042,696 plus interest rates at the rate of 12 per cent plus damages.

The ruling, made by Justice Tan Sri Sn, is based on Article 5(A)(1)(b) of the Judicial Authority Law, which says the DIFC Court of First Instance shall have the exclusive jurisdiction over civil or commercial cases and disputes arising or related to a contract that has been executed or a transaction that has been concluded, in whole or in part in the Centre.

Damas has contested the jurisdiction on the grounds that neither Damas Investment nor the Saudi-based firm is incorporated in DIFC. It said there is no contract between the parties because one of the two documents in the dispute, called "Letter of Agreement", has not been concluded.

The claimant, represented by Clyde, however, debunked these arguments, saying the case involved a transfer of shares of Damas International Limited, a DIFC-incorporated firm.

The Abdullah brothers, who were then directors and shareholders of the firm, also controlled Damas Investments.

Debunking the argument of the Letter Agreement, Sapna Jhangiani, Senior Associate at Clyde said the Letter Agreement is supplemental to a share purchase agreement (SPA) dated June 16, 2008, which has not been disputed by either party. Under the SPA, Amwal Al Khaleej agreed to sell its 22m shares in Damas International Limited to Abdullah brothers on July 10, 2008. The shares were effectively priced at $22m.

The SPA sets out that should the brothers fail to pay, they were obliged to send back the shares. It turned out the brothers neither paid the amount nor sent back the shares.