Banking and financial services, Commercial disputes, International / offshoreTuesday 17 October 2023
DIFC Court rejects $18.5 million damages claim in Kirtanlal International DMCC v State Bank Of India (DIFC Branch)
Judgment has been handed down in the Court of First Instance of the DIFC by Justice Sir Jeremy Cooke.
Kirtanlal International DMCC (“Kirtanlal”), a steel trading company, brought a claim for damages of USD 18.51m in relation to what it said was the unlawful termination of its facility agreement with the Defendant bank (the “Bank”). Kirtanlal claimed that the Bank acted in breach of a duty of good faith and/or a Braganza duty, alleging malice on the part of the Bank. Kirtanlal also alleged that there were breaches of tortious, fiduciary and regulatory duties by the Bank.
The Claim was dismissed.
The claims in tort, fiduciary duty and regulatory duty were abandoned by Kirtanlal in closing submissions. The Claim in contract was rejected by the Court, as it held that the Bank was entitled to terminate the contract when it did.
The Court held that there was no duty of good faith or Braganza duty implied into the contract between the Bank and Kirtanlal, but that, in any case, the Bank’s decision was not only “rational but also reasonable” such that there would have been no breach of any such duty even if it existed.
In so finding, the Court rejected the assertions made that the Bank or its witnesses had acted in bad faith or with malice. However, the three witnesses tendered by Kirtanlal were all described by the Court as “dishonest” in their evidence.
In addition, the Court held that the Claim would have failed on the basis of causation and loss, with the Court concluding that there was “no basis on which it can properly be said that Kirtanlal suffered any loss at all from the suspension or termination of the SBI facilities, let alone any evidence of any such loss and damage which the Court could regard as established with a reasonable degree of certainty on the balance of probabilities for the purposes of Article 11 of the Damages Law”.
The judgment contains an interesting discussion in particular of the principles concerning good faith and the Braganza duty as a matter of DIFC Law, including in relation to Articles 57 and 58 of the Contract Law.
Bobby Friedman, together with David Holloway of Al-Tamimi & Company, acted successfully for the Bank.
Please click here to read the full judgment