26 October, 2020

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Refusal By Dubai Court To Freeze Brat-Pack Account 

By Chrishmal Warnasuriya

Chrishmal Warnasuriya

Chrishmal Warnasuriya

Refusal By Dubai Court To Freeze Brat-Pack Account; Where we may have gone wrong – the “Banker/Customer” Contract 

The Facts – As Reported at the Weekend Press

This was one of the headlines making last weekend’s Press – that a certain Bank in Dubai had refused a request by the Government of Sri Lanka (GOSL) to freeze foreign-held monies of a politician. Since these issues cut across commercial banking law and several aspects of the banker-customer contract (or relationship) I felt there was a public interest in the knowledge of at least the basics; hence these essays, with a prompt disclaimer that I am depending entirely on what was published as regards the facts of the matter and therefore the truth or not of what was reported is beyond my personal knowledge or comprehension.

The summary of what was reported was, inter alia that:

  • Days before the August 17 election news had reached the GOSL of a secret account of a young politician, son of a former VVIP at the Emirates National Bank of Dubai (NBD);
  • That in an attempt to expose this and bolster the joint UNF campaign of the SLFP under H.E. the President Maithripala Sirisena (MS) and UNP under the Hon. Prime Minister Ranil Wickremesinghe (RW) a process began to track down details of the account holder and pursue further action against him;
  • However although a direct authority was issued by President MS in addition to an appeal to Sheikh Rashid Al Maktoum, the information was not forthcoming;
  • A legal firm was hired to represent the GOSL in Dubai (presumably with knowledge of banking law – can’t differ much when it comes to international transactions) that assured to “recover and return” the monies, had it been obtained illegally;
  • However months thereafter, the Dubai court has turned down the GOSL request to freeze these funds on the principle premise that the holder of the account/s had not been convicted in Sri Lanka, nor a case filed against him in any court.

This invites us to consider whether the Dubai court ruling can be sustained on the Law. To economize word-space only the fundamentals of this area in Commercial Banking Law will be discussed.

The Banker’s Duty of Care – “Tournier Duty”

We must first understand that any customer’s (VIP’s or otherwise) dealings with his/her bank are governed by a Contract, the Banker/Customer relationship which holds its own sanctity and privity; whether provided for expressly in the Mandate or implied by customary Banker’s usage. Therefore all others outside of that relationship, even the mighty GOSL are third parties to that contract and will not be entitled to any dealings with it; unless expressly sanctioned by the one party (customer) and accepted by the other (bank). These contract terms are further strengthened by the Banker’s Duty of Care at common law, which are generally accepted standards of conduct expected of a banker in its dealings with customers; confidentiality being at the pinnacle under both these considerations.

It should be expected therefore that to depart from such strictly enforceable duties of a banker, particularly in a fast developing commercial hub like Dubai where even the scent of such a breach would lead to disastrous consequences globally in their public perception, it would have taken a bit more than a communication by the MS/RW led GOSL nor a polite request to the Sheikh; to freeze the accounts of any customer, leave alone this particular politico! The underlying principle and the very limited exceptions which would allow a departure were set out in the case of Tournier v. National Provincial and Union Bank of England (hence the name) where it was accepted that there was an implied term in a contract between a banker and his customer that the banker will not divulge to third persons without consent either –

  1. the state of the customer’s account, or
  2. any transactions with the bank, or
  3. any information acquired through the keeping of his account

The Rule which existed at common law and was implied into banker/customer contracts has since been also recognized and written into both the Business Banking Code as well as the Bankers Code (at Sections 8.3 & 11 in the UK), where funnily enough; it is almost an ad verbatim reproduction of the Tournier duties of confidentiality and its qualifications.

