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Commercial disputes, Banking and financial services, Civil fraud and asset recoveryMonday 4 April 2022

Abu Dhabi Commercial Bank PJSC v Shetty & others [2022] EWHC 529 (Comm)

On 1 April 2022, the Commercial Court handed down judgment as between the claimant Bank and the first to fourth defendants on the jurisdiction and WFO applications in this US$1 Billion damages claim, following a 4 day hearing at the end of November 2021.

The Court concluded that it should stay the proceedings in this jurisdiction on grounds of forum non conveniens, and made orders for the discharge of the WFO granted against the defendants in December 2020.

The claim arises out of the collapse of NMC PLC, a former FTSE 100 company, and its operating subsidiaries in the UAE, all of which are now in administration in England and Wales and the UAE. The claimant is an Abu Dhabi-based bank, and the first to third defendants are the former private shareholders in NMC PLC. The Bank alleged that the defendants are responsible, with others, for a serious fraud that appears to have taken place within the NMC Group of companies. The defendants all deny involvement in the fraud.

By these proceedings, the Bank alleged that it had been induced by fraudulent misrepresentations made by or with the knowledge and encouragement of these defendants into lending in excess of $1 Billion to NMC PLC, which sums remained unpaid when the NMC Group collapsed into administration.

Giving judgment for the first to fourth defendants on their jurisdiction and discharge applications, the Judge held that the claim should not continue in this jurisdiction against these defendants because the proper forum was the onshore courts of Abu Dhabi and that as a consequence the claim should be stayed and the WFO discharged. The Court also held that the Bank had breached its obligations of full and frank disclosure at the without notice hearing.

Among other things, the judgment on proper forum is of interest because the court concluded that the applicable law of the tort was UAE law under Rome II  (and the bank’s submission that the applicable law might be English law was unarguable), and that it was more appropriate for the UAE courts to be deciding issues of UAE law. Additionally, the Court rejected the Bank’s submission that the adversarial nature of proceedings in this jurisdiction made the Commercial Court a more suitable court than the UAE Court to try a complex fraud claim.

Another interesting aspect of the judgment is its detailed consideration of the potential impact of s.6 of the Statute of Frauds (Amendments) Act 1828 to a complex fraud claim.

Tim Penny KC acted for the second and third defendants, leading James Sheehan of Essex Court Chambers, Sam Goodman of 20 Essex Street and Fred Alliott of 7 KBW, instructed by Trevor Mascarenhas of PCB Byrne.

The full judgment can be accessed here.

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