BANK SARASIN-ALPEN v MR ELIE VIVIEN SASSOON [2024] DIFC CFI 009 — Dismissal of strike-out and summary judgment applications in insolvency-related fraud claims (30 April 2024)

This order addresses the Court’s refusal to terminate complex insolvency-related litigation, affirming that allegations of fraud and breach of fiduciary duty must proceed to a full trial on the merits.

What are the specific claims and the monetary stakes involved in the dispute between Bank Sarasin-Alpen and Mr Elie Vivien Sassoon?

The litigation arises from the insolvency of Bank Sarasin-Alpen (ME) Limited (BSA). The Claimants, represented by the liquidator Shahab Haider, have brought a Part 7 claim and an insolvency claim against multiple defendants, including Mr Elie Vivien Sassoon, Mr Stephane Emile Astruc, Mr Edmond Carton, and associated entities Bank J Safra Sarasin Limited and Bank J Safra Sarasin Asset Management (Middle East) Limited. The causes of action are extensive, encompassing unlawful means conspiracy, breach of fiduciary duty, dishonest assistance, knowing receipt, fraudulent trading, transactions in fraud of creditors, misfeasance, and transactions at an undervalue.

The dispute centers on the dissipation of assets and the conduct of the defendants leading up to the bank's collapse. The financial scale of the underlying issues is significant, as the Court noted that the bank’s remaining assets were insufficient to satisfy potential liabilities. As stated in the judgment:

The assets of BSA at the end of 2013 appear to have been about USD 9 million which would not have been anywhere near sufficient to pay either the compensatory or additional damages ultimately awarded.

The litigation is part of a broader series of proceedings, including: BANK SARASIN-ALPEN v MR ELIE VIVIEN SASSOON [2023] DIFC CFI 009 — Procedural refusal of adjournment and cross-examination (25 August 2023), BANK SARASIN-ALPEN v MR ELIE VIVIEN SASSOON [2023] DIFC CFI 009 — Jurisdiction and service challenges in corporate insolvency (15 September 2023), and Bank Sarasin-alpen v Elie Vivien Sassoon [2023] DIFC CFI 009 — Procedural finality in cross-border service (01 November 2023).

Which judge presided over the strike-out and summary judgment hearing in CFI 009/2023?

The hearing was presided over by Justice Sir Jeremy Cooke in the DIFC Court of First Instance. The proceedings, which culminated in the order issued on 30 April 2024, followed a series of directions hearings and applications filed by the defendants throughout early 2024.

What were the primary legal arguments advanced by the Defendants in their application to strike out the claims?

The Defendants, represented by Ms Martin, sought to strike out the claims under RDC 4.16 and/or obtain immediate judgment under RDC 24.1. Their arguments primarily focused on the contention that the claims were time-barred under the relevant limitation periods and that the pleadings lacked the necessary specificity to sustain allegations of fraud and conspiracy. The Defendants argued that the causes of action were stale and that the Claimants had failed to establish a sufficient nexus for the various equitable claims asserted against the corporate and individual defendants.

Did the Court find that the limitation period under Article 9(1) of the DIFC Obligations Law barred the claims?

The central legal question was whether the statutory limitation period under Article 9(1) of the DIFC Obligations Law operated to extinguish the Claimants' right to sue, given the time elapsed since the alleged conduct. The Court had to determine if the nature of the claims—specifically those involving fraud and breach of fiduciary duty—exempted them from the standard limitation bar or if the "fraud" exception applied to the conduct in question.

How did Justice Sir Jeremy Cooke apply the doctrine regarding fraud and limitation periods?

Justice Sir Jeremy Cooke rejected the Defendants' limitation arguments, emphasizing that where fraud is central to the cause of action, the limitation period does not provide a shield for the defendants. The Court applied a robust interpretation of the DIFC Obligations Law, noting that the conduct alleged fell squarely within the exceptions for fraudulent activity. The reasoning is summarized as follows:

Even if fraud is not a necessary ingredient of the cause of action, if the cause of action arises as a result of fraud in the conduct which constitutes the breach, it is covered by Article 9.

The Court further clarified that the end result of its analysis was that there was no valid limitation point to be taken in relation to any of the causes of action pleaded, as the allegations of dishonesty and fraudulent trading fundamentally altered the limitation landscape.

Which specific statutes and DIFC rules were central to the Court's analysis of the strike-out application?

The Court relied heavily on Article 9(1) of the DIFC Obligations Law, which governs limitation periods, and Article 115(b) of the Insolvency Law 2019, alongside Article 80 of the Insolvency Law 2009. Procedurally, the Court applied RDC 4.16 (strike out) and RDC 24.1 (summary judgment). Additionally, the Court referenced Article 35 of the Law of Damages and Remedies, noting:

Article 35 of the Law of Damages and Remedies gives wide powers to the court to make such orders as it thinks fit where a person commits a breach of any requirement, duty or obligation imposed under any DIFC Law.

How did the Court utilize English and DIFC precedents in determining the validity of the pleadings?

The Court relied on Rafed Abdel Mohsen Bader Al Khorafi v Bank Sarasin Alpen (ME) Ltd [2018] DIFC CFI 014 to confirm that there is no material difference between the DIFC Obligations Law Article 9(1) and the English Limitation Act 1939. Furthermore, the Court cited Re DIFC Authority [2020] DIFC CA 002 to affirm its authority to develop the common law of trusts and equitable principles. English authorities such as Bristol & West Building Society v Mothew and Williams v Central Bank of Nigeria were used to define the scope of fiduciary duties and the requirements for dishonest assistance, ensuring the pleadings met the high threshold required for fraud-based claims.

What was the final disposition of the strike-out application and the associated costs order?

The Court dismissed the Defendants' Strike Out Application in its entirety. The Defendants were ordered to pay the Claimants' costs of the application on the standard basis. Specifically, the Court ordered:

The Defendants shall make a payment on account of such costs of AED 440,000 by no later than 4pm on 3 May 2024.

Additionally, the Court set a clear path for trial, ordering the parties to exchange information regarding documents and listing the trial to commence on 27 October 2025. Regarding the Security for Costs Application, the Court ordered:

The costs of the Security for Costs Application in CFI-009-2023/11 dated 23 February 2024 shall be costs in the case.

What are the wider implications of this ruling for practitioners dealing with insolvency and fraud claims in the DIFC?

This ruling reinforces the DIFC Court’s commitment to allowing substantive fraud and insolvency claims to proceed to trial, signaling a high threshold for defendants seeking to strike out such claims on technical limitation grounds. Practitioners must anticipate that where allegations of dishonesty or breach of fiduciary duty are well-pleaded, the Court will prioritize the determination of the merits over procedural attempts to truncate the litigation. The case also highlights the Court’s proactive use of its wide remedial powers under the Law of Damages and Remedies to ensure that complex corporate collapses are fully investigated.

Where can I read the full judgment in Bank Sarasin-alpen v Mr Elie Vivien Sassoon [2024] DIFC CFI 009?

The full judgment can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0092023-1-bank-sarasin-alpen-me-limited-2-shahab-haider-his-capacity-liquidator-bank-sarasin-alpen-me-limited-v-1-mr-elie-vi-6 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-009-2023_20240430.txt

Cases referred to in this judgment:

Legislation referenced:

• DIFC Obligations Law, Article 9(1)
• DIFC Trust Law, Article 10
• DIFC Insolvency Law 2019, Article 115(b)
• DIFC Insolvency Law 2009, Article 80
• DIFC Law of Damages and Remedies, Article 35
• RDC 4.16, 24.1, 28.10