Jafar v Abraaj: Deceit Claims

In a Nutshell

The Grand Court (the “Court”) dismissed the plaintiff’s claims for deceit under Cayman Island law and unjust enrichment under UAE law. The extensive judgment summarises legal principles relating to the Court’s approach to the assessment of witness evidence, the drawing of adverse inferences from a party’s failure to call a witness, the law of deceit, admissibility and application of expert evidence regarding foreign law, and the law of attribution and vicarious liability.

Background and Claim

The liability judgment relates to the high-profile collapse of the Abraaj Group, a prominent United Arab Emirates (“UAE”) based private equity group founded by Mr Naqvi. The plaintiff (“Mr Jafar”) loaned approximately US$350 million to Abraaj Investment Management Limited (“AIML”) and Abraaj Holdings (“AH”) — via three separate loans. The loans were rapidly passed from AIML and AH to two private equity funds in the Abraaj group (the “Funds”).

Following Abraaj Group’s collapse, AIML and AH went into insolvent liquidation and therefore Mr Jafar needed to establish claims directly against the Funds to recover his losses in respect of the loans. Mr Jafar had made the loans at Mr Naqvi’s request following a few meetings and conversations with Mr Naqvi in December 2017. Mr Jafar claimed that Mr Naqvi had made fraudulent misrepresentations that induced him to make the loans. Mr Jafar brought claims against the Funds’ general partners and an Abraaj Group company that one of the Funds made investments through (the “Fund Parties”) seeking US$232 million plus interest:

• The first claim was in deceit based on the Funds being liable for the fraudulent misrepresentations allegedly made by Mr Naqvi.
• Secondly, Mr Jafar made a claim against the Fund Parties under the UAE law of unjust enrichment based on the Fund’s receipt of payments made by AIML and AH out of the monies advanced by Mr Jafar.

Decision

Mr Jafar’s case was based on conversations with Mr Naqvi that were never documented in writing, and Mr Jafar was forced to rely on his own recollection of conversations that took place many years ago in circumstances where he was largely unable to recall the precise words used. Mr Naqvi did not give evidence (he was on remand in the UK, awaiting extradition to the United States), and Mr Jafar’s son, Badr (a director of AH and close to Mr Naqvi), was not called as a witness—which the Court concluded was a significant omission on Mr Jafar’s part. The Court also found that Mr Jafar was aware of aspects of Mr Naqvi’s misconduct and turned a blind eye to it.

The Fund Parties were indirect recipients of the loans Mr Jafar advanced to AIML and AH. Mr Jafar had to argue that Mr Naqvi was formally acting on behalf of the Fund Parties when they were not assuming any liability to Mr Jafar and did not need to engage with him. The Court noted that this was an uphill struggle that Mr Jafar couldn’t meet.

The Court ultimately dismissed Mr Jafar’s claims. The deceit claim failed because:

• Mr Jafar did not prove that Mr Naqvi said what Mr Jafar claimed;
• Mr Jafar did not understand (and a reasonable lender in his position would not have understood) that Mr Naqvi was making the express or implied representations claimed; and
• Mr Jafar was not induced by, and did not rely to any material extent on, any representations made by
  Mr Naqvi.

While these conclusions meant that it was not strictly necessary for the Court to consider the UAE deceit claim under the double actionability rule, it also concluded that Mr Jafar failed to prove his case in deceit under UAE law. As to Mr Jafar’s UAE unjust enrichment claim, the Court concluded based on expert evidence on UAE law that Mr Jafar was unable to maintain a claim in enrichment without cause when he affirmed and did not rescind the loans.

Key Takeaways

In considering the claims, the Court summarised various legal principles as follows:

• When assessing witness evidence, the Court will focus on objective evidence and inherent probabilities, treat witness recollections with caution, and require strong proof to substantiate serious allegations such as fraud.
• The Court will consider drawing adverse inferences from the absence of a witness in justified circumstances. However, the Court will do so carefully by considering all relevant factors and explanation, and it will give reasons for doing so. In this case, the Court drew an adverse inference from Mr Jafar’s failure to call a witness because that decision was found to be deliberate and self-serving.
• The double actionability rule imposes an additional requirement in cases of civil wrongs based on acts done in a foreign jurisdiction that a plaintiff must satisfy, namely, to show that they could maintain their tort claim in the foreign jurisdiction. The double actionability rule must apply unless clear and satisfying grounds are shown why it should be departed from and what solution should be preferred. While there is a flexible exception to the double actionability rule, that exception should not be applied lightly.
• When applying foreign law, the Court must not apply Cayman Islands (or English) common law patterns of thought and must instead focus and rely on the expert evidence regarding the foreign legal system. The task of a trial judge when there are disputed questions of foreign law is to determine what the highest relevant court in the foreign legal system would decide if the point was to come before it.

¹ [2025] CIGC (FSD) 70