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Claim No: CFI 004/2024

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

SKATTEFORVALTNINGEN (the Danish Customs and Tax Administration)

Claimant

and

FFA PRIVATE BANK (DUBAI) LIMITED

Defendant

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ORDER WITH REASONS OF JUSTICE SIR JEREMY COOKE

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UPON the Part 8 Claim dated on 8 January 2024 seeking production of documents

AND UPON hearing Counsel for the Claimant and Counsel for the Defendant on 23 July 2024

IT IS HEREBY ORDERED THAT:

1. In this Order:

Disclosure

2. The Defendant shall as soon as reasonably practicable and in any event by 4pm on 15 August 2024 serve on the Claimant’s solicitors copies of:

3. If the documents referred to in paragraph 2 are not in the possession of the Defendant, the Defendant must take reasonable steps to obtain those documents from Ajman Bank PJSC, or any other third party who, to the Defendant’s knowledge, holds documents belonging to the Defendant or any third party from whom, to the Defendant’s knowledge, the Defendant has a right to obtain documents.

4. If the documents referred to in paragraph 2 are not in the Defendant’s possession, and the Defendant is unable to obtain copies of the said documents as required under paragraph 3, the Defendant shall as soon as reasonably practicable and in any event by the date specified in paragraph 2 make and serve on the Claimant’s solicitors a witness statement explaining (to the best of the Defendant’s knowledge) why such documents are not in its possession and what steps it has taken to obtain those documents.

Use of information obtained

5. Except with the permission of the Court, the Claimant may only use the documents provided to it by the Defendant pursuant to the terms of this Order for the purposes of the Relevant Global Proceedings.

6. Liberty to apply for the determination of any question or issue arising out of the operation of this Order.

7. The Claimant shall pay the Defendant’s reasonable costs of complying with this Order, to be assessed if not agreed.

8. Liberty to apply in relation to the costs of the Application and hearing if the Parties cannot reach agreement thereon.

Issued by:
Hayley Norton
Assistant Registrar
Date of issue: 25 July 2024
At: 8am

SCHEDULE OF REASONS

Introduction

1. These are the reasons for the decision given orally on 23 July 2024 to grant the Claimant (“SKAT”) a Norwich Pharmacal/Bankers Trust Order against the Defendant, (“FFA”). FFA does not dispute the fact that in December 2015 and February 2016, it received into two accounts for unknown customers at least GBP 12.5 million and EUR 5 million which are said to be the traceable proceeds of a massive fraud perpetrated on SKAT. SKAT seeks information and documents identifying the holders of the recipient accounts, any further dealings with the money received and any other receipts of SKAT’s money by FFA. In SKAT’s skeleton argument, it is said that SKAT intends to use such material in support of personal and/or proprietary claims against any currently unidentified recipients or traceable assets and also seeks permission to use any documents obtained in the litigation referred to in the next paragraph of these Reasons as the “Main Scheme Action” or the “Breakaway Scheme Action”.

2. In the witness statement of Damian Crosse, filed in support of the application, reference is made to the alleged fraud which relates to what has been described as the “Breakaway Scheme”, which is the subject of the Breakaway Scheme Action in on-shore Dubai and which follows the same pattern as the “Main Scheme” which is currently being tried in the Commercial Court in England. Proceedings in respect of the Main Scheme were also commenced in the DIFC against Elysium Global (Dubai) Limited and Elysium Properties Limited, which were stayed, by consent, to abide the result of the English proceedings against them and multiple other defendants. The Breakaway Scheme largely involves different entities and different individuals and is the subject of Case Number 668/2020 in onshore Dubai. Although there are a limited number of defendants who are common to the English Main Scheme action and the Dubai Breakaway Scheme action, and I was told that, in the English Proceedings, participation in the Breakaway Scheme is relied on as evidence of the conspiracies alleged, neither Worldwide Asset Management Limited (“WAM”), a key recipient of allegedly fraudulent payments, nor its shareholders Mr and Mrs Haider, are involved in the English proceedings.

