This order marks a critical procedural development in the ongoing enforcement of a freezing injunction, compelling the First and Second Defendants (FAB Respondents) and the Third Defendant to provide granular financial disclosures to ensure the efficacy of the Court’s previous asset-restraining measures.
What specific financial information did Larmag Holding B.V. seek to compel from First Abu Dhabi Bank and Mr Abdulla Saeed Bakheet Obaid Aljaberi in CFI 054/2019?
The lawsuit concerns a complex dispute involving the alleged dissipation of assets, specifically Reditum S.A. corporate bonds and their associated proceeds. Larmag Holding B.V. (the Applicant) initiated these proceedings to secure its position through a series of freezing injunctions, ultimately seeking to trace and preserve assets valued at over EUR 7 million. The current dispute centers on the Applicant’s need for transparency regarding the Third Defendant’s (Mr Aljaberi) financial dealings with the First and Second Defendants (FAB Respondents).
The Applicant sought to uncover discrepancies in account balances, the nature of negative balances, and the movement of funds that might have occurred in violation of the existing freezing orders. The Court’s intervention was required to force the Respondents to account for how the Third Defendant’s accounts were being managed, particularly regarding the release of funds for legal and living expenses. As noted in the order:
The information to be provided pursuant to paragraph 2 above must be provided within seven (7) working days of service of this Order by service on the Applicant’s legal representatives of an affidavit sworn by the Third Defendant. 5.
This disclosure is essential for the Applicant to verify whether the Third Defendant has complied with the Court’s prior restrictions on asset disposal.
Which judge presided over the disclosure application in Larmag Holding B.V. v First Abu Dhabi Bank on 27 May 2021?
The application was heard and determined by Justice Sir Richard Field, sitting in the DIFC Court of First Instance. Justice Sir Richard Field has been the presiding judge throughout the lifecycle of this case, having issued the original injunction on 19 July 2019, the continued injunction in October 2019, and the subsequent freezing orders and disclosure mandates that have defined the procedural trajectory of this litigation.
What were the respective positions of Larmag Holding B.V. and the FAB Respondents regarding the disclosure of the Third Defendant's account details?
Larmag Holding B.V. argued that the information previously provided by the FAB Respondents and the Third Defendant was insufficient to track the movement of assets and ensure compliance with the freezing injunction. The Applicant contended that the unexplained fluctuations in account balances and the potential unauthorized release of funds for legal and living expenses necessitated a more rigorous disclosure process. They sought specific confirmation regarding term deposits, negative balances, and the history of instructions given by the Third Defendant to the bank.
Conversely, the FAB Respondents, represented by Dr Nimer Basbous, had previously provided affidavits in February and March 2021. Their position, while acknowledging the duty to comply with court orders, required the Court to balance the Applicant’s need for information against the bank’s operational constraints. The Court addressed the financial burden of this compliance by ensuring the Applicant bore the costs:
The Applicant undertakes to pay the First and Second Defendants' reasonable costs of complying with this Order. 6.
The Third Defendant, Mr Aljaberi, had previously sought the release of funds for his legal costs and living expenses, a move the Applicant scrutinized closely to ensure no breach of the freezing order had occurred.
What was the precise jurisdictional and procedural question Justice Sir Richard Field had to resolve regarding the scope of the Further Disclosure Orders?
The Court had to determine whether the existing disclosure obligations were sufficiently comprehensive to capture the current financial status of the Third Defendant, or if a supplemental order was required to address specific gaps in the evidence. The doctrinal issue centered on the Court’s inherent power to grant further disclosure in aid of a freezing injunction to ensure that the "fruits" of the litigation—the assets subject to the injunction—remained intact. The Court had to decide if the FAB Respondents and the Third Defendant were required to provide a granular breakdown of account activity, including the justification for negative balances and the history of fund access, to satisfy the requirements of the ongoing freezing order.
How did Justice Sir Richard Field apply the principle of effective enforcement to compel the Third Defendant’s disclosure?
Justice Sir Richard Field utilized the Court’s broad case management powers to mandate that the Respondents provide a detailed accounting of the Third Defendant’s financial position. The reasoning focused on the necessity of transparency to prevent the frustration of the Court’s earlier orders. By requiring the FAB Respondents to explain the discrepancy between previous affidavits and current account statuses, the Court ensured that the freezing injunction remained a living, enforceable instrument rather than a static document.
The Court emphasized the timeline for compliance to ensure that the Applicant could act upon the information without undue delay. The order explicitly required:
The information to be provided pursuant to paragraph 1 above must be provided within seven (7) working days of service of this Order by service on the Applicant’s legal representatives of an affidavit sworn on behalf of both the FAB Respondents by an appropriate officer for each Respondent. 4.
This step-by-step verification process allows the Court to maintain oversight of the assets and ensures that the Respondents remain accountable for any movement of funds.
Which specific DIFC Rules of the Court (RDC) and legal principles underpin the Court’s authority to order further disclosure in this matter?
The Court’s authority to issue these orders is derived from the RDC, specifically those rules governing the Court’s power to grant interim remedies and disclosure in aid of such remedies. While the order does not cite specific RDC numbers in the text, the Court relies on its inherent jurisdiction to manage proceedings and ensure the efficacy of its freezing injunctions. The Court’s power to order the provision of information is a standard feature of the DIFC Court’s approach to freezing orders, ensuring that the "value" of the assets—as defined in the original 19 July 2019 injunction—is not diminished.
How does the Court’s approach to disclosure in Larmag Holding B.V. align with the broader DIFC jurisprudence on freezing injunctions?
The DIFC Courts have consistently held that a freezing injunction is not merely a passive restraint but an active obligation that requires the respondent to be transparent about their assets. By citing the previous affidavits of Dr Nimer Basbous and the Third Defendant, Justice Sir Richard Field demonstrated a commitment to "continuous disclosure." This approach aligns with the principle that the Court will not allow a respondent to hide behind vague or outdated financial statements when the Applicant has demonstrated a prima facie case for the dissipation of assets.
What was the final disposition of the application heard on 27 May 2021?
The Court granted the application for further disclosure. The FAB Respondents were ordered to provide written information and copy documents regarding the status of the Third Defendant’s term deposits, total available balances, and an explanation for the negative balances observed in the accounts. Furthermore, the Third Defendant was ordered to provide a sworn affidavit detailing his financial position. The Applicant was ordered to bear the reasonable costs of the FAB Respondents in complying with these disclosure requirements.
What are the practical implications for practitioners managing freezing injunctions in the DIFC following this order?
This case serves as a reminder that the DIFC Court will actively intervene to bridge gaps in disclosure when a freezing injunction is at risk of being rendered ineffective. Practitioners must anticipate that the Court will not accept "one-off" disclosure affidavits. Instead, if account balances fluctuate or if there are unexplained movements of funds, the Court will likely grant further, more specific disclosure orders. Litigants should be prepared to provide detailed, sworn evidence that explains not just the "what" of the account balance, but the "why" behind any changes, especially when legal or living expenses are involved.
Where can I read the full judgment in Larmag Holding B.V. v First Abu Dhabi Bank [2021] DIFC CFI 054?
The full order is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-054-2019-larmag-holding-bv-v-1-first-abu-dhabi-bank-pjsc-2-fab-securities-llc-3-mr-1
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No specific case law precedents were cited in the text of this Order. |
Legislation referenced:
- Rules of the DIFC Courts (RDC) (General powers of case management and interim remedies)