Every rule has an exception – Did we get it right

Of course the rule itself as indeed the exceptions are not without complication. Firstly on this implied duty of secrecy itself, there doesn’t appear to be a clear-cut authority but the developments of common law, read together with the Banking Codes will direct a prudent practitioner to the right approach in tackling the subject. As in every rule, the “Tournier duty” doesn’t appear to be an absolute brick wall, we can clearly identify at least four distinct qualifications, where:

  • disclosure is under compulsion by law;
  • there is a duty to the public to disclose;
  • the interests of the bank require disclosure;
  • disclosure is made under express or implied consent of customer

We may safely conclude in our instant case that (d) is completely out, this brat-pack would clearly not give such consent. Similarly both (b) and (c) would hardly hold any argument in a Dubai court as regards a Dubai bank (may very well have been different if it were a local bank here); unless we could show a “public duty” owed to us to disclose such information. It certainly would not have been “in the bank’s interest”; quite to the contrary they will suffer greatly in business confidence had such information leaked out, that they were a bank not to be trusted! As such we should have been ready with option (a) which was the only one open to us.

Option (a) – When compelled by Law

The Press reports that the Dubai Court rejected our application on the singular premise that there was no order issued by our courts, nor indeed any likelihood of same; as such the Dubai bank could not have reasonably been placed under such a compulsion. Had we been armed with such an order, we may have been able to rely on the following:

  • A Protective Breach – In the case of Parry Jones v Law Society Lord Justice Diplock discusses how a contractual duty of confidence may be overridden by the duty of a party to comply with the law. Where a bank knows (or reasonably suspects) of an offence being committed and discloses information, such a breach of its duty of confidentiality is referred to as committing a “protective breach”; on all other occasions the bank must be ordered by law to disclosure such information.
  • Notice to Customer – It has been established that where the breach is sanctioned by law the Bank is not under any additional duty to oppose such orders of court or even to notify the client. However in Robertson v Canadian IBC the Privy Council departed from this somewhat and left it open to the bank (as an implied duty) to either notify the customer or inform Court of having attempted to do so.

“Shapira” Injunctions

The Court of Appeal (UK) findings in the case of Banker’s Trust Co Vs Shapira is an authority on the issuance of freezing orders to banks to suspend and hold transactions on a customer’s assets held with the bank, known in common parlance amongst practitioners as “Shapira orders” (replacing what was previously known as Mareva injunctions); which is what the GOSL appears to have been seeking in Dubai, in addition to the information of transactions. The Dubai Court too appears to have been led by this authority in refusing the orders we sought. In Shapira it was held that –

The court will order disclosures of confidential banker/customer information even at the early interlocutory stages of an action –

  • Where the Plaintiff (in this case GOSL) seeks to trace funds which might be dissipated as a result of delay;
  • if there is strong evidence that the monies had been fraudulently deprived;

So clearly for the Dubai court to hold so, we should have been able to at least show a prima facie case that we were attempting to trace these funds which had been the subject of fraudulent dealings. Also in order to be successful in obtaining a Shapira order, as it was held in the case of Arab Monetary Fund v Hashim the claimant must show a real prospect of making a proprietary claim to those assets asked to be frozen; thus a note from President MS nor a message to the Sheikh will hardly come up to these expectations of the law!

Public Duty to disclose – Libyan Arab Bank Case

Although we could hardly impose such a public duty obligation on the State of Dubai (or indeed the UAE to which it belongs) domestically, it may have been an argument to try and come under the law established in this case; that for its protection of banking business it was under a higher public duty to disclose such information to the GOSL to assist in its investigations. This qualification though is more a defense for a bank to rely on, as opposed to the more positive nature of the above first exception.

