Masri v Consolidated Contractors International UK Ltd and Others (No. 2)
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Gloster, DBE,MRS JUSTICE GLOSTER, DBE |
| Judgment Date | 20 December 2007 |
| Neutral Citation | [2007] EWHC 3010 (Comm),[2006] EWHC 1931 (Comm) |
| Docket Number | Case No: 2004–124,Case No: 2004-124 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 20 December 2007 |
[2006] EWHC 1931 (Comm)
MRS JUSTICE GLOSTER, DBE
Case No: 2004-124
2004-831
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mark Hapgood Esq, QC and Simon Salzedo Esq (instructed by Simmons & Simmons) for the Claimant
Charles Aldous Esq, QC, Ms Helen Davies & Simon Birt Esq (instructed by Herbert Smith LLP) for the Defendants
Hearing dates: 7 th—9 th March 2006; 13 th—15 th March 2006; 20 th and 21 st March 2006; 23 rd March 2006; 27 th and 28 th March 2006; and 4 th April 2006
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
The Claimant, Munib Masri ("Mr. Masri"), is a Jordanian national and Palestinian businessman, now aged 71, who had a career in the energy industry before founding the EDGO group of companies ("EDGO"). At all material times he was Chairman and Chief Executive Officer of EDGO and he (or his family interests) owned 50% of its shares, the balance being owned by his business partner, Tarif Ayoubi ("Mr. Ayoubi"). Mr. Masri seeks payment from the Defendants of monies that he claims are due under, or damages in respect of the alleged breach of, an agreement which he entered into over 13 years ago on 6 November 1992 ("the 1992 Agreement"). The Defendants contend that Mr. Masri had very substantial payment obligations under that agreement, which they allege he never fulfilled and that the 1992 Agreement came to an end a number of years ago. Accordingly they allege that nothing is owed to Mr. Masri.
The Defendants are members of the Consolidated Contractors Company group of companies, (which I shall refer to as "CCC" when I am referring to the group as a whole, or when I am referring to a particular company in the group without being specific as to which precise company). CCC is a large international group of companies specialising in construction projects in the Middle East. CCC was founded by the Second Defendant, Said Tawfic Khoury ("Mr. Khoury"), together with Kamel Abdul Rahman ("Mr. Rahman"), who died in 1980, and Hasib Sabbagh ("Mr. Sabbagh"), who was Chairman of CCC until 2004, when he resigned after he had suffered a major stroke. The First Defendant, Consolidated Contractors International (UK) Limited ("CCUK"), was incorporated in England and is CCC's English subsidiary. The principal activity of CCUK is the provision of services (such as office space and staff) to companies in the group. The Third Defendant, Consolidated Contractors Group SAL ("CC Holding"), is a company registered in Lebanon, whose only assets are its shareholdings in other members of CCC. The Fourth Defendant, Consolidated Contractors International Company SAL ("CCIC"), which is also registered in Lebanon, is the main operating company in CCC, and owns or controls the majority of the group's operating assets. Its managing office is in Athens, Greece. The predecessor to CCIC was Consolidated Contractors International Company Limited ("CCIC Ltd"), a company registered in Liberia. The Fifth Defendant, Consolidated Contractors (Oil & Gas) Company SAL ("CC (Oil & Gas)") is also a Lebanese company, which was incorporated in September 1992 and whose main function is to operate the oil and gas interests of CCC. It is also principally operated from Athens.
Mr. Masri, Mr. Sabbagh and Mr. Khoury are (or, in the case of Mr. Sabbagh, were) all leading Palestinian businessmen, and part of what Mr. Khoury described as the Middle Eastern business community, who have known each other well socially and in business for at least 30 years. All three men have been involved in Arab Bank plc ("the Bank"), a major international banking group. Mr. Masri has been a non-executive director since 1974 and is currently Deputy Chairman of the Bank. Mr. Sabbagh became a non-executive director in 1979, but retired in 2003, when he was replaced by Mr. Khoury. Another person, who features in this case, was Abdul Majid Shoman ("Mr. Shoman"), who for many years was the Chairman of the Bank and was the son of the Bank's founder. It was common ground that Mr. Shoman was a man of the highest integrity who was very widely admired and respected, not only in the Middle East, but also internationally. He died in 2005. Mr. Sabbagh, Mr. Khoury, Mr. Shoman and Mr. Masri were business colleagues of long standing. They shared a deep concern for the welfare of the Palestinian nation, and each of them was in some way or another involved with organisations which supported the Palestinian cause, such as the Welfare Association and the Palestine Development and Investment Company. CCC moved more of its business to the Bank, after the collapse of its previous bankers, because of the friendship of Mr. Sabbagh and Mr. Khoury with Mr. Shoman's father and Mr. Shoman himself. CCC was an important client for the Bank. These were men who would strive not to offend each other. The background of these past friendships and business associations is relevant to the Court's assessment of the parties' conduct in relation to the making and implementation of the 1992 Agreement.
