The judgment of Mr Justice Henshaw of the High Court of England and Wales was handed down on 10 January 2022 in Barclays Bank plc v Shetty. The judge ruled that while the High Court will adjourn a hearing if it is in the interest of fairness, a party cannot succeed in bringing an adjournment application at a late stage in proceedings if it failed to take the necessary steps in a timely manner when the claim was commenced. The High Court also provided a helpful overview of the principles that apply on a claim for the enforcement of a foreign (DIFC) judgment in England by way of an application for summary judgment.
Barclays Bank plc and UAE Exchange Centre LLC (UAEEC), a foreign exchange business founded by Dr Bavaguthu Raghuram Shetty, entered into a range of foreign exchange transactions. Dr Shetty had executed a guarantee in favour of Barclays in relation to the performance his company’s obligations (the Guarantee). Following UAEEC’s failure to pay currency amounts to Barclays, Barclays claimed an ‘early termination amount’, which was not paid by UAEEC. Barclays then served a formal demand on Dr Shetty under the Guarantee for the early termination amount plus accrued interest, which UAEEC also failed to pay.
Barclays therefore commenced proceedings against Dr Shetty before the Court of First Instance of the Dubai International Financial Centre Courts (DIFC Court), claiming the money due under the Guarantee. The DIFC Court awarded a judgment against Dr Shetty for the sum of nearly $131.5 million, plus costs and interest (DIFC Judgment).
On 27 August 2021, Barclays issued an application for summary judgment for the enforcement of the DIFC Judgment in England.
THE ADJOURNMENT APPLICATION
Dr Shetty sought an adjournment of the hearing of the summary judgment application on the following grounds:
- He was a litigant in person who did not have the necessary command of legal language, or knowledge of the law or procedure to enable him to defend the claim without legal representation and advice.
- In addition to a freezing order granted by the DIFC Court, he was subject to a number of freezing orders in various jurisdictions, including at least three Indian freezing orders (the Indian Orders) which paralysed him financially and prevented him from spending money on legal advice and/or representation.
- He required an adjournment to seek variations of the Indian Orders, after which he could obtain legal advice and/or representations in the current proceedings because, although a law firm was assisting with the adjournment application (despite his inability to pay), he could not expect the firm to represent him without payment on a claim of more than $130 million.
- There would be no countervailing prejudice to Barclays that would flow from the adjournment sought.
The judge noted that in circumstances where the court decides that “it is necessary to adjourn a hearing in the interest of fairness, then it must be adjourned, for the court cannot countenance an unfair hearing.”
Although the parties had cited (among others) certain cases concerning adjournments for medical reasons, the judge considered that “…the guiding principle of fairness, applies also when considering an application to adjourn so as to enable the applicant to be professionally advised and represented”.
However, the judge could not find “any arguable ground for resisting enforcement of the DIFC Judgment” and dismissed the adjournment application for four reasons:
- Dr Shetty had not provided any evidence of efforts to vary the Indian Orders until this point, and he had not offered any explanation as to why it had taken a year and a half after the first of the Indian Orders was made to give instructions to seek variations. This “tends to suggest that the adjournment application is in reality a deliberate last minute tactic designed to seek to delay the proceedings”.
- Dr Shetty had simply stated that he hoped and expected that the Indian Orders would be varied “within about 3 to 4 months”, but there was no reasoned explanation as to “why it would take so long to achieve even such a basic variation as permission to pay legal costs”. Dr Shetty’s lack of legal representation had been caused because he “delayed far too long before seeking any necessary variation of the Indian Orders”.
- Dr Shetty had been able to defend or pursue other major litigation (including the proceedings before the DIFC Court), and in his witness statement, he stated that he is represented in legal proceedings where his lawyers are paid for by insurers, or have agreed to extend credit to him, or are paid by well-wishers where such expenses are comparatively low. Nonetheless, he failed to explain how he claims to be unable to fund a defence to the adjournment application.
- There was no mention in Dr Shetty’s evidence of any plausible ground on which the enforcement of the DIFC Judgment could be resisted (see further on this below).
The judge concluded that Dr Shetty “has not satisfied the onus of establishing that it would be unfair to proceed with the summary judgment application. He has not shown that any problem arising from lack of legal representation has arisen for any reason other than his own unexplained delay in taking steps to rectify matters”. The judge was persuaded that the adjournment application was a “last minute application” that had been brought as “a delaying tactic”.
THE SUMMARY JUDGMENT APPLICATION
Civil Procedure Rule (CPR) 24.2 provides the following:
“The court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue if –
- it considers that –
- that claimant has no real prospect of succeeding on the claim or issue; or
- that defendant has no real prospect of successfully defending the claim or issue; and
- there is no other compelling reason why the case or issue should be disposed of at a trial.”
In this context, a “real prospect” means “realistic” as opposed to “fanciful”, and it is more than merely arguable.
In order for a judgment of the DIFC Court to be enforceable at common law in England:
- It must be final and conclusive (this may be so even if it is subject to an appeal).
- It must be for a definite sum of money, but not an order for the payment of taxes, fines, or penalties.
