Dubai’s Highest Court Asked To Review Ruling On Dispute Between Local Bank And International Investor

A Cayman Islands-based investor involved in logistics projects around the world has filed a request to Dubai’s highest court asking it to reconsider a ruling which saw it lose a multi-million-dollar claim for missed interest payments from a local bank.

The complex case dates back to November 2017, when $497 million belonging to The Port Fund was frozen at a branch of Noor Bank in Dubai, the commercial capital of the United Arab Emirates. The money remained frozen for almost 15 months, until February 2019.

The money represented the proceeds of a development project in the Philippines called Sabah Al-Ahmad Global Gateway Logistics City. This was sold in 2017, with the amount transferred to the bank account in Dubai. The money was frozen following a request from authorities in Kuwait who claimed there was a risk of embezzlement; Kuwait’s interest stemmed from the fact that the fund’s shareholders included the Kuwait Port Authority (KPA) and the Public Institution for Social Security

Lack of interest

Port Link, the general partner of The Port Fund, later sued Noor Bank to claim interest on the frozen funds, seeking $13.2 million in interest payments.

The Central Bank of the UAE initially ordered Noor Bank to pay that sum in interest, but Noor Bank objected and a succession of court cases and appeals followed.

Court-appointed experts in the UAE later said Noor Bank should pay $9.5 million in interest for the period when the funds were frozen. In July last year, an appeal court agreed with that view, on the basis that Noor Bank had been instructed in November 2017 by the central bank to freeze the money in an account that paid interest.

Noor Bank subsequently appealed to the Dubai Court of Cassation – the highest court in the emirate – arguing that, as a Sharia-compliant bank, it should not pay interest.

On December 22, the Court of Cassation issued its ruling, largely siding with Noor Bank and deciding that the bank should pay $33,371 in interest payments – a figure based on the interest due for a seven-day period.

“We are disappointed in the court’s ruling,” said Andrew Childe, an independent director of Port Link GP. “The Cassation Court seems to have disregarded the UAE Central Banks directive, despite the court-appointed experts, in consultation with the UAE Central Bank, giving clear guidance that interest was due for the entire 14 months.”

“The Cassation Court’s decision to overturn the ruling of the Appeals Court, and to reject the evidence of its own experts and the UAE Central Bank is difficult to understand,” he added. “This certainly puts a question mark on transferring large sums through Dubai.”

Lawyers acting for the Port Fund said they filed a request with the Cassation Court on January 20, asking it to reconsider its verdict. A ruling on whether this application is admissible is expected in the next couple of weeks. If it is allowed, a final decision on the matter could take several more months.

Dubai Islamic Bank – which bought Noor Bank in January 2020 – had not responded to questions from Forbes for this article by the time of publication.