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Is DIFC Courts’ latest ruling good news for MMG?

Could the dismissal of Protiviti’s appeal against MMG’s DIFC Courts legal case offer fresh hope to Saudi Arabia’s Al-Mojil family? James Morgan finds out

Legal technicalities: Could a decision favouring the Al-Mojil family in DIFC Courts form part of a future appeal in Saudi Arabia?
Legal technicalities: Could a decision favouring the Al-Mojil family in DIFC Courts form part of a future appeal in Saudi Arabia?

Earlier this year, Construction Week published an analysis piece on the legal battle surrounding the misrepresentation of Mohammad Al-Mojil Group’s (MMG) value (‘The case that nobody won’, CW 616).

The long-running dispute stretches back to July 2012, when the publicly traded contractor incurred significant losses. It was at this point that the kingdom’s Capital Market Authority (CMA) suspended trading of MMG shares on the Saudi Stock Exchange, Tadawul.

In June 2016, the CMA’s Committee for the Resolution of Securities Disputes (CRSD) imposed prison sentences on three MMG executives, including the company’s founder, Mohammad Al-Mojil, and his son, Adel Al-Mojil. Messrs Al-Mojil both received five-year custodial terms for misrepresenting MMG’s value, and a third unnamed executive was sentenced to three years in prison.

Yet ever since the CMA first launched its investigation into MMG’s operations and financial reporting in 2013, the Al-Mojils have denied any wrongdoing – and in the strongest possible terms. The family’s primary objections centre on a report conducted by financial consultancy, Protiviti Member Firm (Middle East) Ltd, at the behest of the CMA.

Messrs Al-Mojil argue that the CMA’s investigation relied “almost exclusively” on Protiviti’s report – a document that they claim contains serious errors and misrepresentations.

A statement released on behalf of the family earlier this year said: “Messrs Al-Mojil have brought legal proceedings against Protiviti in relation to [its] report. They allege that Protiviti lacked even a licensed capacity to undertake the work. Furthermore, they allege that the report contains significant material errors, misrepresentations and untrue statements, and is defamatory, making arbitrary and unproven allegations. These proceedings are currently ongoing in the DIFC [Dubai International Financial Centre] Courts.”

Protiviti, which is registered in DIFC, is reported to have responded to the aforementioned legal proceedings by objecting to the validity of the Al-Mojil family’s case. However, last week, it emerged that the consultancy’s appeal had failed.

A statement issued on behalf of the Al-Mojil family revealed that Protiviti’s appeal, which related to the earlier decision of HE Justice Al Muhairi, had been dismissed in the DIFC Courts. Justice Sir Richard Field, who delivered the latest judgement, said that the primary issue to be determined during the full hearing – scheduled to take place in Dubai in 2017 – would be “whether Protiviti’s conclusions were inaccurate, having been negligently arrived at due to a failure to conduct a competent and thorough investigation”.

The statement also claimed that Protiviti has been instructed to meet the costs incurred by the Al-Mojil family during the original hearing and subsequent appeal. Construction Week contacted Protiviti for comment, but received no reply.

DIFC Courts’ latest judgement does not relate to the validity of the Al-Mojils’ claims that Protiviti acted “negligently and libellously” in its investigation of MMG and its management. It simply confirms that the case that the family has brought against the consultancy will be heard in the UAE next year.

Even so, the ruling has imbued Messrs Al-Mojil with fresh optimism. Commenting in the wake of the latest ruling, Adel Al-Mojil said: “My family and I thank God for the just and fair judgement of the DIFC Court, which has decisively ruled that our proceedings in the DIFC can continue.

“This positive development allows us to move forward in tackling the injustice we face as a consequence of Protiviti’s conduct, and to clear our family name once and for all.”

The Al-Mojils also contend that the outcome of next year’s DIFC Courts proceedings will have a “crucial impact” on the validity of the CMA’s charges. In the family’s most recent statement, Adel Al-Mojil added: “Thanks to this judgement, we hope we have moved one step further towards justice for the family.”

This statement raises an interesting legal question: namely, whether the decision of a UAE court could be used as the basis for a legal appeal in Saudi Arabia.

Daniel Xu, senior legal consultant at DLA Piper Middle East, tells Construction Week that, while a favourable DIFC Courts ruling could form part of a future appeal from Messrs Al-Mojil, the weight that it carries would remain at the discretion of the kingdom’s judiciary.

Xu explains: “The UAE and Saudi Arabia are separate jurisdictions with distinct laws. Given the publicity surrounding this case, taking into account the subject matter, [and considering] the parties are all KSA-related, it is reasonable to expect that the Saudi Arabian courts will want to determine the matter within their jurisdiction.

“Presumably, if there is a favourable DIFC Courts judgement [for Messrs Al-Mojil], that would form part of any appellate brief to be filed in the future. However, practically, it is very unlikely that any subsequent appeal would revolve solely around the DIFC Courts judgement. Thereafter, it would be for the competent local court to decide whether to consider or accept the findings of a foreign judgement as part of its overall consideration.”

Xu also points out that whether or not a Saudi Arabian court were to consider a UAE judicial decision would likely depend on the nature of the ruling’s subject matter.

He continues: “It is important to determine the parts of the judgement that will be relied on, and whether the portions relied on deal with findings of fact or findings of law.

“While the law is subject to interpretation, facts – when determined within a proper context – are relatively less likely to be open to interpretation. As such, a court might be more open to considering findings of fact by a foreign court [than it would findings of law].”

Of course, these points will remain academic for the time being. All that has been decided so far is that the Al-Mojils’ case will be heard in the DIFC Courts. Nevertheless, it will be interesting to see how next year’s proceedings play out.

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