UK court slaps $20m fines on Beximco |
Co also to repay $30m in defaulted loans to Shamil Bank
M Shamsur Rahman
A British court has slapped US$ 20million in fine on Beximco and asked the group to pay up another US$ 30million in loans and interest.
Sources said Beximco obtained US$ 30 million in loans from the Bahrain-based Shamil Bank in 1996 and then defaulted on payments in 1999.
The loans were sanctioned by the bank's head office in Bahrain under two Morabaha financing agreements in which both parties agreed that the loans would be governed by the English law but they would follow the principles of Sharia law.
The agreements were revised between 1999 and 2002 after Beximco defaulted, sources said.
They said the loans were fully secured by property and equipment through Islamic lease agreements.
Failing to realise the loans, Shamil Bank took Beximco to the British court and got the ruling.
In its judgement, the court on August1 awarded US$ 50 million to Shamil Bank.
The court said the Beximco defaulted, failing to make certain payments to the bank, and the bank sought summary judgement.
Beximco, however, contested the case, saying that the transaction was "in effect an interest bearing loan, which had been dressed up by the claimant (Shamil Bank)".
The bank submitted that it was clear that the bank activities had been supervised by a special religious board, and that subject to Article 3 of the Treaty of Rome, the general obligations contained in the contract could not be governed simultaneously by two separate legal systems, especially since Sharia was not a national legal system.
The court in its ruling said, "It was clear that the intentions of the parties was not to ask a secular court to derive answers to their legal issue from religious writings. There would be great controversy otherwise, since a secular English court was not suited to determining principles of disputed religious law."
"While the court could be used to settle disputes of foreign law, that was not the same as attempting to determine English law principles through religious law and it was improbable that the parties would ask the court to judge matters of Islamic orthodoxy, considering that as far as the bank was concerned, passing the activities by its special board was sufficient."
It said that what the defence contended for was largely a lawyer's construct and was not arguable.
Talking to The Daily Star, Vice-chairman of Beximco Group Salman F Rahman said the British court had overlooked the very fact that the loans were also to be governed under the principles of Sharia.
He said Beximco still has the option to appeal against the judgement. "We even have the option of going to courts in Bahrain," he said, adding that the group is trying for a 'out-of-court settlement'.
Rahman also said the ruling of the British court hardly has any impact on his Dhaka business since the British court cannot enforce its decree in Bangladesh.
He said if the bank files for enforcing the decree of the British court then his group would take shelter of a Bangladesh court.
Salman said his company does not agree with the judgement of the British court and will not pay the amount which the British court has fixed.
Despite repeated attempts, top executives of Shamil Bank could not be reached for comments.