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Jersey Unreported Judgments
You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Dubai Islamic Bank PJSC v Ridley  JRC 204 (05 December 2017)
Cite as:  JRC 204
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T. J. Le Cocq, Esq., Deputy Bailiff, sitting alone
Dubai Islamic Bank PJSC
Cititrust (Jersey) Limited
Advocate J. C. Turnbull for the Defendant/Appellant.
Advocate D. R. Wilson for the Plaintiff/Respondent.
the deputy bailiff:
1. This is an appeal from a decision of the Master of 7th June, 2016, in which the Master granted parts of a summons brought by Dubai Islamic Bank PJSC, the Plaintiff/Respondent, ("the Bank") seeking to strike out certain parts of an amended answer filed on the part of Mr Charles Ridley, the Defendant/Appellant ("Mr Ridley").
2. In considering an appeal from the Master in a matter such as this the court's duty is to consider the matter afresh and reach its own conclusion whilst taking into account the decision of the Master and the reasons for his decisions (see Café de Lecq Limited-v-R A Rossborough (Insurance Brokers) Limited  JRC 011).
3. The principle applicable to an application to strike out is that the court should only strike out pleadings in plain and obvious cases. In Re Esteem Settlement  JLR 119 Birt, Deputy Bailiff, (as he then was) said this:-
4. In that case the court also recognised that such a cautious approach to striking out is even more applicable in "an uncertain and developing field of law". The court cited with approval Chadwick LJ's paraphrase of Lord Browne Wilkinson's judgment in Barrett-v-L B Islington  3WLR 83 in which the court said:-
5. The Master himself acknowledged that this was the correct way to approach this matter where, at paragraph 43 of his judgment Dubai Islamic Bank-v-Ridley  JRC 102, he says:-
6. I agree with the characterisation by the Master of his function and I must consider this appeal not only against whether I take the view that the Master may or may not have been correct but whether, which is in issue in this appeal before me, he should have assumed the jurisdiction to determine these matters in the first place.
7. It cannot be said that the Master's judgment is anything less than thorough and detailed in its close argument comprising as it does some 73 sides and 174 paragraphs.
8. After a full exchange of written submissions the Master heard oral submissions in connection with the strikeout application on the 8th February, 2016. At the conclusion of the hearing the Master reserved judgment but gave further directions for the filing of further submissions including submissions as to what system of law applied to the proprietary claim underpinning the tracing claim brought by the Bank; what the creditor/debtor relationship was that underlined the Bank's Pauline action; submissions relating to Sharia law; and specific legal authority.
9. Those further written submissions were received and the Master then determined that he wished an oral hearing to take place in order that he could be addressed on limits relating to the tracing claim, the basis of the Pauline action by reference to the RSA (defined below), whether the claim in the tort of deceit had been compromised by a provision of the RSA, whether the lack of rights or remedies available under Sharia law is a question of construction of the Agency Agreements (defined below) and whether an argument that Jersey Private International Law provides that Sharia law is capable as operating as part of the law of the Agency Agreements has given rise to an issue estoppel or an abuse of process. A second hearing took place on the 21st April, 2016.
10. I go into this small detail relating to the procedure before the Master because clearly when the Master first heard argument this gave rise to issues on which he required further assistance both written and by way of oral submission. These things to my mind suggest, without more, that this was a matter of some complexity.
11. The essence of the claim before the Court is an application by the Bank for assets worth approximately US$7 million which, it is alleged, have been contributed to a Jersey Law Trust known as the Natang Trust by Mr Ridley between 2005 and 2007. The basis of the claim is that they represent monies obtained by Mr Ridley as a result of a fraud on the Bank and are the Bank's property. The claim is accordingly proprietary in its nature, the Bank claiming that it can trace monies into the Natang Trust. The Bank claims that the monies were subject to an immediate constructive trust in its favour on receipt by Mr Ridley.
12. The fraud was perpetrated using the mechanism explained below through a number of agreements entered into between the Bank and CCH (as hereinafter explained) between November 2002 and February 2007. These agreements were known as the Agency Agreements ("the Agency Agreements").
13. In his answer, amongst other things, Mr Ridley disputes that the monies transferred into the trust were the product of any fraud, he denies that such a fraud took place, and claims that in any event he has defences available to him under Sharia law because the Bank's claim had in effect been discharged when the Bank took possession of certain property (known as Plantation) used as security. He asserts that the Bank cannot assert a constructive trust and that to succeed in a proprietary claim the Bank must rescind the Agency Agreements and meet the double-actionability criteria which, under UAE/Sharia law, it cannot do because the claim has been satisfied by the Bank taking Plantation.
