On 7 October 2015, the DIFC Court of First Instance issued its judgment on quantum issues, awarding multiple (or punitive) damages based on the deliberate conduct of Sarasin-Alpen, confirming that it will follow the US, rather than the English, approach to such damages.
Liability had been determined in August 2014, with the defendants being held jointly liable for regulatory breaches and breaches of duty (currently under appeal). Briefly, the defendants had recommended structured financial products totalling c.USD 200m as well as loans to finance/leverage some of the investments. Following the financial crisis, the investments dropped dramatically resulting in margin calls for extra capital to be provided to prop up the investments. Unable to meet these, Bank Sarasin liquidated the investments resulting in huge losses for the claimants.
The court held that this was: "a clear case of mis-selling unsuitable investments to an unsophisticated investor..." Bank Sarasin had also carried out financial services in or from the DIFC in breach of the general prohibition under the Regulatory Law.
Whilst a proportion of the claimants' losses had already been quantified and awarded as part of the liability judgment, the claimants sought to recover further losses under Article 40(2) DIFC Law of Damages and Remedies which grants the DIFC Court discretion to "where warranted in the circumstances, award damages to an aggrieved party in an amount no greater than three (3) times the actual damages where it appears to the Court that the defendant's conduct producing actual damages was deliberate and particularly egregious or offensive".
The court disapproved of the defendants' conduct and its deliberate breach of regulatory law and made it clear that, instead of being constrained by English law principles, its discretion "reflects the intention to depart from that law in favour of the law in the United States of America."
This claim is one of the largest successful mis-selling claims seen in the region with damages of nearly USD 60m (in addition to interim payments of USD 11.5m) awarded. The claim was originally backed by professional litigation funders and the prospect of multiple damages awards may lead to an increased willingness by third party funders to fund such claims and result in an increase in negligent advice/mis-selling claims in the DIFC.
US-Style Damages Awarded In Dubai: Al Khorafi V. Bank Sarasin-Alpen And Bank Sarasin (2015)
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