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Claim No: CFI 045/2020

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

(1) EMIRATES NBD BANK PJSC
(2) HSBC BANK MIDDLE EAST LIMITED
(3) ICICI BANK LIMITED, BAHRAIN LIMITED
(4) ICICI BANK UK PLC
(5) UNION BANK OF INDIA
(6) BANK OF JORDAN COMPANY
(7) NATIONAL BANK OF BAHRAIN BSC
(8) AHLI UNITED BANK BSC (DIFC BRANCH)
(9) COMMERCIAL BANK OF DUBAI PSC
(10) WARBA BANK KSCP

Claimants

and

(1) KBBO CPG INVESTMENT LLC
(2) MR. KHALEEFA BUTTI BIN OMAIR YOUSIF ALMUHARI
(3) HIS EXCELLENCY SAEED MOHAMED BUTTI MOHAMED ALQEBAISI
(4) INFINITE INVESTMENT LLC
(5) GROUP OF FATHIMA CO LLC
(6) FATHIMA SUPERMARKET LLC (SHARJAH)
(7) FATHIMA SUPERMARKET WLL (ABU DHABI)
(8) FATHIMA TRADING & SUPERMARKET COMPANY WLL
(9) FAIRWAY GENERAL TRADING
(10) FAIRWAY CATERING SERVICES LLC (DUBAI)
(11) FAIRWAY CATERING SERVICES LLC (ABU DHABI)
(12) FATIMA GENERAL MARKET LLC
(13) TELE LINK COMMUNICATION LLC
(14) ONE PREPAY COMPANY LLC
(15) TECHLINK SYSTEMS LLC
(16) FRESHLY FROZEN FOODS FACTORY LLC
(17) SENORA FOODS LLC
(18) SPECTRAMI DMCC
(19) ONE PREPAY COMPANY LLC (KSA BRANCH)

Defendants

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REASONS FOR THE ORDER OF JUSTICE SIR JEREMY COOKE DATED 28 OCTOBER 2021

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Introduction

1. The background to the Claimants’ application for immediate judgement dated 11 June 2020 (the “Immediate Judgment Application”) sufficiently appears from the previous judgments and the reasons for the orders made in this matter since the stay of the proceedings ordered by me at the previous hearing of that application on 1 July 2020. These include the decision of Justice Wayne Martin on 9 August 2021, my decisions of 22 August 2021, 19 October 2021 and 25 October 2021 and my ruling as to the future conduct of the proceedings on the morning of 27 October 2021 and the reasons expressed for those decisions.

2. On 9 September 2021, following the lifting of the stay, I gave directions for the hearing of the Claimants’ applications and those of the First, Second, Fourth, Thirteenth, Fourteenth Sixteenth and Seventeenth Defendants (the “Hadef Defendants”), which I had not already decided. This required the Hadef Defendants to file any further evidence on which they wished to rely by 7 October 2021. The Hadef Defendants had previously been directed on 24 June 2020 to set out in outline the nature of their defences to the claim for the hearing on 30 June 2020, which they failed to do. The Hadef Defendants, have thus been given every opportunity to raise substantive defences to the Claimant’s claims in debt under the Conventional Facility Agreement, the Murabaha Investment Agency Agreement, the Master Murabaha Agreement, the CTAs (together referred to herein as the “Facility Agreements”) and the stand-alone guarantees of the Second and Fourth Defendants, but have failed to put in any evidence at any time which provides a defence to those elements of the Claimant’s claims and have advanced no defence against liability in respect of the sums owing under those agreements, all of which were dated 19 November 2019.