3. FFA is a private bank, operating in the DIFC and offering services in the fields of private wealth management, asset management, online trading and capital markets. Its sole shareholder is another DIFC entity. The role of FFA in relation to the Breakaway Scheme came to light during SKAT’s review of documents produced by Standard Bank Isle of Man pursuant to a Norwich Pharmacal Order granted by the Isle of Man Courts towards the end of 2023. Bank statements were disclosed by the Standard Bank for accounts held by WAM which is a named defendant in the Breakaway Scheme action in onshore Dubai. WAM is said to be one of the largest recipients of funds originating from SKAT which were paid out as a result of the fraudulent withholding tax scheme. During the review of the documents produced by the Standard Back, payments were identified of GBP 12.5 million and EUR 5 million from WAM to FFA’s accounts at Ajman Bank, into its sterling and euro accounts respectively in December 2015 and February 2016. It is alleged that WAM’s accounts were solely funded by amounts originating from SKAT. In consequence, it is said that funds transferred from those accounts and received by FFA’s accounts at Ajman Bank can all be traced back to amounts paid out by SKAT as a result of the fraud.

4. On the evidence before the Court, a key aspect of FFA’s operations is to hold and manage client funds which would typically include funds held by FFA at commercial banks. SKAT does not know what became of the funds paid to FFA’s accounts with Ajman Bank and does not know the identity of the ultimate beneficiary of the funds that FFA received and was managing on their behalf. By this application, SKAT seeks an order for FFA to produce information in the form of documentation evidencing the ultimate beneficiary or beneficiaries of the funds that FFA received from WAM in its accounts with Ajman Bank, together with copies of bank and portfolio statements, onward dealings and correspondence in the hands of FFA relating to WAM. SKAT does not know what happened to the funds after receipt by FFA, nor does it know the purpose of the transfers to FFA or on whose behalf those funds were being held and/or managed. It is specifically said that, without this information, SKAT is unable to ascertain whether it has claims, including proprietary claims against unidentified third parties who received SKAT’s funds from FFA or against FFA itself. It is further said that the information requested might well strengthen SKAT’s case evidentially against the defendants and joined parties to the Dubai Breakaway Scheme Claim in onshore Dubai.

5. The evidence produced by a witness for FFA states that the two Ajman Accounts are now closed, that the transfer of GBP 12.5 million in December 2015 was the majority but not the entirety of the deposits received by that account in that month (71%), that the transfer of EUR 5 million in February 2016 was the majority but not the entirety of the deposits received by the euro account in that month (93%), but at the time of the sterling and euro transactions, the sterling and euro accounts were used for three clients and eight clients respectively

FFA’s grounds of opposition

6. Whereas most banks do not actively challenge Norwich Pharmacal applications, FFA has taken a fundamental point of principle relating to the jurisdiction of this court to make such orders and, in particular, has raised objection in relation to the purposes underlying the application, as referred to in Mr Crosse’s statement. The underlying principles for the grant of Norwich Pharmacal orders were not in dispute. The jurisdiction classically permits a claimant to identify wrongdoers so that the person who has sustained damage knows who to sue. It does however go beyond that in identifying the location of property which the claimant seeks to trace and claim as his own or as subject to a constructive trust. “If through no fault of his own a person gets mixed up in the tortious acts of others so as to facilitate their wrongdoing, he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoer… Justice requires that he should cooperate in writing the wrong if he unwittingly facilitated its perpetration”- per Lord Reid in the classic statement - the fons et origo of the English Court’s exercise of the jurisdiction. Relief is usually given by ordering the production of documents at a ready way of providing the information.

Illegitimate purpose of the application.

7. In Mr Crosse’s witness statement, as mentioned above, two distinct purposes for bringing the application are set out. The first is the need to ascertain whether SKAT has claims, including proprietary claims against unidentified third parties who received SKAT’s funds from FFA (or FFA itself). The second is the potential use of the information and documentation received to strengthen SKAT’s existing case in the Breakaway Scheme action in onshore Dubai. The witness statement refers also to the English proceedings and states that the onward transfer of the WAM funds to FFA is critical in identifying who the ultimate account holders are and if the funds were transferred to defendants to the English proceedings, to entities which are understood or may be connected to the English Defendants or to individuals known to be conduits connected to them. Without such information, SKAT says it is unable to obtain a complete picture of who received SKAT’s funds from WAM via FFA. It is said that SKAT is not aware of any other means available to it to obtain the information sought in the application.

