Your Bank Cut Off Trade Finance: Can You Recover the Business You Lost?

When a DIFC bank withdraws a credit facility, a damages claim needs two separate foundations: a breach of an obligation the bank actually owed and evidence of loss caused by that breach. A long banking relationship, unused facility limit or subsequent fall in turnover does not supply those foundations by itself.

This guide concerns a business borrower facing suspension, termination or non-renewal of trade finance. It uses Kirtanlal v State Bank of India, a DIFC case about a corporate facility and claimed trading losses. The focus is the funding commitment and loss evidence, not a general right to keep an account open or a guide to consumer lending.

Issue	Record needed	Question to answer
Funding commitment	Facility letter and executed agreement	What was the bank obliged to make available?
Withdrawal	Notices, requests and correspondence	Was this suspension, cancellation, acceleration or non-renewal?
Relevant period	Availability and expiry provisions	For how long did any commitment last?
Lost transaction	Order, funding request and cancellation evidence	Did this transaction fail because required finance was unavailable?
Loss calculation	Costs, margins and alternative finance records	What loss follows from the alleged breach rather than other events?

What did the DIFC bank-withdrawal case decide?

In Kirtanlal International DMCC v State Bank of India (DIFC Branch) [2022] DIFC CFI 041, decided on 11 October 2023, the Court dismissed the claim against the bank. It held that the facility terms justified the bank's actions. It also examined causation and loss for completeness and found the borrower's evidence deficient.

The claim arose after fraudulent bills of lading were presented in transactions involving the borrower's suppliers. The bank suspended further use of the facilities and later terminated future use. The Court distinguished those events from the contractual expiry date and the absence of an obligation to renew.

That outcome is not a rule that banks may always withdraw committed funding without consequences. The decision depended on the express provisions, events and evidence. The first task in another dispute is to identify the actual commitment and test the withdrawal against it, not to assume that the result follows from the word bank.

Read the case's loss discussion with its procedural position in mind. Liability had already failed. The Court's additional analysis explains why the damages case would not have succeeded either. It was not an award of the forecast profits claimed, nor a finding that every business loss after the withdrawal was caused by the bank.

What did the bank promise to provide, and subject to which conditions?

Collect the facility letter, agreement, amendments and product-specific terms. Identify what applies to loans, letters of credit, guarantees and other facilities separately. A headline limit can conceal different conditions, purposes and approval requirements. Do not assume that every part of the limit was freely available for any transaction.

In Kirtanlal, the Court read the facility documents closely, including the permitted purposes, conditions for advances and cancellation provisions. The borrower could not replace that text with its expectation that the relationship would continue on favourable terms. Your own documents may allocate rights differently.

Prepare a schedule of the requested utilisations. For each one, identify the product, amount, date, proposed transaction and documents submitted. Record any unmet condition or disputed requirement. A claim that the bank refused finance is more useful when it identifies a particular request that the contract allegedly required it to honour.

Distinguish an indicative discussion from a completed approval. Keep the relationship manager's messages, but compare them with the approval and authority provisions. If a later assurance is relied upon as changing the commitment, identify its exact wording and context. Do not describe an expectation of approval as an executed amendment.

Keep acknowledgments of each drawdown request beside the request itself. A submission date, receipt date and proposed funding date may differ. If documents were returned as incomplete, retain both versions and the bank's explanation. That record helps isolate a refusal from a request that was still being processed or corrected.

Was the facility suspended, terminated or simply not renewed?

These events need separate dates and documents. A temporary pause on new requests is different from cancelling an unused limit, demanding repayment of an existing advance or allowing a facility to expire. The effect on an already issued guarantee may differ again. Ask what action was actually taken under which provision.

The Kirtanlal judgment found a suspension on 6 October 2020 followed by termination of future use on 4 November 2020. The bank did not insist on immediate repayment of everything outstanding or cancel guarantees already issued to third parties. The distinctions affected both the alleged breach and the period of possible loss.