14. I am conscious that in characterising the claims and the defences in this way I have oversimplified them but I believe that this is sufficient general statement for dealing with the instant appeal before me.
15. The application by the Bank to strike out parts of Mr Ridley's amended answer follows on from proceedings in England brought by the Bank in which the Bank claimed as a debt US$432 million from five defendants including Mr Ridley ("the English Proceedings"). In addition, the Bank claimed that certain shares held by another defendant (PSI Energy Holding Company BSC (PSI)) were in equity the Bank's property.
16. The claims in the English proceedings were brought in reliance on an agreement called the re-structuring agreement dated 17th August, 2007, ("the RSA"). Insofar as this is material, the RSA provides as follows (and I quote from the relevant parts of the Master's judgment):-
17. It is central to the argument on this appeal, as indeed it was in the argument before the Master, that each of the Agency Agreements were also expressed as being subject to Sharia law. Sharia law is central to the operations of the Bank. Indeed the preamble to each of the Agency Agreements provide that various purchases and sales of commodities were to be "based on the tenets and precepts of Islamic Sharia". Furthermore, each of the Agency Agreements had a governing law provision that provided that each of the Agency Agreements would only be governed by English law (or in the case of one of them, German law) "insofar as not contradicting with the tenets and precepts of Islamic Sharia".
18. The Bank succeeded in the English proceedings for the reasons set out in the judgment of Flaux J dated 6th December, 2013, reported as Dubai Islamic Bank PJSC -v- PSI Energy Holding Company BSC  EWHC 3781 (Com) and in the judgment of the Master and herein referred to as "the December judgment". There were earlier judgments in the English Proceedings, one by Flaux J ("the October judgment"), and one by Hamblen J ("Hamblen J's judgment"). Some reference shall be made to these other judgments later in this judgment.
19. It is the Bank's contention that in the December judgment the Court dealt with, as one of the issues, the question as to whether or not Mr Ridley was a party to the fraud perpetrated against the Bank as a result of which the RSA was created. The question of whether or not the issue of fraud was determined in the December judgment is one that is contested in this appeal as it was before the Master in the application to strike out.
20. At paragraph 44 of his judgment the Master listed the issues that in his view he needed to determine in the form of the following questions:-
21. I do not consider it necessary to address each of the questions and indeed the Master himself addressed these various issues under general headings of Sharia law, estoppel, fraud, the Pauline action and deceit and then set out his conclusions.
22. At paragraph 22 of his judgment The Master recited certain passages from the December judgment (in which Mr Ridley was the third defendant) as follows:-
23. Before the trial which led to the October and December judgments the Bank had started the present proceedings seeking to assert a proprietary claim for assets held in the Natang Trust on the basis that they were the traceable proceeds of the fraud. Secondly, since 2015, the Bank has sought to set aside assets transferred into the Trust by Mr Ridley by means of a Pauline action.
24. The judgment of the Master, at paragraph 24 et seq, explains part of the application before him in the following terms:-
25. It is the paragraphs in the amended answer that reflect that defence that the Bank sought to strike out and to which the Master acceded. Furthermore, the Bank sought to strike out a further paragraph of the amended answer in which Mr Ridley asserted that any outstanding balance under the RSA had been extinguished by virtue of the Bank taking title to Plantation. The Master considered that that further request fell to be considered on the same basis as the matters generally relating to the defences in Sharia law. That was, in my view, clearly the case.
26. As I have already stated, the other part of the Bank's application to strike out parts of Mr Ridley's amended answer in the main relates to those parts in which Mr Ridley challenges the conclusions in the December judgment that there was a fraud and that he was a party to it. I have quoted the relevant part of the December judgment above.