3. The Nineteenth Defendant was incorrectly described in the Claim Form as the KSA branch of the Fourteenth Defendant, when in fact, on 20 February 2020, that branch was converted into a separate KSA company that succeeded to all the former branch’s liabilities. It is well aware of these proceedings and filed an Acknowledgement of Service on 4 June 2020, and Mr. Mokhtar Badr (who was appointed interim CEO of the First Defendant (“KBBO CPG”) in May 2020) has filed witness statements dated 15 May 2020 and 3 June 2020 stating he was authorised to act for it. The Claimants issued and served their Immediate Judgment Application. On 30 June 2020, the Court permitted Hadef & Partners to come off the record for that Defendant, but following the lifting of the stay, on 21 October 2021, I permitted the Claimants to change the name of the Nineteenth Defendant from “One Prepay Company LLC (KSA Branch)” to “One Prepay Company (Sole Proprietorship) - LLC”. Although the probability is that it, in its reconstituted form as a Saudi Limited company, is well aware of the Immediate Judgment Application, it has not apparently been served with the Amended Claim Form and the right course is therefore for the Immediate Judgment Application against it to be adjourned, with liberty to restore and I so order. It is hard to see that there is any material difference between its position and that of the other corporate guarantors and it may well be that, following service, the Claimants’ application against it can proceed on paper without the need for an oral hearing.

4. Following the ruling that I made on the morning of 27 October 2021 (the “Ruling”) in which I dismissed the Hadef Defendants’ reverse immediate judgement applications and refused a stay at the invitation of those Defendants in a letter to the Court, and that of the Single Trustee and the Panel of Trustees (as defined in that Ruling), the matters that I have now to determine are the Claimants’ applications for a money judgement against the Hadef Defendants and the ancillary orders sought in relation to the provision of security and information under the contractual provisions of the Facility Agreements, including the claim raised by all such Defendants that they should not provide the information because of an alleged privilege against self-incrimination. I am not called on to determine the proprietary claim made by the Claimants.

5. Although the Hadef Defendants were not represented before me on 27 October 2021, I had the benefit of the written submissions made on their behalf in June/July last year, together with all the evidence upon which they then relied, none of which goes to the merits of the claims in debt against the First Defendant as the primary debtor under the Facility Agreements or the other Hadef Defendants who guaranteed its obligations, either under the Facility Agreements themselves or by way of stand-alone guarantees. They did submit evidence of UAE law in relation to the claim for privilege against self-incrimination however, in the form of reports from Mr. Juma of Hadef & Partners and Mr. Al Shamshi, to which the Claimants responded with a report from Dr. Al Mulla.

6. The Claimants’ Immediate Judgment Application was based on the facts and matters set out in three affidavits, from David Sanders and Mohammed Fayad of the Second Claimant and from Tarek Alam of the Tenth Defendant, all dated 13 May 2020 and affidavits from Robin Hickman and Paul Hughes of the Claimants’ solicitors (“AG”) dated 14 May 2020 and 10 June 2020 respectively, all of which were adduced in support of the ex parte application for a freezing order which I granted on 15 May 2020 or its subsequent continuance. The Second Claimant, together with the Third Claimant was one of the two conventional mandated lead arrangers and bookrunners on the loans made under the Conventional Facility Agreement, as described below and the Tenth Defendant was the “Investment Agent” for what are described below as the Islamic Facilities. Additional evidence in the form of witness statements from Akil Mohandas of the First Claimant and Antonia Grieve of AG were adduced in relation to the quantum of the claim.

7. The quantum of the claim was thus established by that evidence in the sums set out in the Order of the Court, based upon the sums advanced in under the Facility Agreements, the outstanding balances as at 19 May 2020, the interest provisions, the profit provisions and commissions contained therein with a credit given for the USD 8,390 371.70 swept up by the Claimants on 21 May 2020.

The Facility and Guarantees

8. The Claimants are banks which loaned money to KBBO CPG and the First Claimant is the “Global Facility Agent” for the syndicate constituted by the other banks, but is not itself a lender. The syndicate comprises:

9. The Second Defendant (“Mr. KBBO”) is a wealthy Emirati businessman. At the material time he was chairman of what was known as the KBBO Group and has (or had) a large shareholding in the collapsed London Stock Exchange-listed NMC Health PLC held through the Fourth Defendant (“Infinite”).

