The two defendants in the GCC region's biggest ever financial mis-selling case have lost their first appeal.

Switzerland's Bank J Safra Sarasin and its former Middle East affiliate, Bank Sarasin-Alpen (ME), have lost their appeal in a legal battle with a wealthy Kuwaiti businessman over losses incurred from mis-selling.

In November last year, the Court of the Dubai International Financial Centre ruled that the two banks should pay the Al Khorafi family more than $70 million to cover financial losses resulting from the sale of $200 million structured investment products between late 2007 and early 2008. Bank J Safra Sarasin paid its share of the damages into court, pending the hearing of its appeal against the award of damages.

Bank Sarasin-Alpen (ME), however, did not pay its share and sought a stay of the order to pay the damages. This was denied in January 2016. It was then ordered to pay just over $35 million (its share of the $70 million damages) into court by February, which it failed to do.

“Justice has been served in a systematic and procedural manner by the justices of the DIFC courts. It has been a lengthy battle and I am glad to see that the case will serve as a precedent for all investors and banks to abide strictly by the code of the DFSA in all their future dealings. Dubai has always been a safe haven for investors and this case proves that,” said Rafed Al Khorafi in a statement on the court's decision.

The case is of particular interest to the wealth management industry because it relates to a region where cash-rich Middle Eastern investors meet Western financial institutions – and this includes the traditionally secretive Swiss private banking space. In April 2015, the Dubai Financial Services Authority ordered a fine of $8.4 million against Deutsche Bank's Dubai branch for inadequate controls over money laundering. Outside the Middle East, Switzerland's oldest bank, Wegelin & Co, announced in January this year that it was shutting down as a result of court action in New York leading to a $57.8 million payment in restitution and fines for helping US clients to evade taxes.