Build a chronology from contemporaneous communications. Mark what was said in meetings and what was confirmed in writing. If a later minute conflicts with emails sent at the time, preserve the conflict. Do not retrospectively use termination to describe every earlier restriction simply because it supports a longer damages period.

For immediate business decisions, ask the bank to clarify what remains available and what existing commitments continue, subject to lawful disclosure limits. Coordinate that inquiry with legal advice about urgent obligations. Uncertainty about a new advance should not lead you to assume that an outstanding repayment or separate guarantee has disappeared.

Common mistake. Treating the annual facility limit as a promise of uninterrupted finance for the next decade. The availability period, drawdown conditions and renewal provisions must be established before profits are projected.

Does a long relationship mean the bank must renew?

Not on the basis accepted in Kirtanlal. The facility had a defined expiry of 6 January 2021 and renewal required the bank's approval. Earlier annual renewals did not create the continuing commitment alleged. The Court rejected a damages analysis that assumed the same facility would remain available for many subsequent years.

For your review, collect the earlier renewal letters as well as the latest agreement. They may explain the history, but do not assume that history overrides the operative terms. Identify any distinct promise about renewal, extension or a transition period and the evidence of its acceptance.

Separate a request for commercial accommodation from an asserted legal entitlement. Asking for three months to arrange alternative finance may be sensible, but it does not establish that the bank was already obliged to grant that period. Record whether the request was accepted, refused or left unanswered.

The distinction is important for damages. If the disputed breach concerns a short remaining availability period, a model assuming years of continued lending needs an independent legal and factual basis. Give the expert the actual limits of the alleged obligation. Do not ask the calculation to assume a renewal that the contract did not require.

What if you were innocent of the supplier's document problem?

Preserve the evidence of what you knew and did. In Kirtanlal, the bank did not contend for the purposes of the action that the borrower was privy to the suppliers' fraud. That did not resolve whether the events triggered contractual cancellation rights or increased the risks associated with the transactions.

The Court examined the bank's reasons and the facility provisions addressing deterioration and material adverse change. It concluded that the relevant contractual rights were engaged. The point is not that an innocent borrower has no rights. It is that absence of participation in wrongdoing may answer a different question from the contract's risk allocation.

Give advisers the underlying shipping and transaction records, including corrected documents and communications with the supplier. Identify when the problem was discovered and what explanation was provided. Do not describe a knowingly backdated document as a harmless correction without addressing the contemporaneous evidence.

This article does not restate current anti-money-laundering or reporting legislation from a 2023 judgment. Any current duties concerning reporting, confidentiality or what a bank can disclose require separate advice. Avoid demanding protected information or drawing a conclusion of bad faith solely because an explanation is incomplete.

Can good faith override the bank's express termination rights?

In Kirtanlal, the Court rejected the attempt to use implied good-faith obligations to rewrite the specific termination and renewal rights before it. It distinguished express rights to end the arrangement in prescribed circumstances from arguments about contractual discretion. It also found that the bank's decision-making was not irrational on the evidence.

That should not become a blanket statement that every bank decision is unreviewable. Ask which provision creates the right, what event activates it and whether the facts satisfy that event. The proper characterisation of a particular contractual power must come before conclusions about any limits on its exercise.

Separate allegations from evidence. If you say the bank acted because you complained, identify the communications and decision chronology supporting that assertion. In Kirtanlal, the alleged retaliatory explanation did not withstand the documentary record. The Court's actual findings should not be replaced by the borrower's original accusations.

Have the present time-applicable law assessed alongside your documents. This guide uses the judgment's reasoning as an example of the issue, not as a complete statement of every current statutory, regulatory or contractual duty owed by a bank. Avoid multiplying legal labels where the essential funding obligation remains unidentified.

Which specific customer order or tender was lost?

Move from turnover figures to transactions. Identify the customer, product, quantity, required financing instrument and deadline. Locate the quotation, order, tender or negotiation record. Then identify why the transaction failed and the evidence connecting that failure to the absence of the disputed finance.

