October 26, 2021 court of first instance - Orders
Claim No. CFI 045/2020
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE COURT OF FIRST INSTANCE
BETWEEN
(1) EMIRATES NBD BANK (P.J.S.C.)
(2) HSBC BANK MIDDLE EASTLIMITED
(3) ICICI BANK LIMITED, BAHRAIN BRANCH
(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 B.S.C. (DIFC BRANCH)
(9) COMMERCIAL BANK OF DUBAI PSC
(10) WARBA BANK K.S.C.P.
Claimants
and
(1) KBBO CPG INVESTMENT LLC
(2) KHALEEFA BUTTI BIN OMAIR YOUSIF AL MUHAIRI
(3) HIS EXCELLENCY SAEED MOHAMED BUTTI MOHAMED AL QEBAISI
(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
REASONS FOR THE DECISION OF JUSTICE SIR JEREMY COOKE DATED 25 OCTOBER 2021
1. On 25 October 2021, I ordered that the materials in CFI-085-2021 be immediately made available to the Claimants in this action and that materials relied on by all parties be made available to each other, including Hadef & Co, the lawyers previously purporting to represent the Trustee in Bankruptcy/Insolvency, Mr Salem, Mohammed Ballama Altamimi (the “Trustee”) and Hamad Alrahma Advocates (apparently trading as “Prime Case”), who are now apparently authorised to do so. I asked the Court to send the documents filed by the last named on behalf of the Trustee whilst ordering service by the Trustee to take place at once. I ordered that both matters (CFI-045-2020 and CFI-085-2021) be listed for the hearing on 27 October 2021 and 28 October 2021 when the Claimants’ application for summary judgement and the Defendants’ application for discharge of injunctions, originally listed for 30 June/1 July 2020 were scheduled to be heard.
2. My reasons for so doing are set out herein. At the same time, it appeared to me to make sense to refer to new materials emanating from the Trustee which gave further information and/or updated the position as set out in my judgement in CFI-063-2020, (Mashreqbank v Infinite Partners Investment LLC and others). Whether those matters are contentious or not remains to be seen and I express no firm conclusions about them.
3. Since my judgment in CFI-063-2020, reissued on 4 October 2021 (albeit still with one typographical mistake in paragraph 33 where the words “foreign corporation” should read “foreign court”) and the order I made in this action, CFI-045-2020 on 19 October 2021, which largely repeated the reasons set out in the earlier judgment, I have now seen documents filed by Prime Case with the Court on 14 October 2021, on behalf of the Trustee in CFI-085-2021.
4. Included in the documents filed was a Witness Statement of the Trustee dated 7 October 2021, which thus preceded the order previously made in these proceedings on 19 October2021 and which impacts on that order because material in it appears to update the evidence as recorded in the judgment in CFI-063-2020 and should have been made available to me by the Trustee when reaching my decision then. The only material then made available to me from the Trustee, in addition to that available when giving my reasons in CFI-063-2020, was a letter of submissions from Hadef & Partners of 17 October 2021 which made no reference to this evidence in CFI-085-2021. I do not know whether or not the latter was aware of the steps taken by the Trustee through Prime Case.
5. From the currently uncontroverted evidence of the Trustee in that Witness Statement, it now appears that he is the properly appointed “Foreign Representative” of the First Defendant (“D1”), Fourth Defendant (“D4”), Thirteenth Defendant (“D13”) – Fourteenth Defendant (“D14”) and Sixteenth Defendant (“D16) – Seventeenth Defendant (“D17”) which are foreign companies and has authorised Mr Zaidan of Prime Case to act on its behalf to apply for recognition of the Abu Dhabi judgment relating to the restructuring of what could loosely be referred to as the KBBO Group of Companies. The evidence appears to show that, notwithstanding the court’s later appointment of two further trustees, the Trustee remained at all times in a position to act with authority on behalf of the Defendants as the result of the orders made by the Abu Dhabi Court. Whether or not he consulted his co trustees when issuing the Claim Form or Application is uncertain, (Hadef & Partners say that the claim form was issued on 10 October although the form I have seen is dated 14 October) or signing his Witness Statement on 7 October 2021, which appears to have preceded the finalisation of the appointment of the other trustees on 12 October. On his evidence, however, the Defendants no longer have power to control their assets, and he alone could give instructions in relation to them. He is authorised by the Abu Dhabi Court to fulfil the functions set out in its orders. It is also arguable that the terms of Article 15(2)(a)(b) and (c) have been fulfilled as have the requirements of Article 15(3) of Schedule 4 to the DIFC Insolvency Law, though no details appear of any claims made in the UK or USA.
6. As pointed out in paragraph 41 of my judgment in CFI-063-2020, the effect of that judgment was not that an application seeking recognition of the Abu Dhabi foreign winding up order could not constitute “foreign proceedings” within the meaning of the DIFC Insolvency Law and the UNCITRAL Model Law in Schedule 4 thereto, or that an application for a stay could never succeed if made by those with authority to do so and in compliance with the statute.
7. There are however two individual Defendants who do not constitute foreign companies, namely the Second Defendant (“D2”) and the Third Defendant (“D3”). On the face of it, the Insolvency Act makes no provision for recognition of foreign bankruptcy of individuals and however odd that may be, I have not thus far been pointed to any provision which caters for the situation where such proceedings have been commenced abroad. It may, of course be, that individual bankruptcy proceedings have to be commenced in the DIFC. Similarly, for the reasons given in my earlier judgement, Article 117(1) of the Insolvency Law only appears to apply to assistance to be given, when requested by a foreign court, where that court is the Court of incorporation of the foreign company in question. “Assistance”, as set out in the subsection, speaks of the “gathering and remitting of assets maintained within the DIFC”, which is not the subject of the request made by the Trustee. Of the Defendants in the current action, D4, Fifth Defendant (“D5”), Seventh Defendant (“D7”), Eighth Defendant (“D8”), Eleventh Defendant (“D11”), Twelfth Defendant (“D12”), D13 and D14 are incorporated in Abu Dhabi, although the latter two are also apparently incorporated in onshore Dubai.
