EMIRATES NBD BANK PJSC v RASHED ABDULAZIZ ALMAKHAWI & Anor.

A foreign judgment will not be refused enforcement for breach of natural justice merely because the foreign court relied on a procedural irregularity or adopted a different procedure. The defect must deprive the process of substantial justice, assessed in the circumstances and with regard to available remedies in the foreign jurisdiction.

Under Insolvency Act 1986, section 423, a transaction at an undervalue must have been entered into with a subjective, positive intention to put assets beyond creditors’ reach or prejudice their interests. That purpose need not be sole or dominant and may be inferred from the evidence, including timing and the debtor’s desire that the consequence occur. The consequence alone is insufficient.

The claimant bank obtained a substantial judgment against the first defendant in Dubai proceedings concerning guarantees of company borrowing. It sought enforcement of that judgment in England and Wales by a common law action.

The first defendant argued that enforcement should be refused because Dubai courts had relied on expert reports referring to superseded legislation. The bank also challenged gratuitous transfers of a London property and substantial sums to the first defendant’s son, seeking declarations based on resulting trust principles or relief under section 423 of the Insolvency Act 1986.

The central issues were whether the Dubai proceedings were opposed to natural justice, whether the transfers remained beneficially owned by the first defendant, and whether they were made for a prohibited purpose.

1. Enforcement of the Dubai judgment. The natural justice exception concerns procedural fairness, not the correctness of the foreign judgment. A mere procedural irregularity, or a different procedural approach, is insufficient unless it deprives the foreign process of substantial justice. The availability of a remedy in the foreign jurisdiction is relevant.
2. The Dubai expert’s references to the superseded 1974 legislation were, at most, a defect in form. Dubai law did not require an expert report to identify the applicable regulatory legislation. There was no evidence that the expert had failed to comply with the substantive duties under the 2012 legislation, nor that the Ministry Circular retrospectively invalidated earlier judgments. The alleged defect therefore did not establish substantial injustice. The Dubai judgment was enforceable in England and Wales, and judgment was entered against the first defendant.
3. Beneficial ownership. The gratuitous transfers were subject to the rebuttable presumption against gift and the counter-presumption of advancement between parent and child. The evidence, including the subsequent deed of gift and the instructions to solicitors, established that the London property was intended to be gifted absolutely. The timing and circumstances of the money transfers did not rebut the presumption of advancement or establish a resulting trust.
4. Section 423. The section imposes cumulative requirements: an undervalue transaction and a prohibited purpose. The purpose requirement is subjective and positive. It need not be the only, dominant or predominant purpose, and it may coexist with family-protection or succession-planning purposes. Foreseeability and desire that assets be protected from creditors may support an inference of purpose, but consequence cannot be equated with purpose.
5. The timing of the transfers after adverse Dubai judgments, the first defendant’s substantial liabilities, the concealed or unusual arrangements, the unused UK account and the unsatisfactory evidence established that protecting assets from creditors was at least one purpose of the transfers. The bank’s section 423 claim succeeded. The court deferred consequential orders, including the precise relief under section 423.

First-instance decision. The judgment records prior Dubai proceedings, culminating in the Dubai Court of Cassation judgment, but this English claim was commenced as a fresh common law enforcement action and associated statutory claim.