The case involves the sale of $200m (£139m, €183.5m) in structured investment products to a wealthy Kuwaiti family between late 2007 and early 2008 by Switzerland’s Bank J. Safra Sarasin and its authorised subsidiary, Bank Sarasin-Alpen (ME) Ltd which has now ceased operations.
In November 2015 the DIFC court determined that the two banks should pay the Al Khorafi family more than $70m to cover the financial losses resulting from the sale.
The Swiss private bank, Bank J. Safra Sarasin, immediately paid its share of the damages into court pending the hearing of its appeal against the award of damages. However, Bank Sarasin-Alpen (ME) Ltd did not pay its share and had sought a stay of the order to pay the damages which was denied on 18 January 2016.
It was ordered to make the payment by 1 February this year ands has failed to meet this deadline.
Drawn out case
This latest development in a long-running legal battle involving the notoriously secretive private investment banking industry in theory exposes Bank Sarasin-Alpen (ME) Ltd to the possibility of further court proceedings.
It also throws the appeal against damages, which is expected to be heard by the DIFC Court of Appeal in March 2016, into doubt.
The claimant is now expected to seek to enforce the next step in securing the sum through the DIFC Court.
According to the law firm which is acting for the Al Khorafi family, Hamdan Al Shamsi Lawyers & Legal Consultants, the case is being closely watched by the international banking world as it could set a precedent in the Gulf region where cash-rich Middle Eastern investors meet Western financial institutions responsible for managing their investments into overseas markets.
It said the case was not the first time questions had been raised about the powers of financial regulators and the governance of private investment banks internationally.