In Libyan Arab Foreign Bank v. Bankers Trust Co the facts were briefly that a banker was said to have made a statement to the Federal Reserve Bank of New York to the context that “it looked like the Libyans were taking their funds out of the various accounts “. There was no mention of Libyan Arab Bank by name, nor was this information given under compulsion of law (as above). Upon being sued the Bankers Trust assumed three of the above four exceptions, that they were entitled to act as they did, including that of a “higher public duty” to disclose. In delivering judgment however the other two qualifications were rejected, but this public duty component accepted, on the premise inter alia that –

  • There was a statutory power at s. 4(3) of the Bank of England Act, 1946 and s. 16 of the Banking Act, 1979 to obtain information from banks
  • There was a presumption that New York law on this point was the same as English law
  • Therefore the Federal Reserve Board, as the central banking system in the United States, may have a public duty to perform in obtaining information from other banks.

The Press does not report whether we attempted to run this line of argument, however even to do so, we may still have been asked to show evidence of such an investigation being conducted here locally; which it is reported we did not have.

A request by Sri Lankan courts – the Law

Although clearly there has been none made on this occasion by our courts, other than this reported “communication” by President MS, perhaps this too was an angle open to the GOSL to explore; to go armed with an order from our courts seeking such disclosure and freezing of funds. This should have been looked at prior to filing an application that has now been rejected by the Dubai court. Banking Law permits such requests generally, when made by a foreign court of competent jurisdiction making such inquiries, in so far as they are –

  • Not being a simple fishing expedition
  • Not a denial of a privilege (of the account holder) in the banker’s country

In the case of Westinghouse Electric Corp it was held that the High Court (in UK) will accede to such a request of a foreign tribunal for the production of specific documents, provided that those proceedings were not penal and that such person will be entitled to claim privilege against self-incrimination if the evidence is likely to render such person liable to financial sanctions. A similar line of thinking was followed in the case of Pharaon v Bank of Credit and Commerce International SA, where in determining competing public interests in the matter, the English court held that –

  • the duty of confidentiality was subject to the demands of any greater public interest;
  • the role of the court was to weigh the competing public interests of assisting the US courts in ensuring that justice was done in a case involving allegations of serious wrongdoing

The People’s mandate of 8th January

We formed part of a joint-voice that rallied the absolutely sovereign citizens of this Republic to make that historical change in January this year, a major component of which was bringing perpetrators to justice and vesting corrupt and ill gotten gains of all these brat-packs back in the coffers of the People. This battle cry was once again raised during the August 17th election, to which the People again responded.

Almost 10 months have elapsed in the year and I do hope we will not wait for the next election to rush into such ill-advised and hurried actions without seeking proper counsel and advise, but think carefully, strategize the initiatives and do the job that the People of this country empowered their government to do; we the People will remain in the presently “silent Opposition” (as there doesn’t appear to be one in the Legislature) and keep watch!

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Latest comments

  • 2
    1

    Dubai Wants to be an international business center. So, many people may be transferring money like this.

    Govt should have first talked to the Emirate govt and explained the situation.

    Only thing is the International Trnasparency guy – retired Judge will be filthy rich for doing nothing.

    • 4
      3

      RW/MS just wanted some political mileage by exposing this MR son’s Dubai bank account on eve of elections, nothing more,

      Never wanted to recover robbed national wealth or to put Namal or any body behind bars,

      This very much evident RW’s interference with AG actions , preventing Gota’s arrest under Fire Arms act.

      Just get convinced Ranil -Maithri try to fool us, nothing more,

      They MR /Gota. / Ranil are one big league

    • 0
      1

      Hey Jim Shitty, the LTTE backed diaspora must be after the money eh?

    • 4
      0

      Yes Jim,

      Now that we have hired the Transparency head honcho, millionaire (courtesy of Air Lanka) J.C. Weliamuna, we think its time to hire someone with direct access to the US machine, like the guy who contested the election under a JVP ‘false flag’ and lost it due to party machinations.

      We bet the yankees will make things happen for his benefit!

      Long live espionage.

