The Cayman Islands Court of Appeal (CICA) has handed down its long-awaited judgment in the landmark case of AHAB v SICL & Others. In the latest chapter of the Saad story, the CICA overwhelmingly endorsed the Chief Justice’s Grand Court decision to dismiss AHAB’s claims, finding in favour of the defendants/respondents on the majority of the key issues, in particular the issues of knowledge and authority on the part of the plaintiffs of what was described at first instance as a “cauldron of a fraud”. Harneys acts for the Joint Official Liquidators of SIFCo5.

The case is best summed up in the CICA’s own words as “complex and arduous”. This was reflected in the hearing being the longest-running appeal in the history of the Commonwealth and the resulting 280-page judgment.

The factual matrix is well known but worth restating given the sheer scale of the litigation. The claims revolved around Maan Al Sanea, the Kuwaiti-born former fighter jet pilot, once thought to be one of the wealthiest men in the world. Having married into the Algosaibi family, the owners of the AHAB partnership, Al Sanea assumed a prominent role in the partnership despite not being a partner. AHAB claimed that Al Sanea, over much of his business life, defrauded the partnership by using his position as favoured son-in-law of the Sheikh Abdulaziz and the partnership’s ability to borrow in order to enrich himself at the partnership’s risk and expense. The principal allegation of the defendants, many of whom are companies in liquidation in the Cayman Islands, is that the partnership was run as a gigantic Ponzi scheme, in which both the partners and Al Sanea were involved, and in which the partnership was complicit. The total value of the claim is in order of the amount of approximately US$4 billion.

At first instance, Chief Justice Smellie dismissed AHAB’s claims in their entirety in a comprehensive judgment which ran to over 1300 pages, holding that the AHAB partners knew of and authorised the fraudulent borrowing through its various businesses.

The CICA has upheld the vast majority of the Chief Justices’ findings in its judgment, holding that by reason of AHAB’s knowledge of and consent to the far-reaching fraud, Al Sanea was not in breach of the fiduciary duty owed to AHAB and its businesses and that its appeal fails accordingly. The finding is subject to a minor qualification in respect of a transfer which was made in May 2009, when it was apparent that the partnership had defaulted on its debt obligations and was on the verge of collapse. The CICA suggests this is a US$500,000 issue for AHAB and SIFCO5 to resolve. The CICA also held that the Chief Justice was correct in finding that the governing law of AHAB’s proprietary claim and claims of knowing receipt and unjust enrichment is that of Saudi Arabia. The decision considers the applicability of the following principles:

1. Double actionability in respect of the tortious claims of dishonest assistance and conspiracy
2. Tracing claims
3. Illegality

The breadth of issues discussed in the CICA’s judgment is likely to have a profound impact on the jurisprudence of the Courts of the Cayman Islands and contribute to significant discussion of the impact of the application of the relevant principles by practitioners and litigants alike. We will discuss the principles in more detail in future blogs and articles on the judgment.