Charles Russell advise Barwa on successful multi-million BCDR litigation

05 Sep, 2013

Charles Russell’s Middle East Real Estate and Litigation teams have secured a successful judgment in the Bahrain Chamber for Dispute Resolution (BCDR) for Barwa Investment SPC, an investment arm of the Qatari Sovereign Wealth fund, against Inovest (a shariah compliant investment company listed on the Bahraini bourse) and its sister company Al Khaleej Development Company (Defendants).


The BCDR judgment, handed down earlier this year, accepted that Barwa had been misled by the Defendants when they invested in Dannat, a Cayman based fund vehicle set up and controlled by the Defendants to help finance a substantial property development in Saudi Arabia. The Defendants had circulated a Private Placement Memorandum (PPM) in 2008 to secure third party investment into Dannat and based upon the information provided to them Barwa advanced a total of BHD 6,000,000 (approximately USD 16,000,000).


Subsequently Barwa discovered that the Defendants had shortclosed the funding of Dannat with only 40% of the target capital achieved and had then utilised the investment money to purchase a large amount of land in Saudi Arabia in the knowledge that they had no remaining funds to develop the land and therefore benefit their investors. Amongst numerous other defences, the Defendants argued that the disclaimers in the PPM meant they were not liable for their actions in short closing the fund that Bahrain was the incorrect jurisdiction in which to bring the claim and that not informing investors of a failure to reach a target capital did not amount to a misrepresentation.


After a litigation process lasting over a year, the BCDR held that the entire investment of BHD 6,000,000 should be returned to Barwa with a compensation rate of 1.5% to be applied from the date of the investment in early 2009. The BCDR also awarded Barwa discretionary damages of BHD 300,000 (approximately USD 795,700). 


The Group Chief Executive Officer of Barwa, Abdulla Abdulaziz Al Subaie, welcomed the ruling and stated “Barwa is delighted with the outcome of the BCDR proceedings and the clear judgement that was handed down in favour of Barwa“.   


The team at Charles Russell was led by John Sykes and Simon Green (pictured) with support provided by Gareth Mills, Reem Al Mahroos and Abeer Humood.     


John Sykes, Litigation Partner, Charles Russell commented “We are delighted to achieve such a successful outcome for Barwa in what was a relatively complex matter. The judgment further emphasises that Charles Russell is the go to international law firm for dispute resolution in Bahrain and the region.” 


Simon Green, Client Relationship Partner for Barwa commented “I am extremely pleased that we have achieved this result for one of our key clients in the Middle East.”

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