LARMAG HOLDING BV v FIRST ABU DHABI BANK [2019] DIFC CFI 054 — Limited legal representation for interlocutory applications (28 October 2021)

What was the nature of the fraudulent misappropriation claim brought by Larmag Holding BV against Abdulla Saeed Bakheet Obaid Aljaberi in CFI 054/2019?

The dispute centers on the fraudulent misappropriation of 70,000 Reditum bonds, which had a nominal value of EUR 70 million. The Claimant, Larmag Holding BV, alleged that the Third Defendant (D3), Abdulla Saeed Bakheet Obaid Aljaberi, acted either alone or in concert with others to misappropriate these assets. The Court found that D3 had engaged in a sophisticated scheme of deceit to induce the Claimant to transfer these bonds into an account D3 held with the Second Defendant, FAB Securities LLC.

The gravity of the fraud was underscored by the Court’s findings regarding the forgery of banking documents. As noted in the judgment:

The Court further held, inter alia, that in the course of achieving this transfer, D3 forged, or authorised the forging of, documents purportedly issued by a reputable bank stating that a pre-payment for the Reditum bonds in the sum of Euros 20 million had been sent to the Claimant’s bank account in Holland.

Following the trial, the Court ruled in favor of the Claimant, awarding substantial damages. The financial stakes were significant, reflecting the scale of the misappropriated assets. As stated in the judgment:

The Court awarded the Claimant, inter alia, damages in the sum of EUR 57,711,500, in respect of the deceit practised by D3 that induced the Claimant to transfer the bonds into D3’s account with the Second Defendant.

Which judge presided over the de novo review of the Registrar’s decision in the Larmag Holding BV v First Abu Dhabi Bank proceedings?

Justice Sir Richard Field presided over this matter in the DIFC Court of First Instance. The judgment, delivered on 28 October 2021, addressed the Claimant’s application for a de novo review of a decision previously made by the Registrar on 23 September 2021. The proceedings were conducted within the Court of First Instance, which had been managing the complex enforcement and appeal-related applications following the substantive judgment against D3.

How did Clyde & Co and BSA Ahmad Bin Hezeem & Associates LLP differ in their arguments regarding D3’s legal representation status?

The dispute over representation arose after D3’s original solicitors came off the record on 17 June 2021. When BSA Ahmad Bin Hezeem & Associates LLP (BSA) attempted to file an application for permission to appeal on behalf of D3, the Claimant’s solicitors, Clyde & Co, challenged their standing. Clyde & Co argued that BSA were not properly on the record because they had failed to serve a formal Notice of Change of Legal Representative as required by the Rules of the DIFC Courts (RDC).

The procedural friction was highlighted by the Court:

D3’s former solicitors had come off the record on 17 June 2021 and in an email addressed to the Registry and “cc’d” to BSA dated 6 September 2021, the Claimant’s solicitors, Clyde & Co (“Clydes”), stated that BSA were not on the record because they had not served a notice of Change of Legal Representative.

Mr. Bowden of BSA contended that his firm’s instructions were limited specifically to the filing of the Notice of Appeal. The Claimant argued that this "limited" instruction was insufficient to bypass the procedural requirements for being on the record, effectively seeking to treat D3 as a litigant in person for the purposes of the "Unless Order Application" until full compliance was achieved.

What was the precise doctrinal issue the Court had to resolve regarding the Registrar’s classification of D3 as a litigant in person?

The Court was tasked with determining whether a defendant, who has been found liable for fraud and is subject to multiple outstanding court orders, can be permitted to instruct legal counsel for a specific, high-stakes interlocutory application—the "Unless Order Application"—without that counsel being required to act for the defendant in the entire CFI proceedings. The doctrinal tension lay between the strict application of RDC procedural requirements for legal representation and the Court’s inherent discretion to ensure access to justice, particularly when a party faces the severe sanction of being debarred from further participation in the proceedings.

How did Justice Sir Richard Field apply the principle of access to justice to the Unless Order Application?

