Shekhar Dooma Shetty v Al Rushaid Petroleum Investment Company (a company incorporated under the laws of the Kingdom of Saudi Arabia) and Others Thomas A. Caplis (Third Party) James MacDonald Wight (Fourth Party)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Floyd |
| Judgment Date | 08 May 2013 |
| Neutral Citation | [2013] EWHC 1152 (Ch) |
| Court | Chancery Division |
| Date | 08 May 2013 |
| Docket Number | Case No: HC1001303 |
[2013] EWHC 1152 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Rolls Building London EC4A1NL
Lord Justice Floyd
Case No: HC1001303
and
and
Charles Samek QC (instructed by Speechly Bircham LLP) for the Claimant
Justin Fenwick QC and Graham Chapman (instructed by Edwin Coe LLP) for the Defendants
Mr Caplis and Dr Wight in person
Hearing dates: 5 th-8 th, 11 th-15 th and 18 th-20 th March 2013
In this action, the claimant Mr Shekhar Shetty, claims for sums alleged to be owing to him and for compensation following the termination of his employment with the first defendant, Al Rushaid Petroleum Investment Company ("ARPIC"), a Saudi company, and the second defendant Cleveland Bridge Dorman Long Engineering Limited (" CB"), a Jersey company. Mr Shetty also claimed damages for false imprisonment arising out of his alleged detention against his will at the London offices of CB on 30 September 2009. Following cross-examination, this false imprisonment claim was abandoned. I refer to all these claims together as "the employment claims".
By counterclaim and additional claim, the defendants, who for this purpose include the third defendant Al Rushaid Parker Drilling Limited ("ARPD"), another Saudi company, make a claim against Mr Shetty and the third and fourth parties, Mr Caplis and Dr Wight. ARPD was formed to carry out a joint venture project between the Al Rushaid Group (of which ARPIC, CB and ARPD are all members) ("the Group") and Parker Drilling LLC, a Delaware company, ("PD"). Mr Caplis and Dr Wight were involved in the joint venture, although their status within the Group is the subject of dispute. The defendants' claim is based on the taking of alleged secret commissions on supplies to ARPD by Mr Shetty, Mr Caplis and Dr Wight via a company called TSJ Engineering Consulting Limited ("TSJ"). TSJ was incorporated by Mr Shetty, Mr Caplis and Dr Wight in the British Virgin Islands. These commissions were allegedly paid to TSJ by suppliers of drilling rigs and associated equipment to ARPD ("the suppliers"), and subsequently shared between Mr Shetty, Mr Caplis and Dr Wight. The defendants say that these commissions were secretly made and taken by these three men, in breach of duties which they owed to the defendants under Saudi law. Accordingly, the defendants say that Mr Shetty, Mr Caplis and Dr Wight are liable to them for these wrongful acts. In addition they say that they were justified in terminating Mr Shetty's employment summarily, thus defeating the employment claims. There is also a Saudi law claim that all three participated in the taking of the commissions relying on the Saudi doctrine of ishtirak.
Messrs Shetty, Caplis and Wight take issue with the defendants' case in several ways. Mr Caplis and Dr Wight deny that the sums received by TSJ were in respect of commissions, and maintain that they were for genuine work undertaken by TSJ for the suppliers. Mr Shetty's position is that he does not know the details of what the payments were for, but does not admit that they were commissions on supplies to ARPD. There are also issues concerning the status of Messrs Shetty, Caplis and Wight in relation to the Group, and the content of any duties owed by each of them to companies in the Group under Saudi law. Messrs Shetty, Caplis and Wight also allege that their activities, or some of them, were consented to by the Group.
Mr Justin Fenwick QC and Mr Graham Chapman presented the case for the defendants. Mr Charles Samek QC did so for Mr Shetty. In the midst of all this legal firepower, Mr Caplis and Dr Wight were representing themselves, although Mr Samek did what he could to assist them where their interests coincided with Mr Shetty's. I have had to bear in mind that there was an inequality of arms, and have done my best to allow for this.
All the defendants are members of the Group. The Group is not a legal entity, but consists of a large number of legal entities of various descriptions throughout the world, all of which are under the control and ultimate ownership of Sheikh Abdullah Al-Rushaid ("Sheikh Abdullah" or "the Sheikh"). The group was founded in Saudi Arabia in 1978, and is now an important provider of equipment and services to the onshore and offshore oil industry in Saudi Arabia. The Group commonly carries on its business through joint ventures with non-Saudi companies. Sheikh Abdullah's son, Rasheed Al-Rushaid ("Rasheed") is also involved to some extent in the running of the Group's affairs.
