Funds successful in professional negligence claim against BNP Paribas in “Golden Belt” Sukuk litigation: [2017] EWHC 3182 (Males J.)

8 December, 2017

Mr Justice Males has given Judgment in favour of a number of distressed debt funds run by The Fortress Group and Cyrus Partners Limited, following a 6-week trial of a professional negligence action which the funds brought against BNP Paribas.

The funds purchased certificates in the after-market of the “Golden Belt” Sukuk, a US$650m Islamic financing instrument akin to a bond, which was arranged by BNP Paribas.

Following a trial in the Financial List of the Commercial Court, Mr Justice Males found that BNP Paribas was in breach of its duty of care to the funds to take reasonable care to ensure that a promissory note, which was the primary means of enforcement for certificate holders in the Sukuk, was properly executed.

After widespread allegations of fraud against the ultimate Saudi borrower (the Saad Group), the Sukuk defaulted. However, the funds could not enforce the promissory note before the Saudi Courts since it had been not been signed in a manner which rendered it compliant with Sharia or Saudi law. Mr Justice Males found that BNP Paribas “dropped the ball” in making arrangements for the execution of that key document.

The funds were represented by Jeremy Brier, who was instructed by Marc Jones of Stewarts and led by Nigel Tozzi QC.