Irvani v Irvani

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Buxton,Mr Justice Ferris,Lord Justice Nourse
Judgment Date09 December 1999
Neutral Citation[1999] EWCA Civ J1209-6
Judgment citation (vLex)[1999] EWCA Civ J1209-13
Date09 December 1999
Docket NumberQBCMI 1999/0072/A3

[1999] EWCA Civ J1209-13

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

(Mr Justice Colman)

Royal Courts of Justice

Strand

London WC2

Before:

Lord Justice Nourse

Lord Justice Buxton

and

Mr Justice Ferris

QBCMI 1999/0072/A3

Bahman Irvani
Claimant/Respondent
and
Ali Irvani
Defendant/Appellant

Mr S Gee QC and Miss R Sabben-Clare (instructed by Messrs Holman, Fenwick & Willan, London EC3) appeared on behalf of the Appellant Defendant.

Mr M Collins QC and Mr J Smouha (instructed by Messrs Simmons & Simmons, London WC2) appeared on behalf of the Respondent Claimant.

Thursday, 9th December 1999

Lord Justice Buxton
1

Introduction

2

This appeal stems from a long-standing dispute between two brothers. It will make for ease of identification, and I hope will not be thought discourteous, if I refer to them throughout simply by their first names, respectively Ali and Bahman.

3

The procedural history of the case has been the subject of a number of serious difficulties, from which the complaints made in this appeal mainly stem. The appeal itself seeks to disturb various declarations made by Colman J in relation to an arbitration agreement [the 1995 agreement] between the two brothers entered into on 5 June 1995, the arbitrator appointed having been their elder sister Mrs Nezhat Khosrowshahi [Mrs Khosrowshahi]; and an award published by Mrs Khosrowshahi on 2 February 1996 [the 1996 award]. Bahman was successful before Colman J in securing declarations that, to summarise their significant effect, (i) the 1995 agreement, and the appointment of Mrs Khosrowshahi under that agreement, were valid and binding on both parties; and

4

(ii) the 1996 award was valid and binding on the parties. Ali says that both of those declarations should be set aside, and the matter be remitted for a new trial, one of his main complaints being that he did not receive a fair trial before Colman J.

5

This brief outline of the nature of the case conceals a great deal of complication and dispute, to which I must now turn. In the first place, and simply in order to provide a structure and to avoid excessive cross-reference or interpolation later in the judgment, I set out in summary form the main features, first of

6

the facts and then of the legal issues. These next two sections of the judgment are intended to have only this limited editorial function, and not to take the place of the fuller exposition that follows them in its due place.

7

An outline of the history

8

Here, and later, I shall endeavour to state the history as neutrally as possible, and to the extent only that is necessary for an understanding of the legal arguments. A good deal of the narrative is or may be in dispute, but it would lengthen this judgment to an intolerable extent were I to record all these actual or potential disagreements in any instances save where the disagreement is germane to the issues in this appeal.

9

From about 1986 Ali and Bahman were in partnership in a wide range of business matters in the USA. There was no written partnership agreement. The partnership terminated in 1991, difficulties having been caused by, amongst other things, Ali's addiction to heroin. Thereafter, there were continuing disputes about the distribution of the actual or alleged partnership assets. After abortive attempts to mediate through third parties, it was agreed that Mrs Khosrowshahi should be approached. There was an exchange of correspondence between Ali and Bahman, and then a two-day meeting with Mrs Khosrowshahi. The 1995 agreement had been agreed at an early stage of that meeting. After the meeting, and some further exchanges, Mrs Khosrowshahi produced the 1996 award in 1996.

10

The 1996 award was broadly unfavourable to the claims made by Ali. On 4 March 1998 he brought proceedings in the United States District Court for the northern district of Georgia [the Georgia proceedings] seeking dissolution of the partnership and the distribution of the partnership assets. That jurisdiction was chosen because Bahman was resident there. Ali alleged in the Georgia proceedings, inter alia, that when he entered into the 1995 agreement he had not been competent to contract because of his substance abuse, and that fact had been known both to Bahman and to Mrs Khosrowshahi; and that the 1996 award had been produced without proper enquiry and through bias on the part of Mrs Khosrowshahi in favour of Bahman.

