What was the specific dispute between Skatteforvaltningen and Elysium Global regarding the release of frozen assets?
The lawsuit concerns a massive tax fraud claim brought by the Danish Customs and Tax Administration (SKAT) against Elysium Global (Dubai) Limited and Elysium Properties Limited, involving an alleged loss exceeding $2 billion. The current dispute centered on an application by the Defendants to lift a Freezing Order—and a corresponding onshore Attachment Order—over eight bank accounts held at Emirates NBD. The Defendants sought to access these funds to pay outstanding business expenses, specifically a debt owed to Hertz and salary arrears for Mr. Sanjay Shah.
The Claimant vehemently opposed the release, citing deep-seated suspicion regarding the legitimacy of the alleged debts and the lack of transparent evidence provided by the Defendants. The court noted the tension between the Defendants' need to operate and the Claimant’s fear of asset dissipation:
The Claimant, whilst recognising the “ordinary business expenditure” exemption, has objected to the release of the relevant bank accounts from the Order, with its consequent effect on the onshore Attachment Order, because of its suspicions about the rationale put forward by the Defendants. The Claimant is suspicious by reason of the very nature of the alleged wrongs perpetrated by the Defendants and Mr Shah as well as an incident which occurred at the end of October 2018.
This application is part of a long-running procedural battle in SKAT v Elysium Global [2018] DIFC CFI 048 — Adjournment of stay application due to evidentiary deficiencies (27 September 2018).
Which judge presided over the application to lift the freezing order in CFI 048/2018?
Justice Sir Jeremy Cooke presided over this application in the DIFC Court of First Instance. The order was issued on 26 January 2021, following a series of procedural skirmishes regarding the disclosure of assets and the validity of the Defendants' claims for business expenses.
What were the specific arguments advanced by the Claimant and the Defendants regarding the AED 325,200 salary claim?
The Defendants argued that the funds were necessary to satisfy legitimate business obligations, specifically asserting that Mr. Sanjay Shah was entitled to a monthly salary of AED 50,000. They sought to utilize the "ordinary and proper course of business" exemption typically found in standard freezing orders.
The Claimant, however, challenged the veracity of these claims, pointing to the lack of supporting documentation and the suspicious nature of the alleged creditors. The Claimant highlighted that the initial request for the release of funds was based on figures that appeared unsubstantiated:
When the Defendants’ lawyers first sought the consent of the Claimant to the release of the onshore attachment order on 12 August 2020 it was said that Mr Shah was owed AED 325,200, including salary for August 2020, on the basis of his entitlement to AED 50,000 per month.
The Claimant argued that the court should not facilitate the release of assets when the underlying evidence of the debt was questionable, especially given the history of the case and the alleged fraudulent nature of the Defendants' activities.
What was the precise legal question the court had to answer regarding the interplay between the DIFC Freezing Order and the onshore Dubai Attachment Order?
The court had to determine whether it could, and should, permit the release of funds from accounts that were not only subject to a DIFC Freezing Order but also to an onshore Dubai Attachment Order. While the DIFC Freezing Order contained a standard exemption for "ordinary and proper course of business" expenses, the onshore Attachment Order—which recognized the DIFC order—was absolute and lacked such an exemption. The doctrinal issue was whether the DIFC Court could order the parties to jointly apply to the onshore courts to discharge the attachment to allow for the payment of expenses, despite the Claimant's strong objections regarding the Defendants' credibility.
How did Justice Sir Jeremy Cooke apply the "ordinary and proper course of business" test to the Defendants' request?
Justice Sir Jeremy Cooke acknowledged the "suspicious" nature of the Defendants' evidence but ultimately prioritized the principle that a freezing order should not paralyze a company’s ability to meet genuine, ordinary business debts. He adopted a pragmatic approach, requiring the funds to be paid into the Defendants' solicitors' client account to ensure oversight.