- It must have been given by the DIFC Court as a court of competent jurisdiction, i.e., the person against whom the judgment was given
- was present in the jurisdiction at the time when proceedings were commenced;
- was the claimant or counterclaimant in the proceedings;
- submitted to the jurisdiction of the DIFC Courts; or
- agreed, before commencement, in respect of the subject matter of the proceedings to submit to the jurisdiction of the DIFC Courts.
- It must not be capable of challenge on grounds that it was obtained by fraud, contrary to English public policy, or contrary to the principles of natural justice.
Therefore, to successfully resist the summary judgment application, Dr Shetty must have had a real prospect of arguing that one of the four grounds above did not apply, or that there was another compelling reason to proceed to trial.
Taking each issue in turn:
- Final and conclusive: Dr Shetty did not contest Barclays’ evidence that the DIFC Judgment is a final and conclusive judgment on the merits that cannot be altered or reopened by the DIFC Court (which, the judge observed, was consistent with the text of the DIFC Judgment). Further, the 21 days to file an appeal (pursuant to the DIFC Court procedural rules) had expired and Dr Shetty had not done so.
- Definite sum of money: The DIFC Judgment concerned an ordinary contractual claim under a guarantee, and not a fine, tax, or penalty.
- Court of competent jurisdiction: The parties to the Guarantee agreed to submit to the jurisdiction of the DIFC Court, and Dr Shetty submitted to the jurisdiction of the DIFC Court by participating in the proceedings before it, including by defending on the merits Barclays’ application for “Immediate Judgment” in the DIFC Court.
- Impeachability: Dr Shetty did not advance any argument to the effect that the DIFC Judgment was obtained by fraud, and there was no evidence or suggestion that there had been any contravention of English public policy, or any breach of natural justice by the DIFC Court.
One of the arguments advanced on behalf of Dr Shetty at the hearing in respect of the Immediate Judgment application was that UAEEC was not liable to Barclays because Barclays had acted negligently when it did not promptly cease to trade with UAEEC following UAEEC’s first default on 10 March 2020.
In a letter to Barclays, Dr Shetty cited a number of Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) rules and framed the argument as a proposed counterclaim for damages under section 138D of the Financial Services and Markets Act 2000 (FSMA). Dr Shetty intended to rely on this counterclaim by way of set-off against the DIFC Judgment.
The judge concluded that this “counterclaim” would not provide a compelling reason as to why the case should proceed to trial, rather than be dealt with by way of summary judgment. The following reasons were given:
- None of the FCA or PRA rules cited in Dr Shetty’s letter could give rise to a claim for damages under section 138D of FSMA.
- It would be an abuse of process to seek to litigate the counterclaim at this stage, in response to an application for enforcement of the DIFC Judgment, instead of pursuing it before the DIFC Court.
- Deploying the counterclaim by way of set-off would arguably be inconsistent with clause 6 of the Guarantee, which provides that “[a]ll payments to be made by [Dr Shetty] to Barclays under this Guarantee shall be made without set-off or counterclaim and without any deduction or withholding whatsoever”.
- No arguable specific breach was identified that would be capable of founding a damages claim, and a “mere speculative possibility that such a claim might exist does not provide a reason, let alone a compelling reason, for this case to proceed to trial”.
- The pursuit of a counterclaim that might be founded on allegations that were ruled on as part of the DIFC Judgment would constitute “an impermissible attack on the substantive merits of that judgment” and “Dr Shetty would be estopped from raising it”.
The judge therefore held that Barclays was entitled to summary judgment.
Arising out of this judgment is a helpful indication for litigants as to the principles an English court will apply on an application for summary judgment under CPR 24.2 to enforce a DIFC judgment in England, in particular, where the defendant seeks to resist summary judgment through its reliance on a counterclaim for damages by way of set-off.
Furthermore, this judgment serves as a useful reminder for litigants of the following:
Considerations of fairness do not entitle a defendant, particularly one who has had professional assistance (even if informally) for several months, to fail to take steps which were (at least on Dr Shetty’s case as to the effect of the Indian Orders) obviously necessary as soon as the claim was commenced, and then to make a last minute adjournment application based on lack of legal representation.
In other words, in circumstances where a party makes an adjournment application on the basis of a lack of legal representation, yet has failed to take the necessary steps to improve their position (and indeed had already benefitted from professional assistance), such an application may not get a sympathetic reception from the court.
Trainee solicitor Charlotte Warke contributed to this LawFlash.
 Barclays Bank plc v Shetty  EWHC 19 (Comm).
 Dr Shetty referred to the case law of the European Court of Human Rights, which indicates that the right to a fair hearing under Article 6 of the European Convention of Human Rights is violated where a party is neither represented nor capable of effectively representing himself.
 Bilta (UK Ltd) (In Liquidation) v Tradition Financial Services Ltd  EWCA Civ 221; and Solanki v Intercity Telecom Ltd  EWCA Civ 101.
 Swain v Hillman  1 All ER 91; ED & F Man Liquid Products v Patel  EWCA Civ 472.
 GFH Capital Limited v Haigh and others  EWHC 1269 (Comm), - (quoting the Memorandum of Guidance as to Enforcement between the DIFC Courts and the Commercial Court, Queen’s Bench Division, England and Wales issued in January 2013).
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