P.R.I.M.E. Finance
Panel of Recognized International Market Experts in Finance
The role of experts in complex financial cases:
DIFC Court case study (Al Khorafi v Bank Sarasin)
Presentation by PD Dr. Thomas Werlen
2016 P.R.I.M.E. Finance Annual Conference
25 & 26 January, Peace Palace, The Hague
Agenda
The Dubai International Financial Centre (DIFC) Court …
… heard a dispute involving alleged misselling of investment
instruments to a retail customer.
III. The multifaceted factual and legal pattern required involvement of
foreign law experts …
IV. … raising a number of issues, including …
V. … expert accountability, …
VI. … rights of the parties and the Court’s discretion, …
VII. … and collaboration between experts of opposing sides, …
VIII. … exposing advantages and risks of the DIFC regime.
I.
II.
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I. The Dubai International Financial Centre (DIFC)
Court …
•
DIFC is an economic zone with its own legal system and courts
•
Activities of banking and financial institutions in the DIFC are regulated by
the Dubai Financial Services Authority (DFSA)
•
Legislative system is consistent with English Common law; laws and regulations
are written in English and defer to English law in the event of ambiguity
•
DIFC courts have exclusive jurisdiction over
•
Civil or commercial disputes involving the DIFC or any entity or business established
in the DIFC
•
Civil or commercial disputes arising out of or related to a contract that has been
executed in the DIFC
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II. … heard a dispute involving alleged misselling
of investment instruments to a retail customer.
•
In late 2009, the Al Khorafi family (Claimants) brought proceedings against Bank
Sarasin & Co Ltd. (Swiss entity) and Bank Sarasin-Alpen ME Ltd. (DIFC entity)
(Defendants) to recover substantial losses after structured products Claimants had
bought were liquidated.
•
Claimants alleged that (1) Sarasin’s DIFC entity was in breach of contract, negligent and
guilty of misrepresentation in advising Claimants that the products sold were suitable for
their investment objectives, and in breach of the DFSA regulations under which it was
authorized to offer financial services; and (2) that Sarasin’s Swiss entity acted in breach
of DIFC regulatory law in carrying on an unauthorized financial services business within
the DIFC, and was itself in breach of contract by operation of Swiss law and vicariously
liable for Sarasin’s DIFC entity’s negligence and misrepresentation under DIFC law.
•
The Court held that Sarasin’s DIFC entity had been in breach of its regulatory
obligations and was liable to pay compensation to Claimants, and that the Swiss entity
had acted in breach of the regulatory law and was also liable to pay compensation to
Claimants.
•
Defendants have been ordered to pay a total sum of USD 70m to Claimants
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II. … heard a dispute involving alleged misselling
of investment instruments to a retail customer.
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III. The multifaceted factual and legal pattern
required involvement of foreign law experts …
“119. On balance, however, we have come to the conclusion that this is one of
those exceptional cases where the court should exercise its discretion
against enforcing the jurisdiction clause and should permit the
proceedings against Sarasin Switzerland to continue in this Court which
we consider to be the appropriate forum in the interests of justice,
convenience and fairness.
To the extent that there will need to be consideration by the DIFC Court of
relevant principles of Swiss Law, expert evidence can be called to enable
the court to give effect to the choice of Swiss Law in the contracts.”
Decision of 5 January 2012, CFI 026/2009 and CA 003/2011
Swiss law expert for Claimants: PD Dr. Thomas Werlen
Swiss law expert for Defendants: Prof. Dr. Peter Nobel
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IV. … raising a number of issues, including …
• Involvement of experts is governed by Part 31 of the DIFC Court
Rules
• Parties are further referred for guidance to the “Protocol for the
Instruction of Experts to give evidence in civil claims” issued by the
English Civil Justice Council
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V. … expert accountability, …
Court Rules – Overriding duty to the Court
• 31.3 It is the duty of an expert to help the Court on the matters within
his expertise.
• 31.4 This duty overrides any obligation to the person from whom he
has received instructions or by whom he is paid.
• 31.5 Expert evidence should be the independent product of the
expert uninfluenced by the pressures of litigation.
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VI. … rights of the parties and the Court’s
discretion, …
Court Rules – Court’s power to restrict expert evidence
• 31.12 Expert evidence shall be restricted to that which is reasonably
required to resolve the proceedings.
• 31.13 No party may call an expert or put in evidence an expert’s
report without the Court’s permission.
• 31.14 Any application for permission to call an expert witness or
serve an expert’s report should normally be made at the Case
Management Conference.
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VII. … and collaboration between experts of
opposing sides.
Court Rules – Discussions between experts
•
•
•
•
31.58 The Court will normally direct a meeting or meetings of expert witnesses
(including any Court-appointed expert) before trial. Sometimes it may be useful for
there to be further meetings during the trial itself. The Court may, at any stage, direct
a discussion between experts for the purpose of requiring the experts to:
1) identify and discuss the expert issues in the proceedings; and
2) decide, with the benefit of that discussion, on which expert issues they share or
can come to share the same expert opinion and on which expert issues there
remains a difference of expert opinion between them (and what that difference
is).
31.59 The Court may specify the issues which the experts must discuss.
31.61 Neither the parties nor their legal representatives should seek to restrict the
freedom of experts to identify and acknowledge the expert issues on which they
agree at, or following further consideration after, meetings of experts.
31.62 The content of the discussion between the experts shall not be referred to at
the trial unless the parties agree.
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VIII. … exposing advantages and risks of the DIFC
regime.
• Conflict of interest between party and Court regarding allocation of
costs
• Obligation of expert towards party and Court
• By agreeing among themselves, experts can prevent the Court from
learning about and taking into consideration certain issues
• Proceedings expose key role of experts in complex international
disputes
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