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PLANTATION HOLDINGS (FZ) LLC V DUBAI ISLAMIC BANK PJSC

Lloyd's Law Reporter

PLANTATION HOLDINGS (FZ) LLC V DUBAI ISLAMIC BANK PJSC

[2017] EWHC 520 (Comm), Queen's Bench Division, Commercial Court, Mr Justice Picken, 23 March 2017

Banking - Guarantee - Bank taking conditional assignment of leasehold land as security - Bank wrongly enforcing security - Measure of damages - Whether guarantor had suffered loss - Causation

Plantation, a Dubai company, was incorporated in 2004 for the purpose of developing an upmarket and exclusive polo facility on the outskirts of Dubai. In December 2004 Plantation took an assignment of the lease of the land from Mr Fitzwilliam, the majority shareholder and manager of Plantation. The lease to Mr Fitzwilliam was granted by the predecessors in title of Dubai Land LLC. In 2007 Plantation entered into a Restructuring Agreement (RSA) with Dubai Islamic Bank, arranging for the restructuring of debts of some US$501 million. The RSA was entered into as the result of the fraud of Mr Cornelius and Mr Ridley, who received funds from the bank and misappropriated some US$18 million by investing them in the project. Under the RSA, Plantation agreed to act as surety by granting the bank a conditional assignment of the leasehold land. The RSA permitted the bank, on the occurrence of a Plantation Enforcement Event, to give 15 days' notice for the breach to be remedied, failing which the bank could enforce its security. On 9 June 2008 the Bank by notice alleged that Plantation had committed four breaches of the RSA, including infringement of Dubai law, and required the breaches to be remedied within 15 days. Plantation denied that there were breaches. On 20 July 2008, with the breaches not having been remedied, the bank perfected its assignment of the lease and took control of the land. Mr Fitzwilliam was in the meantime arrested. Plantation brought the present proceedings, asserting that the bank had acted in breach of contract and that it was liable for the value of the lease, either US$2 billion or US$800 million, the former figure being based on an alleged agreement with Chescor in June/July 2008 to obtain the whole of, or a major stake in, Plantation.

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