10. The Consumer Product Group (“CPG Group”) is one division of the wider KBBO Group. KBBO CPG is part of the CPG Group along with the Fifth to Nineteenth Defendants. The Fifth, Sixth and Eighth to Eleventh Defendants carried on business running supermarkets (the “Fathima Group”); the Fourteenth and Nineteenth Defendants ran an e-payment business; and the Thirteenth Defendant ran a telecoms business.

11. By 2019, the CPG Group had obtained borrowing from various lenders totalling AED 888.9m ($241.9m) (the “Existing Facilities”) and approached the Second Claimant about consolidating this lending into a single loan to KBBO CPG and increasing the total borrowing. The Second Claimant formed the Syndicate to advance the funds. Some Syndicate members were lenders under the Existing Facilities.

12. The loans made (the “Facility”) are comprised of a number of agreements, all executed on 19 November 2019, of which the most significant are:

13. The Third Claimant was the “Conventional Facility Agent” for the Conventional Lenders and the Tenth Claimant, Warba Bank KSCP was the “Investment Agent” for the Islamic lenders. The Syndicate members made funds available to these banks for onwards provision to KBBO CPG and the CPG Companies.

14. The Facility was available in three tranches as follows:

15. Clause 2.4 of the CTA dealt with the application of the funds drawn under the Facility. It provides:

16. The result of this was that:

17. The Facility’s primary purpose was to consolidate all the CPG Group’s lending into one loan owed by KBBO CPG with performance guaranteed in stand-alone guarantees by Mr. KBBO, the Third and Fourth Defendants and in the CFA and Islamic Facilities by the subsidiaries in the KBBO Group, the Fifth to Nineteenth Defendants, including the other Hadef Defendants (the “Guarantors”, also referred to as the “Obligors”). By clause 6.19 of the CTA, KBBO CPG and the other Guarantors warranted that:

18. Clause 9.9 of the CTA restricted further borrowing. It provided:

19. “Obligor”, as referenced in clause 9.9, included KBBO CPG and the CPG Companies (including the Fifth- Nineteenth Defendants). “Permitted Financial Indebtedness” and “Permitted Transaction” were defined in such a way as to prohibit borrowing outside the terms of the Facility

20. The Thirteenth, Fourteenth, Sixteenth, Seventeenth and Nineteenth Defendants were each a “Guarantor” in the CFA. Under clause 15 of the CFA, each Guarantor “guarantees to each [Conventional Lender] punctual performance by [KBBO CPG] of all [KBBO CPG’s] obligations under the Finance Documents”.

21. They were also “Guarantors” in the Murabaha Investment Agency Agreement. Under clause 6, each Guarantor “irrevocably and unconditionally, jointly and severally guarantees to each [Islamic Lender] punctual performance by [KBBO CPG] of all [KBBO CPG’s] obligations under the Murabaha Documents”.

22. Mr. KBBO gave a stand-alone guarantee dated 19 November 2019 to the Claimants. Under clause 4, he “irrevocably and unconditionally guarantees to [the Claimants] the punctual performance by [KBBO CPG] of all [KBBO CPG’s] obligations under [the Conventional and Islamic Facilities]”.

23. Infinite also gave a stand-alone guarantee dated 19 November 2019 to the Claimants in materially identical terms to that given by Mr. KBBO.

24. By clause 2.6(a)(ii) of the CTA each “Obligor” appointed KBBO CPG as their agent to receive any demands. As set out above, “Obligor” included the Thirteenth, Fourteenth, Sixteenth, Seventeenth and Nineteenth Defendants,

25. Between 25 November and 23 December 2019, KBBO CPG drew down $294,999,999.66 of the available $300,000,000 Facility.

26. Under clause 9.27(a) of the CTA, KBBO CPG was obliged to comply with the “Conditions Subsequent” by 19 December 2019 and provide certain security known as the “Subsequent Moveables Security Agreement” and the “Initial KS Security Documents” (an account pledge agreement). KBBO CPG sought an extension on 18 December 2019 but the Syndicate did not agree. The UAE Companies in the CPG Group were also obliged by clause 11.3 of the CTA to effect cash sweep obligations, by which amounts in excess of an aggregate total equivalent to US$10 million on 2 specific days in each month were to be transferred to Collection Accounts held by the First Claimant as “the Global Facility Agent” and to provide their bank statements and monthly summary reports of payments in and out of each of their UAE accounts.

