Between: Ahmad Hamad Algosaibi and Brothers Company Plaintiff/Appellant v (1) Saad Investments Company Ltd (2) Maan AL Sanea and Others Defendants/Respondents

• Jurisdiction: Cayman Islands
• Judge: Sir Bernard Rix,John Martin,Sir Michael Birt
• Judgment Date: 21 December 2021
• Court: Court of Appeal (Cayman Islands)
• Docket Number: CICA CIVIL APPEAL NO: 15 of 2018

Between:

Ahmad Hamad Algosaibi and Brothers Company

Plaintiff/Appellant

and

(1) Saad Investments Company Limited

(2) Maan AL Sanea and others

Defendants/Respondents

Before:

The Rt. Hon Sir Bernard Rix JA

The Hon John Martin QC JA

The Hon Sir Michael Birt JA

CICA CIVIL APPEAL NO: 15 of 2018

(Formerly Cause No: FSD 54 of 2009 (ASCJ))

IN THE COURT OF APPEAL OF THE CAYMAN ISLANDS

FROM THE GRAND COURT OF THE CAYMAN ISLANDS

FINANCIAL SERVICES DIVISION

Appearances:

John Wardell QC instructed by Nicholas Fox and Christopher Levers of Mourant Ozannes for the Appellant (‘ AHAB’).

Stephen Smith QC and Marcus Haywood, instructed by Colette Wilkins and Shelley White of Walkers for the 1 ^st, 8 ^th, 30 ^th to 33 ^rd, 35 ^th to 37 ^th Respondents (‘ GT Respondents’).

Ben Valentin QC, Harriet Fear Davies, James Hart instructed by Ian Lambert of HSM Attorneys for the 13 ^th to 18 ^th Respondents (‘ AwalCos’).

Thomas Lowe QC and Jack Watson, instructed by William Peake, James Elliott and Niall Dodd of Harney, Westwood & Reigels for the 34 ^th Respondent (‘ SIFCO 5’).

TABLE OF CONTENTS
Subject	Paragraph
Introduction	1
An executive summary of the judgment below	6
An introduction to the Personae Dramatis	9
The Respondents' Summary of Findings at trial	36
The era of Abdulaziz	37
The Money Exchange accounts and Audit Packs	65
The era of Suleiman and Saud	124
- 2001	129
- 2002	137
- 2003	142
- 2004	146
- 2005	153
- 2006	160
- 2007	163
- 2008	165
The collapse and its aftermath	167
AHAB's “New for Old” case: a phoenix born of the collapse of the London Proceedings	185
The agreed List of Issues on appeal	194
Disclosure	212
The Money Exchange's fraud on the banks: some pivotal questions and answers at the commencement of trial	224
The nature of the appeal	231
The witnesses	250
“Core errors, substantive and procedural irregularities”	268
AHAB's allegedly new point of fully informed consent	309
Innocence, complicity and fraud: a road-map	335
- AHAB's submissions:	340
(i) Al Sanea was the fraudster	343
(ii) The Counterclaim	357
(iii) AHAB's knowledge of the fraud on the banks and of Al Sanea's indebtedness	365
- The Respondents' submissions:	387
(i) An overview	393
(ii) The purpose and nature of the Money Exchange	397
(iii) The Audit Packs	402
(iv) Suleiman and Yousef	409
(v) Suleiman's knowledge of Al Sanea's activities	418
(vi) Yousef's knowledge of Al Sanea's activities	420
(vii) Saud's knowledge	426
(viii) Dawood's knowledge	466
New for Old, forgery and manipulation	470
- New for Old	484
- Manipulation	499
- Forgery	513
Innocence, complicity and fraud: Discussion and analysis	619
- Foreign exchange transactions	651
- Letters of credit	656
- The property transactions	657
- TIBC and the Financial Businesses	661
Innocence, complicity and fraud: Conclusion	665
The Payment of $ 191 million on 3 May 2009	673
(i) Factual background	674
(ii) The Chief Justice's finding	678
(iii) Discussion	680
The proper law of the claims	692
(i) AHAB's claims	692
(ii) The Chief Justice's decision as to the proper law	704
(iii) Outline contentions on appeal	707
(iv) Classification of the claims	709
(v) The receipt based claims	715
(vi) The tortious claims	729
(vii) Conclusion	737
The substantive law of Saudi Arabia	739
(i) Introduction	739
(ii) Proprietary claim	748
(iii) Joint and several liability	782
Attribution	798
(i) Introduction	798
(ii) The law	810
(iii) Application to the facts	847
Tracing	858
(i) Governing law	859
(ii) Factual background	867
(iii) Cayman law on tracing	871
(1) The Chief Justice's findings	871
(2) Discussion	880
(a) Inferences	881
(b) Maelstrom	901
(3) Duty to account	930
(4) Tracing to particular Respondent companies	933
The claims other than the proprietary claim	954
(i) Dishonest assistance under Cayman law	959
(ii) Conspiracy under Cayman law	979
(iii) Dishonest assistance and conspiracy under Saudi law	987
(iv) Unjust enrichment under Cayman law	1000
(v) Unjust enrichment and Saudi law	1015
(vi) Knowing receipt and Saudi law	1023
Illegality	1024
(i) The law on illegality	1026
(ii) Relevant factual background	1033
(iii) The Chief Justice's decision	1042
(iv) Discussion	1049
Summary of conclusions	1087