8. FFA submits that the proper analysis of “purpose” gives rise to a threshold point: namely that, as a matter of English common law, Norwich Pharmacal relief is not available where the application is brought in support of claims that are currently before a court of competent jurisdiction in order to obtain further evidence in relation thereto. It is submitted that the jurisdiction of English courts to order persons to provide oral or documentary evidence in aid of proceedings in foreign courts has always been exclusively statutory and for this a number of authorities are relied on, including the decision of the Court of Appeal in R (Omar) v Secretary of State for Foreign and Commonwealth Affairs [2014] QB 112 and Shalaimoun v Mining Technologies Inc [2012] 1 WLR 1276. In the latter case, Coulson J as he then was, stated:

9. Further reliance was placed on the decision by Charles Hollander KC in Linda May Green v C T Group Holdings Ltd 2023 WL 08564808 paragraphs 43 – 60 and on that of Hoffman J (as he then was) in MacKinnon v Donaldson [1986] 1 Ch 482, where each drew attention to the distinction between information and evidence, where the latter should be obtained by use of statutory procedures, or, in the ordinary way, international conventions.

10. The relevant statutory scheme is constituted in England by the Evidence (Proceedings in Other Jurisdictions) Act 1975, and the authorities draw a distinction between “information” on the one hand and “evidence” on the other. The former can be the subject of a Norwich Pharmacal application, but the latter can only be obtained by use of the statutory scheme. It is said by Counsel for FFA that although there is no equivalent statutory scheme in the DIFC, the effect of the Treaty between the UK and the UAE on Judicial Assistance in Civil and Commercial Matters is to bring in a scheme which has the same effect in the DIFC as the English statute has in England and Wales.

11. As to the terms of that Treaty:

12. RDC 30.65, which appears under the title of “Evidence for Other Courts”, provides that where an application is made to the Court for an order for evidence to be obtained in the DIFC and the Court is satisfied that the application is made in pursuance of a request issued by or on behalf of a court or tribunal exercising jurisdiction in Dubai, in any other part of the UAE or in a country outside the UAE: and that the evidence to which the application relates is to be obtained for the purpose of proceedings which have been instituted before the requesting court or whose institution before that court is contemplated, the Court has power to give effect to an application for assistance.

13. This Treaty does not, in my view, amount to anything like the equivalent of the statutory position in England; nor can the provisions of the RDC in relation to the mechanism for obtaining such judicial assistance impact upon the jurisdiction of the court to make orders of the Norwich Pharmacal/Bankers Trust nature.

14. It is now undisputed that UAE treaties are not directly incorporated into the law of the DIFC and the only relevant provision in Article 5 of the Federal Law No 8 of 2004 operates to prevent Financial Free Zones doing anything which may lead to contravention of any international agreements to which the state is or shall be a party. There is nothing in the Treaty, nor in the RDC which prevents, or militate against, the granting of Norwich Pharmacal orders. The Treaty and the RDC set out a method of obtaining evidence for the purpose of foreign proceedings but are permissive and not mandatory in the sense of providing an exclusive mechanism for assistance. None of the concerns expressed by the English Court in Ramilos Trading v Buyanovsky [2016] 2 CLC 896 about the inappropriate use of such orders to obtain evidence obtainable under the 1975 statute, which refers to the earlier decisions cited, therefore apply.

15. The jurisdiction of the DIFC Courts is statutory and is not based on English common law or upon English statutes. It is the DIFC statutes to which reference must be made to ascertain the DIFC Courts’ powers and not to the basis of jurisdiction for Norwich Pharmacal/Bankers Trust orders in England, whether that is seen as based on English Common Law, as restricted by English statute relating to the obtaining of evidence or not [see the relevant discussion at paragraph 20 of the judgment of Lord Sumption in Singularis Holdings Ltd v PWC [ 2014] WL 5797387 (PC)]. The powers of the DIFC Court to grant orders of various kinds are set out in DIFC statutes and are very broadly expressed.

16. This statutory jurisdiction is therefore untrammelled by any other statutory restriction and the Court’s discretion is not fettered apart from the need for any discretion to be exercised judicially. The principles of DIFC law and any relevant common law fall to be taken into account on the well-known cascading basis in determining how that discretion should be exercised but that is a far cry from being required to apply an English statutory scheme which has no application in the DIFC. This Court will therefore take into account the principles upon which Norwich Pharmacal/Bankers Trust orders are made in England and other common law courts and, as prior DIFC authorities show, will apply the relevant criteria from such cases, but there is no relevant restriction in the law of the DIFC requiring that no such orders should be made simply because there is a permissive basis in DIFC law for obtaining evidence by the method of letters of request. The Court’s jurisdiction to make Norwich Pharmacal/Bankers Trust orders is not limited by any statute relating to the obtaining of evidence for foreign proceedings. The overriding objective for the Courts to deal with cases justly in RDC 1.7 requires the Courts to seek to give effect to it when exercising any power given to it by the Rules. Where international fraud is concerned, it behoves this Court to assist the courts of friendly foreign nations in doing justice and, for that purpose, on the application of an alleged victim of such wrongdoing, to enable the foreign Court to have before it the maximum information available for it to make its own determination. There are no conflicting policy requirements of the kind which operate in England by reference to the statutory framework for providing evidence to be used in foreign proceedings.