Events of Default

27. Clause 10 of the CTA provided that each of the events or circumstances set out in that clause was to constitute an “Event of Default”. In addition to failure to pay sums due, the following constituted such an event:

28. Under the CTA, a “Transaction Document” and a “Secured Transaction Document” included the CTA, the CFA and the Murabaha Investment Agency Agreement and the Master Murabaha Agreement.

29. Clause 10.19 of the CTA provided that, if an “Event of Default” occurred and was continuing, the First Claimant could, by notice to KBBO CPG:

Breaches of the Facility Agreements constituting Events of Default

30. The Claimants allege that there were six separate “Events of Default”, but they need only one to justify the exercise of rights under clause 10.19 of the CTA. The evidence of Mr. Sanders is unchallenged in relation to the alleged breaches and the lack of any attempt to remedy any of the breaches which might be considered remediable. The alleged breaches, all of which have been established on the balance of probabilities are as follows:

Breaches relating to the Security to be provided to the Claimants

31. It was a condition subsequent in the CTA under clause 9.27(a) that KBBO CPG was obliged to procure and deliver to the First Claimant, within 30 days of execution of the Facility Agreements (i.e. by 19 December 2019), those documents and evidence listed in Part 3 of Schedule 2 to the CTA in a form and substance satisfactory to the First Claimant.

32. The documents and evidence listed in Part 3 of Schedule 2 of the CTA included:

33. It is not disputed that these “Conditions Subsequent” were not complied with by 19 December 2019. There is no remedy period under clause 10.3 of the CTA for breach of these “Conditions Subsequent”. Even now (despite court order) no Subsequent Moveables Security Agreement signed by all of KBBO CPG, the Ninth, Eleventh, Fifteenth and Eighteenth Defendant has been provided; nor has the Initial KSA Security Document been registered in KSA.

34. This constitutes a clear “Event of Default” under clause 10.3 of the CTA.

Breaches relating to cash sweep and, provision of reports and Bank Statements

35. In breach of clauses 11.3(a) and 11.3(c) of the CTA, the Fifth to Eighteenth Defendants failed to carry out cash sweeps on the 5th and 20th of each month and KBBO CPG failed to procure that these cash sweeps be carried out. In breach of clause 11(c) of the CTA, KBBO CPG also failed to provide any of the required monthly reports and bank statements.

36. On 19 April 2020, the First Claimant gave notice of these defaults. If such defaults were capable of remedy out of time, no attempt was ever made to do that, and the breaches continue. This was another Event of Default, this time under clause 10.4 of the CTA.

The Failure to Discharge Existing Facilities.

37. Following drawdown, all of the “Existing Facilities” should have been paid off and thereafter the only borrowing should have been that permitted by the Facility, as is clear from the terms of:

38. Although clauses 2.4(a) and (c) provided for use for other expenditure also, the amounts advanced were such that, if clause 9.9 was to be complied with, all the money advanced as Tranche A and Tranche C, by reason of the definition of “Financial Indebtedness”, had to be used to pay of the Existing Facilities so that none remained after the First Utilisation date (the first date of drawdown). KBBO CPG’s own documents show that these clauses were breached. A spreadsheet provided on 11 March 2020 (the “11 March Spreadsheet”) which was described by Mr. Vaidya, a KBBO CPG Chartered Financial Analyst, as a table of “outstanding debt in the KBBO CPG Group” showed that the following indebtedness existed (amounting to AED 354 million, the equivalent of approximately US$ 96.57 million):

39. The similarity between some of the borrowing figures listed in Schedule 9 to the CTA as the “Existing Facilities” and in the 11 March Spreadsheet shows that part of the Existing Facilities were simply not paid off with “Tranche A” and “Tranche C”. That was a breach of clauses 2.4(a) and (c) of the CTA which required that the Facility be used to repay in full all “Existing Facilities”. Whilst emails have been received from some banks who advanced some of the Existing Facilities, to the effect that some loans were paid off, the evidence established to my satisfaction that this is not the case, certainly not in respect of all the Existing Facilities, and that those emails are unreliable.

