DIFC Courts – Al Tamimi & Company successful in AED1.9 billion Immediate Judgment application

In one of the largest judgments issued by the DIFC Courts,  the Court has granted Immediate Judgment to a syndicate of nine banks following the failure by the borrower and eight guarantors to re-pay AED1.9 billion syndicated conventional and Islamic facilities (and other failures).

Al Tamimi & Company was instructed by the syndicate and in succeeding at this early procedural stage, the banks have avoided very significant costs and lengthy preparations required for a multi-day trial, including disclosure and further witness evidence. The banks have potentially been saved from years of litigation.

The Claim

The banks’ application followed the exchange of pleadings, including a lengthy 162 paragraph Defence and Counterclaim against the banks.

The Defendants made allegations of duress/intimidation (on the basis that the arranging bank, allegedly as agent for the syndicate, exerted illegitimate economic pressure upon them to enter into the facilities). Alternatively, allegations of misrepresentation and breach of contract with regards to the provision of working capital were raised. The Defendants claimed rescission of the facility, damages, and argued the banks were prevented from relying on the failure to repay (as a result of the banks’ alleged failures). Finally, it was said that the Islamic facility was a nullity due to an alleged failure to follow AAOIFI guidelines.

Immediate Judgment

Immediate Judgment may be granted where a claimant can show that a defendant has no real prospects of successfully defending the claim and there are no other compelling reasons why the matter should go to trial (no such reasons were argued).

The Application

The Defendants initially failed to file a response to the banks’ application, which was supported by detailed factual evidence, and a two day hearing was fixed. The Defendants filed an application to adjourn the hearing (which was refused) before finally filing evidence in response.

The Court concluded that:

1.  “there is simply no basis for the allegation” that the arranging bank acted as agent for the other banks (the arranging bank was acting on behalf of the borrowers);

2.  there is no basis for an assertion that the relationship between the banks, prior to entry into the facilities, could give rise to vicarious liability;

3.  even if there were an arguable claim in respect of what the arranging bank allegedly said, it could only operate against that bank;

4.  the Defendants affirmed the facilities in any event;

5.  there was no unlawful duress in the alleged working capital statement made by the arranging bank prior to completion of the facilities and no collateral contract or implied representation could be made out (the Judge also dealt with the correlation between certainty for contractual provisions and implied representation, as he did in Hexagon Holdings v DIFCA [2019] DIFC CFI 013);

6.  there was no room for a case in negligent misrepresentation on the alleged facts; and

7.  as a matter of English law, the defences based upon alleged breaches of Sharia had no merit.

Therefore none of the defences put forward had any real prospect of success and nor did any of the counterclaims.

The Court was cautious not to conduct a mini-trial and was faced with an 83 page skeleton from the Defendants which suggested that the claim in fact required a multi-week trial. Nevertheless the DIFC Court has again demonstrated in a robust judgment that it is prepared to summarily determine a claim at an early stage when presented with detailed and appropriate evidence which justifies immediate judgment.

Tom Montagu-Smith QC and Matthew Watson of 3 Verulam Buildings were also instructed.