Baker & Partners court success for Dubai bank, seeking to enforce non-performing loan in Jersey.

In Emirates NBD v Almakhawi and others [Emirates NBD Bank PJSC v Almakhawi and Ors [2024] JRC 265], the plaintiff bank (ENBD) has a Dubai judgement for a sum in excess of $100m with interest against Rashed Almakhawi (RAM), who had personally guaranteed huge loans taken out by his company. RAM paid nothing towards the judgment debt. Attempts to enforce against his Dubai assets generated virtually nothing.

ENBD engaged investigators to search for foreign assets held by RAM. They found property in London, and a property in New York connected to a Jersey trust. Baker & Partners, specialists in asset tracing litigation, were instructed in Jersey to find out what there was in Jersey and enforce against Jersey-related assets.

We obtained disclosure orders against professional trustees, with temporary gagging orders to prevent RAM moving assets. The disclosures revealed one Jersey trust that held the New York Apartment and another with an investment portfolio worth over $20m. Freezing orders were obtained to lock those assets down, and a claim was brought to unwind RAM’s disposal of those assets into the trusts.

The ‘Pauline Action’ is an action in Jersey customary law, derived from Roman law. The plaintiff must prove that, when the debtor disposed of an asset, he had a substantial intention to frustrate creditors, and that he was (or became as a result of the transfer) insolvent.

After a trial in June 2024, in which both parties were represented, the Royal Court found that the nature and timings of the transfers showed that RAM did intend to frustrate his creditors by making the transfers.  It ordered the unwinding of the transfers, enabling ENBD to enforce against the assets.  This decision is consistent with ENBD’s judgement against RAM from the English High Court in 2023, in relation to assets in England.

This outcome reaffirms that Jersey law provides effective mechanisms for creditors worldwide to enforce claims against those who abuse Jersey’s financial services. Debtors who hide their assets from creditors by putting them in Jersey trusts can expect no protection from the Jersey courts.

William Redgrave, a partner of Baker & Partners, appeared for ENBD. He was assisted by Thomas Harris, associate.