3VB successful in landmark DIFC Norwich Pharmacal decision
In an important decision for civil fraud litigators, the DIFC Court in SKAT v FFA Private Bank (Dubai) Limited [2024] DIFC CFI 004 (25 July 2024) confirmed that the DIFC Courts have an unfettered power to grant Norwich Pharmacal and Bankers Trust relief in support of foreign proceedings.
Background
The applicant, SKAT, is the Danish tax authority. The proceedings arose out of what SKAT says was a sophisticated fraud perpetrated upon it by several individuals and entities whereby SKAT was induced to pay out billions as a result of false misrepresentations made in relation to entitlements to withholding tax refunds. SKAT’s claim in England is currently the subject of a year-long trial, described as the biggest trial ever to be heard in the Commercial Court.
SKAT obtained evidence that some of the proceeds of the alleged fraud passed through the respondent bank, which was based in the DIFC. It applied to the DIFC Court for Norwich Pharmacal and Bankers Trust relief to identify the holders of the account and what had happened to the funds. SKAT also sought permission to use the documents obtained in support of other proceedings against defendants in Dubai and England.
The issue
There was no doubt that the DIFC Court had jurisdiction over the bank under Article 5 of the Judicial Authority Law, as the bank was a DIFC entity. There was also no doubt that the DIFC Court had the power to grant Norwich Pharmacal and Bankers Trust orders.
However, the English courts had held in R (Omar) v Secretary of State for Foreign and Commonwealth Affairs [2014] QB 112 and in Ramilos Trading v Buyanovsky [2016] 2 CLC 896 that such relief is not available at common law where the relief is sought in support of foreign proceedings. Instead, in England, evidence can only be obtained in support of foreign proceedings through the cumbersome statutory regime under the Evidence (Proceedings in Other Jurisdictions) Act 1975.
That is controversial. In England, the point as regards civil proceedings was obiter in Omar and Ramilos is a first instance authority whose correctness has never been considered by an appellate court. Other common law jurisdictions with statutory regimes similar to the 1975 Act, in particular the Cayman Islands and the BVI, have declined to follow Ramilos or interpreted that decision narrowly. Nevertheless, the generally accepted view in England remains that the 1975 Act excludes the common law remedy.
Before the DIFC Court, the respondent bank contended the same result should follow in the DIFC. It pointed to the fact that Section II of RDC Part 30 contained rules in almost identical terms to the 1975 Act. It also pointed, as regards obtaining evidence in support of English proceedings, to the Treaty between the UK and the UAE on Judicial Assistance in Civil and Commercial Matters (2006) which, the bank argued, brought in a scheme which had a similar effect to the 1975 Act.
The result
Justice Sir Jeremy Cooke rejected the bank’s submission, holding that the DIFC Court had the power to grant Norwich Pharmacal or Bankers Trust relief, even where the object was to obtain evidence in support of foreign proceedings.
Unlike in England, the powers of the DIFC Court are exclusively statutory. The powers contained in the DIFC Court Law and the DIFC Law of Damages and Remedies were untrammelled by any other statutory restriction and the court’s discretion was not fettered apart from the need for any discretion to be exercised judicially.
The DIFC Court takes into account the principles upon which Norwich Pharmacal/Bankers Trust orders are made in England and other common law courts and, as prior DIFC authorities show, will apply the relevant criteria from such cases, but there is no restriction in the law of the DIFC requiring that orders should not be made simply because of the provisions in the RDC. RDC Part 30 was permissive. It also had (by RDC 1.7) to be read in accordance with the overriding objective of dealing with cases justly. To that end, he held:
“Where international fraud is concerned, it behoves this Court to assist the courts of friendly foreign nations in doing justice and, for that purpose, on the application of an alleged victim of such wrongdoing, to enable the foreign Court to have before it the maximum information available for it to make its own determination. There are no conflicting policy requirements of the kind which operate in England by reference to the statutory framework for providing evidence to be used in foreign proceedings.”
As to the Treaty, Justice Cooke observed that UAE treaties are not directly incorporated into DIFC law and that there was nothing in the Treaty which prevented or militated against the granting of Norwich Pharmacal relief. Like the RDC, the Treaty was permissive and not mandatory in the sense of providing an exclusive mechanism.
Justice Cooke ultimately went on to grant Norwich Pharmacal and Bankers Trust relief against the bank.
Conclusion
This is an important decision and a welcome one for those litigating on behalf of claimants in civil fraud claims in the Middle East. It confirms the wide powers available to the DIFC Court against those respondents who are subject to its jurisdiction, and its willingness to use them to assist complex international litigation.
The decision also raises a further question mark over the decision in Ramilos not least because Justice Cooke appeared to express sympathy for those common law jurisdictions that regarded the decision as “uncommercial and not in accordance with the principles of comity”. The DIFC now joins the list of common law jurisdictions whose courts have declined to follow that decision.
Matthew Watson of 3 Verulam Buildings was instructed for the successful applicant by Damien Crosse, Amelia Cave and Sammy Nanneh of Pinsent Masons LLP.
The decision is available here.