27. In addition to the December judgment (already cited) the Hamblen J's judgment at paragraph 4 states:-
28. Mr Ridley raises a number of grounds of appeal against the judgment of the Master and they may be summarised as follows:-
(i) The Master erred in fact or in law in concluding that English private law principles determined the efficacy of the Sharia law qualification to the governing law of the Agency Agreements. As a result the Master held, in error, that that qualification had no effect or gave insufficient reasons for his conclusions;
(ii) The Master erred in fact or in law in concluding that the Sharia law principle on which Mr Ridley relies was not capable of being incorporated by reference into the Agency Agreements or that the Master failed to give sufficient reason for his conclusion;
(iii) The Master erred in fact or in law in concluding that the principle of Sharia law did not fall to be taken into account in construing the Agency Agreements;
(iv) The Master exceeded his jurisdiction in determining a point of law and a point of construction in the context of an application to strike out and/or summary judgment;
(v) The Master fell into error of law and/or fact in concluding that Mr Ridley was precluded by res judicata and/or abuse of process principles from relying upon the relevant Sharia law principle in connection with the claims advanced under the Agency Agreements;
(vi) The Master erred in law and/or was procedurally irregular in taking judicial notice of his understanding of the content of German law rather than assuming German law to be the same as Jersey law;
(vii) The Master erred in law by holding the constructive trust could arise without the plaintiff satisfying the requirements of the tort of deceit and rescinding the Agency Agreements;
(viii) The Master erred in law by holding that the double-actionability test did not need to be satisfied in respect of a fraud relied upon for the existence of a constructive trust in its favour.
(ix) Some of the paragraphs struck-out were not justified by the reasons contained in the Master's judgment.
29. These grounds of appeal, or at least the more substantial ones, come down to the consideration of three primary issues:-
(i) What the rule of Jersey law is as to the extent to which a contract may have more than one proper law and the extent to which a non-municipal law can be the (or a) proper law;
(ii) Whether UAE Law can have any relevance to a tracing claim which relies on an allegation of deceit;
(iii) The extent to which Mr Ridley is prevented from making arguments by reason of issue estoppel by the fact of the findings in the English proceedings.
30. It does not appear to be Mr Ridley's case that he is not liable under the RSA as such. Rather, his defence is that the RSA is unenforceable against him because the Bank took title to Plantation and he is no longer liable to the Bank under the RSA because of that.
31. In dealing with the governing law provisions of the Agency Agreements and specifically the effect of the Sharia law qualification it is first necessary to identify the system of private international law that applies to this question.
32. Before the Master it had been accepted by the parties that the operation of the governing laws of the Agency Agreement would be determined by reference to the private international law principles of Jersey law as the lex fori. In Mr Ridley's view the Bank's agreement over this principle is unsurprising. As is argued on his behalf, conflict of law questions, including questions as to the proper law, are procedural matters which under Rule 19 of Dicey, Morris and Collins on The Conflict of Laws (15th Edition) at 7R - 001:-
Were the position to be different, so it is argued, the courts of Jersey would be having to apply, in a situation such as this, conflict of law rules of a foreign state including, potentially, those imposed by conventions to which Jersey is not a party.
33. This latter point is said by Mr Ridley to be important because it would mean, in this case, applying the provisions of the Rome Convention on contractual obligations to which Jersey is not a party. The Rome Convention requires contracting states to apply certain convention rules in certain circumstances but in other circumstances the conflicts of law rules of the convention state remains unaltered. In Dicey (above) 7 - 010 the authors state:-
Thus, it is argued by Mr Ridley, the Rome Convention can never affect the private international law principles to be applied by a court of a non-convention jurisdiction.
34. Although the parties agreed on the relevance of Jersey Private International Law, the Master determined that the appropriate conflict of law rules were in fact those of England and Germany. In paragraphs 57 to 65 of the Master's judgment the Master appeared to consider the conflict of law principles in so much as they relate to restitutionary claims.
35. At paragraph 65 of his judgment the Master identified the following as having emerged from his consideration of the authorities:-
(i) The existence of an obligation to restore the benefit is agreed as being determined by the law of the Agency Agreements;
(ii) The law of the Agency Agreements will provide the legal concept by which the obligation to restore the benefit is secured;
(iii) In this case where English is the law of the Agency Agreement, English law provides for the imposition of a constructive trust and/or tracing and therefore the Jersey court should in principle apply English law as the proper law of those Agency Agreements governed by English law. English law recognises a right to trace to enforce an equitable proprietary interest.
(iv) The Royal Court should recognise and give effect to a tracing claim based on a constructive trust, if permitted by English law, even where neither possibility would exist as a matter of Jersey law. In this case the ability to trace in fact under Jersey law goes further than English law which supports why the Jersey court should recognise and give effect to any tracing claim permitted under English law as the proper law of the obligation. This may lead to the conclusion that the English tracing law rules would have to be applied, but that is a matter argument of trial.
(v) As noted at the conclusion of paragraph 34 - 049 of the 14th Edition of Dicey the appropriate analysis for the Agency Agreements governed by English law is to ask whether English law would impose on the defendant in the present proceedings a liability to disgorge a benefit. If so the Royal Court may hold the defendant liable as constructive trustee by giving effect to a substantive right arising under English law.
