Diamonds aren’t Forever: Cross-Border Enforcement and the Importance of Governing Law in Bank of India v Firestar Diamond FZE

The recent Commercial Court decision in Bank of India v Firestar Diamond FZE & Ors [2026] EWHC 1565 (Comm) highlights the complexities that can arise where commercial transactions involve multiple jurisdictions and legal systems.

The case serves as a useful reminder of the importance of carefully drafted contractual documentation, particularly where lending arrangements and guarantees have an international dimension.

Background:

The dispute arose from lending facilities provided by the Bank of India (the “Bank”) to Firestar Diamond FZE, a Dubai-incorporated company operating in the international diamond and jewellery sector. The lending was supported by a personal guarantee provided by Mr Nirav Modi, who has been the subject of high-profile fraud allegations.

Following the borrower's failure to repay sums advanced under the facility, the Bank obtained summary judgment against Firestar Diamond FZE for approximately USD $4.1 million. The Bank subsequently sought to enforce the personal guarantee against Mr Modi.

A key feature of the case was that the facility agreement was governed by English law, whilst the personal guarantee was governed by Indian law. Mr Modi challenged the Bank's claim on several grounds, including arguments that the guarantee was unenforceable under Indian law and that valid demands had not been served upon him.

As a result, the English court was required to consider both English law issues and substantive questions of Indian law through expert evidence.

Judgment:

The High Court found in favour of Bank of India and held that Mr Modi was liable under the personal guarantee.

The principal issue concerned the enforceability of the guarantee under Indian law. Mr Modi argued that the guarantee was void or unenforceable because approval had not been obtained from the Reserve Bank of India under the Foreign Exchange Management Act (FEMA) regime, which operates in India.

After considering expert evidence on Indian law, the Court rejected that argument. It accepted that the absence of regulatory approval did not render the guarantee void or unenforceable and that any necessary approval could potentially be obtained retrospectively.

The Court also held that the Bank had validly served the relevant demand notices, the indebtedness fell within the scope of the guarantee, and Mr Modi remained liable for both the principal debt and the contractual interest due. Accordingly, judgment was entered against Mr Modi under the terms of the guarantee.

Implications:

The decision is noteworthy because it demonstrates how courts frequently have to grapple with foreign law issues in international commercial disputes.

Although the proceedings were brought before the English Commercial Court, the outcome depended heavily on the interpretation and application of Indian law. The case therefore illustrates the importance of obtaining specialist legal advice when transactions involve parties, assets or obligations across multiple jurisdictions.

The judgment also reinforces the importance of carefully considering governing law provisions, jurisdiction clauses, service provisions and regulatory requirements at the outset.

The Importance of Personal Guarantees and Relevance for Northern Ireland:

The case is a reminder that personal guarantees remain a powerful form of security for lenders, particularly where recovery from the principal debtor may prove difficult.

More broadly, the decision has practical relevance for businesses and advisers dealing with cross-border matters. In Northern Ireland, transactions frequently involve parties and assets located in both Northern Ireland and the Republic of Ireland, giving rise to similar jurisdictional and enforcement considerations.

Whilst the legal issues may differ from case to case, the underlying lesson remains the same: where a transaction crosses borders, careful drafting and early legal advice can be critical in avoiding costly disputes and uncertainty at the enforcement stage.

If you would like any further information or advice, please get in touch with a member of our Banking & Finance team.

*This information is for guidance purposes only and does not constitute, nor should be regarded as, a substitute for taking legal advice that is tailored to your circumstances.