Following the dismissal of the Respondents' appeal regarding the DIFC Court’s jurisdiction, this order solidifies the Applicant’s protective measures by extending a freezing injunction and mandating comprehensive asset disclosure.
What specific assets and parties are at the center of the Larmag Holding B.V. v First Abu Dhabi Bank dispute?
The dispute concerns the recovery of Reditum S.A. corporate bonds (ISIN XS1257166956) originally held in account number 47502 at First Abu Dhabi Bank. Larmag Holding B.V. (the Applicant) initiated proceedings against First Abu Dhabi Bank PJSC and FAB Securities LLC (the Respondents) to prevent the dissipation of these assets, which include the bonds themselves, any interest accrued thereon, and any derivative assets or income derived from the primary holdings.
The litigation has expanded beyond the initial banking respondents to include Mr. Abdulla Saeed Aljabri and Elite Holding Group Limited as intended third and fourth defendants. The stakes involve the preservation of these financial instruments pending the final determination of the Substantive Claim. The court’s intervention ensures that the Respondents remain under a strict prohibition against disposing of or diminishing the value of the identified assets. As noted in the court's directions:
To the extent that the information ordered be provided in this paragraph is available to and/or within the knowledge of the Respondents or any affiliate of the Respondents, the Respondents must inform the Applicant’s solicitors in writing of the location, value and/or nature of the Bonds, Interest and any Derivative Assets. This information must include: a.
Which judge presided over the October 2019 hearing in the Court of First Instance?
Justice Sir Richard Field presided over the hearing held on 10 October 2019, which resulted in the order issued on 13 October 2019. The proceedings took place within the DIFC Court of First Instance, following a period of intense jurisdictional litigation that had previously reached the Court of Appeal.
What were the respective positions of Larmag Holding and First Abu Dhabi Bank regarding the court's jurisdiction and the continuation of the injunction?
Larmag Holding B.V. argued that the DIFC Court possessed the requisite jurisdiction to oversee the dispute and that the ongoing risk of asset dissipation necessitated the continuation of the Original Injunction. The Applicant successfully sought to extend these protections to include the intended third and fourth defendants, Mr. Abdulla Saeed Aljabri and Elite Holding Group Limited, to ensure the efficacy of the freezing order.
Conversely, the Respondents initially challenged the court's jurisdiction, a position that was ultimately rejected by the Court of Appeal on 30 September 2019. Following the failure of their jurisdictional challenge and their subsequent application for permission to appeal, the Respondents did not attend the 10 October 2019 hearing. Consequently, the court proceeded in their absence to grant the Applicant’s request for a continued injunction and mandatory disclosure of asset locations.
What was the precise jurisdictional question the DIFC Court had to resolve before issuing the October 2019 order?
The court was required to determine whether the DIFC Court had the legal authority to exercise jurisdiction over First Abu Dhabi Bank PJSC and FAB Securities LLC in relation to the recovery of the specified bonds. This issue was the subject of the "Jurisdictional Ruling" dated 4 August 2019. The resolution of this question was a prerequisite for the court to maintain the freezing injunction, as the Respondents had sought to oust the court's authority, necessitating a final determination that was subsequently upheld by the Court of Appeal.
How did Justice Sir Richard Field justify the extension of the injunction and the requirement for asset disclosure?
Justice Sir Richard Field’s reasoning centered on the necessity of preserving the status quo until the Substantive Claim is fully adjudicated. By extending the Original Injunction, the court ensured that the Respondents could not dispose of or diminish the value of the bonds, interest, or derivative assets. The court further utilized its powers to compel the Respondents to provide an affidavit detailing the exact location, value, and nature of these assets.
The court’s order specifically mandates that the Respondents disclose the identities of all financial institutions holding the assets and the specific account numbers involved. This ensures that the Applicant has the necessary information to track the assets effectively. The court’s reasoning is reflected in the following directive:
The information to be provided pursuant to paragraph 4 above must be provided within 7 working days of service of this Order by service on the Applicant’s legal representatives of an affidavit sworn on behalf of both Respondents by an appropriate officer for each Respondent. 6.
Which specific RDC rules and procedural mechanisms were invoked to bind the intended third and fourth defendants?
The court relied on RDC 20.55 to facilitate the service of the Order and the Original Injunction upon the intended third and fourth defendants, Mr. Abdulla Saeed Aljabri and Elite Holding Group Limited. This procedural rule allows for the service of documents in circumstances where the court deems it necessary to ensure that the injunction’s reach is effective against all relevant parties involved in the potential dissipation of the assets.
How did the court expand the scope of the Original Injunction regarding the intended third and fourth defendants?
The court exercised its discretion to ensure that the freezing order was not limited to the original Respondents. By explicitly including the intended third and fourth defendants, the court prevented any potential loophole where assets could be transferred to these parties to evade the injunction. As stated in the order:
Notwithstanding the terms of paragraph 9 of the Original Injunction, the terms of the Original Injunction as herein extended will affect, in addition to those persons identified in paragraphs 9.2 (a), (b), and (c) of the Original Injunction, the Intended Third Defendant and the Intended Fourth Defendant in the Substantive Claim. 4.
What was the final disposition of the court regarding the injunction and the disclosure of asset details?
The court granted the Applicant’s request to extend the Original Injunction until the final determination of the Substantive Claim. Furthermore, the Respondents were ordered to provide comprehensive details regarding the assets, including:
The names and addresses of all persons, including any financial institutions, holding the Bonds, Interest and any Derivative Assets. b.
The Respondents must provide this information via a sworn affidavit within seven working days of the service of the order. Regarding costs, the court reserved the general costs of the action but set a specific timetable for submissions regarding the costs of the jurisdictional issue at first instance:
Submissions as to whether the Applicant should have its costs of the jurisdictional issue at first instance must be filed and served by 4 pm on 17 October 2019 and any reply submissions must be filed and served by 4 pm on 24 October 2019. 1.
What are the practical implications for practitioners regarding asset disclosure and injunctions in the DIFC?
Practitioners must note that the DIFC Court will actively use its powers to compel disclosure of asset locations and values once jurisdiction is established. The inclusion of intended third and fourth defendants in an existing injunction demonstrates the court's willingness to adapt protective orders to the evolving nature of a substantive claim. Litigants should anticipate that failure to attend hearings after being served with notice will not prevent the court from issuing stringent orders, including mandatory disclosure requirements backed by the threat of contempt.
Where can I read the full judgment in Larmag Holding B.V. v First Abu Dhabi Bank [2019] DIFC CFI 030?
The full order can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0302019-larmag-holding-bv-vs-1-first-abu-dhabi-bank-pjsc-2-fab-securities-llc-3
Legislation referenced:
- Rules of the DIFC Courts (RDC), Rule 20.55