36. It is argued for Mr Ridley that the Master fell into error in applying English private law international rules to determine the proper law of the Agency Agreement and/or proprietary claims arising therefrom when it was common ground between the parties and "a rule of general application which is universally admitted" (see Dicey 15th Edition) that it is the private international law rules of the lex fori which must be applied in determining such proper law, whether or not the question is identified as being one of the proper law of the Agency Agreements as contracts or the proper law of restitutionary and/or proprietary claims arising from the Agency Agreements. Mr Ridley also argues that as a consequence the Master wrongly applied English private international law rules derived from the Rome Convention which prevented the Sharia law qualification from having effect because, pursuant to that convention, it is expressly stipulated that a contract shall be governed by one singular system of law chosen by the parties while a reference to a choice of law must be to a law of a country. He further argues that there is strong support in English common law for the proposition that a system of law which is not that of any given state, and specifically Sharia law, may form part of a governing law clause.
37. For the reasons that I refer to hereinunder I do not think it is necessary to explore at length the English common law position in the way that it was done before the Master. One example cited by Mr Ridley suffices. In the case of Al Midani -v- Al Midani  1 Lloyds Rep 923 where Rix J, under the heading "the proper law of the arbitration agreement" made the following statement:-
38. The Master was addressed at length on this and other authorities both on the part of Mr Ridley and on the part of the Bank in the former case seeking to show that English common law (and by extension the law of Jersey) permits the incorporation of Sharia law into contracts as part of the proper law or otherwise and, in the latter case, that it does not. As I have said, I do not need to go into this in detail.
39. The parties having agreed that it is for Jersey, as the lex fori, to apply its own system of private international law in determining what the governing law of the contract is and whether that is a permissible choice of law, why then did the Master depart from the parties agreed positions?
40. At paragraph 71 of his judgment the Master says:-
41. At paragraph 77 of his judgment the Master stated:-
42. In paragraph 78 of his judgment the Master states:-
43. This approach seemed less complex to the Master than the approach based on the agreement of the applicable law by the parties. In paragraph 81 of his judgment he states:-
44. This appears to be the basis on which the Master reached his view that it was the Law of England including its Private International Law, that should apply in this case.
45. That does not, however, seem to me to be obviously the case. Indeed, as I have already said, it was and is common ground between the parties that it is Jersey Private International Law that falls to be considered when determining the rights of the parties before this Court.
46. It is put by Mr Ridley, as I have stated, that in effect conflict of law questions, including as to proper law, are in essence procedural matters. I have already cited above the section from Rule 19 of Dicey and Morris on the Conflict of Laws (15th Edition). In a document filed by the Bank before the Master entitled 'Plaintiff's written submissions in relation to applicable law' at paragraph 14, the Bank says:-
"The question of remedy, however, is classically for the lex fori; see Lord Hoffmann's speech in Harding v Wealands  UKHL  2 AC1. Once it is accepted that remedies are for Jersey Law as the lex fori, and no other law, it necessarily follows that Sharia can have no role to play whatever."
This position was in effect repeated before me in submissions on behalf of the Bank.
47. In Harding v Wealands  2 A.C. 1, in the leading judgment, Lord Hoffman surveyed a number of prior authorities in which the English Courts had treated the remedies sought in connection with the foreign claim as a matter for the Law of England as being the 'lex fori' and considered judgments of the Australian Courts which appeared to give a more restrictive interpretation of matters of procedure. At paragraph 32 of his judgment his Lordship said:-
48. With respect to the careful judgment of the Master it is in my view at least arguable that the applicable law relating to remedy is the Private International Law of Jersey as the lex fori. It does not seem to me to be plain and obvious that this is not the case and, as I have said, it is and was the common position of the parties. There is persuasive authority from the House of Lords that the lex fori applies.
49. The Bank goes on to argue that, this notwithstanding, the Law of Jersey renders irrelevant Sharia law. However in paragraphs 72 to 75 inclusive the Master in his judgment reflects the agreement between the Bank and Mr Ridley on the applicable law and referred to their respective arguments that under the Private International Law of Jersey either Sharia law could not apply (as the Bank argued) or that it could and provided a defence (as Mr Ridley argued). There was some reference to authority as I have touched on above but I think it at this point unnecessary to do more than reflect the fact that the Master then said, at paragraph 76 of his judgment:-
50. With that observation I agree and in my view the Master was correct when he said that a determination of Jersey Private International Law on this point was not for a striking out application. Not only is there an absence of evidence on the Law of England as the Master indicates but there is also no expert evidence whatsoever on Sharia law and issues as to its applicability, ambit and certainty may well be relevant to any decision as to Jersey Private International Law on this point. Moreover not only is it complex, potentially, but the point has not previously been decided in Jersey and it could also therefore be said, insofar as Jersey Law is concerned, to be a developing area of law. For these reasons I do not think that a determination of the Private International Law of Jersey on this issue is a matter for a strikeout application.