The 1992 Agreement was contained in, or evidenced by, a memorandum signed by Mr. Masri and Mr. Khoury at Mr. Khoury's home in London on 6 November 1992 on the headed writing paper of CCUK, following a meeting between Mr. Masri and Mr. Khoury at CCUK's London office earlier on the same day. The purpose of the 1992 Agreement was stated to be to define the principles of Mr. Masri's participation in "CCC's" interest in an oil field in the Masila block or concession ("the Concession") in southern Yemen, which was originally held by CCIC and was subsequently transferred to CC (Oil & Gas), by an assignment dated 25 October 1992 ("the Assignment"), but which it was common ground did not take place as a legal assignment until written notice thereof had been given to the Yemeni Ministry of Energy on 8 February 1993.
The 1992 Agreement, as amended and signed, provided as follows:
"This is to define the principles of participation of Munib Masri (MASRI) in CCC's interest in the Masila Block in Yemen.
Basic principle is for Masri to receive 10% of CCC's 10% interest or a 1% overall interest in the Block for Masri subject to the following conditions, payments and adjustments:
1. Masri is to pay 10% of Masila Block Development costs which are paid by CCC.
2. Masri is to pay 10% of Masila Operating costs assessed to CCC.
…
4. Masri shall pay 10% of CCC's share of Bonus and Training payments required under the Production Sharing Agreement (PSA).
In consideration for the payments and participation of Masri as described above, Masri shall be entitled to the following when and if received by CCC. (Based on actual net receipts by CCC, i.e. after payment of marketing and other costs).
A. 10% of CCC's share of Contractor oil entitlements under the PSA.
B. 10% of Development Cost Recovery received by CCC.
For the purpose of this agreement, the following priority shall be assigned to funds available for cost recovery:-
1. Operating Expenses.
2. Exploration Expenses.
3. Development Expenses."
There is a dispute between the parties as to which of the Defendants was party to the 1992 Agreement and on whose behalf Mr. Khoury signed it. At the time he signed the 1992 Agreement, Mr. Khoury was a director and authorised signatory of both CCIC and CC (Oil & Gas). He was not, and has never been, an authorised signatory, nor a formally appointed director or direct shareholder of CCUK. Mr. Khoury presently holds the positions of President and Chairman of CC Holding and President of CCIC. He was also Chairman of CC (Oil & Gas) until June 1993.
Mr. Masri's contention is that he contracted with CCUK, through Mr. Khoury. If that is wrong, then he contends that he contracted with the owner of the Concession at the date of the November 1992 Agreement, namely CC (Oil & Gas). Failing that, he contends that the contract was with Mr. Khoury himself and/or as agent for the top company in the group, CC Holding, both of whom, he contends, were in a position to procure that any relevant group company fulfil the obligations owed to Mr. Masri. Only if all those submissions are wrong, does Mr. Masri contend that CCIC was the contracting party. The Defendants contend that the only party to the 1992 Agreement was CCIC, which was the legal owner of the interest in the Concession at the time of the 1992 Agreement, although, because of the Assignment, the beneficial owner was CC (Oil & Gas). However the Defendants accept that there is to be implied in the 1992 Agreement a term as pleaded at paragraph 29 of the Amended Defence, which would oblige CCIC, in the event that it assigned its interest under the PSA, to procure that the assignee assumed CCIC's obligations under the 1992 Agreement so that the assignee would undertake to pay a share of its own revenue from the Concession to Mr. Masri. The identity of the contracting party is relevant to certain limitation defences raised by the Defendants.
The Concession has turned out to be immensely profitable. It is common ground that, although the 1992 Agreement was binding on the relevant entity in CCC when it was made, CCC has not accounted to Mr. Masri in respect of any entitlement which he may have thereunder. The central issue at trial was whether CCC is justified in treating the 1992 Agreement as having been terminated, as it contends. The Defendants deny liability on a number of grounds, including an allegation that Mr. Masri failed to make the payments due under the 1992...
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