Dentons faces $3.5m professional negligence claim in DIFC courts

SNR Denton legacy firm Denton Wilde Sapte is being sued by a former client for around $3.5m in the Dubai International Financial Centre (DIFC) courts.

Injazat Technology Fund (ITF), a subsidiary of G Capital Limited (formerly Injazat Capital Limited), has instructed Dewey & LeBoeuf Dubai partner Peter Gray to sue Denton Wilde Sapte for professional negligence. SNR Denton has instructed Simmons & Simmons partner Miles Alexander to defend the claim.

The facts of the case hark back to 2006 when ITF made a $3m investment in Broadlink Research. When Broadlink became insolvent in 2007, ITF instructed Dentons’ UAE office to advise it “how best to protect its position in relation to the investment, including the merits of bringing a claim against Broadlink and/or the guarantors”.

Dentons’ lawyer on the case, associate Matthew Blycha, who is no longer at the firm, reviewed the contract between ITF and Broadlink and advised ITF to go into arbitration at the International Chamber of Commerce. ITF won the arbitration under advice from Dewey & LeBoeuf, but the company claims that Blycha’s advice was negligent as he failed to mention a clause in the contract, which subsequently expired, that would have allowed ITF to recoup its investment from Broadlink, as well as a 25 per cent uplift, without the need to go into arbitration.

A source close to the claimant said that the company alleges that a high turnover of Dentons lawyers working on the case were to blame for the alleged slip-up.

ITF is now suing Dentons for $2m in relation to the amount paid to Broadlink, $500,000 for the 25 per cent premium it would also have recovered under the expired clause, and more than $850,000 in relation to the allegedly unnecessary arbitration costs. The company is also claiming damages for time spent in connection with the arbitration as well as in investigating Dentons’ alleged negligence.

SNR Denton is now arguing that the matter should be heard by the Dubai courts, where negligence claims require an intention to defraud, as opposed to the DIFC courts, which operate under international laws. A jurisdictional hearing has been scheduled in the DIFC courts.

Injazat has instructed Fountain Court’s David Murray as counsel. It is not yet known who SNR Denton has instructed as counsel.

Dewey & LeBoeuf declined to comment.