Middle Eastern Oil LLC v National Bank of Abu Dhabi

A jurisdiction clause submitting both parties to the courts of a country, while expressly preserving only the bank’s right to sue elsewhere, may require the customer to bring proceedings in that country. The customer bears the burden of showing strong reasons against enforcing the clause. Loss or evidence located in England will not ordinarily suffice where the banking relationship, parties, relevant conduct and governing law are closely connected with the foreign jurisdiction. Allegations that a foreign trial will be unfair require clear and cogent objective evidence. Alternatively, where jurisdiction exists in England as of right, a stay may be granted if the foreign court is clearly and distinctly the more appropriate forum and justice does not require proceedings to continue in England.

The claimant, a Dubai-incorporated company, held a US dollar account with the defendant bank’s Dubai branch. The claimant alleged that the bank wrongfully failed to transfer US$1.6 million to an English company in which it held shares. The funds were placed in suspense following instructions from the UAE Central Bank and were later subject to a lien imposed by the Dubai Attorney General. The claimant claimed losses arising from the English company’s subsequent liquidation, advancing contractual and tortious causes of action.

The defendant sought a stay on the basis that clause 9 of the banking contract required proceedings by the customer to be brought in the UAE. Alternatively, it relied on forum conveniens. The central questions were whether the clause was exclusive, whether strong reasons justified refusing enforcement, and whether the UAE was clearly and distinctly the more appropriate forum.

1. The application for a stay was granted. Clause 9 was construed as requiring the customer to commence proceedings concerning the banking relationship in the civil courts of the UAE. The express preservation of the bank’s right to sue in any court, coupled with the absence of an equivalent preservation for the customer, indicated that the customer’s general right to sue elsewhere was prejudiced, while the bank’s was not (paras 7–10).

2. Once an exclusive jurisdiction clause was established, the claimant had to show strong reasons for refusing to enforce it. The claimant’s loss in England was a strong connecting factor, but it was foreseeable when the banking relationship was formed and was insufficient. The other asserted English connections were unpersuasive. The alleged torts were principally connected with the UAE: the alleged failure occurred there, against the background of UAE money-laundering law, and the alleged statutory duty concerned UAE legislation (paras 11–18).

3. The court also concluded that, under sections 11 and 12 of the Private International Law Act 1995, UAE law governed the tort claims. Even if English law applied, the contractual and tortious claims involved the same factual inquiry, the contract governed the parties’ relationship, and the UAE courts were best placed to assess the bank’s conduct under UAE law (paras 19–21).

4. Allegations that the UAE courts would provide an unfair trial were unsupported by clear and cogent evidence. A genuine belief that England offered a better forum was insufficient. The evidence concerning the UAE’s insolvency and economic-loss law was also inadequate, and the relevance of Emir8’s English insolvency did not prevent the UAE courts from determining the dispute (paras 22–27).

5. The alternative forum conveniens ground independently justified a stay. The UAE had the most real and substantial connection with the dispute. Both parties were incorporated there, the account and funds were there, the relevant conduct occurred there, and the UAE courts were best placed to apply the relevant money-laundering law. The English location of the claimed loss and related evidence did not make England the more appropriate forum, and justice did not require refusal of the stay (paras 28–35).