51. The Master consistent with his view at paragraph 76 of his judgment does not, quite appropriately in my view, make any finding of the proper law based on the application of Jersey Private International Law principles. It would be wrong for me to do so in this appeal. This is a matter that should be left over for the trial court.
52. In light of the view I have expressed it seems to me that, unless it is clear the Court should not apply the Private International Law of Jersey to the issue, then insofar as it relates to the Master's orders for striking out issues of Sharia law I should allow that part of the appeal. In my view it is more than simply arguable that all matters of remedy, including the Bank's claims for relief in the present proceedings, are matters for the lex fori, namely the Law of Jersey, and it may be necessary for a determination to be made as to the effect of the Sharia law qualifications in the Agency Agreements.
53. Having found that, in my view, the Master was wrong to determine in the application before him that it is the law of England in its entirety that determines the proper law of the Agency Agreements for the purposes of the proceedings before this Court, and in determining that, in my view, it is the law of Jersey Private International Law that applies to that determination then this part of the appeal must succeed.
54. The Master also went on to consider the question as to whether the references in the Agency Agreement to the principles of Sharia law are sufficient to incorporate Sharia law into the contract. He rejected that argument.
55. He did so in substantial reliance on the judgment of the English Court of Appeal in Beximco Pharmaceuticals Limited -v- Shamil Bank of Bahrain EC  1 WLR 1784 and the statement of Potter LJ where at paragraph 51 he states:-
56. At paragraph 87 of his judgment, the Master says:-
57. In the subsequent case of Halpern-v-Halpern  QB 195 the judgment of Potter LJ in Beximco was clarified by Waller LJ at paragraph 33 where he said:
58. Without in any way deciding this point definitively it seems to me that it is possible to argue that the Sharia law provisions do not defeat the commercial purposes of the contract. Indeed, in one sense, it is one of the bases of the Agency Agreements. It is arguable that they go to the fundamental nature of the agreements themselves although that is an argument to be resolved if necessary on another day.
59. Nor is it clear to me, nor I respectfully suggest could it have been clear to the Master, that Sharia law was incapable on the relevant points of being expressed with sufficient certainty or clarity as to what that law might provide. In my view it is not possible to conclude with certainty that Sharia law cannot be incorporated by reference into the Agency Agreements and certainly not to the extent necessary to strike out any pleading to that effect. It may be that Sharia is not certain enough but there would need to be evidence about it before the Court to reach that conclusion.
60. It seems to me that what is important in considering whether or not a non-municipal law might be incorporated into the proper law of a contract depends upon how certain it is. Upon that point there was no sufficient evidence before the Master or indeed before this Court relating to the certainty, clarity or ambit of Sharia law in this context. Accordingly, I do not think that it is possible to determine at this stage, and without further information, whether Sharia law is capable of incorporation.
61. Lastly, under this area, the Master determined that Sharia law could not be used as an aide to construction of the Agency Agreements. The Master's response to the argument that it could be used as an aide to construction is to be found at paragraph 94 of his judgment in which he says:-
62. It appears, therefore, that the Master formed the view that the position was unarguable as a result of the conclusion he had already reached that English private international law prevented Sharia law from having any effect at all. For the reasons that I have set out above, it seems to me that this is not clearly the case and that it may be necessary, in the context of a fiduciary or proprietary claim to construe the Agency Agreements as a whole.
63. It appears to me I should allow the appeal in this respect also. In my view all matters of Sharia law should fall for determination by the trial court given that it is at least arguable that Sharia law can be used as an aid to construction should on further argument such prove necessary. The question of the effect of Sharia law is to my mind still alive within these proceedings.
