July 04, 2022 court of first instance - Orders
Claim No: CFI 065/2020
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
(1) EMIRATES NBD BANK PJSC
(2) AL KHALIJI FRANCE S.A.
(3) HSBC BANK MIDDLE EAST LIMITED
(4) UNITED ARAB BANK PJSC
(5) UNITED BANK LIMITED
(6) NATIONAL BANK OF FUJAIRAH PJSC
(7) COMMERCIAL BANK OF DUBAI PJSC
(8) NOOR BANK PJSC
(9) DUBAI ISLAMIC BANK PJSC
Claimants
and
(1) ADVANCED FACILITIES MANAGEMENT LLC
(2) NASSER BUTTI OMAIR YOUSEF ALMHEIRI (PERSONALLY AND TRADING AS NBB GROUP ESTABLISHMENT)
(3) ADVANCED INTERNATIONAL EMPLOYMENT SERVICES LLC
(4) ADVANCED LAUNDRY LLC
(5) ADVANCED ENVIRONMENTAL SERVICES LLC
(6) AL ETIHAD INTERNATIONAL TYPING & TRANSACTION FOLLOWING CENTRE LLC
(7) ADVANCED NATIONAL CONTRACTING LLC
(8) CRUISE EXPRESS RENT A CAR LLC
(9) BIN BUTTI INTERNATIONAL HOLDINGS LLC
Defendants
ORDER WITH REASONS OF JUSTICE SIR JEREMY COOKE
UPON the Order with Reasons of Justice Sir Jeremy Cooke dated 9 May 2022 (the “Order”)
AND UPON the Defendants’ permission to appeal application dated 30 May 2022 filed against the Order (the “Permission Application”)
AND UPON the Claimants’ written submissions in opposition to the Permission Application dated 20 June 2022
IT IS HEREBY ORDERED THAT:
1. The Permission Application is refused.
2. The Defendants shall pay the Claimants’ costs of the Permission Application to be assessed by the Registrar, if not agreed.
Issued by:
Nour Hineidi
Registrar
Date of issue: 4 July 2022
At:3pm
SCHEDULE OF REASONS
1. There are no realistic prospects of success for any appeal and there is no compelling reason for the matter to go to trial, for the reasons set out in the Claimants’ skeleton opposing the grant of permission to appeal. Furthermore, in order to succeed on any appeal, the Defendants would need to succeed on several issues and on each, the prospects of success are fanciful. In particular:
Agency
2. There was no pleaded factual basis for the allegation of agency and no actual basis for it:
2.1. In any contract between Noor Bank PJSC (“Noor”) and the other Claimants.
2.2. In any conduct which could constitute alleged holding out by the other Claimants of Noor.
2.3. In the IMLA letter or in any agreement between Noor and the Ninth Defendant that Noor should be the arranging bank and/or the security agent for the yet to be formed Syndicate that it was hoped would lend money to the Defendants.
3. There is no basis for any suggestion that the Defendants would obtain, on disclosure, any material or evidence in support of the allegation of agency in the circumstances, given the nature of the relationships between the parties. Nothing has been identified as likely to arise at trial which was not available to the Defendants at the time of the hearing of the application for immediate judgment.
4. In such circumstances, this is fatal to the Defendants insofar as there could be no misrepresentation made by Noor on behalf of the other Claimants, no duress exercised by it on their behalf and no collateral contract between the Claimants and Defendants made at the Palm Meeting of 16 December 2018.
5. In the absence of any realistic prospects of success on the issue of agency, there is no room for any defence which would operate against any Claimant other than Noor, apart from the Sharia law defences raised by the Seventh – Ninth Defendants. Noor itself was not a party to the CFA, only the MMA, IIA and CTA. There is also an anti set- off provision which operates in respect of Noor and the other Claimants under the CTA.
6. Rescission, whether for misrepresentation or duress was not available to the Defendants in a multipartite contract where all of the Claimants were not implicated in the wrongdoing.