40. But even if those “Existing Facilities” had been repaid, followed by new borrowing in the same amounts, this would have been new “Financial Indebtedness” incurred after 25 November 2019 by the Fifth, Thirteenth and Fourteenth Defendants in breach of clause 9.9 of the CTA; and KBBO CPG was in breach for failing to ensure their compliance with clause 9.9 of the CTA.

41. These were “Events of Default” under clause 10.4 of the CTA which were not capable of remedy.

42. Furthermore, before accelerating the Facility, on 19 March 2020 the Claimants gave notice of these breaches which continued.

Further Borrowing

43. KBBO CPG’s Spreadsheet of 11 March 2020, referred to above shows that on or after 19 November 2019, the Fifth, Fourteenth and Sixteenth Defendants had outstanding “Financial Indebtedness”, which was not part of the disclosed “Existing Facilities”. In other words, this was either borrowing that had not been disclosed when the Facility was entered into or new borrowing taken afterwards: The figures total AED240 million, equivalent to approximately US$65.395 million.

44. This borrowing was “Financial Indebtedness” not permitted under the Facility. When the Facility was executed on 19 November 2019:

45. Therefore:

46. Furthermore, before accelerating the Facility, on 19 March 2020 Cs gave notice there was Financial Indebtedness not permitted by the CTA, which has continued.

Misuse of Funds Advanced

47. The Evidence adduced by the Claimants establishes that KBBO CPG has admitted using funds advanced by the Claimants for purposes other than those permitted by clause 2.4 of the CTA.

The provision of incorrect information prior to the Facilities Agreements

48. The evidence before the Court establishes that:

49. On this evidence, the representation and warranty given in clause 6.11(b) of the CTA was incorrect and misleading and was not capable of remedy. This constituted a further Event of Default, in this case under clause 10.5 of the CTA.

Letters of Complaint, Acceleration and Demand

50. On 19 March 2020, the First Claimant sent a letter by email, notifying KBBO CPG that it was in breach of contract and had committed an Event of Default.

51. On 30 March 2020, the Syndicate held a call with Mr. KBBO, Mr. Banthia and Mr. Singh. On this call Mr. KBBO admitted that:

52. On 13 May 2020 the First Claimant gave notice to each of KBBO CPG (on its own behalf and as agent for the other Obligors) and to the Second, Third and Fourth Defendants, accelerating repayment of the Facility and making demands under the Guarantees. At that time the outstanding Conventional Finance amounted to US$219,949,336.73 and the Islamic Finance amounted to US$79,293,570.19. No sums have ever been paid but the Claimants have, as set out in paragraph 7 above, collected the sum of the US$8,390,371.70 from the various accounts of the Obligors on 21 May 2020.

Conclusion on the Monetary claims under the Facilities Agreements and the Guarantees

53. On the evidence before the Court, it is clear that the Hadef Defendants have no realistic prospect of successfully defending the claims for monies due under the Facility and the stand alone guarantees and that they are therefore liable in the sums set out in the Order made. As at 19 May 2020 the sums due under the Conventional Facility and the Islamic Facilities totalled US$ 213,664,764.36 and UD$ 77,128,854,29 respectively to which interests and other charges fell to be added in accordance with the evidence referred to in paragraph 6 above. No defence has been put forward by any Defendant, despite being given every opportunity to do so. The Hadef Defendants’ approach has been to seek to put off the day of judgement in the face of admitted “Events of Default”. There is no compelling reason why the case should go to trial on these claims. If the Hadef Defendants are insolvent, then these debts will rank in the bankruptcy or liquidation of the relevant defendant in due course.

The Claimant’s Application for mandatory injunctions

54. The Claimants have not pursued any application for immediate judgement on their proprietary claims based on the Quistclose line of authorities but on the dismissal of the Hadef Defendant’s application for reverse summary judgement thereon, which has not been pursued, the position remains that there is a serious issue to be tried on that claim.

