Derivative Claims and Foreign Companies – Three Stone involved in successful first stage permission hearing for permission to continue a claim on behalf of a UAE company

On 7 February 2023, Peter Knox K.C. (sitting as a Deputy Judge of the High Court) handed down judgment in Haider v Delma Engineering Projects Company LLC & Ors [2023] 219 (Ch).  John McDonnell KC, leading Mark Baldock, appeared for the Claimant, Mr Haider.

This is the first example of permission being granted at the first stage for a claimant to pursue a derivative claim on behalf of a foreign company in England and Wales pursuant to the provisions of CPR rr.19.9A and 19.9C.

Permission was granted at the first stage in respect of a claim for loss under UAE law arising out of alleged frauds of which Delma Engineering, a company also incorporated in the UAE, was the victim. The alleged frauds were perpetrated using letters of credit to extract monies from Delma Engineering, which were then paid away to a vehicle controlled by the Delma Group’s then CFO. It is alleged that some £33m were misappropriated from Delma Engineering using the scheme, which involved procuring letters of credit from Delma’s bankers for the purchase of non-existent goods, which were then made the subject of sham purchase and re-purchase transactions (“repos”). It is alleged that the scheme was orchestrated by a company in London specialising in inventory financing.

The Judge gave directions for a so-called “second-stage hearing”, at which the Court, having heard from any other interested parties, will consider whether or not permission to continue should be granted.

If you would like more information, please contact Justin Brown.