However suspicious the Claimant may be and the doubts which I entertain, on the evidence I consider that the Defendants should be allowed access to the relevant accounts in order to make the business payments referred to.
The judge effectively balanced the Claimant's concerns with the necessity of allowing the Defendants to settle specific, identified liabilities (Hertz debt and salary), provided that the disbursement was strictly controlled by legal counsel.
Which specific statutes and RDC rules governed the court's authority to manage these frozen assets?
The court relied on the inherent jurisdiction of the DIFC Court to manage its own orders, specifically the provisions within the Freezing Order itself, which mirror standard RDC requirements regarding the disclosure and management of assets. The court referenced paragraph 10(2) of the original Freezing Order, which allows for the disposal of assets in the "ordinary and proper course of business."
The court also addressed the procedural requirements for notification:
The sums therefore are subject to paragraph 10(2) of the Order which provides that there is no prohibition on the two defendants dealing with or disposing of any of their assets in the ordinary and proper course of business. The paragraph nonetheless provides that “before doing so, the Respondents must tell the [Claimant’s] legal representatives where the money is to come from”, without any obligation to inform the Claimant of the nature of the expense or the recipient.
How did the court address the evidentiary deficiencies raised by the Claimant?
Justice Sir Jeremy Cooke explicitly noted the Claimant’s skepticism regarding the evidence provided by the Defendants. The court acknowledged that the Claimant remained unconvinced by the documentation provided for the alleged creditors:
The Claimant remains suspicious as to the receipt by any of the supposed creditors of cash payments of this kind and the lack of evidence produced in support.
Despite these doubts, the court determined that the specific amounts requested were relatively insignificant compared to the $2 billion claim, and that the risk of dissipation was sufficiently mitigated by the requirement that the funds be paid into the solicitors' client account rather than directly to the Defendants or Mr. Shah.
What was the final disposition of the application and the specific orders regarding the Emirates NBD accounts?
The court granted the application in part, ordering the lifting of the Freezing Order and the joint application to the onshore Dubai Courts to discharge the Attachment Order for the specific accounts listed. The court mandated the following:
1. The accounts at Emirates NBD (ending in 701, 702, 703, and 704 for both Defendants) were to be closed.
2. All funds were to be transferred to the client account of Meaby & Co Solicitors LLP.
3. The solicitors were ordered to pay the Hertz debt (AED 154,649.02) first, followed by the remaining balance to Mr. Sanjay Shah for salary.
4. The Defendants were required to file a witness statement confirming the closure of the accounts and the disbursement of funds.
Regarding costs, the court decided:
In all the circumstances, I consider that the costs involved in this Application should be reserved.
The court further noted that because the substantive issues were likely to be determined in English litigation, reserving costs was the most appropriate course of action.
What are the wider implications for DIFC practitioners regarding the use of frozen assets for business expenses?
This decision reinforces the DIFC Court’s pragmatic approach to freezing orders: they are intended to prevent asset dissipation, not to force a company into insolvency by preventing the payment of ordinary business expenses. However, the case serves as a warning that where the court harbors "doubts" about the reliability of the Defendants' evidence, it will impose strict procedural safeguards—such as requiring disbursements to be made through solicitors' client accounts—to ensure transparency and prevent abuse. Practitioners must be prepared to provide clear, albeit potentially contested, evidence of the "ordinary" nature of the expenses and should expect the court to impose rigorous oversight mechanisms when the Claimant raises legitimate suspicions of fraud.
Where can I read the full judgment in Skatteforvaltningen v Elysium Global [2021] DIFC CFI 048?
The full order with reasons can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-048-2018-skatteforvaltningen-danish-customs-and-tax-administration-v-1-elysium-global-dubai-limited-2-elysium-properties-lim-1 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-048-2018_20210126.txt.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No specific case law precedents were cited in this Order. |
Legislation referenced:
- DIFC Court Rules (RDC)
- Judicial Authority Law (regarding recognition of orders)