55. This means that in relation to any interim injunction, the balance of convenience or prejudice would come into play in accordance with American Cyanamid principles but the Claimants seek final injunctions to enforce the terms of clause 9.27 and clauses 11.3(a) and (c) of the CTA. The breaches of these terms are set out at paragraphs 31-36 above.

56. Since the making of the the 15 May Order , there has been some attempt by the Defendants to comply with the mandatory orders made therein in relation to these obligations. On 22 June 2020, the Thirteenth, Fourteenth, Sixteenth and Seventeenth Defendants provided the Claimants with (second ranking) Subsequent Moveables Security Agreements, because there were in place prior agreements of the same kind, given as security for other indebtedness which should not, under the Facility have existed. However, KBBO CPG has not procured that the Fifth, Sixth, Seventh, Eighth, Tenth or Twelfth Defendants provide similar second ranking security (which is all that would be possible in the face of other prior ranking security); nor that first ranking security be executed by the Ninth, Eleventh, Fifteenth and Eighteenth Defendants, which would appear to be possible. In addition, KBBO CPG has not procured the granting and perfection of the Initial KSA Security Document by the Nineteenth Defendant.

57. There has equally been no compliance with the mandatory orders made in respect of the cash sweep and associated reporting requirements and provision of banks statements.

58. The Defendants have advanced one argument against the enforcement of these obligations which are clearly set out in the CTA. It was submitted that these obligations in the CTA ceased to be effective on the exercise by the Claimants of their rights of acceleration under clause 10.19 of the CTA. The contention was that the exercise of that right had the effect of terminating the Facility. This submission has only to be stated to be rejected, both because of the express terms of clause 10.19 and the terms of clause 29 of the CTA. The former provides:

59. Clause 29 of the CTA provides:

“no single or partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in each Transaction Document are cumulative and not exclusive of any rights or remedies provided by law”.

60. The combined effect of these clauses is, in my judgment, clear. The right of acceleration is a contractual right like the rights to security. The rights granted to the Claimants under the Facility and the CTA can be exercised cumulatively save where they are mutually inconsistent. There is no inconsistency in accelerating the repayment obligations and relying on clauses which require security to be provided in respect of the indebtedness. As the Claimants submit, where acceleration occurs, whatever the breaches/“Events of Default” on which it is based, the party exercising that right may well wish to rely on and exercise security rights. The failure to provide contractual security, whether or not triggering the right to accelerate is a continuing breach, where a mandatory injunction can be ordered in order to perfect that security for the indebtedness which has been accelerated. There is no termination of the Conventional Facility, nor the Islamic Facilities, whether by acceptance of repudiatory breach or otherwise. All that has happened is that the Claimants seek to rely on and enforce contractual rights provided in the Facility/ Transaction Documents.

61. In the acceleration and demand letter of 13 May 2020, the Claimants, at paragraph 4.1 gave notice to KBBO CPG and all the Hadef Defendants that the transaction total commitments were cancelled; that the Loans, the “Deferred Payment Price” and all other amounts outstanding under the Transaction Documents were declared immediately due and payable; and that the Global Facility Agent (the First Claimant) was entitled, immediately following the letter, to give directions to the Security Agents in respect of the Transaction Security Documents. The Claimants thus elected to accelerate the loan and to rely on the security provided, as they were specifically entitled to do under clause 10.19 of the CTA in exercising their cumulative rights.

62. The security should have been provided long since and the Claimants had a vested contractual right to it prior to any acceleration. No good reason has been advanced as to why this clear right should not be enforced by the Court on ordinary principles relating to the grant of injunctions. The cash sweep up provisions and terms relating to reporting and provision of bank statements which have been breached constituted vested rights prior to acceleration and accruing rights since, but there is again no good reason why they should not be enforced and every reason why they should in circumstances where the Claimants are entitled to and need to realise the security granted to them, in circumstances where the Defendants have paid nothing voluntarily.

63. In these circumstances, subject only to the issue of privilege against self-incrimination, the Claimants are entitled to the orders sought which are set out in paragraphs 8-13 of the Order approved by the Court on 28 October 2021.