17. Even if it were, contrary to the above, considered that the provisions of the Treaty and the RDC provided something equivalent to the legislative scheme in England for obtaining evidence for foreign proceedings, it is noteworthy that other common law jurisdictions have failed to follow the decision in Ramilos for various reasons, but essentially, doubtless, because it was seen as uncommercial and not in accordance with the principles of comity. The Letter of request route is slow, puts the alleged fraudster on notice, so that he/she can move assets in an attempt to make himself/herself judgement proof and requires such a level of specificity in identifying documents that it is often of no use at all. In the British Virgin Islands and the Cayman Islands - see K v Z BVIHCM (Com) 2020/016 and Essar Global Fund Limited v Arcelomittal USA LLC (CICA 3 May 2021- unreported) where it was said that there were equivalent statutory schemes, the Court refused to follow that decision - as well as in Jersey, Guernsey, the Isle of Man and Gibraltar.

18. The distinction between “information” on the one hand and “evidence” on the other is therefore nothing to the point where an application is made to the DIFC Court in relation to its Norwich Pharmacal/Bankers Trust “jurisdiction”. Both information and documents can be ordered under the Court’s wide statutory powers where the interests of justice require it.

19. Although the secondary purpose expressed by SKAT in Mr Crosse’s witness statement is stated to be the obtaining of evidence for use in other proceedings, the primary objective is the identification of the recipients of the WAM funds and the location of those funds following their receipt into the FFA accounts with Ajman Bank. This primary objective falls fairly and squarely within the ambit of the requirements for the exercise of the Norwich Pharmacal “jurisdiction”, as expressed in all the relevant authorities. Equally, it makes no difference if there remains the possibility of a claim against FFA itself, although the Norwich Pharmacal “jurisdiction” is aimed at those who are innocently caught up in facilitating wrongdoing. FFA is not saying that it is not innocently caught up in such wrongdoing, and SKAT’s reservation of rights against it, and even a veiled threat, cannot derogate from the Court’s powers to order disclosure of information and documents revealing the identity of the recipients of the funds and the location of them, so far as known to FFA. The critical point is that, without such information, SKAT cannot know the identity of a recipient of the funds against whom it may have a good cause of action whether for dishonest assistance or knowing receipt or the whereabouts of such funds after receipt.

20. The issue of use of the information/documents obtained as evidence in foreign proceedings can be seen as separate from the provision of the information/documents to SKAT under Court order, but this has an air of unreality about it. At present SKAT is in the position where it does not know who has the money received from WAM, whether it sits in different accounts at Ajman Bank or FFA or has been invested elsewhere, since all that FFA has been prepared to say about the funds is that the relevant accounts with Ajman Bank have been closed. On receipt of the information/documents sought, SKAT may be in a position to commence proceedings or to include in existing proceedings new claims relating to the sums. This is not therefore simply a case where evidence is being sought in relation to known existing claims which are being pursued elsewhere in the world.

21. In the circumstances I consider that there is no principled objection which would prevent this Court from granting the Norwich Pharmacal/Bankers Trust orders sought by reference to the English authorities upon which FFA relied.

Utility

22. FFA submitted that there is no real prospect of assets now being located, 8 to 9 years after the sums were originally remitted to its accounts with Ajman Bank. It is said that the Court should be realistic in this respect and that the birds must long since have flown. Without any evidence from FFA (save that the accounts are now closed), that is not an assumption which the Court can readily make. For all that the Court knows, the funds might have been transferred into property purchased in the DIFC, in onshore Dubai, or indeed elsewhere in the world. Whilst money can be moved swiftly round the world, tracing it in the days of electronic records, is not as difficult as perhaps it once was. I do not consider that this potential difficulty is a good reason for not making the order sought.