The Court criticised Kirtanlal's failure to identify particular contracts or tenders lost because finance was unavailable. General statements that business became harder did not supply that missing detail. The evidence also failed to correlate the volume of business with the form and amount of facilities actually available.

For an uncompleted opportunity, distinguish a firm order from a preliminary inquiry. Record conditions that still needed to be met and other reasons the customer might not have proceeded. Do not turn a pipeline spreadsheet into guaranteed sales by assuming every prospective transaction would have completed.

Use a loss register with one row per opportunity and links to supporting documents. Include transactions that were completed through another arrangement. They may reveal the actual additional cost or show that the whole margin was not lost. Excluding them would distort the comparison between what happened and the alternative scenario.

These records connect the funding issue to the trading issue.

What other finance and working capital were available?

Prepare a dated schedule covering all bank facilities, actual use, cash and relevant alternative arrangements. Distinguish approved limits from amounts accessible for the particular transaction. A larger headline facility elsewhere may not serve the same purpose, but that difference must be evidenced rather than assumed.

Kirtanlal's alternative finance was central to the Court's loss analysis. The judgment examined the facilities obtained from other banks, their actual use and the availability of additional support. It also considered cash paid to connected parties during the period in which the company said lack of working capital prevented business.

Keep unsuccessful finance applications too. Record the proposed terms, security requested and stated reasons for refusal or withdrawal. If the business chose not to proceed because the terms were expensive or unsuitable, preserve that assessment. Do not automatically attribute every unsuccessful application to the first bank.

Ask the adviser how those choices affect the proposed loss claim. This is not an instruction to accept any lending offered, pledge every asset or ignore commercial risk. It is an instruction to keep an accurate record so that the reasonableness, availability and consequences of alternatives can be examined.

Can you blame the bank for negative credit references?

Only advance an allegation supported by evidence and a proper legal basis. Identify the particular reference, recipient, date and words said to have caused the refusal. A belief that discussions went quiet after a bank was contacted is not the same as proof of an inaccurate or harmful statement.

In Kirtanlal, the Court rejected the allegation that the bank had prevented replacement finance. The documents showed other reasons affecting negotiations, including financial information and security requirements. The borrower had not established that false or inaccurate statements by the bank caused the difficulties alleged.

For your file, preserve the prospective lender's written reasons and requests. If a relationship manager reports a conversation, identify what they actually heard and from whom. Avoid converting several layers of hearsay into a quotation attributed directly to the original bank.

Review any proposed reference claim separately from the claim about cancellation. The events, duty and loss may differ. Do not add an unsupported allegation of dishonesty to strengthen the tone of a demand. A precise, supportable complaint is more useful than a broader narrative that cannot survive comparison with the records.

Why can a lost-profit spreadsheet fail even if the business declined?

A before-and-after comparison does not establish causation. Identify changes in demand, suppliers, customers, prices and the business itself. The Kirtanlal judgment criticised assumptions that attributed the deterioration to the bank while failing to address other known influences and the actual finance available.

The Court also rejected the assumption of continued facilities long beyond the expiry date. Its criticism of the growth-rate model was tied to the unsupported assumptions and missing business data. It did not establish that every growth-rate technique is inherently invalid in every damages assessment.

Prepare the factual foundation before commissioning the calculation. Reconcile monthly accounts with orders, margins, costs and financing requirements. Explain unusual historic transactions that affect the comparison period. A single unusually profitable deal can distort a benchmark if it is treated as ordinary recurring business.

Use the current RDC Part 31 requirements when preparing expert evidence. An expert must assist the Court independently and consider material facts that may detract from the opinion. Calling an expert or putting an expert report in evidence requires permission. A private calculation is not automatically a trial-ready report.

Ask the expert to identify the assumptions that drive the result and the documents supporting them. Where a fact is disputed, a sensitivity analysis may help explain its significance. The expert should not be instructed to assume the very causal link the claim needs to establish and then present the resulting arithmetic as proof of that link.