    • 5
      0

      Charity begins at home! Why has not a single corrupt politician been convicted in Sri Lanka so far with all the piles of evidence available?
      Why blame a bank in Dubai when there is not a shred of Justice in Sri Lanka and the Prime Minister flouts the legal process with impunity?!
      What a Corrupt moron the Miracle of modayas has as PM!
      Ranil Wickramasinghe must be forced to resign for aiding and abbetting corruption.
      He is morally corrupt and playing a shell game with the law of the land. He has sent a strong message to the entire country and all legal and judicial institutions that corrupt politicians are above the law of the land. He has insulted airport security and the police who arrested the common criminal Weerawansa.

      Ranil and his famous parliamentary privileges are an insult to Sri Lankan citizens. At this rate Mahinda Jarapassa will be back has head of state in 2 years time.

      When the Prime Minister of Sri Lanka aids and abets corrupt clowns like Wimal Weerawansa to escape the law what hope is there for any conviction of the Rajapaksa brats?!
      Ranil WIckramasinghe should be forced to resign for interfering with the law and releasing Wimal Weerawansa who has 2 or 3 passports and his wife too. Ranil Wickramasinghe is aiding and abetting corruption at the Central Bank where Arjuna Mahendran is a corrupt insider traders and he and his son in law should be investigated.

      Wimal Weerawansa has stolen houses from the Ministry of Housing for his relatives – he is corrupt to the core and Ranil Wickramasinghe has bailed him out to spread heat speech.

  • 2
    2

    Where we went wrong is quite “obvious” and now the writer has taken lot of pain to examine and explain it to the reader. Thank you.

    Before we embarked on this “Project”, both the President and the Prime Minister had the best “Resource” available to make use of and obtain correct guidance in this case where banking principles are involved. Who or What that “Authority” is? None other than the present Governor of the Central Bank of Sri Lanka. He claims considerable hands on experience as to the operational aspects and investment policies of the banking sector in the Middle East and particularly Dubai. Why his ADVICE and DIRECTION were not obtained? OR if in fact he was consulted, why he did not give the CORRECT procedure to be followed, including the provisions in regard to “Commercial Law” that prevails and applicable internationally. This matter also relates to “Off Shore” bank accounts held by “supposed” to be Sri Lankans and dealing with foreign currencies. Then who should take the responsibility and the task of “examining” such matters? Isn’t it the responsibility of our Central Bank, Ministry of Finance and the Foreign Affairs? Why the the President and the Prime Minister are involved? Who advised the President to address a “REQUEST” to Emir of Dubai to help in the “Freeze” of accounts in a local bank? The Emir and his advisers must be still “Laughing” at us. What a “CIRCUS” our newly instituted Government Leaders are staging? It is time to discard that attire of the Joker and put on the attire of king in the “Pack of Cards” – (meaning the members of the Cabinet and the group) and start Governing the entrusted affairs in a “Majestic and Honourable” manner. Mr President and Mr Prime Minister, you know that a pack of gaming card has only TWO “Joker” cards. Please don’t try to fit in into that. Please note this is said with good intentions of correcting some matters that appear to be going very wrong.

  • 1
    1

    since you know who the brat is just arrest the bugger and put him in remand with the worst of the worst to share a cell and hey presto account will be unfreezed fast and all moneys robbed from the country returned.

    • 2
      0

      No, this does not happen! Look at Mr. Sajin Vass G and his wife. They have achieved
      what they want under MSD protection, probably the Police have been heavily bribed to
      manage this new Status – with due State approval. Similar action will follow when MRs
      family is involved in any Case they are due to go-in, in the future.

  • 1
    3

    Did anyone watch the SATANA programme when the writer tried to mislead the audience in his introduction to the AVANGARDE discussion.

    How can you trust these people?

  • 0
    0

    It was the same old story. SLK Government requesting foreign countries to ban LTTE while it was negotiating with them in Sri Lanka, and refusing to treat them as a terrorist organization.

    The stupid politcians in SLK and their law officers need their heads examined: no wonder the MR clan is laughing their heads off and heading to foreign banks to collect their loots!

    Put the buggers under lock and key until investigations are complete, just the same way MR held SF in a dungeon at the naval base Colombo while his Army and Law Officers concocted a false charge to imprison him.

