The Libyan Investment Authority v Credit Suisse International
| Jurisdiction | England & Wales |
| Judge | Pelling |
| Judgment Date | 03 December 2021 |
| Neutral Citation | [2021] EWHC 2684 (Comm) |
| Docket Number | Case No: CL-2019-000691 |
| Court | Queen's Bench Division (Commercial Court) |
[2021] EWHC 2684 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
HIS HONOUR JUDGE Pelling QC
SITTING AS A JUDGE OF THE HIGH COURT
Case No: CL-2019-000691
Roger Masefield QC, Andrew George QC, Craig Morrison and Samuel Ritchie (instructed by Enyo Law LLP) for the Claimant
Timothy Howe QC, Simon Atrill and Natasha Bennett (instructed by Cahill Gordon & Reindel (UK) LLP) for the First Defendant
Paul McGrath QC and Ruth Den Besten (instructed by Willkie Farr & Gallagher (UK) LLP) for the Second Defendant;
Paul Lowenstein QC and Sam Goodman (instructed by Cooke, Young & Keidan LLP) for the Third Defendant;
Alan Gourgey QC and Anna Littler (instructed by PCB Byrne LLP) for the Fourth Defendant; and
Michael Holmes QC and Ralph Morley (instructed by Stewarts Law LLP) for the Fifth Defendant
Hearing dates: 28,29 and 30 June; 1, 5 and 6 July 2021
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.
HIS HONOUR JUDGE Pelling QC SITTING AS A JUDGE OF THE HIGH COURT
HH Judge Pelling QC:
Introduction
This is the hearing of the first and second defendants' applications for summary judgment or to strike out the claimant's claims against them and the third to fifth defendants' applications to set aside the orders made in these proceedings extending the validity of the claim form and permitting the service of the claim form on the third to fifth defendants out of the jurisdiction.
I have come to the conclusion that the claimant's claims are statute barred as against all defendants and that it has no realistic prospect of succeeding in avoiding that conclusion by relying on s.32 of the Limitation Act 1980. In those circumstances, the first and second defendants' applications for summary judgment succeed and the order permitting service of these proceedings on the third to fifth defendants out of the jurisdiction must be set aside. I have also concluded that as a matter of law the LIA has no realistic prospect of success in relation to two of the causes of action that it relies on as against the second and third defendants. In light of those conclusions, it is not necessary that I decide any of the other issues that have been argued at the hearing before me.
My reasons for reaching the conclusions summarised above are set out below.
Factual Background
For the purposes of the present applications, the parties have proceeded on the basis of the factual allegations as pleaded by the LIA. However, I note that all allegations of wrongdoing are themselves denied by the defendants.
The LIA alleges (but the fourth defendant (“WMAG”) denies) that WMAG was a close political or commercial associate of Saif al-Islam Gaddafi, the second son of the late Colonel Muammar Gaddafi, who was Libya's head of state until the revolution in 2011 referred to below. WMAG is said to control and/or be the ultimate beneficial owner of the fifth defendant (“ LCL”).
On 2 June 2008, the LIA entered into an agreement to invest an aggregate principal amount of US$200 million in five-year notes issued by the first defendant (“ Credit Suisse”). These notes (referred to in these proceedings and this judgment as the “ Original Notes”) were derivative products that had 90% capital protection upon maturity and the performance of which tracked the performance of a fund managed by the second defendant (“ GLGP”). Following payment of US$200m by the LIA to Credit Suisse, on 23 June 2008 Credit Suisse paid GLGP US$6m. Credit Suisse had disclosed to the LIA that it would be paying a fee to GLGP prior to execution as I explain in more detail later, but not its amount. On or about 24 June 2008, GLGP paid US$6m to LCL.
The LIA alleges (but each of Credit Suisse, GLGP, LCL and WMAG deny) that in return for the US$6m payment to LCL, WMAG provided fraudulent and corrupt services to Credit Suisse and/or GLGP in relation to the Original Notes, by bribing or intimidating at least three LIA officials who at that time had day to day control of its affairs (Mr Layas, the LIA's Executive Director, Mr Zarti, the LIA's Deputy Executive Director and Mr Gheriani, the LIA's Head of Alternative Investments) in order to bring about the acquisition by the LIA of the Original Notes to the knowledge of Credit Suisse and GLGP. The LIA alleges that GLGP was interposed between Credit Suisse and LCL for the purpose of concealing the involvement of and payment to (ultimately) WMAG. It is alleged by the LIA that WMAG was able to act as alleged because he had a corrupt relationship with Mr Haffar, a director of Credit Suisse based in Dubai, who was involved in marketing the Original Notes to the LIA and Ms Chabarek, a senior employee of an affiliate of GLGP who was also involved in that process. These allegations are disputed by Credit Suisse, GLGP, LCL, and WMAG.
