Plantation Holdings (FZ) Llc v Dubai Islamic Bank PJSC

Summary judgment is inappropriate where the defence has a real, rather than fanciful, prospect of success and the dispute requires a fact-sensitive determination of foreign law or conflicting expert evidence. A party cannot establish that a contractual default is impossible merely by relying on a regulator’s view of the applicable law. Contractual payment obligations remain potentially enforceable unless the relevant statutory exemption is established. Where several alleged defaults raise substantial factual and legal disputes, the application should proceed to trial.

The claimant developer sought summary judgment against the defendant bank and an interim payment of approximately US$440 million. The bank had enforced a conditional assignment of the development lease after alleging four breaches of a restructuring agreement.

The central issues were whether Dubai Law No.8 of 2007 applied to sales of bare villa plots, whether the claimant had breached obligations concerning registration and an escrow account, and whether it had failed to provide sale agreements requested under the restructuring agreement. The claimant argued that the bank’s defence was fanciful and that the bank’s admission of an pleaded repayment matter eliminated any event of default.

1. Summary judgment test. The application was governed by the requirement that the defence have a real, as opposed to fanciful, prospect of success. That requires more than an arguable case and involves a degree of conviction, applying TFL Management Services Limited v Lloyds Bank PLC [2014] 1 WLR 2006.
2. First alleged breach. Whether villa-sale proceeds were excluded from the claimant’s payment obligation depended on the true construction and application of Dubai Law No.8. The issue could not be resolved by RERA’s reported view that the law applied. Conflicting expert evidence, the purpose of the legislation, the parties’ conduct and the question whether the sales involved bare plots created a real and substantial dispute requiring trial.
3. Second and third alleged breaches. If Law No.8 applied, the claimant arguably had to register as a developer and pay sale proceeds into an escrow account. The contemporaneous correspondence concerning the registration in Mr Fitzwilliam’s name and the opening of the escrow account meant that the bank’s case was not fanciful. Responsibility for the absence of an account and the legal effect of the registration required trial.
4. Fourth alleged breach. It was arguable with a degree of conviction that sale and purchase agreements fell within the contractual obligation to provide financial or other information reasonably required by the bank. Although the request made shortly before the cure notice might not alone establish breach, an earlier request and the subsequent sales created a triable issue.
5. The bank therefore had a real prospect of establishing its defence. Summary judgment and the application for an interim payment were refused, and the case was to proceed to trial. It was unnecessary to determine damages.

Not stated in the judgment.