64. In paragraph 115 of his judgment the Master considered the Agency Agreement that was governed by German law (with the Sharia law qualification expressed within it). There was no evidence before the Master relating to German law nor indeed was German law pleaded within the pleadings before him. The Master made reference to the fact that he could not "ignore that Germany is subject to the same European law as the United Kingdom" and he therefore proceeded to approach the matter on the basis that German law was the same as English law. It seems to me that the relevance of German law would depend upon in part the conclusion of the Master that Jersey Private International Law did not apply in determining the effect of the Agency Agreements and, if it does not, then German law would fall to deal with the proper law of the Agency Agreements without reference to Jersey Private International Law principles. It seems to me that further directions will need to be given for determining relevant aspects of German law.
65. Res Judicata falls to be examined in this appeal in two contexts. The first is whether or not the question of Sharia law has effectively been settled during the course of the English proceedings such as to give rise to a res judicata in one or more of its forms. The second is whether or not the question of whether Mr Ridley was a party to the fraud referred to in the English proceedings has been similarly determined.
66. At paragraph 108 of his judgment the Master set out an extensive extract from the judgment of Lord Sumption in Virgin Atlantic Airlines Limited v Zodiac Seats UK Limited (formerly Contour Aerospace Limited)  UKSC 46  AC 160. I do not propose to repeat that extract within this judgment although undoubtedly Lord Sumption gives a comprehensive treatment of res judicata and in particular the doctrines of cause of action estoppel and issue estoppel which fall within it.
67. In paragraph 17 of Virgin Atlantic Lord Sumption defines cause of action estoppel in the following terms:-
68. In paragraph 20 of the judgment in Virgin Atlantic his Lordship cites with approval the analysis by Lord Keith of Kinkel in Arnold v National Westminster Bank plc  2AC 93 in the following terms:-
69. At paragraph 22 of Virgin Atlantic the following extract occurs:-
70. The basis for the Master's determination that the Sharia law points have been dealt with within the English proceedings is the judgment of Flaux J in the October judgment. At paragraph 78 of his judgment the Master quotes from the October judgment as follows:-
71. Further, in dealing with the question of estoppel, in paragraph 105 of this judgment the Master quoted the following paragraphs from the October judgment:-
72. As is clear from the quote set out in paragraph 22 above Flaux J in the December judgment characterised the nature of the October judgment. The argument considered UAE/Dubai law and the position with regard to the security provided by Plantation. I repeat what Flaux J said:-
73. The context of the October judgment was a consideration by Flaux J of a proposed amendment on the part of Mr Ridley to plead aspects of UAE/Dubai law. At paragraph 30 of the October judgment the issue that remained before Flaux J in considering that application was whether 'the bank's appropriation..... by taking possession was a usurpation under UAE Law, the effect of which was that the value of..... at the time of the usurpation must be applied in diminution of the rescheduling amount'. It appears that Flaux J did not allow the amendment because it was late and it lacked prospects of success in the light of English conflict of law principles that obtained to the specific debt claim brought pursuant to the RSA in the English proceedings.
74. In light of the principles set out in Virgin Atlantic, it seems to me there are differences between the defence on which Mr Ridley sought to rely (but was unable to do so) in the English proceedings and the defence on which he seeks to rely in these proceedings and no cause of action estoppel has arisen. In the English proceedings the Bank was making a debt claim under the RSA and UAE/Dubai law fell to be considered. In the present proceedings we are concerned with fiduciary or trust type obligations arising, so it is alleged, under the Agency Agreements and the effect of Sharia law (which may or may not be identical to UAE/Dubai law).
75. It seems to me also the position is similar where issue estoppel is concerned. The context of the October judgment is an application for an amendment. It seems to me the issue of the availability of the defence under Sharia law against a claim brought under the Agency Agreements has not been determined in the October judgment.
76. It seems to me it would not be safe to conclude that issues of Sharia law or indeed its applicability insofar as is relied upon in these proceedings have been determined definitively in the English Proceedings and accordingly in my view no res judicata arises.
77. In summary, on this aspect of the appeal, matters of Sharia law, its extent and applicability and effect on the remedy claimed remain live in this case at this point.
78. The Master dealt with his assessment of the findings of fraud in the December judgment between paragraphs 116 and 140 of his judgment.
79. He carried out a detailed review of the pleadings in the English Proceedings and it was clear it was alleged that Mr Ridley was party to a fraud against the Bank and that the Bank was pleading that at all material times it retained equitable title to certain monies. Mr Ridley for his part pleaded to specific allegations and denied he had acted as party to a fraud. I do not need to repeat at length the extracts of the pleadings referred to in the Master's judgment which, from in his own words, he put in "because they put in context the observation recorded at paragraph 10 of Flaux J's December judgment". The Master repeated the assertion contained in the December judgment to the effect that evidence was before the Court that Mr Ridley had admitted fraud, that that evidence was not challenged at trial and that, as is concluded in the December judgment:-
80. In the present proceedings Mr Ridley denies that he ever made any admissions as to fraud but in the December judgment consideration was given by Flaux J of the position irrespective of the admissions made and the learned judge there concluded 'that there was a fraud and that the second, third and fourth defendants actively participated in it, is irrefutable'.