    May be RW does not want to do that iaw his deal with MR, but just go through these false pretenses until all the loot is transferred to another bank with RW commission placed in deposit some other swiss bank. In SLK it won’t be a miracle

  • 0
    3

    Your grasp of basic international law is far below par. Are the Courts in Dubai governed by the English law ?

    • 3
      0

      Dear Lex

      Please stop trying to mislead others through your ignorance.

      The Dubai international finance centre (which governs the bodies in question) is governed by English law and has a British chief justice. This is the only state in the emirates that does.

      A first year law student could have told you that, or google, had you bothered.

      • 0
        2

        Please do not seek to mislead

        • 1
          0

          Dear Lex

          Are you talking to yourself? Yes, please take your own advice.

          In the meantime, please read the following link for some basic understanding of the Dubai courts:

          http://difccourts.ae/the-courts-of-the-dubai-international-finance-centre-a-common-law-island-in-a-civil-law-ocean/

          • 0
            0

            DIFC is the applicable law.When you err, dont attempt to cover up

            • 0
              0

              Dear Lex

              Thanks. Glad to see you are spouting rubbish as usual. Try and distinguish between the DIFC and the law, first

              • 0
                0

                Dont talk rubbish

  • 0
    1

    Check money pipeline. America.

  • 0
    1

    Permission from Payer

  • 0
    0

    “Days before the August 17 election news had reached the GOSL of a secret account of a young politician, son of a former VVIP at the Emirates National Bank of Dubai (NBD);”

    I believe that 8 bank accounts in Dubai have been identified as belonging to our beloved VVIPs.

    Have our VVIPs really been stupid enough to open “secret” accounts using their own names instead of different offshore companies, trusts and foundations?

    Some of the illegal payments for PR companies in the USA were for companies working with private wealth management not PR. Did our VVIPs not understand the advice they received or are the Dubai accounts just the tip of an ice berg?

    Residents of SL are not allowed to open bank accounts abroad without Central Bank authrorization. The interest income should have been reported to the IRD.

    • 1
      0

      @The Rogue Ayer

      You said “Residents of SL are not allowed to open bank accounts abroad without Central Bank authorization”

      Do you have any references to this that you can show ? Is there a law against it ? What are the consequences

      I dont think the thousands of Middle East workers (for example) actually get Central Bank authorization

  • 0
    0

    [Edited out] Please avoid typing all capitalized comments – CT

  • 2
    0

    Sirisena is dumb, or he is afraid of MaRa, or he is now in partnership to protect and share stashed away funds, or all three of them.

    By no stretch of the imagination can he be considered a patriotic minded President devoted to serving the interest of Sri Lanka.

    Suicide bombers looking for a noble cause please take note. Be aware Mother Lanka will survive this fiasco too.

  • 0
    0

    Why not just check the assets of the so called VVIP’s, that’s enough to put them behind bars. Then investigate the rest. All monies internationally or otherwise can be frozen. Welliamune read the law first before embarking on a mission and not redicule our country

  • 0
    0

    To rule a country you only need a dozens politicos even
    in army uniform.All you need to do is IDETIFY AND
    UNDERSTAND YOUR REAL MASTERS.The rest is ABCD.Accordig
    to this law,GOOD POLTICOS can loot and take their loot
    to designated safety.If billions stacked in foreign banks
    then MARA knows there are things for public to talk about
    and men like Arjuna have time to hunt for more loved ones.

  • 0
    0

    Thank you for the article

  • 0
    0

    Thanks Chrismal for a level – headed discussion. People like you should be in parliament, but are not. Which party is worhty of you, I wonder?

    If you read the election manifesto of a certain presidential candidate, he promised ‘ten times the development’ from corruption-generated monies stashed away.

    We still are waiting for the monies, but maybe it should be used to pay off the debt first, without ‘ten times the development’

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