Continuation of Freezing Order

64. There is also every reason to continue the Freezing Orders made last year. Post judgment freezing orders are made to guard against the risk of dissipation of assets and the risk of such dissipation is often increased when judgment has been given against the defendant in question. Here that risk has increased as can be seen by the failures to comply and the limited efforts made by the Defendants to comply with the Court orders made in relation to disclosure of assets and provision of security, particularly since KBBO CPG dismissed Mr. Banthia and Mr. Singh.

65. There is an issue as to who currently has control of the assets of the relevant Defendants, which depends on the effect of the Abu Dhabi Court Commencement of Restructuring Orders. The evidence of the Single Trustee in his Witness Statement of 7 October 2021 is challenged by the Claimants who submit that there is nothing in that Court’s orders of 27 July and 23 August 2021 which has the effect of vesting assets in the Single Trustee or the Panel of Trustees or giving them any powers of management over the assets of Mr. KBBO and the joined litigants. The actions taken by the Hadef Defendants in defending their position and issuing summonses support that, as do various inconsistent passages in the Single Trustee’s witness statement of 7 October 2021 and in particular paragraph 35 thereof. At this stage, in circumstances where the Panel of Trustees has not been prepared to pursue the application taken out by Prime Case on 25 October 2021 at the hearing on 27 October 2021, I cannot be confident that the Single Trustee or Panel of Trustees has control of the Hadef Defendants’ assets so as to render them safe from dissipation by defendants who have acted in flagrant breach of the Facility, have used assets in breach of contract and have misrepresented the financial position to the Claimant, as I have already found.

66. In post judgment freezing orders, it is usual to delete the exception of use of assets in the ordinary course of business (the “Angel Bell Exception”) because the Court has determined that the judgment creditor should be paid and there is no reason why a judgment debtor should be allowed to carry on business whilst failing to pay a judgment debt. See the Court of Appeal’s decision in Emmott v Michael Wilson & Partners EWCA Civ 219 [2019] 4 WLR 1 at paragraph 56.

67. For all the reasons put forward by the Claimants at the time of the making of the Orders last year, and in the light of the subsequent conduct of the Hadef Defendants in relation to these proceedings, there is good reason to consider that there currently remains a real risk of dissipation of assets and that the freezing injunction should be continued. The proprietary claim remains in being as a serious issue to be tried, so that the proprietary aspects of the Orders should also continue in being until trial of that aspect of the claim on ordinary principles. The injunctions will therefore continue in their existing form with the exclusion of the Angel Bell Exception.

Privilege against Self- Incrimination:

68. The Hadef Defendants have refused to comply with a number of orders made in 2020. They claim a privilege against self-incrimination in respect of the following obligations to which those order refer:

69. The grounds on which privilege is claimed are set out in Witness Statements from Mr. KBBO, Mr. Badr, the interim CEO of KBBO CPG since the departure of Mr. Banthia, and Mr. Singh, and the expert reports of Mr. Juma and Mr. Al Shamsi. The Hadef Defendants assert that compliance with any of the obligations will expose all of them to a risk of prosecution in the UAE. It is said that there is a risk of prosecution under the UAE Federal Law 3 of 1987 (the “Criminal Law”) and that this risk is enhanced by the production of any of the information ordered, including in Mr. KBBO’s case, information about his assets generally:

70. I have no hesitation in rejecting the claim for privilege for a number of reasons of which the first two would suffice.

71. First, the unchallenged evidence of Dr. Al Mulla is that there is no privilege against self- incrimination which is operative in the DIFC or the UAE, whether in criminal law or for a party in civil law proceedings. Article 8 of DIFC Law No 3 of 2004 provides for the primary application of DIFC law or any other law in force in the DIFC, which includes the Criminal Law. The Criminal Law is therefore applicable in the DIFC and falls to be applied when considering any risk of prosecution in the UAE which the Hadef Defendants put forward. There is no other jurisdiction said by the Hadef Defendants to be relevant and it is the legislation of the UAE which is said to be relevant for any potential prosecution.