81. The Master's analysis of the findings by Flaux J are in essence set out at paragraph 133 of the Master's judgment in which he said this:-
82. The Master went on to conclude that cause of action estoppel did not apply in this case but that issue estoppel did apply. At paragraph 136 of his judgment the Master says:-
83. It seems clear that at no stage had Mr Ridley in any meaningful sense contested the question of fraud or challenged any of the evidence that implicates him in the fraud. The question of fraud was clearly pleaded in the English proceedings, it was denied and evidence was given and there was cross-examination (although not, as I understand it, on the specific issues relating to Mr Ridley's involvement although it was open to Mr Ridley to do so). It is clear that fraud must have been anticipated by him as being a live issue in the proceedings in England. Naturally whether or not the monies in respect of which the bank makes a claim in Jersey are or could be said to be the proceeds of such a fraud is a different question but to argue that a fraud did not take place and that he was not a party to it no longer seems to me to be an argument available to Mr Ridley.
84. I also respectfully agree with the learned Master's determination that to allow the issue of fraud to be litigated before the Royal Court would be an abuse of process. He sets out his reasoning at paragraph 138-140 and I agree.
85. In his judgment the Master dealt with the Pauline action brought by the Bank. At paragraph 142 of his judgment he identified the nature of the Pauline action by reference to the case of In re Esteem Settlement  JLR 53 and in particular the headnote which states:-
86. The Master then went on to analyse how the Pauline action was pleaded.
87. For Mr Ridley it was argued that, irrespective of whether he could challenge the assertions of fraud, it was a live issue as to when the Bank became his creditor and in respect of how much. The contributions made by Mr Ridley to the Trust were done between June 2005 and 2007. At paragraph 150 of his judgment the Master says:-
88. With that assessment I agree. At paragraph 151 of his judgment the Master goes on to say:-
89. It is clear that to proceed with the Pauline action the Bank will need to prove what was due from Mr Ridley and by when as a result of the fraud. It will also have to establish that Mr Ridley was insolvent at the material time in the way suggested in In re Esteem. Were this Court to make a finding that he was insolvent it would of course need to determine how much money was owed by Mr Ridley to the Bank.
90. The Bank alleges there was an immediate proprietary interest or constructive trust in its favour over any monies drawn down under the Agency Agreements in respect of any fictitious contract or purchase and, by extension, any transfer of assets that Mr Ridley had made to the Natang Trust. It is Mr Ridley's case that no such constructive trust or proprietary interest immediately arose and that one would only have been possible were the Bank to have rescinded the Agency Agreements which because of the RSA and the fact that it had taken title to Plantation it could no longer do. By reason of the same Sharia law arguments that have been referred to earlier, Mr Ridley asserts the Bank can no longer mount a proprietary claim against him because the Bank could not meet the double-actionability requirement of the claim in deceit on which the Bank relies.
91. It is common ground that a significant number of the transactions conducted under the Agency Agreements were legitimate and it is alleged that a number of them were in respect of the fictitious trade finance agreements. In the evidence before the Master it was accepted by the Bank that approximately US$150,000,000 was used for the legitimate purposes of trade financing. Some of the monies advanced under the Agency Agreements were not as a result of fraudulent transactions at all. As the Master says, at paragraph 159 of his judgment:-
92. Although, therefore, I agree it is not open to Mr Ridley to say that fraud did not take place in 2003 equally it cannot be said, as the Master confirmed, that every transaction under the Agency Agreements was fraudulent. That is far from being the case.
93. This is in my view of some significance. As I understand it, the claim by the Bank appears to be to the effect that as soon as fraud arose then the Bank had a binding constructive trust in its favour over Mr Ridley's assets and, by extension, any transfer of assets that Mr Ridley had made to the Trust.