Justice Sir Richard Field exercised the Court’s discretion to allow D3 to be represented for the limited purpose of the Unless Order Application. The Judge reasoned that while the Registrar’s concerns regarding D3’s procedural non-compliance were valid, the severity of the potential outcome—being struck out and debarred from the proceedings—necessitated legal assistance.

The Court’s reasoning emphasized the importance of ensuring that the defendant could properly defend against the Unless Order Application, which threatened to terminate his ability to appeal the substantive judgment. As stated in the judgment:

the Court should give D3 the opportunity of being legally represented at this stage in respect solely of the Unless Order Application without the need for the appointed legal practitioner to be instru

This approach allowed the Court to maintain procedural order while preventing a situation where a party, despite their history of non-compliance, was left without professional assistance in a critical phase of the litigation.

Which specific DIFC Court Rules and statutes were applied by Justice Sir Richard Field in determining the representation issue?

The Court primarily navigated the Rules of the DIFC Courts (RDC) regarding the appointment and change of legal representatives. Specifically, the Court considered the requirements for serving a Notice of Change of Legal Representative and the Registrar’s powers to issue directions for the conduct of proceedings. The Court also referenced the history of orders made against D3, including freezing orders and disclosure obligations, which were grounded in the Court’s general jurisdiction under the Judicial Authority Law. The judgment also relied on the Court’s inherent jurisdiction to manage its own process and ensure that interlocutory applications are determined fairly.

How did the Court utilize English authorities such as Hadkinson v Hadkinson and X Ltd v Morgan-Grampian in this judgment?

The Court utilized these English authorities to frame the balance between a party’s right to be heard and the consequences of their failure to comply with court orders. Hadkinson v Hadkinson [1952] P 285 was cited to address the principle that a party in contempt or in breach of court orders may be restricted in their ability to take further steps in proceedings. X Ltd v Morgan-Grampian (Publishers) Ltd [1991] 1 AC 1 was used to support the Court’s broad discretion in managing procedural fairness. These cases provided the doctrinal foundation for Justice Sir Richard Field to hold that while D3’s past conduct was egregious, the Court retained the flexibility to permit limited representation to ensure the Unless Order Application was determined on its merits rather than by default.

What was the final disposition of the application for a de novo review, and what orders were made regarding costs?

Justice Sir Richard Field allowed the application in part. The Court held that D3 could be legally represented by BSA solely for the purposes of the Unless Order Application, without the firm being required to come on the record for the entirety of the CFI proceedings. The Court maintained the directions previously issued by the Registry regarding the filing of evidence for the Unless Order Application. Regarding costs, the Court ordered that the costs of the Unless Order Application would be determined following the resolution of that application, effectively reserving the issue of costs until the substantive merits of the Unless Order Application were decided.

What are the practical implications for DIFC practitioners regarding limited legal representation in interlocutory applications?

This judgment serves as a reminder that the DIFC Courts prioritize the fair determination of interlocutory applications over rigid adherence to procedural formalities, particularly when a party’s right to participate in proceedings is at stake. Practitioners should anticipate that the Court may permit "limited scope" representation in complex cases where a party is facing severe sanctions, such as an "Unless Order." However, this does not absolve practitioners of the duty to comply with RDC requirements for coming on the record; rather, it highlights that the Court will exercise its discretion to prevent a "litigant in person" status from becoming a barrier to the effective administration of justice during critical procedural junctures.

Where can I read the full judgment in Larmag Holding Bv v First Abu Dhabi Bank [2019] DIFC CFI 054?

The full judgment can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/larmag-holding-bv-v-1-first-abu-dhabi-bank-pjsc-2-fab-securities-llc-3-abdulla-saeed-bakheet-obaid-aljaberi-4-ali-mohamed-5-elit

The CDN link for the judgment text is: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-054-2019_20211028.txt

Cases referred to in this judgment:

Legislation referenced:

• Rules of the DIFC Courts (RDC)
• Judicial Authority Law (Dubai Law No. 12 of 2004)