Stuart Adair obtains judgment for Alawwal Capital JSC in misrepresentation claim against Rasmala Investment Bank Limited following a trial in the DIFC Court

Alawwal Capital JSC v Rasmala Investment Bank Limited [2025] DIFC CFI 038 (12 June 2025)

In a detailed judgment given on 12^th June 2025 H.E. Justice Roger Stewart KC (the “Judge”) found that Alawwal Capital JSC (“Alawwal”) had succeeded in establishing liability on the part of Rasmala Investment Bank Limited (“RIBL”) for the losses suffered by Alawwal as a result of its investment in the Rasmala Trade Finance Fund (the “Fund”) and awarded Alawwal damages of USD 4,199,519.22 (plus interest).

Alawwal made a series of investments in the Fund between March and December 2019, but due to losses suffered by the Fund dealings in units of the Fund and all redemptions were suspended with effect from 31^st March 2020.

The Judge found that it had been explained to RIBL’s “Head of International Business” (and he would have understood) that Alawwal “was looking to invest in a Shariah compliant fund with low volatility where a cautious approach to investment was taken…” and that “…unless the Fund matched these objectives, Alawwal would not invest in it”. In these circumstances, the Judge further found that it was orally represented to Alawwal during two separate meetings that the Fund met these investment objectives and that, in reliance upon those representations, Alawwal took the decision to invest in the Fund.

Internal emails recorded RIBL’s compliance officer raising questions regarding Alawwal’s appetite for risk and the suitability of an investment in the Fund, to which RIBL’s Head of International Business responded that Alawwal’s tolerance of risk was “high”. The Judge did not consider that there was any basis for this statement and concluded that this exchange evidenced the fact that the Head of International Business knew that the risks of investing in the Fund “were, in fact, higher than they had been presented to Alawwal”.

The Judge also found that Alawwal had established that RIBL had breached its statutory duty under COB Rule 3.2.1 to take “reasonable steps to ensure that the communication is clear, fair and not misleading”.

During the course of his judgment the Judge made reference to the observations of Leggatt J (as he then was) at paragraphs 15 to 22 of his judgment in Gestamin SGPSA v Credit Suisse Ltd [2013] EWHC 3650 (Comm) regarding the proper approach to oral evidence and the fallibility of memory, before noting the “tension between the need to rely upon documentary records and the modern approach to document production which has tended to restrict the documents and records that a party will be entitled to obtain from the other party.” In these circumstances, the Judge stated that in order to be able to consider the documents produced in their proper context and the findings of fact that should follow, the Court is likely to be required to make an assessment of the following matters:

“(i)       Whether the Court is likely to have access to all or only a sub-class of records in relation to particular issues;

(ii)        What documents were ordered to be produced in relation to what issues;

(iii)       Who has control over relevant records; and

(iv)       What positive assertions are being made by each party and what records could be expected to be produced by a party in order to support such assertions…”

In relation to the issue regarding the cause of the losses suffered by the Fund, the Judge observed that there was no equality of arms. Whilst RIBL had access to all the underlying trading information and documents and was able to produce any and all documents in support of its case, Alawwal only had access to public documents. Alawwal had sought production of the trading records prior to trial, but this had been refused on the basis that production of these documents would have been too expensive and onerous. In these circumstances the Judge concluded that:

“If and to the extent that Alawwal succeeds in establishing the existence of some evidence in support of its case, the Court is likely to accept such evidence in the absence of contrary evidence from RIBL.”

In this context, the Judge expressed surprise that RIBL had not prepared a comprehensive report identifying the causes of the losses suffered by the Fund, but stated that it was possible to reach conclusions from public documents, including the Funds own audited accounts. Following a careful review of those documents, the Judge concluded that “there were substantial “baked in” problems by the end of 2018”, which extended to at least 25% of the Fund’s assets. In these circumstances, the Judge rejected RIBL’s case that the losses suffered by the Fund were caused by the Covid pandemic. The Judge concluded that by the end of 2018 the Fund’s assets were over-valued and that:

“…the Directors of the Fund and RIBL, as the Investment Manager of the Fund, were unwilling to make provision for possible bad debts or delays in receipt of funds even where funds were well overdue and credit insurers or guarantors were unwilling or unable to comply with their own obligations. This was despite the fact that trade finance was meant to be relatively short term and that obligations were, in many respects, very substantially overdue. The likely reason for not making such provisions was straight-forward – if provisions were made they would very substantially imperil the long-term steady performance of the Fund and put off future investors.”

To read the full judgment, please click here.

In these proceedings Stuart Adair, instructed by Taylor Wessing (Dubai), represented the successful Claimant, Alawwal, a Saudi Arabian Investment Bank.