94. However the Master had cited to him the case of Shalson -v- Russo  EWHC 1637(Ch) where at paragraph 108 and 109 Rimer J says:-
95. And, at paragraph 111 of the judgment Rimer J states:-
96. The last extract above was cited by the Master in his judgment then, at paragraph 156, he went on to refer to Jersey authority in the case of Nolan -v- Minerva Trust and others  JRC 078A where, at paragraph 151 Commissioner Hunt states:-
97. The Master then considered the learned Commissioner's review of Halley Trust -v- The Law Society  EWCA Civ 97 in which Commissioner Hunt agreed that Halley also represented the law of Jersey. He went on to say "the key question, therefore, is whether the arrangement in question between Joan and Mr Walsh can properly be described as, in the words of Carnwath LJ, "the instrument of fraud, and nothing else"".
98. The Master went on to analyse the Agency Agreements against these tests. I have already cited that part of his judgment in which he stated it would be difficult to conclude that the entirety of the Agency Agreements had no legal effect. It might therefore be reasonable to conclude that they fell within the principles of Shalson -v- Russo and not those in Halley.
99. The Master went on, however, to analyse the Agency Agreements as being the basis for CCH Europe as agents to enter into a series of individual contracts for the sale and purchase by the agent on behalf of the Bank. The Master goes on to say, at paragraph 161:-
100. He went on to conclude, at paragraph 162:-
101. The Master then went on to conclude that an immediate equitable proprietary claim arose in favour of the Plaintiff over monies drawn down under the Agency Agreement in respect of any fictitious contract or purchase.
102. But for this further analysis by the Master, it appears, from paragraph 159 of his judgment quoted above, he accepted that any fraud based upon the Agency Agreements themselves would render those agreements voidable and not void. The fact that US$150,000,000 of business was conducted under the Agency Agreements but was not part of the fraud seems to me to make it clear that those agreements as such were other than a nullity.
103. The Bank's skeleton argument suggests that the Master's analysis to the effect that Shalson -v- Russo does not apply was not the subject of submissions to him by either party. In answer to the Master's analysis Mr Ridley argued that title to the monies passed not under the underlying trade finance agreements but under the Agency Agreements and therefore by the time that the monies were re-advanced by CCH in furtherance of such trade finance agreements it, CCH, already had title to the monies pursuant to the Agency Agreements. In the circumstances, so it is argued, an immediate constructive trust in favour of the Bank could not have come into being.
104. It seems to me these, too, are complex matters and should be for consideration by the trial court in the light of the facts as there established. It seems to me it is for that court to consider whether the Agency Agreements are the agreements in play for the purposes of considering whether or not a constructive trust arises or whether, as the Master analysed, it is rather the trade financing agreements.
105. As I have said, it is argued by Mr Ridley that because an immediate constructive trust does not arise there is a requirement for rescission of the Agency Agreements to further the Bank's claim. This, so it is argued, gives to Mr Ridley a defence based on the principle of double actionability. In other words, under UAE/Sharia law the Bank has already been satisfied in taking Plantation, and cannot therefore pursue a claim against Mr Ridley there. If that is so, he cannot do so in Jersey.
106. Having concluded that an analysis of which of the contractual arrangements (the Agency Agreements or the trade financing agreements) are relevant for the purposes of determining whether an immediate constructive trust has arisen is a matter for the trial court, it is equally the case that the question of whether or not double-actionability is available of a defence to Mr Ridley is for that court as well.
107. Accordingly, and in summary, I allow Mr Ridley's appeal against the judgment of the Master save and insofar as that judgment found there was an issue estoppel in connection with the findings of Flaux J relating to fraud. The limitation of that finding is as expressed by the Master himself.
108. I have of course not touched on all of the arguments advanced before me in this appeal either in oral submissions or in the written material. They have been comprehensive and I have sought at this interlocutory stage to deal with what I believe to be the essential points.
109. It is clear that in the light of this finding the Master will need to give further detailed directions as to the ongoing conduct of this case. I do not make any findings or give directions in connection with what further information the Bank might need to produce to plead or vindicate its Pauline action or claim generally or indeed what either party need do to deal with those parts of the claim that I have held still to be live. I expect that the Master will also need to give directions as to the filing of expert evidence, possibly as to German law but certainly as to Sharia/UAE law. I expect that an application will need to be made to the Master seeking the necessary orders which will in part cover that material referred to in paragraph 173(iv), (v), (vi), (vii) and (viii) of his judgment.
110. For the reasons set out by the learned Master I agree with his conclusions set out at paragraph 165 of his judgment.
111. I will leave it to the parties to find a time to deal with any ancillary or consequential matters arising out of the judgment.
 Dubai Islamic Bank PJSC -v- PSJ Energy Holding Company BSC  EWHC 2788Com