Misrepresentation and negligence claims by a Kuwaiti family are rejected.
DIFC Courts judge strikes down 'safe' investment claim
A Dubai International Financial Centre (DIFC) Courts judge has struck down claims of misrepresentation and negligence brought by members of a wealthy Kuwaiti family against a subsidiary of Switzerland's Bank Sarasin after they lost US$75 million (Dh275.4m) on investments allegedly sold as safe. Justice Tan Sri Siti Norma Yaakob ruled on Wednesday that Rafed al Khorafi, along with his wife and mother, had not established a sufficient factual basis for the court to support those claims, although she allowed the family to proceed on its claims of breach of contract and breach of statutory duty.
The al Khorafis said in earlier filings they were given oral assurances by an employee of Bank Sarasin-Alpen, the subsidiary based in the DIFC, that the investments would "never lose money". They sought triple damages of $225m from the courts when they did. "The oral representations were allegedly made at the various meetings with the [al Khorafis] and they now allege that those representations were false and made intentionally and recklessly," the ruling says. "However, what is lacking in the pleadings is the basis how that conclusion can be reached."
Justice Yaakob ruled the al Khorafis' negligence charge "suffers the same fate for lack of particulars in disclosing [its] basis" and complained that the overall claims were "confusing" and had "not been happily drafted". "The application of [Bank Sarasin-Alpen] to have the ? [case] struck out is allowed in part as it has succeeded to have the misrepresentation and negligence claims struck out," she ruled.
Bank Sarasin-Alpen's lawyers had also asked the court to require Dh5m as security against a possible judgment in the bank's favour, since the al Khorafis were Kuwaitis and had no substantial assets in the DIFC that the court could seize. The al Khorafis argued that they were "of substantial means and are able to meet any future costs liability that they may be ordered to meet". According to a statement from a lawyer hired by Bank Sarasin-Alpen, the al Khorafis had made $533m of personal guarantees relating to court cases in Kuwait. The lawyer, Rita Jaballah, said Raed al Khorafi had 11 cases filed against him in Kuwait. Mr al Khorafi's mother was contesting seven civil suits in Kuwait, while his wife was involved in one "mortgage enforcement" case, Ms Jaballah wrote.
Because the family "failed to show that they have assets in the UAE" that could be seized and provided "no direct evidence" that they were of substantial means, the judge asked the al Khorafis to post Dh3m as security for court costs through a guarantee issued by a bank in Dubai pending a court order or final judgment. The al Khorafi case is one of the first in the DIFC where investors have alleged they were mis-sold investments that lost value in the aftermath of the financial crisis. Lawyers say more such claims may arise as the centre's young court system adjudicates a rising number of disputes between financial companies, employees and investors. More than 35 cases were lodged in the DIFC Courts last year, up from just eight in 2008.
Justice Yaakob has yet to set a date for further hearings on the remaining claims in the al Khorafi case. Bank Sarasin-Alpen declined to comment on the ruling, citing the continuing legal proceedings. Representatives of the al Khorafis could not be reached for comment. @EMail:firstname.lastname@example.org