Should you ask the DFSA to restore the facility?

Do not assume that a regulatory complaint will compel the bank to provide new credit. In Kirtanlal, the DFSA did not provide the reinstatement sought. That was part of the historical record, not a statement that the regulator can never consider misconduct concerning a lending relationship.

The current DFSA complaints guidance explains its remit and says that it does not generally seek commercial outcomes for complainants unless a public interest is served. A complaint and a private claim therefore should not be treated as interchangeable remedies.

If a complaint is appropriate, state the conduct and supporting records clearly. Separate a challenge to the commercial decision from an allegation of regulatory misconduct. Keep the account consistent with the correspondence and any court documents. Do not exaggerate the complaint to strengthen your position in the funding negotiations.

Obtain advice about court and contractual deadlines independently. A pending complaint should not be assumed to stop time or preserve a claim. At the same time, keep investigating viable operational options for the business. Waiting for a regulatory response does not establish that replacement finance was unavailable during that period.

What should the first legal and financial review contain?

Start with a short chronology and a clause map, followed by the transaction-level loss register. The adviser should be able to identify the obligation, alleged breach, relevant period and claimed consequence without first working through every historic banking email. Keep an index to the complete underlying archive.

1. Identify the operative facility and each product's conditions.
2. Separate suspension, termination, repayment demands and expiry.
3. Locate the contractual right and event the bank relies upon.
4. Preserve the transaction-document problem and your response.
5. List specific trades said to have failed for lack of finance.
6. Record alternative facilities, applications and available cash.
7. Reconcile margins and other causes before quantifying losses.
8. Check the forum, deadlines and any expert or regulatory steps.

Ask for an initial view on the strongest and weakest link. If the contract permitted the withdrawal, a larger loss model does not cure liability. If a breach is arguable but no affected trade can be identified, the evidential work should focus there before a long-range profit projection is commissioned.

Keep the factual narrative free from unsupported motives. Your business may have suffered a serious disruption, but the legal claim must still explain what the bank was required to do and what difference its failure made. A clear account can also reveal a narrower, better-supported loss than the first headline estimate.

Key takeaway. Start with the bank's promised performance and the transaction that allegedly failed. Business decline alone does not show either wrongful withdrawal or recoverable loss.

Sources and bounded later history were checked on 29 September 2026. A later 6 November 2023 consent order dismissed the proceedings against the other defendants following service issues, not a reversal of the bank judgment. The historical facility and damages findings are not presented as a complete current-law opinion on your financing arrangement.

Frequently Asked Questions

Can the bank always cancel a corporate facility? No universal answer follows from Kirtanlal. Examine the actual commitment, cancellation terms and triggering facts.

Does unused credit mean the bank had to advance it? Not by itself. Identify the product, purpose, conditions and particular request under the operative agreement.

Does a long relationship guarantee renewal? It did not in Kirtanlal, where renewal required approval and the facility had a defined expiry.

Does innocence of supplier fraud settle the dispute? Not necessarily. The contractual consequences of the document problem required separate assessment in the case.

Can I claim every fall in turnover after cancellation? The decline must be connected to an established breach, with other causes and available finance addressed.

Do I need actual lost orders? Transaction-level evidence is important. The Court criticised the absence of identified contracts or tenders and the unsupported loss assumptions.

Will a DFSA complaint restore the facility? Do not assume that. Regulatory remit and private contractual recovery require separate consideration.

What should the accountant receive first? The legal scope of the alleged funding obligation, specific affected transactions, available finance and the complete supporting financial records.

This article is for general information only and does not constitute legal advice. Consult a qualified advocate for advice on your specific situation.

Related Guides

See the Dubai and DIFC commercial-contracts section and these related guides.

• Can the DIFC Courts hear your bank dispute?
• Proving the loss caused by unavailable services
• Contract termination and the claimed payment

Related Guides

Our DIFC commercial contracts page covers payment, suspension, termination, guarantees and shareholder disputes under DIFC-law agreements.

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