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Commercial litigation: It’s all about fairness – no default judgement in part of ongoing hacking and fraud claim

Commercial litigation: It’s all about fairness – no default judgement in part of ongoing hacking and fraud claim

A long running commercial dispute has taken a new and important legal turn after the High Court refused a businessman’s application for default judgment on a counterclaim to set aside a judgement for fraud because it would be more unfair on two other parties connected to the case to allow it.

The case (Ras Al Khaimah Investment Authority v Azima and others [2023] EWHC 2108 (Ch)) shows how important the High Court considers the overall issue of fairness and the specific circumstances of each case when deciding whether to grant a default judgement for a remedy other than money.

Wards Solicitors is highly experienced in commercial dispute resolution which often involves highly complex areas of the law, providing crucial advice at the earliest opportunity and negotiating any formal court proceedings.

What happened with this default judgement decision?

The judge considered the proper approach to granting default judgment for a remedy other than money and highlighted three key principles:

  1. The court has the discretion to determine whether granting default judgment would be just or unjust.
  2. Default judgment should not be granted if there is evidence that justifies setting it aside.
  3. If there is no such evidence, the court will determine what remedy the claimant is entitled to on the basis of the statement of claim, treating the allegations as true and legally valid unless there are no reasonable grounds for the claim.

What did the judge decide in this default judgement application case?

It was held that there were compelling reasons why the default judgement had to be refused in this ongoing case. The judge said:

“The unfairness to Dechert and Mr Gerrard in relation to their defences….if default judgement is granted clearly outweighs any unfairness (if any) that Mr Azima might suffer from not being granted default judgement...”

…I think the court should be cautious about setting aside judgements at both first instance and the Court of Appeal without consideration of the merits, particularly where defences have been pleaded to those claims...

…I do not think Mr Azima is prejudiced by the fact that RAKIA is not participating in the proceedings. Nor do I consider that there is any real risk that Mr Azima will not get a fair trial…”

What is important about this default judgement case?

Dechert and Mr Gerrard had the legal standing to contest Mr Azima’s default judgement application because they were parties to the proceedings.

They met the judge’s criteria for being ‘directly affected’ – which typically means having a substantial interest affected by the judgment or being entitled to the rights of the judgement debtor – because they sought to uphold the judgement challenged by Mr Azima.

Get in touch

Wards Solicitors is recommended as a South West leading firm in the independent Legal 500 list for 2024 having received overwhelmingly positive testimonials from clients.

Solicitor Associate Richard Darbinian, who specialises in complex commercial contract disputes, striving for practical, business-focused solutions whether than means going through formal court proceedings or employing alternative dispute resolution, is here to help.

    Get in Touch

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