Golden Belt 1 Sukuk Company BSC(c) v BNP Paribas

Golden Belt 1 Sukuk Company BSC(c) v BNP Paribas

BNP Paribas, as Arranger, owed a duty of care to certificate holders (but not to Golden Belt) to take reasonable care to ensure the Promissory Note was properly executed. BNPP breached that duty by failing to ensure independent witnesses and proper execution, instead allowing Saad to control the process. This breach caused loss to the Funds, as they relied on the validity of the Note when purchasing certificates. Damages are to be assessed as the difference between the recovery the Funds would have made with a valid Note and the recovery they will in fact achieve.

Parties
Claimant: Golden Belt 1 Sukuk Company B.S.C.(c); Claimants: FCOF II UB Securities LLC and Others (Fortress and Cyrus Funds); Defendant: BNP Paribas
Jurisdiction
England and Wales
Judgment Date
07 December 2017
Procedural Posture
Commercial Court (financial List) Negligence Claim / Judgment After Trial on Liability and Measure of Damages in Principle
Outcome
Claim by Golden Belt dismissed; claim by Funds (certificate holders) succeeds on liability; quantum to be determined at further trial.
Legal Topics
Negligence of Arranger in Capital Markets Transaction, Duties to Investors in Sukuk/eurobond Issues, Validity of Promissory Note Under Saudi Law, Measure of Damages for Negligent Arranger, Secondary Market Investor Rights
Banking and Finance Law Tort Law Islamic Finance Negligence of Arranger in Capital Markets Transaction Duties to Investors in Sukuk/eurobond Issues Validity of Promissory Note Under Saudi Law Measure of Damages for Negligent Arranger Secondary Market Investor Rights

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Parties

Golden Belt 1 Sukuk Company B.S.C.(c)

Claimant

FCOF II UB Securities LLC and Others (Fortress and Cyrus Funds)

Claimants

BNP Paribas

Defendant

Procedural Posture

Commercial Court (financial List) Negligence Claim / Judgment After Trial on Liability and Measure of Damages in Principle

Legal Issues

  1. 1 Did BNP Paribas owe a duty of care to certificate holders and/or Golden Belt to ensure the Promissory Note was properly executed?
  2. 2 Was BNP Paribas in breach of that duty?
  3. 3 Did the breach cause loss to the claimants?

Ratio Decidendi

BNP Paribas, as Arranger, owed a duty of care to certificate holders (but not to Golden Belt) to take reasonable care to ensure the Promissory Note was properly executed. BNPP breached that duty by failing to ensure independent witnesses and proper execution, instead allowing Saad to control the process. This breach caused loss to the Funds, as they relied on the validity of the Note when purchasing certificates. Damages are to be assessed as the difference between the recovery the Funds would have made with a valid Note and the recovery they will in fact achieve.

Court Disposition

Claim by Golden Belt dismissed; claim by Funds (certificate holders) succeeds on liability; quantum to be determined at further trial.

Orders

  • BNPP liable to the Funds for breach of duty; damages to be assessed as difference between recovery with valid Promissory Note and actual recovery.
  • Golden Belt's claim dismissed.