Judgment of the Court

Introduction

1 This appeal arises out of the massive collapse of a Saudi Arabian partnership which is under bankruptcy proceedings in the Kingdom of Saudi Arabia. A principal figure within the history of that partnership, albeit not a partner himself, is Maan Al Sanea ( Al Sanea), a leading Saudi Arabian businessman and reputedly once one of the wealthiest men in the world. He is the son-in-law of Sheikh Abdulaziz, who, from about 1980 until an incapacitating stroke in 2000 (followed by his death in 2003) had been the most influential of three brothers who were partners at the apex of the partnership. Al Sanea's affairs involved numerous Cayman Islands companies, which are themselves in liquidation. It is this fact that grounds this litigation in these Islands. The collapse of the partnership and of Al Sanea's business affairs occurred in May 2009, no doubt in part as a result of the 2008 global financial crisis. This litigation is in effect a struggle between the creditors of the partnership and the creditors of Al Sanea's erstwhile business empire for control of the remaining funds. The claim is brought in the name of the partnership, which has made a deal with its creditors for the purpose of the litigation. The claim is in the order of a net amount of $ 4 billion. 1 The litigation is immense. The trial took place over a period of a year. The judgment below runs to over 1300 pages.

2 The principal allegation of the plaintiff partnership is that Al Sanea over all or much of his business life, which stretches back into the early 1980s, defrauded the partnership by using both his position as the favoured son-in-law of 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 defendant Al Sanea companies and their creditors is that the partnership ran a gigantic Ponzi scheme, in which both the partners and Al Sanea were involved. For numerous reasons, but in essence because the partnership was entirely complicit in the scheme and therefore knew and authorised everything that Al Sanea did, the defendants say that the loss must lie where it falls and the partnership's claim must fail.

3 The judge, Chief Justice Smellie, agreed with that defence. In dismissing a counterclaim brought (inter alia) on Promissory Notes purportedly granted by AHAB to Al Sanea's companies, he concluded his judgment as follows:

For the sake of clarity, it should be understood that while I have rejected and dismissed the counterclaim and in doing so accept that Al Sanea as its partial instigator would seek to defraud AHAB, this conclusion does not suggest an acceptance on my part that his running of the Money Exchange prior to its collapse in May 2009 involved a fraud by him upon AHAB. That issue is separately and from my point of view conclusively dealt with above in this Judgment in which is examined the overwhelming evidence of the AHAB Partners' knowledge and authorisation of his activities at the Money Exchange (and to a lesser but no less significant extent, at the other Financial Businesses). 2

4 In a very real sense that paragraph sums up the whole of the dispute from the point of view of the judgment below. The partnership appeals. There is no Respondents' notice.

5 In the course of writing this judgment, AHAB and the so-called GT Defendants (the 1 ^st, 8 ^th, 30 ^th–33 ^rd, and 35 ^th–37 ^th defendants) settled. More recently, AHAB and the so-called AwalCos (the 13 ^th–18 ^th defendants) have also settled. On the other hand, it does not appear that any of the substantive issues which we have had to consider have been affected by those settlements.

An executive summary of the judgment below

6 It may assist the reader to have at the outset an executive summary of the lengthy judgment below. This summary was agreed by the defendant Respondents on 15 November 2018. It is not confirmed by the agreement of AHAB, but it remains a helpful and sufficiently accurate introduction to our judgment on appeal. 3 It is as follows:

• 1. Ahmad Hamad Algosaibi Brothers partnership, or AHAB, has its origins in a business begun by Hamad Algosaibi in the 1940s. Hamad died in 1969 and was succeeded by his three sons, Ahmad, Abdulaziz, and Suleiman. Together, they incorporated AHAB as a general partnership and successively chaired AHAB until Suleiman's death in February 2009. AHAB has since been chaired by Yousef, Ahmad's son. Yousef, Saud (Abdulaziz's son), and Dawood (Suleiman's son) are amongst the current AHAB Partners.

• 2. From 1980 onwards, AHAB strategically expanded into financial services and other related businesses. In 1981, AHAB's board of directors established the Money Exchange as an unincorporated division of AHAB. Maan Al Sanea (“Al Sanea”), who had married Abdulaziz's daughter in 1980, was appointed its Managing Director. In the 1980s, AHAB incorporated Algosaibi Investment Holdings EC (“AIH”) and Algosaibi Trading Services Ltd (“ATS”) (originally incorporated as Algosaibi Investment Services Ltd (“AIS”)) and in 2003, AHAB incorporated a bank in Bahrain, The International Banking Corporation (“TIBC”) (collectively, “the...