11

The present, English, proceedings were commenced by Bahman by Originating Summons on 26 March 1998, a principal objective being to provide a definitive statement of the validity of the 1995 agreement for use in the Georgia proceedings; and on 8 April 1998 Bahman duly filed a motion in the Georgia proceedings for the dismissal of those proceedings on the ground that they were subject to the 1995 agreement. After various procedural hearings the summons was heard by Colman J on 5 August 1998. Ali had at one stage of the process been represented by solicitors and counsel, but he was unrepresented before Colman J. The judge effectively made the declarations sought by Bahman, the most important aspects of which I have already set out.

12

Summary of the legal issues

13

Against that background, the legal issues in this appeal can be set out as follows.

14

Ali contends that

15

1. The 1995 agreement was not binding on him. Although it was claimed, at least in the Georgia proceedings, that the agreement was intended to be binding in honour only, the substantial claim before us was that the agreement had been entered into under the undue influence of Bahman and Mrs Khosrowshahi; or alternatively or additionally at a time when Ali did not have contractual capacity; or in the further alternative the 1995 agreement was an unconscionable bargain.

16

2. The 1996 award was not binding on him because Mrs Khosrowshahi had not given him a proper occasion to state his case, and had acted without proper impartiality. That was so as a matter of general English law; and also because, since the 1996 award had been signed in Vancouver, it was a New York Convention award, and thus, by section 5(2)(c) of the Arbitration Act 1975 (the then ruling statute) enforcement of it might be refused in the United Kingdom against a party who had been unable to present his case in the arbitration.

17

3. He did not have a fair trial before Colman J because

18

(i) the judge did not give him a proper opportunity to put his case; and

19

(ii) he was not mentally competent to conduct the case unaided.

20

Ali said that the effect of these errors was that the trial had been a nullity, and all the orders resulting from it should be set aside.

21

Bahman took issue with all these points, and raised the further following issues:

22

4. The argument based on section 5(2)(c) of the Arbitration Act 1975 was not open to Ali. That was because both the curial and the enforcing courts was the English court. It would therefore have been open to Ali to apply for remission of the award under section 22 of the Arbitration Act 1950. Since he had not done that in due time, he could not now complain further of it.

23

5. Even if Ali had not had a proper opportunity to state his case with regard to the 1996 award before Colman J, that failure was of no effect because the case that Ali now said he wished to make would not have prevailed with the judge.

24

6. The issues as to the 1995 agreement and the 1996 award, respectively, were quite different. If this court were satisfied that there had been a proper hearing as to the 1995 agreement before Colman J; and were further satisfied as to the enforceability of the 1995 agreement; then it should not be deflected from upholding Colman J's declarations about the 1995 agreement by any criticisms directed solely at the 1996 award.

25

The case put by, in particular, Ali can only be fairly explained by significant verbatim citation of the documents, even though that has the effect of seriously extending this judgment. It is however first necessary to set out in more detail how the dispute between the brothers developed.

26

The partnership

27

The agreement between the brothers was informal, and never reduced to writing. What the terms of the agreement had in fact been, and in particular what it provided or assumed in the event of dissolution, was a principal issue in the later arbitration. The partnership however covered a wide range of business and property transactions. It was summarised by Ali in the Georgia proceedings as follows:

28

In 1986, the Irvani brothers formed a partnership to pursue a variety of real estate development commercial ventures in the United States and abroad. During the twelve year life of the partnership, the brothers pursued a wide variety of business ventures, including, but not limited to the following:

29

(i) Investment in residential property in Atlanta, Georgia;

30

(ii) Development of commercial real estate -e.g office buildings and industrial parks in New York City, metropolitan and suburban Washington D.C., Gwinnett County and Buford County, Georgia;

31

(iii) Shoe manufacturing operations in Atlanta, Georgia, and Cairo, Egypt;

32

(iv) Software development and marketing; and,

33

(v) Foreign exchange arbitration through merchant banks based in London and Germany.

34

The 1991 termination, and the subsequent disputes

35

It is common ground that Ali suffered from addiction to heroin (and, in Bahman's contention, other illicit or harmful substances) during the currency of the partnership. That understandably rendered him of less assistance than he might have been expected to be in the affairs of the partnership. Ali...

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1 books & journal articles
  • VITIATING FACTORS IN CONTRACT LAW — SOME KEY CONCEPTS AND DEVELOPMENTS
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    • Singapore Academy of Law Journal Nbr. 2005, December 2005
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