SANJEEV SAWHNEY v UBS AG [2026] DIFC CFI 062 — Regulatory disclosure and client classification disputes (24 February 2026)

The DIFC Court of First Instance affirms that evidence of industry-wide classification practices is admissible in assessing the reasonableness of an Authorised Firm’s conduct under the Regulatory Law and COB Rules.

What is the nature of the dispute between Sanjeev and Alka Sawhney and UBS AG regarding the classification of their investment account?

The dispute arises from the Claimants’ contention that they were improperly classified as "Professional Clients" when opening an investment account with the Defendant (formerly Credit Suisse) in January 2012. The Claimants allege that this misclassification allowed the bank to market high-risk financial products to them, ultimately leading to the liquidation of their entire portfolio in March 2020 without their consultation. The Claimants seek damages totaling USD 11.37 million, comprising USD 8.37 million for investment losses and lost profits, USD 2 million for alleged wrongful profits, and USD 1 million for reputational and emotional harm.

The procedural friction centers on the Claimants' attempt to strike out the Defendant’s defense regarding these classifications. The Claimants argue that the Defendant’s reliance on how other institutions classified them is irrelevant to the statutory obligations imposed by the DIFC Regulatory Law. As noted in the procedural history:

(d) On 7 February 2025, the Claimants filed Application No. CFI-062-2021/10 seeking an order to strike out parts of the Defendant’s Re-Amended Defence, and/or for immediate judgment in respect of the Defendant’s Re-Amended Defence (the “Strike Out Application”).

The Claimants maintain that the bank’s duty to classify clients is a self-standing obligation that cannot be mitigated by industry custom.

Which judge presided over the application for permission to appeal in Sanjeev Sawhney v UBS AG and when was the order issued?

The application was heard and determined by H.E. Deputy Chief Justice Ali Al Madhani in the DIFC Court of First Instance. The order, which rejected the Claimants' Appeal Notice and their Stay and Extension Application, was issued on 24 February 2026.

What were the specific legal arguments advanced by the Claimants and the Defendant regarding the disclosure of classification practices?

The Claimants argued that the court should strike out the Defendant’s plea concerning "industry standards" because the DIFC Regulatory Law and the Conduct of Business (COB) Rules impose an independent, non-delegable duty on an Authorised Firm to assess a client’s status. They contended that evidence of how other banks classified them was a distraction from the statutory breach.

Conversely, the Defendant argued that the Claimants’ attempt to stay the proceedings and avoid disclosure was a tactical maneuver to avoid compliance with earlier court orders. The Defendant maintained that while the COB Rules require an independent assessment, evidence of how comparable institutions interpreted the same regulatory requirements is highly relevant to demonstrating that the Defendant acted reasonably and in good faith. As the court noted:

In reply, the Defendant highlights the deadline for compliance with the RFI and DDPO has now passed, and so the Claimants are already effectively in breach; therefore, the Extension Application is a veiled attempt to retrospectively circumvent that breach.

What was the precise doctrinal issue the court had to resolve regarding the admissibility of industry-standard evidence under the DIFC Regulatory Law?

The court had to determine whether evidence of how other similarly regulated institutions classified the Claimants was relevant to the objective assessment of whether the Defendant acted in accordance with the DIFC Regulatory Law. The core issue was whether the "reasonable belief" of an Authorised Firm regarding a client's classification could be informed by the practices of the wider market, or whether such evidence constitutes an impermissible attempt to import an "extra-statutory" standard into the DIFC regulatory framework.

How did H.E. Deputy Chief Justice Ali Al Madhani apply the test for permission to appeal in the context of the November Order?

The Court applied the standard set out in RDC 44.19, which requires an applicant to demonstrate that an appeal has a "real prospect of success" or that there is a "compelling reason" for the appeal to be heard. The Judge concluded that the Claimants failed to meet this threshold, finding that the November Order was sound in its assessment of proportionality and relevance.

The Judge clarified that the reference to "industry standard" was not an attempt to create a new legal rule, but rather a tool to evaluate the reasonableness of the Defendant's conduct. The reasoning is summarized as follows:

It recognises only that the Defendant’s case that comparable institutions applying the same rules reached the same classification is arguable and that disclosure directed to testing that case is proportionate at this stage.

The Court further emphasized that the Claimants’ case remained focused on the statutory breach, and the disclosure of comparative data did not alter the fundamental nature of that claim.

Which specific DIFC statutes and RDC rules were central to the court’s decision to reject the Claimants’ applications?

The court’s decision was grounded in the DIFC Regulatory Law, specifically regarding the obligations of Authorised Firms to categorize clients correctly. Procedurally, the court relied heavily on RDC Part 44, which governs the requirements for seeking permission to appeal. Additionally, the court referenced RDC 20.22 concerning the filing of amended claim forms following the substitution of the Defendant (UBS AG for Credit Suisse AG). The court also applied the principles of case management, ensuring that disclosure requests (RFI and DDPO) were proportionate and relevant to the issues in dispute.

How did the court utilize English and DIFC precedents in its assessment of the disclosure and strike-out applications?

The court utilized Hexagon Holdings (Cayman) Limited v DIFC Authority [2019] to reiterate the "real prospect of success" test for appeals. It also referenced American International Group UK Limited v Qatar Insurance Co [2022] regarding the threshold for "compelling reasons" to grant an appeal. Regarding the substantive issue of client classification, the court looked to the logic in Marfani and Co v Midland Bank [1968] and St Dominic's Ltd v Royal Bank of Scotland [2015] to support the view that evidence of standard banking practice is admissible to determine whether a defendant acted reasonably. The court clarified the limited purpose of this evidence:

Paragraph 53 explains why, for the limited purpose of Article 65(5), evidence of how similarly regulated institutions approached classification may inform whether the Defendant reasonably believed it was acting lawfully.

What was the final disposition of the court regarding the Claimants' Appeal Notice and the Stay and Extension Application?

The Court rejected both the Appeal Notice and the Stay and Extension Application. Consequently, the Claimants were ordered to comply with the previous disclosure orders. Regarding the financial consequences of these failed applications, the court ordered:

Costs will be awarded to the Defendant on the standard basis, to be assessed by the Court by way of submissions if not agreed.

How does this ruling influence the practice of regulatory litigation in the DIFC regarding client classification disputes?

This decision clarifies that while an Authorised Firm’s duty to classify clients under the COB Rules is independent, it is not performed in a vacuum. Practitioners must anticipate that evidence of how other firms in the market applied the same rules will be deemed relevant and admissible. Litigants seeking to strike out such evidence on the basis that it introduces an "extra-statutory" standard will likely face difficulty, as the court views such evidence as a legitimate means of testing the reasonableness of a firm's regulatory compliance.

Where can I read the full judgment in Sanjeev Sawhney v UBS AG [2026] DIFC CFI 062?

The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0622021-1-sanjeev-sawhney-2-alka-sawhney-v-ubs-ag. The text is also available via the CDN: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-062-2021_20260224.txt

Cases referred to in this judgment:

Legislation referenced:

• DIFC Regulatory Law
• DIFC COB Rules
• RDC Part 44
• RDC 20.22