On 17 June 2009, the LIA entered into a re-structuring agreement with Credit Suisse by which the Original Notes were restructured (referred to in these proceedings and this judgment as the “ Restructured Notes”) by linking them to a number of different funds including funds managed by the third defendant (then known as Duet Mena Limited), or companies within the group of which it was a member. The third defendant (“ FIMP”) is an entity registered in the Dubai International Financial Centre, the Dubai financial services free zone. A principal effect of this restructuring was that the 90% capital protection that had been a feature of the Original Notes was removed. A one-off fee was payable (as was disclosed in the term sheet for the Restructured Notes) and paid by Credit Suisse to FIMP. As before the amount of the fee was not disclosed. In fact that fee was US$6m and was paid by Credit Suisse on 1 July 2009. The LIA alleges that thereafter FIMP paid US$6 million to an entity owned and/or controlled by WMAG in return for him providing fraudulent and corrupt services to Credit Suisse and FIMP in relation to the Restructured Notes similar to those allegedly provided in relation to the Original Notes. It is alleged by the LIA that WMAG was able to act as alleged because he had a corrupt relationship with Mr Ben Mlouka, who was employed by FIMP and was involved in the marketing of the Restructured Notes as well as Mr Haffar. These allegations are disputed by Credit Suisse, FIMP and WMAG.
The LIA alleges that the existence and amount of the payments made to WMAG or LCL or any other entity controlled by WMAG were not disclosed to the board of the LIA by any of Mr Layas, Mr Zarti or Mr Gheriani or anyone else at or before the time when the board was asked to sanction these transactions or thereafter. The term sheets for each of the transactions disclosed only payments by Credit Suisse to respectively GLGP and FIMP but not by either to WMAG or any entity controlled by him. This concealment is the critical issue with which the limitation issues that arise on the applications before me are concerned.
I refer to the Original Notes and the Restructured Notes collectively hereafter as the “ Credit Suisse Notes”.
The LIA asserts as against Credit Suisse that the Credit Suisse Notes are voidable (for alleged breach of fiduciary duty and/or undue influence) and/or unenforceable (for alleged illegality). The LIA's pleaded claims against Credit Suisse, GLGP and FIMP are for repayment of the US$200m as money had and received or as a claim in unconscionable receipt and as against Credit Suisse for rescission of the Credit Suisse Notes and a declaration that it has a proprietary interest in the US$200m paid to Credit Suisse or the traceable proceeds of that sum. By the time of this application, the sum claimed against each of GLGP and FIMP was US$6m, being the sum which the LIA alleges WMAG procured to be paid by each in effect to him and which it further alleges was paid from the initial sum of US$200m it paid to Credit Suisse (or the traceable proceeds of that sum).
As is well known, there was a revolution in Libya between February and November 2011 in which the regime led by the late Colonel Gaddafi was ousted from power and Saif Al-Islam Gaddafi was arrested and detained in custody between November 2011 and June 2017. In May 2012, Dr Mohsen Derregia was appointed Chairman of the Board of the LIA. Although Dr Derregia ceased involvement with the LIA in April 2013, and Mr Abdulmagid Breish was appointed Chairman of the LIA on 1 June 2013, it is not suggested that the LIA suffered any of the organisational or political difficulties from May 2012 that it is alleged it faced prior to the revolution. Between July 2015 and 22 December 2020, there was a Receivership Order in place concerning the affairs of the LIA because of a dispute as to who the lawful chairman of the LIA was. It is not alleged that this had any material effect on the issues that arise for the purpose of these applications.
The LIA's solicitors first wrote to Credit Suisse in relation to the claims that the LIA might have in relation to the Credit Suisse Notes on 5 October 2017, some 8 years after the Restructured Notes agreement had been entered into and some 9 years after the LIA had entered into the agreement to invest in the Original Notes. In that letter, the LIA's solicitors stated that:
“the LIA is concerned that in entering into the Credit Suisse Notes it may have been a victim of a fraudulent and corrupt scheme...
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PJSC National Bank Trust v Boris Mints
...own time. My experiences in this regard bear some similarities to those described by His Honour Judge Pelling QC in Libyan Investment Authority v Credit Suisse International [2021] EWHC 2684 (Comm), [139]–[140]. It goes without saying that this is not a satisfactory way in which to conduct......
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PJSC National Bank Trust v Boris Mints
...is that on a number of occasions counsel have either taken submissions at excessive speed (as noted for example in Libyan Investment Authority v Credit Suisse International [2021] EWHC 2684 (Comm) [139–140] where experienced transcribers were unable to keep up with the pace of speech) or h......