8. By an application dated 25 October 2021 in CFI-085-2021 (the “Application”), Prime Case, for the Trustee, applied for:
1.1. Recognition of the Abu Dhabi Restructuring of the affairs of D2 and those of companies whose affairs were said to be intertwined with his, as “main proceedings” under Articles 15 and 17(2) of Schedule 4 to the Insolvency Law;
1.2. Cooperation/assistance from the DIFC Court under Articles 1(a), 25 and 27 of Schedule 4;
1.3. Recognition of the Abu Dhabi Court order of 27 July 2021 staying all proceedings, (with the presumed effect of staying the DIFC proceedings);
1.4. Recognition/enforcement of the onshore Dubai Delegation Letter of 9 September 2021, seeking a stay of the DIFC proceedings;
1.5. Discharge of the Orders made in May/June 2020, freezing the Defendants’ assets and requiring various steps to be taken to provide information in relation to them. A stay of all DIFC proceedings against D2 and the conjoined litigants in Abu Dhabi, including these proceedings, CFI-045-2020;and:
1.6. an interim order to the same effect as that set out in paragraph 8.5 above pending determination of the claims set out in the Application.
9. Both of the last two elements of the Application, seeking a stay, were subject to the applications already made for the discharge of the May/June 2020 orders.
10. In the Application, it was said that the Trustee intended to serve, by email, the Application, the Witness Statement and the exhibit on all parties to litigation in the DIFC, save D2 and his associated companies. That did not appear to have been done and I ordered that this be done, as soon as the Application was drawn to my attention, also asking the Court to forward the material to the Claimants in this action, so that no time was lost.
In the Trustee’s Witness Statement of 7 October 2021, the following appears: –
“32. As explained, Abu Dhabi is the Debtor’s [D2] centre of main interest. I respectfully request that the DIFC Court recognise the Abu Dhabi Proceedings pursuant to Article 15 (1) of Schedule 4 of the DIFC Insolvency Law, as the foreign main proceedings.
35. In light of the above, I seek an order that the ENBD Orders be discharged. In the event that this relief is not granted to me as Trustee, I can confirm that I have authorised the Debtor and the Joined Litigants to continue their existing application in respect of the ENBD Orders which I understood is listed for hearing on 27 – 28 October 2021. As I address further below, the stay I seek needs to include express provision allowing this and any other application to discharge or vary the ENBD Orders to proceed”.
11. In this context, as the Trustee appears to recognise in paragraphs 33 and 34 of his Witness Statement, the validity of the Claimant’s proprietary claim, based on the Quistclose line of authorities has to be resolved because that would obviously impact on questions of security and assets available to the general body of creditors of the various Defendants and any potential restructuring. Those were the matters which were to be resolved in June/July last year prior to the attempted torpedo of the Defendant’s application to the JJC. This Court is the only court which can make such a determination under the terms of the relevant contracts, namely the Facility Agreements, the CTA and, so far as material, the Stand-alone Guarantees.
12. The Trustee’s/Defendants’ failure to serve the claim form in CFI-085-2021 on the Claimants in this action despite its issue on 14 October 2021 or to serve any of the evidence filed in support, together with the late issue of the Application filed on 25 October 2021 when a hearing, scheduled for 27 October 2021 and 28 October 2021 had been fixed for a long time, is par for the course on the part of the Trustee/Defendants who have done everything possible to stymie these proceedings and have abused the process of the Court in doing so, as this Court has remarked on previous occasions.
13. On 24 October 2021, the Defendants, via Hadef & Partners, which had previously purported to act on the instructions of the Defendants and indirectly those of the Trustee, wrote to the Court to refer to the Claim Form issued on his behalf (which they referred to as filed on 10 October 2021). They stated that in the circumstances no further steps should be taken in the action until the Trustee’s application had been determined. They said that they were unable to participate in the proceedings without the Trustee Panel’s authority and instructions and because there now three trustees constituting a new panel, time was needed by them to decide how they wished to proceed. Hadef & Partners said they would be in no position to participate in the hearing scheduled for 27 October and 28 October 2021.
14. It is hard to avoid the conclusion that what has taken place is another attempt to sabotage the hearing of the Claimants’ summary judgement application and the question whether the Quistclose proprietary claim is or is not justifiable.
15. The Claimants’ solicitors wrote on 25 October 2021 to say that the hearing should go ahead and that their application for summary judgement should be heard for all the reasons set out in that letter, raising points as to the invalidity of any application for recognition or stay, based in part on my earlier judgment, some of which may arguably have been superseded by the evidence in the Trustee’s Witness Statement.
16. It was in the circumstances that I decided that not only should all materials relied on by the parties be served on each other, including Hadef & Partners and Prime Case, but that the Application made by the Trustee should be listed at the same time as the Claimants’ application so that the future course of the litigation could be determined with the parties properly represented.
17. I have formed no final views on the future course of this action nor on the new material raised by the Trustee in CFI-085-2021. It may be however that the contents of this note of my reasons may help to focus the parties on the areas which will need to be addressed in the hearing on Wednesday 27 October 2021.
Issued by:
Amna Al Owais
Chief Registrar
Date of issue: 26 October 2021
Time: 4pm
