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

22 February, 2023

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.

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