72. If there is no provision for a privilege against self-incrimination in the UAE and that is the relevant criminal law operative in the DIFC and the location of the Hadef Defendants, there can be no basis for the application of any privilege of that kind which operates in common law or European jurisdictions which have a different system of criminal law and where the European Convention of Human Rights, as opposed to the Arab Charter of Human Rights, the latter of which contains provisions relating to criminal law but nothing about any such privilege. English law on the subject has long been recognised as problematic, even allowing for the exceptions in the Fraud Act (see below) and there can be no basis for importing this into DIFC procedure.

73. As to the law of the UAE:

74. Secondly, even if English law procedural rules in relation to the privilege against self-incrimination were applicable, whether under the cascade provisions of the statute referred to above or otherwise, the effect of section 13 of the Fraud Act would be to prevent any such reliance in relation to answering questions in proceedings relating to property or complying with orders made in proceedings relating to property. A similar provision applies in relation to any offences under the Theft Act 1968 by virtue of section 31 of that Act. That would apply directly to the provision of all the information in the orders made by this Court.

75. Thirdly, the Hadef Defendants have all agreed to waive the privilege by agreeing to clause 32.4(a) of the CTA which provided for an irrevocable waiver by each “Obligor” of any claim to immunity in relation to any “…court proceedings arising out of or connected with this Agreement” and that waiver specifically included “immunity from any injunctive or other interim relief or any order for specific performance”.

76. Fourthly, the Hadef Defendants agreed in the Transaction Documents to provide the information set out in clauses 7.1, 7.2, 7. 4, and 7.5 of the CTA in relation to the financial affairs of the Obligors and the Fourth Defendant, in relation to the financial circumstances and performance of KBBO CPG and the Guarantors (including the Hadef Defendants), details of any default and any steps being taken to remedy it, quite apart from the obligations which the Claimant seeks to enforce. This is all capable of constituting a waiver of any privilege which might exist.

77. Fifthly, as appears from earlier findings in this Judgement, not only did Mr. Banthia and Mr. Singh provide some information about how funds drawn down under the Facility had been used but, following the making of the 15 May Order, Mr. Singh on 17 May 2020 provided some Tracing Information and a spreadsheet showing the destination of the funds advanced, which Mr. Badr and Mr. KBBO on 21 May and 3 June 2020 subsequently stated was inaccurate, whilst intimating that correct information would be forthcoming, thereby themselves providing information about the destination of such funds. A party cannot blow hot and cold on such a matter and once information has been given, whether accurate or not, it is not possible to row back from the waiver of any privilege that there might have been.

78. The reality of the matter is that there is no real risk of prosecution in any event, because it is hard to see how the corporate Hadef Defendants could be prosecuted because the acts of individuals can only be attributed to them for criminal purposes, if the acts in question were done for the account and in the name of the corporation and intentionally performed for their benefit. As all appears to have been done for the benefit of companies outside the CPG Group, that would be a difficult row to hoe. If there was any risk of prosecution of the individual defendants, it almost certainly would have materialised by now because some Tracing Information has been provided, because the authorities in the UAE are aware of the serious allegations being made and nothing has been done.

Conclusion

79. In these circumstances and for all the above reasons I have concluded that the Claimants are entitled to immediate judgment on their debt claims under the Facility and the stand alone guarantees and to immediate judgment in relation to their claims for the provision of security and information/ bank statements provided by the Transaction Documents.

80. Furthermore, the Orders previously made in 2020 will continue in force and, in the absence of any privilege against self-incrimination, there is no basis upon which any of the Hadef Defendants can legitimately refuse to provide any of the information which they have been ordered to provide.

81. It also follows that the Hadef Defendants must pay the costs of the Claimant’s applications for immediate judgement and the costs of their own applications which they have failed to pursue and which I have dismissed. I have made orders accordingly in relation to the provision by the Claimant of schedules of costs and directions for submissions in relation to a potential payment on account.

Issued by:
Nour Hineidi
Registrar
Date of Issue: 4 November 2021
At: 3pm