The Court of First Instance clarifies the limits of guarantor liability when primary commercial agreements are subsequently amended without explicit inclusion in the original guarantee instrument.
What specific financial claims did Siraj Power Machinery and Equipment Leasing bring against Al Tajir Glass Industries and Transnational Pallet Industries in [2024] DIFC CFI 070?
The dispute concerns a commercial solar power leasing arrangement. The Claimant, Siraj Power Machinery and Equipment Leasing LLC, sought to recover substantial sums from the First Defendant, Al Tajir Glass Industries LLC, arising from a 20-year Solar Photo Voltaic System Leasing & Operation Agreement and a subsequent Amendment Agreement. The Second Defendant, Transnational Pallet Industries, was joined as a party based on a guarantee dated 30 June 2021, which the Claimant argued covered the First Defendant’s liabilities.
The Claimant’s financial demands were multifaceted, encompassing unpaid rent, termination payments, and specific installments under the Amendment Agreement. As noted in the judgment:
The Claimant also claims an amount of AED 707,217.70 in respect of outstanding instalments under the Amendment Agreement together with interest at the rate of 6% totalling as at 20 October 2025 an amount of AED 74,437.05.
The total exposure for the First Defendant reached AED 9,826,528.83, while the Second Defendant’s liability was contested based on the scope of the underlying guarantee. The Claimant also sought recovery for rent arrears:
The Claimant claimed an amount of AED 985,874.22 in respect of rent due but unpaid under the Lease Agreement in respect of outstanding invoices for rent covering the period from 10 May 2023 to 30 June 2024.
[Source: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/siraj-power-machinery-and-equipment-leasing-llc-v-1-al-tajir-glass-industries-llc-2-transnational-pallet-industries-2024-difc-cf]
Which judge presided over the trial of Siraj Power Machinery and Equipment Leasing v Al Tajir Glass Industries in the DIFC Court of First Instance?
The matter was heard before H.E. Justice Thomas Bathurst in the DIFC Court of First Instance. The trial took place on 20 October 2025, following a Pre-Trial Review held on 24 September 2025. The final judgment was issued on 18 November 2025.
What legal arguments did the Defendants advance in their Defence regarding the proportionality of the Default Value claimed by Siraj Power Machinery and Equipment Leasing?
Although the Defendants failed to appear at the trial, the Court considered the arguments raised in their written Defence filed on 15 November 2024. The Defendants contended that the amounts sought by the Claimant were not only contractually unsupported in certain respects but also legally excessive. Specifically, they challenged the "Default Value" clause, arguing that the sums demanded were punitive rather than compensatory.
The Defendants’ position was that the Claimant’s calculation of damages failed to reflect the actual loss suffered. As the Court summarized:
Alternatively, it contended the amount claimed was manifestly disproportionate to the loss suffered, pointing out that the Claimant has claimed a total of AED 2,087,449.41 being the sum of the Consideration Invoices, the Default Value and VAT.
The Claimant, represented by Amr Bajamal, countered that these sums were liquidated damages agreed upon under the Lease Agreement and the Amendment Agreement, triggered by the First Defendant’s default.
What was the precise doctrinal issue regarding the scope of the guarantee provided by Transnational Pallet Industries?
The central legal question was whether a guarantee executed on 30 June 2021, which explicitly covered the obligations of the First Defendant under the "Lease Agreement," could be extended to cover liabilities arising from an "Amendment Agreement" executed nearly a year later, on 15 June 2022. The Court had to determine if the Amendment Agreement constituted a variation of the original contract that fell within the scope of the original guarantee or if it created distinct, separate obligations for which the Second Defendant had not provided security.
How did H.E. Justice Thomas Bathurst apply the principles of contract interpretation to the Second Defendant’s guarantee?
Justice Bathurst applied a strict constructionist approach to the guarantee, emphasizing that a guarantor’s liability is limited to the specific obligations it agreed to secure. The Court found that the Amendment Agreement introduced new payment obligations—specifically the "Default Value"—that were not contemplated at the time the guarantee was signed.
