The Grand Court Of The Cayman Islands Grants Security For Costs In Abraaj Related Proceedings

• Published date: 20 December 2021
• Subject Matter: Finance and Banking, Litigation, Mediation & Arbitration, Financial Services, Arbitration & Dispute Resolution, Trials & Appeals & Compensation
• Law Firm: Ogier
• Author: Ms Rebecca Findlay

Introduction

Earlier this year, the Honourable Justice Segal (Segal J) delivered a judgment (Abdulhameed Jafar v Abraaj Holdings and Others, unreported, 10 August 2021) (Judgment) on two security for costs applications. These applications were both made in the Cayman Islands Grand Court Financial Services Division (FSD 203 of 2020) (Proceedings). The Proceedings arise out of circumstances relating to the collapse of the Abraaj group (at one time the largest private equity group in the Middle East, said to have had over US$13 billion of reported assets under management). The claims in the Proceedings have been brought by the Plaintiff, Mr Abdulhameed Jafar in respect of three loans of approximately US$350 million which he is alleged to have made to certain entities in the Abraaj group in late 2017. ¹

The Applications

The applications for security were made by three of the defendants to the Proceedings, who are general partners ² of investment funds formerly known as Abraaj Growth Markets Health Fund LP and Abraaj Private Equity Fund IV LP (Cayman Islands exempted limited partnerships), but which have since been restructured and renamed. ³

In the same way as in many other common law jurisdictions, the Cayman Islands Grand Court Rules (GCR), allow parties defending claims to seek an order for security for costs to offset the injustice that might arise where a party faces defending proceedings with no real prospect of recovering its costs even if it is successful.

The applications for security in this case were made on the basis that the Plaintiff is ordinarily resident outside of the jurisdiction (being domiciled in the United Arab Emirates). It was common ground that the jurisdictional threshold set out in the Grand Court Rules O.23, r.1(1)(a) was satisfied. ⁴ O.23, r.1(1)(a) provides that if a jurisdictional threshold is met, then "if, having regard to all the circumstances of the case, the Court thinks it just to do so, it may order the plaintiff to give such security for the defendant's costs of the action or other proceedings as it thinks just".

Applicable law

As regards the Court's exercise of its discretion in relation to an application for security against a party ordinarily domiciled outside of the jurisdiction, Segal J considered that the summary of English law set out by Lord Justice Hamblen (as he then was) (Hamblen LJ) in the English Court of Appeal decision of Chernukhin v Danilina ⁵ also reflects the position under the law of the Cayman Islands...