Compagnie Noga d'Importation et d'Exportation SA v Abacha (No 3) [QBD (Comm)]

JurisdictionEngland & Wales
JudgeRix LJ.
Judgment Date23 October 2001
Date23 October 2001
CourtQueen's Bench Division (Commercial Court)

Queen's Bench Division (Commercial Court).

Rix LJ.

Compagnie Noga d'Importation et d'Exportation SA
and
Abacha & Anor (No. 3).

Steven Gee QC, Vasanti Selvaratnam QC and Mary Gibbons (instructed by Stephenson Harwood) for Compagnie Noga.

Gordon Pollock QC, Lawrence Cohen QC and Paul Stanley (instructed by Dechert) for the SJ Berwin defendants.

David Railton QC and Andrew Mitchell (instructed by DJ Freeman) for the Federal Government of Nigeria.

The following cases were referred to in the judgment:

Alghussein Establishment v Eton CollegeWLR [1988] 1 WLR 587.

Colley v Overseas Exporters LtdELR [1921] 3 KB 302.

Gouriet v Attorney-GeneralELR [1978] AC 435.

Lake v LakeELR [1955] P 336.

Little v Courage LtdUNK (1994) 70 P & C R 469.

Luxor (Eastbourne) Ltd v CooperELR [1941] AC 108.

Mackay v DickELR (1861) 6 App Cas 251.

Mildenhall (1469) YB 9 Ed IV 4a.

Mona Oil Equipment and Supply Company Ltd v Rhodesia Railways LtdUNK (1949) 83 Ll L Rep 178.

Russian Commercial and Industrial Bank v British Bank for Foreign Trade LtdELR [1921] AC 438.

Tiberghien Draperie SARL v Greenberg & Sons (Mantles) LtdUNK [1953] 2 Ll Rep 739.

Thompson v ASDA-MFI Group plcELR [1988] Ch 241.

Watt or Thomas v ThomasELR [1947] AC 484.

Settlement agreement — Appeal — Court decided that parties had agreed on settlement figure but had not agreed to settle — Permission to appeal granted to claimant on point of law — Whether defendants could raise by respondent's notice issue of whether settlement figure had been agreed — Whether defendants required permission to appeal — Whether defendants in breach of implied term of settlement agreement to co-operate in implementation — Whether defendants liable in debt or damages for breach of settlement agreement.

These were three actions in which the court tried preliminary issues as to whether any claims in them had been settled and, if so, which of the claims had been settled and on what terms and in which after judgment on the preliminary issues the court heard applications for leave to appeal and was asked to consider whether one of the parties was entitled to immediate payment by virtue of a settlement agreement.

A Swiss company, “Noga”, took proceedings in the Commercial Court against a group of individuals and companies connected with the late General Abacha, the former ruler of Nigeria. The action concerned a transaction in which Nigeria bought back debt instruments it had guaranteed in respect of the construction of a steel plant at Ajaokuta in Nigeria. Noga claimed to have an interests in those instruments, the Ajaokuta bills. Subsequently the Federal Government of Nigeria (“FGN”) itself commenced an action against the defendants in respect of the same buy-back transaction, claiming that it was a corrupt transaction, engineered between General Abacha and his family interests, under which the defendants obtained a corrupt profit. Noga, the FGN and the defendants met in Nigeria in July and August 1999 to settle their disputes. The parties entered into an agreement which provided for the claims to be dropped in return for a “settlement sum” to be paid by the defendants. A second agreement between the FGN and the defendants provided for the defendants to pay DM300m to the FGN in return for the settlement of all claims. That agreement was replaced by a third agreement which restricted the DM300m payment to settlement of the Ajaokuta claim. Noga said that the settlement sum was $100m but the defendants said that the figure was never agreed. The validity of the other two agreements was also challenged by the defendants. Preliminary issues were ordered as to whether the claims had been settled and on what terms.

Rix LJ held that the figure of $100m had been agreed between Noga and the defendants but not unconditionally and not by way of a contractually binding contract to be found in the tripartite agreement. The second agreement, between the FGN and the defendants, was valid but had been superseded by the later agreement which was also a valid agreement. The judge was asked to reconsider his judgment but declined to do so. He gave Noga leave to appeal on issues of law raised on the reconsideration application. The defendants applied for permission to appeal in relation to the factual question whether the figure of $100m had ever been agreed and argued that that issue could if necessary be raised by respondent's notice without the need for leave to appeal. Noga argued that the court could frame its formal order in such a way, by referring to the facts found in the judgment, as to prevent the defendants submitting on appeal by way of a respondent's notice that the decision below should be upheld on the ground that the figure of $100m had never been agreed.

