This amended order provides critical judicial clarification on the governance of DIFC foundations, specifically addressing the definition of a 'Founder' under the DIFC Foundations Law and the scope of Council authority over foundation assets.
What was the specific nature of the dispute between Bhanu Choudhrie and the Respondents regarding the Stellar International Art Foundation?
The dispute concerns the governance and management of the Stellar International Art Foundation, a DIFC-registered entity. The Claimant, Bhanu Choudhrie, initiated proceedings in August 2025, eventually filing a Part 8 Claim in October 2025, to challenge the administrative control and the legal status of the Foundation’s stakeholders. The conflict centers on the interplay between the Foundation’s constitutional documents, the rights of the Founder, and the authority of the Council to manage assets, particularly in light of concurrent matrimonial proceedings in the UK involving the Claimant.
As noted in the court records:
The Defendants filed a Chronology to which reference can usefully be made to see the course of these proceedings commenced by the Claimant on 29 August 2025, with a Part 8 Claim Form filed on 30 October 2025.
The stakes involve the operational control of the Foundation, including access to the DIFC portal, management of email accounts, and the legal determination of who holds the status of 'Founder' under the DIFC Foundations Law. The litigation has seen multiple procedural hurdles, including a failed attempt at default judgment by the Claimant and subsequent applications for extensions of time and re-listing.
Before which judge and in which division was the CFI 098/2025 hearing held?
The matter was heard before H.E. Justice Sir Jeremy Cooke in the DIFC Court of First Instance. The proceedings involved a series of hearings, including the initial Part 8 Claim hearing on 16 January 2026, a subsequent hearing on 16 March 2026 (the "Second Part 8 Hearing"), and the issuance of the Amended Order with Reasons on 30 March 2026.
What were the respective legal positions of Bhanu Choudhrie and the Defendants regarding the governance of the Foundation?
The Claimant sought to assert certain rights over the Foundation’s management and assets, which the Defendants contested. The Defendants argued for the strict application of the Foundation’s Charter of Continuance and the DIFC Foundations Law, maintaining that the Council holds exclusive authority over the Foundation’s assets and that the Founder does not possess automatic rights as a beneficiary or qualified recipient.
The Defendants also highlighted the Claimant's failure to appear at the January 2026 hearing and his subsequent attempts to vary previous court orders. The court noted the complexity introduced by the Claimant’s involvement in UK matrimonial proceedings, where legal representation had previously overlapped between the Foundation and the Claimant personally. As observed by the court:
What the evidence shows is that Vardags acted at one time for the Foundation itself and then acted for the Claimant in the context of the matrimonial proceedings in England.
What was the precise legal question the Court had to answer regarding the definition of a 'Founder' under Article 17(1) of the DIFC Foundations Law?
The Court was tasked with determining the identity of the 'Founder' for the purposes of the DIFC Foundations Law, specifically whether the signatory of the Foundation’s charter maintains that status regardless of any underlying nominee arrangements. The doctrinal issue was whether the legal personality of the Founder is defined by the formal execution of the foundation documents or by the beneficial ownership of the assets contributed to the foundation. This required the Court to interpret Article 17(1) of the DIFC Foundations Law (Law No. 3 of 2018) to ensure that the Foundation’s registry accurately reflected the legal reality of its governance structure.
How did Justice Sir Jeremy Cooke apply the test for determining the 'Founder' of a DIFC foundation?
Justice Sir Jeremy Cooke applied a formalist approach to the interpretation of the Foundation's constitutional documents. The Court reasoned that the identity of the Founder must be ascertainable from the documents filed with the Registrar, prioritizing the legal act of signing the charter over any private nominee agreements that might exist between parties. This ensures certainty for third parties and the DIFC Registrar.
