DIFC Court of Appeal: Kapova v Makovini Tomlin Order Enforcement Affirmed

• The DIFC Court of Appeal dismissed an appeal in the Kapova v Makovini case, affirming a previous ruling.
• Khaitan & Co successfully represented Miloslav Makovini and Pharm Trade Holding Ltd in the proceedings.
• The court clarified that DIFC Courts can enforce settlement agreements within stayed proceedings.
• This enforceability extends even to consent orders that do not strictly follow the conventional Tomlin form.
• The ruling provides greater flexibility for settlement enforcement in the DIFC.

The DIFC Court of Appeal's decision, secured by Khaitan & Co, marks a pivotal moment for DIFC Court of Appeal settlement enforcement.

The Dubai International Financial Centre (DIFC) Court of Appeal recently issued a significant ruling in the case of Kapova v Makovini, which saw Miloslav Makovini and Pharm Trade Holding Ltd successfully represented by Khaitan & Co. The appellate court's decision involved the dismissal of an appeal, thereby affirming a lower court's stance on the enforceability of settlement agreements.

This particular case centered on a crucial point of law regarding how settlement agreements are treated within judicial proceedings that have been stayed. The core of the dispute revolved around whether such an agreement could be enforced, especially when the consent order formalizing the settlement did not strictly conform to the conventional format typically associated with Tomlin orders in common law jurisdictions. The DIFC Court of Appeal's judgment provided clarity on this specific issue, setting an important precedent for future cases involving settlement enforcement.

In legal practice, a Tomlin order is a type of consent order used to stay court proceedings on agreed terms, with the settlement details usually appended in a schedule. This mechanism allows parties to resolve their disputes out of court while retaining the ability to enforce the settlement terms through the court if necessary, without needing to initiate fresh proceedings. The conventional Tomlin form typically includes specific wording that clearly states the proceedings are stayed on the terms set out in an attached schedule, which then forms part of the order.

The question of stayed proceedings settlement enforceability becomes complex when the consent order deviates from this established format. Historically, courts might scrutinize such non-conventional forms more closely to ensure that the parties' intentions for enforcement were clear. The recent Kapova v Makovini DIFC Tomlin order enforcement ruling directly addresses this, indicating a more flexible approach by the DIFC Courts towards the form of consent orders, as long as the underlying settlement agreement is clear and valid.

The DIFC Court of Appeal's decision, secured by Khaitan & Co, marks a pivotal moment for DIFC Court of Appeal settlement enforcement. It clarifies that the DIFC Courts possess the authority to enforce a settlement agreement even when the associated consent order does not precisely adhere to the conventional Tomlin form. This interpretation broadens the scope for parties to resolve disputes through settlement, providing greater assurance that their agreements will be upheld by the courts, irrespective of minor deviations in the consent order's drafting.

This Khaitan & Co DIFC ruling underscores the DIFC Courts' pragmatic approach to dispute resolution, prioritizing the substance of a settlement over strict adherence to procedural form. For legal practitioners and parties engaging in litigation within the DIFC, this means increased flexibility in drafting settlement agreements and consent orders. The ruling in Kapova v Makovini confirms that a DIFC consent order non-conventional form will not automatically preclude its enforceability, thereby fostering a more adaptable environment for out-of-court settlements within stayed proceedings.

Lawyers drafting settlement agreements in the DIFC should be aware that the DIFC Courts may enforce such agreements within stayed proceedings, even if the consent order does not strictly adhere to the conventional Tomlin form, offering greater flexibility in dispute resolution.

Source: Original reporting via SCC Times