The issue also arose as to whether FGN was entitled to immediate payment of the DM300m under the third agreement which provided for the defendants, upon release of their accounts frozen in this action, to pay to the FGN the sum of DM 300m in full and final settlement of the claims made by the FGN in this action arising from the Ajaokuta steel complex bills of exchange and contained an undertaking by the defendants to instruct their bankers to credit the account of the FGN with a sum of DM 300m immediately upon the accounts being released as mentioned above.

Held, ruling accordingly:

1. The main issue of fact at trial was whether Noga and the defendants had agreed on a figure of $100m. An objective view of the issue in light of the new regime for permission to appeal suggested that this was the paradigm case in which the court of first instance should consider very carefully whether it was a matter fit for appeal. It would turn that regime on its head if the defendants were entitled as of right to bring that complex issue of fact into an existing appeal on a comparatively short point of law. Therefore, if it was legitimately a matter for the court's discretion as to how its own order was drafted, the questions whether that issue should be within the regime which required permission to appeal and whether it was fit for appeal were matters to be taken into account. The court had power to make a declaration, and ought as a matter of discretion to do so, to the effect that the defendants had not entered into a binding settlement agreement with Noga and were not indebted to Noga in the sum of $100m, although the figure of $100m had been agreed. Such a declaration fairly and accurately reflected the resolution of the dispute and was not improperly made for the collateral purpose of preventing the defendants raising the issue by respondent's notice. On the basis that the defendants needed permission to appeal on that issue it was refused.

2. On its proper construction the third agreement only required release of the accounts frozen in this action and did not require the release of all freezing measures over the defendants' assets here and abroad. The defendants were to give instructions to their bankers in advance so that as soon as the latter could lawfully do so they would credit the FGN with the settlement sum. In that way the discharge of the freezing orders made in these proceedings and release of the accounts were to be simultaneously accompanied by payment. The cause of action for payment of the DM 300m was complete at latest on release of the accounts frozen in this action. There was an implied obligation to co-operate in implementing the agreement. By refusing to co-operate with the FGN in implementing the agreement, the defendants were in breach of that term. The defendants could not rely on their own breach of contract to prevent the fulfilment of a condition precedent to payment. At the same time the defendants would be responsible for any damages which flowed in the ordinary way from their breach. There was no necessary dichotomy in a case such as this between damages and debt and on suitable facts a claimant might be entitled to relief in both. Where the subject matter of the dispute was a payment, the primary relief should be in debt, if that was possible, unless an element of damages was necessary to ensure that the value of that debt at a later time matched the value of earlier payment, where earlier payment had been delayed by the defendant's breach. (Mackay v DickELR(1861) 6 App Cas 251applied.)

JUDGMENT

Rix LJ:

1. In these proceedings in the Commercial Court in London, two actions have been brought by a Geneva company, Compagnie Noga d'Importation et d'Exportation SA, which I shall call Noga, against, among others, a group of individuals and companies who have throughout been known, after their original, but not current, solicitors, as the SJ Berwin defendants. These defendants are essentially the estate, family and business associates of the late General Abacha, a former ruler of Nigeria, as well as certain of their companies. The subject matter of these actions was a transaction by which Nigeria bought back the debt instruments which it had guaranteed in respect of the construction of a steel plant at Ajaokuta in Nigeria. Noga claims to have interests in those instruments, the Ajaokuta bills. Subsequently, the Federal Government of Nigeria (“the FGN”) itself commenced a third action against the SJ Berwin defendants in respect of the same debt buy-back transaction, claiming that it was a corrupt transaction, engineered between General Abacha himself and his family interests, under which the SJ Berwin defendants had obtained a corrupt profit.

2. Subsequently the three parties, by which I intend to refer to Noga, the SJ Berwin defendants and the FGN, met in Abuja in Nigeria in July and August 1999 for the purpose of negotiations designed to settle their disputes. As a result, three agreements were made, the first involving all three parties, and the second and third involving the FGN and the SJ Berwin defendants alone. The first agreement has been called the tripartite agreement. It is...

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