Affirmation
7. The communications and actions of the Defendants in evidence and admitted by the Defendants amount to affirmation of the Facility.
8. The alleged failure to advance working capital was self-evident and no complaint was made about it to the Claimants whilst drawing down on both the conventional Facility and the MMA and making repayments under the latter. These were unequivocal affirmatory acts. No notice of rescission was given prior to the events of default and the acceleration of the loan. There was no evidence of the state of mind of the Group of Defendants, including its legal advisers, showing ignorance of the right to rescind for duress or misrepresentation. The evidence of Mr AlMheiri as to his understanding was carefully worded and insufficient to establish the point even taken at its highest. It is inconceivable that a major group with a complaint of the kind alleged would not have taken advice and would be unaware of its right to rescind in the event of the wrongful acts alleged against the Claimants.
Duress
9. The alleged unlawful means duress lies in the allegation that Noor threatened not to participate in the Facility lending unless it was given separate security. It is not disputed that Noor was under no obligation to lend with the result that a threat not to do so, unless security was provided, cannot be unlawful.
10. Moreover, even in the event of duress the right to rescind could not extend beyond the agreement to provide the security to Noor since the Defendants always intended to enter into the Facility and MMA and were only allegedly coerced into providing separate security to Noor by its threat not to lend. The threat could not be coercive in relation to the entry into the Facility and MMA. The alleged agreement of Noor to provide security was not part of an indivisible bargain with all the Claimants but was with Noor alone.
Collateral Contract
11. The terms of the alleged contract are too uncertain to be enforceable. No terms were agreed for any loan of working capital and the terms of the Facility were altogether different from any working capital loan and inconsistent with a loan of such working capital. No case of part performance was put forward and the OBN security was, as alleged by the Defendants themselves in its duress case, put forward to induce Noor to enter into the Facility itself.
12. The Court did not conduct a mini trial but assessed the evidence of Mr AlMheiri in paragraphs 43 and 44 of his witness statement against the contradictory contemporaneous documents and actions of the Defendants and found it not susceptible of belief. The exchanges of documents between the parties and the conduct of the Defendants after the Palm Meeting were wholly inconsistent with the existence of any such contract. His evidence, even taken at its highest was not credible in the light of the documents and exchanges.
Negligent Misrepresentation
13. The alleged statements made by Noor, in the circumstances which obtained here, could not amount to an implied representation of fact on which the Defendants were entitled to rely. The alleged implied representation of reasonable grounds for guaranteeing the provision of working capital cannot be found in the alleged statement made. Moreover, the evidence showed that Noor never had any intention of providing working capital in addition to participating in the Facility and deceit was not alleged.
Sharia Law
14. This only applies to the Seventh – Ninth Defendants’ case.
15. The MMA was governed by English law and defences based on Shariah law cannot run, absent incorporation of provisions of Sharia law. The question of incorporation of the AAOIFI was a matter of construction of an English law contract on which no expert evidence of Sharia law would assist. No such evidence was adduced by the Defendant in any event. It was available to the Defendant at the time of the hearing and it is now too late to seek to adduce it and rely on it.
16. The question of the construction and effect of the Registrar’s direction was a matter for the Court, whose powers cannot be trammelled by such a direction, whatever its meaning. There was no incorporation of AAOIFI.
17. Regulatory standards, even if they had been incorporated, could not nullify express provisions of an English law contract and, so far as concerns the First Defendant, clause 13 and Recital D rule out any possibility of contending that non- compliance with Sharia law could be a ground of defence, as does clause 17.27.2 of the CTA for the other Defendants.
18. There can be no basis for an argument based on public policy when the MMA is governed by English law in a jurisdiction which allows for contracts to be governed by foreign law with provisions which do not correspond to Sharia.
19. The Defendants advanced no case of breach of AAOFI standards in the CFI, relying solely on the Registrar’s direction to say, misguidedly, that the Court could not decide issues of Sharia law. There was no such breach.
20. In these circumstances, there can be no compelling reason for a trial.