The reasoning centered on the fact that the guarantee was tied specifically to the Lease Agreement. Because the Amendment Agreement created new, separate financial burdens, the Court held that the Second Defendant could not be held liable for those specific additions. The Court’s holding was definitive:
In these circumstances, the Second Defendant is not liable for the amounts claimed under the Amendment Agreement although it remains liable for the amounts otherwise claimed by the Claimant.
This distinction ensured that the guarantor was not burdened with obligations that were outside the "four corners" of the original guarantee document.
Which specific DIFC statutes and provisions were applied by the Court in determining the liability of the parties?
The Court relied on the DIFC Contract Law 2004, specifically Article 49(2), which governs the interpretation of contracts and the determination of parties' intentions. Additionally, the Court applied the general principles of the Law of Damages and Remedies to assess whether the liquidated damages (the "Default Value") were enforceable. The Court also referenced the specific terms of the Lease Agreement, including Clause 13(b)(ii), which provided the mechanism for calculating termination payments upon a "Lessee Default event."
How did the Court utilize the cited authorities to reach its decision on the Claimant’s entitlement to costs?
The Court utilized the RDC (Rules of the DIFC Courts) regarding the assessment of costs. Justice Bathurst reviewed the Claimant’s Statement of Costs to ensure they met the threshold of reasonableness and proportionality. The Court noted:
The Claimant has filed a Statement of Costs claiming an amount of AED 348,210 including AED 300 for disbursements. The Statement of Costs sets out in summary form the work done, the time spent and the rates charged by the Claimant’s legal representatives. The costs incurred seem to me to be reasonable and proportionate having regard to the amount claimed and the issues involved.
By applying these standards, the Court affirmed that the Claimant was entitled to full recovery of its legal costs, notwithstanding the partial success regarding the Second Defendant’s liability.
What was the final disposition and monetary relief ordered by the Court in Siraj Power Machinery and Equipment Leasing v Al Tajir Glass Industries?
The Court entered judgment in favor of the Claimant against both Defendants, albeit with a distinction in the total amounts due. The First Defendant was held liable for the full amount of AED 9,826,528.83. The Second Defendant was held liable for AED 7,792,942.32, reflecting the exclusion of the Amendment Agreement liabilities.
The Court’s order regarding the Second Defendant’s liability was explicit:
Judgment is entered for the Claimant against the Second Defendant in the amount of AED 7,792,942.32 (together the “Judgment Sums”).
Furthermore, the Court ordered interest at a rate of 6% per annum and awarded costs in the amount of AED 348,210 to be paid by the Defendants.
What are the wider implications of this judgment for practitioners drafting guarantees in the DIFC?
This case serves as a critical reminder that guarantees are strictly construed. Practitioners must ensure that if a guarantee is intended to cover future amendments or variations to a primary contract, it must contain explicit "all-monies" or "continuing guarantee" language that expressly encompasses future amendments. Failure to include such language risks the guarantor being released from liability for any obligations introduced after the original guarantee was executed. Litigants must now anticipate that DIFC Courts will look closely at the nexus between the original guaranteed obligation and any subsequent amendments.
Where can I read the full judgment in Siraj Power Machinery And Equipment Leasing LLC v (1) Al Tajir Glass Industries LLC (2) Transnational Pallet Industries [2024] DIFC CFI 070?
The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/siraj-power-machinery-and-equipment-leasing-llc-v-1-al-tajir-glass-industries-llc-2-transnational-pallet-industries-2024-difc-cf
CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-070-2024_20251118.txt
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No external case law cited in the provided judgment text. |
Legislation referenced:
- DIFC Contract Law 2004, Article 49(2)
- Law of Damages and Remedies
- Lease Agreement (General Conditions, Provision 2, Provision 4(a))
- Lease Agreement (Exhibit 8, Clause 13(b)(ii))