Al Rushaid Investment Company became Al-Rushaid Petroleum Investment Company by a change of name. For clarity I will refer to this company as ARPIC even in respect of the period before the change of name. ARPIC was the holding company of the Group. Mr Shetty described it as "the Group company".
ARPD was formed in November 2005 as a vehicle for pursuing a joint venture for the supply of oil drilling equipment and services to Saudi Aramco, the national oil company of Saudi Arabia. The joint venture partner was PD, which is a provider of drilling services to the energy industry. At the outset, the shares in ARPD were held as to 50% by a company in the Group and as to the other 50% by PD. In March 2008, entities within the Group purchased PD's shares in ARPD, so that thereafter ARPD was wholly owned by the Group. There are disputes both as to the type of Saudi company which ARPD is, and as to who are its directors or, to use the Saudi law term, mudirs.
Al Rushaid Trading Company ("ARTC") is another company in the Group. It is not a party to the action. It is the trading arm of the Group, distinguished from the holding function of ARPIC and the joint venture companies such as ARPD.
I heard oral evidence first of all from Mr Shetty. I explain below why I am not able to accept all of Mr Shetty's evidence.
The defendants then called their evidence. Their witnesses were Mohamed Haek, Islam Elgamri, Gerold Ibler, Dariusz Kozlowski and Rasheed.
Mohamed Haek is Vice President of Oilfield Services of ARTC. Mr Haek was the Group's front man in its dealings with Saudi Aramco. However he was not directly concerned in contracts made by ARPD with companies other than Saudi Aramco. In particular the award of contracts to suppliers was not his responsibility. Mr Elgamri is Vice President of Finance of ARPIC, having risen to that post from internal auditor in 1991. He gave evidence about payments to suppliers for ARPD and summarised the payments made to Messrs Shetty, Caplis and Wight. Mr Ibler is the Chief Financial Officer of ARPIC, having been appointed to that position in September 2009 after Mr Shetty's employment with the Group was terminated. He was introduced to the Group by Mr Kozlowski.
A point made by each of Messrs Shetty, Caplis and Wight was that the Sheikh was not called as a witness, although it was common ground that the Sheikh was the ultimate authority within the Group, and that a specific claim to authorisation of the activities complained of was part of their defence. This is a significant point, which I will have to bear in mind throughout, but in particular in connection with the issue of authorisation.
Mr Caplis and Dr Wight also gave evidence in their defence. I shall explain below why I have not been able to accept the majority of the evidence of either witness.
Both Mr Shetty and the defendants called expert evidence of Saudi law. Mr Shetty called Mr Andreas Haberbeck. Mr Haberbeck is an English barrister and solicitor. From 1983 to 1986 he was seconded by Clifford Chance to Omar Farouk Msallati Law Office, its associate firm in Saudi Arabia. After a period working for a London firm, in 1991 he joined the Law Office of Dr Mujahid M. Al-Sawwaf of Jeddah. In August 1993 he joined Abbas F. Ghazzawi Law Firm of Jeddah. He has published extensively, amongst other things, on Saudi Arabian maritime and insurance law. He has extensive practical experience of advising clients on commercial matters in Saudi Arabia.
The defendants called Professor Frank Vogel. Professor Vogel is an independent scholar and legal consultant in Islamic law, based in the United States. He has given evidence on Islamic law in a large number of contentious cases in various parts of the world. From July 2012 he has been conducting a four year study, initiated by royal order, of the commercial legal rules and statutes applied in the courts and judicial committees of Saudi Arabia. He has published textbooks and other materials on Islamic law, some of which were put to him in cross-examination. Mr Samek was critical of some of Professor Vogel's evidence, for example his failure to make clear the essential components of ishtirak in his written evidence. I thought there was some force in Mr Samek's criticisms of Professor Vogel. However the issues of Saudi law that remain in the case are very limited, and I am able to resolve the case, for the most part, on the basis of propositions of Saudi law with which both experts were in agreement.
It is convenient to tackle the issues in this case by considering Mr Shetty's role in the Group and the issues surrounding the termination of his employment. Mr Shetty was first employed within the Group in 1982, initially as internal auditor. He was employed by ARPIC. In 1985 he was appointed Group Financial Controller. In 1991 he was...
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