Necessity

23. FFA also submitted that there was no necessity for this application since there are other means available to SKAT to obtain the information sought in the existing proceedings. Again, I considered this wholly unrealistic in circumstances where fraudsters seek to hide their tracks, fail to give proper disclosure when ordered and do not readily admit anything in the witness box, even when the subject of comprehensive orders by the English Court. In on-shore Dubai, disclosure normally takes the form of a party producing the documents upon which it relies and there is no provision for oral evidence so that alleged fraudsters cannot be cross-examined. The use of the English 1975 statute is cumbersome because of the requirement for specificity and identifying the documents being sought. In practice, the utility of this method is likewise restricted because any application will tip off the alleged fraudster long before any documents are obtained, with the result that the relevant assets may long since have been moved elsewhere. The whole point of the emergence of the Norwich Pharmacal/Bankers Trust orders was to provide speedy and effective ways of identifying wrongdoers and assets in order to enable recovery to be made by the victim of the fraud.

24. A new point emerged in oral argument deriving from a new “gateway” for service out of England of claims begun there. CPR PD 6B paragraph 3.1 (25) applies where:

25. This does not, it seems to me, assist FFA since the Breakaway Scheme is the subject of proceedings in onshore Dubai and not in England. There is no existing claim or prospective claim for the Breakaway Scheme in England. The requirements of subparagraph (b) could not be met. There is no real nexus with England. Moreover, even if such an order were made for service out, FFA could readily ignore it, since it has no branch in England and this provision would therefore not assist in relation to the obtaining of documents under the control of a DIFC registered entity where enforcement of the English Order, which is not a monetary order, would not be feasible.

Other grounds of objection

26. It was said that SKAT has failed to demonstrate a good arguable case against the UBO of the recipients, but this fails to take account of the wrongs alleged, namely dishonest assistance and/or knowing receipt. Where an individual acts to where he/she is the controller, he or she will be just as liable as the corporate entity concerned.

27. The point previously taken by FFA as to delay in bringing the application is no longer maintained.

28. FFA also say that, if disclosure is given, as is sought in the current draft order, since the accounts at Ajman Bank were used for a number of different clients, provision of the information requested will inevitably reveal the names of innocent uninvolved persons and their confidential information. Whilst that may or may not be the case, depending upon the form of documentation in question, that is, it appears to me is a small price to pay in the context of rooting out a fraud. SKAT will be subject to the usual confidentiality provisions in relation to documents provided in any event.

The form of the Order

29. There was some debate about the form of the draft order for which SKAT applied. Many of the points however disappear in the light of the decisions that I have made in relation to the applicable principles underlying the exercise of the Court’s powers. In the operative paragraphs of the draft order, no objection was taken to paragraphs 2 (a) – 2(c) and the objections to paragraph 2(d) and 2(e) related to the issue of the ultimate beneficiary of the two accounts at Ajman Bank, upon which I have already ruled. The identity of the ultimate beneficiary is critical in the context of any claim to be made and any tracing of the assets derived from the Ajman Bank accounts. Whilst paragraphs 2(f)- 2(h) could potentially be wide-ranging in the documentation sought, there is every reason for granting the orders in relation to funds received from WAM from 1 January 2015 onwards. I consider the request fully justified and in line with orders frequently made of this kind where the costs of compliance with the order will be borne by SKAT. Paragraphs 3 and 4 again follow the usual format.

30. I consider however that the orders sought in paragraphs 5 and 6 are premature, since they depend upon the information and documents disclosed under other provisions of the draft order. What paragraph 5 seeks to do is to arrogate to SKAT itself the ability to seek further information without coming back to the court. That, it seems to me, is inappropriate and a fresh application will have to be made if it is thought desirable after receiving the fruits of the order I am making.

31. Paragraph 7 of the draft Order provides for SKAT to be able to use any documents provided in the onshore Dubai and English proceedings. I see no difficulty with that for the reasons previously given, since the information relates to funds received into Ajman Bank and causes of action which would relate to those sums, as opposed to any others for which claims have already been made. New pleas of fact would be required in the extant proceedings, even if there were, contrary to what I have held, any valid objection to such required information obtained being used as evidence in such existing proceedings. Paragraphs 8 and 9 are unobjectionable.

32. I make no order, at this stage, as to the costs of the contest over the application and orders which SKAT has, by reason of this decision, obtained. FFA is entitled to its reasonable costs in complying with the orders made but, beyond that, it does not seem to me that it should be entitled to costs on issues where it has clearly failed in opposing the orders sought. However, I was referred only in passing to some limited authority on the point and it was agreed that I should leave this matter over for further submissions by the parties in writing, should there be no agreement as to how such matters were to be resolved.