Zulfiqur Al-Tanveer Haider v Delma Engineering Projects Company LLC & Ors

The claimant sought permission to continue a derivative claim in England on behalf of a UAE incorporated company, Delma Engineering, alleging two frauds: a letters of credit fraud and an authorised transfer fraud. The court applied the Companies Act/CPR permission regime (notably CPR 19.9C read with s.261 Companies Act 2006), the out‑of‑jurisdiction gateway in Practice Direction 6B para.3.1(3), and the requirements of UAE law (Article 167 LCC and Article 291 CTL as explained in the expert report) to decide whether a prima facie case had been made at the first (ex parte) stage.

The judge held that the proper test at the first stage is whether the applicant, on the evidence uncontradicted and viewed at its reasonable highest, discloses a prima facie case that would entitle the claimant to relief. Applying that test, and on the evidence and expert opinion before the court, the judge concluded there was a prima facie case on the letters of credit fraud against specified defendants (including Delma Engineering’s CFO, Falcon FZE and certain Falcon group entities, Protouch and several recipients) and that the other preconditions for a derivative claim (including that a related party — an employee/director — could prima facie be sued under UAE law) were satisfied. The authorised transfer claim lacked a prima facie case as to any English defendant and was dismissed at this stage. The court also found a prima facie case that the UAE might not be an appropriate forum, permitting the English proceeding to continue to a contested second stage.

Background and parties. The claimant, Mr Zulfiqur Haider (49% shareholder of Delma Engineering, a UAE company), issued proceedings in England seeking, among other relief, permission to continue a derivative claim on behalf of Delma Engineering against multiple defendants (including Falcon group companies, Protouch, various trading companies and individual Al Mureikhy family members). Two principal alleged wrongs were pleaded: (i) a letters of credit fraud diverting sums (allegedly to Protouch) from Delma Engineering; and (ii) an authorised transfer fraud involving forged signatures and transfers to ATECO.

Procedural posture and relief sought. This is a first instance permission application under the CPR procedure for derivative claims applied to a foreign company (CPR 19.9C). The claimant sought (a) permission to continue a derivative claim on behalf of Delma Engineering (limited at this hearing to consideration of whether a prima facie case exists so that Delma Engineering may be joined and served out of the jurisdiction), (b) an extension of time for service, (c) service out of the jurisdiction, and (d) permission to adduce expert evidence on UAE law. The court dealt only with the first‑stage question whether a prima facie case was disclosed; other applications were to be adjourned to a second stage if appropriate.

Issues framed by the court.

• What is the proper prima facie test to apply at the ex parte first stage of a permission application under the CPR/Companies Act scheme?
• On the facts and expert UAE law evidence, against which defendants (if any) is there a prima facie case on the letters of credit fraud and the authorised transfer fraud?
• Do the English procedural gateways (Practice Direction 6B para.3.1(3)) and the UAE substantive derivative rules (Article 167 LCC and related provisions) permit the proposed derivative action to proceed?
• Is England the appropriate forum in light of alleged risks to fair trial in the UAE?

Evidence and legal materials. The claimant relied on witness evidence, documentary exhibits (including emails, stock finance agreements and bank records), and an expert report on UAE law (Professor Chibli Mallat). The court considered English authorities on the prima facie threshold for derivative permission and on forum considerations, and analysed UAE law on derivative actions (Article 167 LCC), liability of non‑related participants (Article 291 CTL) and limitation (Article 298 CTL).

Court's reasoning and conclusions. The judge explained that at the first stage the court must assess whether the applicant’s evidence, if uncontradicted and read at its reasonable highest, discloses a prima facie case entitling the claimant to relief; it is not the occasion to decide contested factual issues. On that basis the judge found:

• There was a prima facie case that the letters of credit scheme involved sham sale/repurchase documentation prepared or passed around by Falcon FZE and the Delma CFO, resulting in banking debits to Delma Engineering and payments to Protouch; that those facts could support claims in deceit, unjust enrichment and participation under Article 291 CTL; and that certain Falcon group entities (Falcon Administrative Services and Falcon Cayman) could be prima facie implicated as participating or authorising the conduct (Falcon Europe was not shown prima facie to be involved).
• Delma Engineering could prima facie sue related parties under Article 167 LCC and join non‑related participants under Article 291 CTL; the claimant had, on the evidence, satisfied the UAE procedural prerequisites (shareholding, pre‑action request, and the requisite threshold) at least prima facie, and service and delay issues did not defeat the application at this stage.
• The authorised transfer fraud lacked any prima facie connection to the English Falcon defendants and therefore failed the gateway requirement to serve out on foreign defendants; that limb of the derivative application was dismissed.
• There was a prima facie case that the UAE may not be an appropriate forum (risk of unfairness / political influence / risk of reprisals) and that England could be a more appropriate forum; accordingly it was appropriate to permit the derivative claim based on the letters of credit fraud to proceed to a contested second stage.

Disposition. Permission was granted to continue a derivative claim on behalf of Delma Engineering in respect of the letters of credit fraud against specified defendants and the matter was remitted to a second stage contested hearing; the application in relation to the authorised transfer fraud was dismissed.

This first‑instance application was allowed in part. The court held that, applying the Companies Act/CPR prima facie test at the first (ex parte) stage, the claimant had disclosed a prima facie case that justified (subject to contested evidence at a second stage) permitting a derivative claim on behalf of Delma Engineering in respect of the letters of credit fraud against specified defendants (including the Delma CFO, Falcon FZE, Falcon Administrative Services, Falcon Cayman, Protouch and certain trading recipients). The court dismissed the permission application as to the authorised transfer fraud because there was no prima facie case against any English defendant and the CPR gateway was therefore not satisfied. The decision was grounded on (i) the evidence and expert UAE law opinion (Article 167 LCC and Article 291 CTL), (ii) the court’s interpretation of the prima facie threshold in s.261/CPR 19.9C, and (iii) forum considerations including a prima facie risk that the UAE would not be an appropriate forum for resolution of the dispute.