Why did the Claimants in CFI 041/2021 seek to discontinue their claim against the Second Defendant, KPMG (a firm)?
The litigation, initiated by the liquidators of Abraaj Investment Management Limited and Abraaj Capital Limited, originally named three distinct KPMG entities as defendants. As the proceedings progressed, it became apparent that the Second Defendant, identified in the pleadings as "KPMG (a firm)," was a misnomer or a non-existent entity in the context of the services provided to the Abraaj group.
Following discovery and internal confirmation provided by the First and Third Defendants, it was established that no partnership registered in the UAE under the name "KPMG (a firm)" exists, nor has such an entity ever provided professional services to the Claimants. Consequently, the parties reached a consensus to remove this entity from the record to avoid unnecessary procedural complexity. The court formalized this agreement through a consent order, which mandates the filing of a Notice of Discontinuance. As noted in the order:
There shall be no order as to the costs of the discontinued claim against the Second Defendant under RDC 34.15.
This step ensures that the litigation remains focused on the viable corporate entities, specifically KPMG Lower Gulf Limited and KPMG LLP, which remain the primary targets of the Claimants' allegations regarding professional conduct during the Abraaj collapse.
Which judicial officer presided over the consent order in CFI 041/2021 on 22 November 2024?
The consent order was issued by Assistant Registrar Hayley Norton, sitting in the DIFC Court of First Instance. The order was formally issued at 11:00 am on 22 November 2024, following the Case Management Order dated 11 November 2024.
What were the positions of the Claimants and the KPMG Defendants regarding the existence of the Second Defendant?
The Claimants, represented by their liquidators, initially brought the claim against three entities, presumably based on the belief that "KPMG (a firm)" was a distinct legal entity responsible for the professional services rendered to the Abraaj group. However, the First and Third Defendants—KPMG Lower Gulf Limited and KPMG LLP—provided formal confirmation to the court that this entity was a phantom in the context of the dispute.
The Defendants argued that because no such partnership exists or has ever existed in the UAE, and because no services were provided by such an entity, the claim against the Second Defendant was fundamentally misconceived. The Claimants accepted this position, leading to the collaborative drafting of the consent order. This agreement allowed the parties to avoid a contested application for strike-out or summary judgment regarding the Second Defendant, instead opting for a streamlined discontinuance that permits the litigation to proceed against the remaining, properly identified parties.
What was the precise procedural question the DIFC Court had to resolve regarding the amendment of pleadings in CFI 041/2021?
The court was tasked with determining the procedural mechanism for removing a party from a complex, multi-defendant litigation while simultaneously ensuring that the remaining pleadings were updated to reflect the new scope of the case. The doctrinal issue centered on the transition from a three-defendant structure to a two-defendant structure without disrupting the ongoing case management schedule.
The court had to ensure that the removal of the Second Defendant did not create a "pleading vacuum." Therefore, the order required the Claimants to file Re-Amended Particulars of Claim that specifically excise the allegations against the Second Defendant, while also providing a structured timeline for the First and Third Defendants to file their Amended Defence and Counterclaim. This ensures that the issues in dispute remain clearly defined for the court and the parties as the case moves toward trial.
How did Assistant Registrar Hayley Norton apply the rules of discontinuance to the Abraaj litigation?
Assistant Registrar Hayley Norton utilized the court’s power to approve a consent order that integrates the discontinuance with a broader schedule of procedural amendments. By linking the filing of the Notice of Discontinuance to the subsequent filing of Re-Amended Particulars of Claim, the court ensured that the litigation remains orderly. The judge relied on the parties' agreement to manage the transition, effectively utilizing the court's case management powers to prevent the discontinuance from causing delays.
The reasoning focused on the efficiency of the proceedings. By requiring the Claimants to serve the Notice of Discontinuance upon the First and Third Defendants within five working days, the court ensured that all active parties were fully apprised of the change in the litigation's composition. The order explicitly addresses the costs associated with this procedural shift:
There shall be no order as to the costs of the discontinued claim against the Second Defendant under RDC 34.15.
This approach reflects a pragmatic application of the Rules of the DIFC Courts (RDC), prioritizing the resolution of the substantive dispute over the technicalities of a misnamed party.
Which specific RDC rules and procedural authorities were invoked in the consent order for CFI 041/2021?
The primary authority invoked in the order is RDC 34.15, which governs the costs consequences of discontinuance. Under this rule, the court has the discretion to determine the liability for costs when a claimant discontinues a claim. In this instance, the parties agreed that there would be no order as to costs regarding the Second Defendant, a position the court adopted to facilitate the settlement of this specific procedural issue.
Additionally, the order references the Case Management Order dated 11 November 2024, specifically paragraph 40, which governs the costs of amendments. The court mandated that the Claimants bear the reasonable costs of the First and Third Defendants arising from any amendments occasioned by the Re-Amended Particulars of Claim. This serves as a protective measure for the remaining defendants, ensuring they are not financially prejudiced by the Claimants' need to correct their initial pleadings.
How did the court handle the interplay between the discontinuance and the existing Case Management Order?
The court treated the discontinuance not as an isolated event, but as a modification to the existing procedural framework established on 11 November 2024. Paragraph 7 of the consent order explicitly states that "Paragraphs 3 to 5 of the Case Management Order shall be varied accordingly."
This indicates that the court viewed the removal of the Second Defendant as a necessary precursor to the substantive trial preparation. By forcing the parties to align their amended pleadings—Defence, Counterclaim, and Replies—within a strict 14-day cycle, the court ensured that the litigation remains on track. The court effectively used the consent order to "reset" the pleading phase for the remaining parties, ensuring that the issues to be tried are current and accurate.
What is the final disposition of the claim against the Second Defendant, and what are the cost implications for the parties?
The proceedings against the Second Defendant, KPMG (a firm), are deemed discontinued upon the filing and service of the Notice of Discontinuance. The order provides a clear timeline: the Notice must be filed within five working days of the order date, followed by the filing of Re-Amended Particulars of Claim within 14 days.
Regarding costs, the order is bifurcated. First, regarding the discontinued claim against the Second Defendant, the court ordered that there be no order as to costs under RDC 34.15. Second, regarding the costs of the amendments to the pleadings necessitated by this change, the Claimants are ordered to pay the reasonable costs of the First and Third Defendants. All other costs are reserved "in the case," meaning they will be determined at the final conclusion of the litigation.
How does this consent order impact future practice for litigants naming professional services firms in the DIFC?
This case serves as a cautionary tale for practitioners regarding the importance of verifying the exact legal identity of corporate defendants before filing a Claim Form. The fact that the Claimants named a non-existent entity—"KPMG (a firm)"—highlights the risks of relying on informal trade names rather than registered legal entities.
Practitioners must now anticipate that the DIFC Courts will expect rigorous due diligence regarding the corporate status of defendants. When a misnomer is identified, the court will likely favor a swift, consensual discontinuance to avoid wasting judicial resources on non-existent parties. Future litigants should ensure that their pleadings are precise, as the court’s willingness to grant costs for amendments occasioned by such errors serves as a deterrent against sloppy drafting.
Where can I read the full judgment in Abraaj Investment Management Limited v KPMG Lower Gulf [2024] DIFC CFI 041?
The full text of the Consent Order can be accessed via the official DIFC Courts website at the following link: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0412021-1-abraaj-investment-management-limited-official-liquidation-2-abraaj-capital-limited-official-liquidation-v-1-kpmg-l-11. The document is also available via the CDN at: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-041-2021_20241122.txt.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No external case law was cited in this consent order. |
Legislation referenced:
- Rules of the DIFC Courts (RDC) 34.15