RAFED ABDEL MOHSEN BADER AL KHORAFI v BANK SARASIN-ALPEN [2014] DIFC CFI 026 — Dismissal of stay of execution application (20 November 2014)

This order addresses the Defendants' attempt to halt the enforcement of substantial monetary judgments and procedural orders pending an appeal in a long-running banking dispute.

What was the specific scope of the stay of execution sought by Bank Sarasin-Alpen in CFI-026-2009?

The Defendants sought to freeze the enforcement of orders issued by Deputy Chief Justice Sir John Chadwick on 28 October 2014, which mandated the payment of significant sums to the Claimants following a trial regarding structured financial products. The Defendants requested that the court stay both the immediate payment obligations and the scheduling of further hearings regarding interest and damages. The scope of the requested relief was defined by the court as follows:

The stay was limited to (i) the orders for payment of the three stated amounts and the interim costs amount (“the money orders”) and (ii) the order for a further hearing of the claims for interest and other damages (“the further hearing order”).

The litigation, which originated in 2009, involved claims by members of a Kuwaiti family against a Swiss bank and its DIFC-licensed entity for losses exceeding USD 200 million. The stay application was filed shortly after the Defendants initiated their appeal process, seeking to prevent the Claimants from realizing the fruits of their trial victory while the appellate proceedings were pending. Further details on the procedural history of this case can be found in AL KHORAFI v BANK SARASIN-ALPEN [2011] DIFC CFI 026 — Jurisdictional dismissal of foreign banking entity (31 March 2011).

Which judge presided over the dismissal of the stay application in the DIFC Court of First Instance?

The stay application was heard and determined by Justice Roger Giles in the DIFC Court of First Instance on 13 November 2014, with the formal order issued on 20 November 2014. This followed the trial and initial consequential orders previously handed down by Deputy Chief Justice Sir John Chadwick.

What arguments did the Defendants advance to justify a stay of execution against the Al Khorafi claimants?

The Defendants argued that a stay was necessary to preserve the status quo pending the determination of their appeal, which challenged the findings of liability for breach of regulatory obligations and misrepresentation. They contended that the financial landscape of the case was complicated by the involvement of a litigation funder. Specifically, the Defendants pointed to a separate proceeding commenced on 3 November 2014, where the funder sought an order that USD 11,445,049.00 be paid into court.

The Defendants suggested that the existence of this competing claim created uncertainty regarding the distribution of funds and potential liability for costs. They argued that if the appeal were successful, there might be difficulties in recovering funds paid out to the Claimants. Conversely, the Claimants argued that the Defendants had failed to demonstrate any real risk of injustice or inability to recover funds, emphasizing that the trial judge had already determined the merits of the case in their favor.

What was the central legal question regarding the threshold for granting a stay of execution under DIFC law?

The court had to determine whether the Defendants had met the high threshold required to deprive a successful litigant of the immediate benefit of a court order. The legal issue was not merely whether an appeal had been filed, but whether the applicant could establish that a stay was necessary to prevent a real risk of injustice or irreparable harm. The court focused on the principle that a judgment creditor is entitled to the fruits of their litigation unless the applicant can provide compelling evidence that the judgment would be rendered nugatory or that the respondent would be unable to repay the funds should the appeal succeed.

How did Justice Roger Giles apply the test for a stay of execution in this banking dispute?

Justice Roger Giles applied a strict standard, emphasizing that the burden lies heavily on the unsuccessful party to justify why the court should interfere with the enforcement of a judgment. He rejected the Defendants' concerns regarding the litigation funder, noting that the disputes were procedural rather than substantive. The court’s reasoning was anchored in the following principle:

The successful party at trial has a decision in its favour, and is entitled to the fruits of that decision unless the applicant does so.

Furthermore, the court dismissed the argument that the Claimants would be unable to repay the funds if the appeal were successful, finding no evidence to support such a claim. Regarding the potential for wasted costs, the court noted:

In the light of this, in my view there is limited scope for the ground of appeal, and the risk of the incurring of wasted costs is not high.

Which specific authorities and statutes were cited in the determination of the stay application?

The court relied on RDC 44.4, which governs the stay of execution in the DIFC Courts. Additionally, the court referenced Article 33 of the DIFC Courts Law 2004 regarding the powers of the court. The reasoning was supported by several English authorities, including Leicester Circuits Limited v Coates Bros PLC [2002] EWCA Civ 474, HTC Corporation v Nokia Corporation [2013] EWCA Civ 1759, and Sunico A/S v The Commissioners for Her Majesty’s Revenue and Customs [2014] EWCA Civ 1108. These cases were utilized to reinforce the principle that the court will not grant a stay simply because an appeal has been filed, but only where there is a clear risk of injustice.

How did the court utilize the cited English precedents in its reasoning?

The court used Leicester Circuits Limited v Coates Bros PLC and Sunico A/S v The Commissioners for Her Majesty’s Revenue and Customs to establish the standard for when a stay of execution is appropriate. These cases were cited to demonstrate that the court must balance the interests of the successful party in receiving their judgment against the potential for the appeal process to be rendered academic. Justice Roger Giles used these authorities to confirm that the Defendants' arguments regarding the litigation funder and the complexity of the fee substantiation were insufficient to meet the "real risk of injustice" threshold.

What was the final disposition and the specific orders made by Justice Roger Giles?

The court dismissed the Stay Application in its entirety. The Defendants were ordered to pay the Claimants' costs of the application. However, the court granted a temporary stay of seven days on the payment of those costs to allow the Defendants to file an application for a different costs order if they so desired. The court also addressed the Defendants' concerns regarding the litigation funder, noting:

In my view, there is little in this. On the evidence of Ms Gayle Hanlon, the disputes are over substantiation of fees claimed by the funder and KBH, and not over liability.

What are the wider implications of this ruling for DIFC banking litigation?

This ruling reinforces the high threshold for obtaining a stay of execution in the DIFC Courts. Practitioners must anticipate that the court will not lightly deprive a successful party of their judgment, even in complex, high-value banking disputes involving litigation funding. The decision confirms that the court prioritizes the finality of trial judgments and that the mere filing of an appeal, or the existence of collateral disputes regarding funding, will not automatically trigger a stay. Litigants seeking a stay must provide concrete evidence of potential injustice or an inability to recover funds, rather than relying on procedural complexity.

Where can I read the full judgment in Rafed Abdel Mohsen Bader Al Khorafi v Bank Sarasin-Alpen [2014] DIFC CFI 026?

The full judgment can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-026-2009-1-rafed-abdel-mohsen-bader-al-khorafi-2-amrah-ali-abdel-latif-al-hamad-3-alia-mohamed-sulaiman-al-rifai-v-1-bank-sa-1 or via the CDN: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI_CFI-026-2009_1_Rafed_Abdel_Mohsen_Bader_Al_Khorafi_2_Amrah_Ali_Abdel_Latif_20141120.txt

Cases referred to in this judgment:

Legislation referenced:

• DIFC Regulatory Law (DIFC Law No 1 of 2004)
• DIFC Courts Law 2004, Article 33
• Rules of the DIFC Courts (RDC), Rule 44.4