The Court’s reasoning is encapsulated in the following holding:
It is therefore the signatories to the relevant documents who constitute the relevant Founders for the purposes both of Panamanian and DIFC law, regardless of any nominee relationship between the sign
By establishing this, the Court effectively decoupled the role of the Founder from the status of a Beneficiary or Qualified Recipient, clarifying that the Founder does not automatically hold rights to the Foundation’s assets under Article 29 of the DIFC Foundations Law.
Which specific sections of the DIFC Foundations Law (Law No. 3 of 2018) were applied in this judgment?
The Court relied heavily on the DIFC Foundations Law (Law No. 3 of 2018). Specifically, Article 17(1) was central to the declaration regarding the identity of the Founder. The Court also interpreted Article 29, which defines 'Qualified Recipients', to clarify that the Founder does not inherently qualify as such. Furthermore, the Court exercised its powers under the broader framework of the Law to mandate the re-organization of 'super user' access on the DIFC Portal, ensuring that the Council maintains collective oversight of the Foundation’s filings and administrative records.
How did the Court address the procedural history and the Claimant's non-compliance in CFI 098/2025?
The Court’s procedural approach was marked by a firm insistence on compliance. Following the Claimant’s failure to appear at the 16 January 2026 hearing and the subsequent refusal of his extension application on 2 March 2026 (as detailed in BHANU CHOUDHRIE v DHARIYA CHOUDHRIE [2026] DIFC CFI 098 — Refusal of extension of time for non-compliance), the Court granted the Defendants' Re-Listing Application. The Court underscored the necessity of finality, ordering the Claimant to bear the costs of the Re-Listing Application.
As stated in the order:
The Claimant shall pay the Defendants’ costs of the Re-Listing Application, to be assessed by the Registrar if not agreed.
What was the final disposition and the specific relief granted by the Court?
The Court granted final declarations and interim relief. The relief included:
1. A directive to the DIFC Registrar to grant all parties 'super user' access to the Foundation’s DIFC Portal account.
2. An order for the records to be amended to reflect Foundation Management Co Inc. as the sole Founder.
3. A restraint on any party making filings without the consent of all Council members.
4. A mandate for the Claimant to disclose details of UK proceedings relating to the Foundation’s property.
5. An order for the joint instruction of an IT expert to provide access to the foundation@stellarart.ch email account.
6. Declarations that the Founder is not automatically a Beneficiary or Qualified Recipient and that the Founder holds no administrative powers over the Foundation.
How does this ruling change the practice for practitioners managing DIFC Foundations?
This case serves as a warning to practitioners regarding the importance of formal documentation in foundation governance. By confirming that the signatory of the charter is the Founder regardless of nominee arrangements, the Court has prioritized the integrity of the DIFC registry over private side-agreements. Practitioners must now ensure that the constitutional documents of a foundation accurately reflect the intended governance structure at the time of registration, as the Court will look to the face of the documents to determine legal status. Furthermore, the ruling reinforces the Council’s exclusive authority, limiting the Founder’s ability to interfere in the Foundation’s day-to-day administration or asset management.
Where can I read the full judgment in Bhanu Choudhrie v Dhairya Choudhrie [2026] DIFC CFI 098?
The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0982025-bhanu-choudhrie-v-1-dhairya-choudhrie-2-anita-choudhrie or via the CDN: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/cfi-0982025-bhanu-choudhrie-v-1-dhairya-choudhrie-2-anita-choudhrie.txt
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| BHANU CHOUDHRIE v DHARIYA CHOUDHRIE | [2026] DIFC CFI 098 | Procedural history/Refusal of extension |
| BHANU CHOUDHRIE v DHARIYA CHOUDHRIE | [2026] DIFC CFI 098 | Governance/Founder status |
Legislation referenced:
- DIFC Foundations Law (Law No. 3 of 2018) Article 17(1)
- DIFC Foundations Law (Law No. 3 of 2018) Article 19(2)(e)
- DIFC Foundations Law (Law No. 3 of 2018) Article 23
- DIFC Foundations Law (Law No. 3 of 2018) Article 29