Mohamed Hassan EL Haddad v Ms Khulood Abdulla Hassan Al Rostamani

Hearing dates: 24, 25, 26, 27 and 28 May 2021

APPROVED JUDGMENT

Introduction

The first to seventh defendants (the “AR Defendants”), challenge the jurisdiction of this court in respect of the claim brought against them by the claimant (“Dr Haddad”). The eighth defendant (“Dr Al Mulla”) also challenges jurisdiction in respect of the claim against him but, in view of the fact that his application was made as recently as 2 March 2021, only certain of his challenges to jurisdiction (being essentially those that overlap with the grounds of challenge of the AR Defendants) were advanced at the hearing to which this judgment relates.

The AR Defendants are members of the Al Rostamani family, a well-known family owning a successful business group in the United Arab Emirates (“UAE”). Dr Haddad (a UK citizen) and the first defendant, Ms Khulood Abdulla Hassan Al Rostamani (“Ms Khulood”) were in a personal relationship for some time prior to 2002. Dr Haddad contends that in 2002 they also became business partners, originally pursuant to an oral agreement in the autumn of 2002, and subsequently pursuant to a written agreement entitled “KMI Partnership Contract (London-Dubai)” (the “KMI-PC”) made on 10 November 2003, although not signed until 14 February 2004 (the “Partnership”).

Dr Al Mulla is a lawyer in the UAE. He was formerly the owner of the firm Habib Al Mulla & Co, and since 2013 has been the executive chairman and partner of Baker & McKenzie Habib Al Mulla in Dubai.

According to the Amended Particulars of Claim (“APOC”):

(1) The business of the Partnership was “a combined offering of management consultancy, real estate, property development, marketing and advertising, investments, healthcare, automobile sales and hotel management, with the aim of becoming a world class property developer”;

(2) The Partnership originally carried on business under the name “UKQC”, from premises in England, with the intention of starting in England but extending to Dubai and Saudi Arabia;

(3) In or around April 2003, the Partnership decided to carry on business under the name “Knowledge Management International” or “KMI”;

(4) On or around 5 June 2003, at a meeting at the Gothic Temple in Derby, Dr Haddad and Ms Khulood agreed to carry on the business of the Partnership as equal partners, headquartered in England, offering management consultancy services in Dubai through its English office.

The KMI-PC provides, materially, as follows:

(1) By clause 1.1, the parties “will continue their original partnership agreement which was made at the Gothic Temple in Derby…” the contract being made, in part, to “align the “Gothic contract” better with the actual practice of doing business in the UAE”.

(5) By clause 1.3, “Both parties will continue under “KMI” the First Party's business idea which first started under UKQC's objects to create an economic entity with a main purpose of being a world class premier property developer specialised in retail, hotels, commercial properties, residential properties and offices using its own interlinked departments/divisions to offer to itself and to others management consulting services, stock market trading, investments, general commercial trading, marketing & advertisements, healthcare, automobile sales & services and a Hotel management operator “The Group””;

(6) By clause 1.4, “Both parties will establish in Dubai companies/establishments to legally execute the activities of “The Group”, since business activities in Dubai are limited to a single activity for every single company”;

(7) Clause 1.5 provided as follows:

“As some business activities in Dubai are limited to UAE nationals only, therefore if any companies or establishments are needed to legally execute the activities of “The Group” but cannot/didn't show the First Party [Dr Haddad] as a 50% shareholder as in the case of “KMI” Dubai, then the Second Party [Ms Khulood] will register the First Party's shares under the Second Party's name or under the name of one of her family members. In this case, the Second Party guarantees to the First Party from her own personal money the value of the First Party's shares in “KMI” Dubai and in the companies and establishments used to execute the activities of “The Group”. In addition, the Second Party guarantees the value of the First Party's shares in the total of “The Group” and not only the value of the First Party's shares in a single activity or a single company or establishment”;

(8) Clause 1.6 made similar, but reverse, provision in case any companies (without reference to any specific jurisdiction) are unable to show Ms Khulood as a 50% shareholder;

(9) By clause 3, “KMI” and any of the companies or establishments used to execute the activities of “The Group” must operate from one physical head office location;

(10) By clause 11, “the parties are 50% partners in all companies and establishments used to execute the activities of “The Group”, whether already established as in the case of “UKQC”, “KMI” UK and “KMI” Dubai or to be established in the future;

(11) By clause 12, the proper law of the KMI-PC was stated to be English law and the partners agreed that all disputes arising under or in connection with the KMI-PC were subject to the exclusive jurisdiction of the English courts;

(12) Clause 13 referred to the fact that “KM Properties” (meaning an entity that was at that time a sole establishment in Dubai and which was later incorporated as KM Properties LLC – “KMP Dubai”) had been established on 10 February 2004 and would change its legal status to a limited liability company “by introducing a member of the second party's family as per Article 1.5 in order to give KM Properties the benefits of a Limited Liability Company, and the Articles of this contract apply to KM Properties.”

The AR Defendants deny that any partnership agreement was made and dispute the authenticity of the KMI-PC. They accept, however (subject to arguments as to the validity of the alleged contracts), that these are not issues that can be determined at this stage. In other words, it is accepted that there is both a good arguable case and a serious issue to be tried that Dr Haddad and Ms Khulood executed the KMI-PC and made the oral partnership agreements that are alleged to have preceded it.

Dr Haddad also relies on certain written undertakings in support of his claim that shares in, and assets of, the companies through which the Partnership carried on business (particularly in Dubai) were held on trust for the Partnership. These consist of:

(1) An undertaking dated 12 August 2004, purportedly made by Ms Khulood on behalf of KMP Dubai (at a time when it was a sole establishment), declaring that all assets and properties registered or to be registered in its name were owned by the Partnership. It is governed by English law and has an exclusive jurisdiction clause in favour of the English courts. Although the defendants dispute its authenticity, it is accepted for the purposes of this application that there is a good arguable case that the undertaking was entered into.

(2) A series of undertakings dated 25 June 2006, by which various of the second to seventh defendants declared that the owner of properties registered in their name in Dubai was KMP Dubai.

(3) An undertaking dated 25 March 2007, purportedly made by Dr Haddad and Ms Khulood on behalf of KMP Dubai and KM Properties UK Limited (“KMP UK”) and by Dr Haddad on behalf of KMP Properties International Real Estate, in which the companies declared that their activities, assets and properties registered or to be registered under their names were owned by the Partnership. The defendants also dispute the authenticity of this document but accept, for the purposes of this application, that there is a good arguable case that the undertaking was entered into.

(4) An undertaking dated 31 March 2007 made by Dr Haddad and Ms Khulood on behalf of KMP Dubai and by the second and third defendants on behalf of the second to seventh defendants (as heirs of the late Abdulla Hassan Al Rostamani), declaring that the heirs did not own any shares in, and had no rights to profits from, KMP Dubai.

The personal relationship between Dr Haddad and Ms Khulood ended in 2006 and the following year they firmly fell out. It is Dr Haddad's case that thereafter Ms Khulood, with the assistance of the other defendants, devised and executed a plan to misappropriate the Partnership assets in Dubai and in England. This included principally the disposal in 2013 of properties in Dubai referred to as the “Three Towers” for no consideration or at a gross undervalue, resulting in a loss to the...