Case details

Al Sadik (Appellant) v Investcorp Bank B.S.C. and others (Respondents) (Cayman Islands)

Case ID: JCPC 2017/0001

Jurisdiction: The Court of Appeal of the Cayman Islands

Case summary

Issue(s)
  1. Whether the terms of the relevant share purchase agreement permitted the First Respondent to invest the Appellant’s monies via the Fourth Respondent and, in particular, to use the Fourth Respondent to borrow monies for the purpose of making leveraged investments;
  2. whether the purchase of shares in the Fourth Respondent was itself an investment and, if so, whether it was an investment permitted by the share purchase agreement;
  3. whether, assuming the terms of the share purchase agreement did not permit such an investment, there was, in any event, any actionable loss; and
  4. whether the first-instance judge ought to have found that the First Respondent had acted deceitfully in the manner in which it carried it out its reporting obligations to the Appellant.
Facts

On 1 March 2008 the Appellant and the First Respondent entered into a share purchase agreement. This agreement gave the First Respondent a discretionary mandate to manage and invest the Appellant’s investment monies, amounting to $136 million, in defined categories of hedge funds or hedge fund products. In purported reliance on this agreement, the First Respondent proceeded to invest on the Appellant’s behalf via the Fourth Respondent, a subsidiary company. On 4 March 2008 the Fourth Respondent used some of the Appellant’s capital to make investments in various hedge funds. On 10 April 2008, the Fourth Respondent became a party to a credit facility provided by the Royal Bank of Scotland. The purpose of this facility was to enable the Fourth Respondent to make leveraged investments (i.e. investments using borrowed money) on the Appellant’s behalf. Between May and September 2008 the Fourth Respondent drew down $214 million using this facility, and used these borrowings to pay for additional investments in the hedge funds. This decision to make leveraged investments increased the Appellant’s losses during the market crash in late 2008/early 2009. Ultimately, the Appellant suffered a return of -42% on his original investment.

The Appellant brought various claims against the Respondents in relation to these losses, including claims that under the share purchase agreement the Respondents were not permitted to leverage the Appellant’s investment in the manner adopted. These claims were dismissed by the first-instance judge, and were also dismissed by the Court of Appeal. The Appellant is now appealing as of right to the Judicial Committee of the Privy Council

.

Parties

Appellant(s)

Riad Tawfiq Al Sadik

Respondent(s)

Investcorp Bank B.S.C and others (Respondents) (Cayman Islands)

Appeal

Justices

Lord Wilson, Lord Sumption, Lord Reed, Lord Hughes, Lord Briggs

Hearing start date

30 Apr 2018

Hearing finish date

01 May 2018

Watch hearing
30 April 2018 Morning session Afternoon session
01 May 2018 Morning session