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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Compagnie Noga D'importation Et D'exportation SA v Abacha & Ors [2003] EWCA Civ 1100 (23 July 2003) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2003/1100.html Cite as: [2003] EWCA Civ 1100 |
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEENS BENCH DIVISION (COMMERCIAL COURT)
Lord Justice Rix
Mr Justice Longmore
London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE TUCKEY
and
LORD JUSTICE LAWS
____________________
1999 FOLIO 404 COMPAGNIE NOGA D'IMPORTATION ET D'EXPORTATION SA |
Claimant |
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- and - |
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MRS MARYAM ABACHA & MR MOHAMMED SANI ABACHA AS THE PERSONAL REPRESENTATIVES OF GENERAL SANI ABACHA DECEASED |
Defendants |
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1999 FOLIO 405 COMPAGNIE NOGA D'IMPORTATION ET D'EXPORTATION SA |
Claimant |
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- and - |
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MRS MARYAM ABACHA AND MR MOHAMMED SANI ABACHA AS THE PERSONAL REPRESENTATIVES OF GENERAL SANI ABACHA DECEASED |
Defendants |
____________________
Smith Bernal Wordwave Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Mr Charles Flint QC; Mr Paul Stanley (instructed by Byrne & Co ) for the S J Berwin Defendants
Mr David Railton QC; Mr Andrew Mitchell (instructed by Kendall Freeman solicitors) for the Federal Government of Nigeria
____________________
Crown Copyright ©
Lord Justice Waller :
Tripartite Agreement – is it binding?
"1. Having taken delivery and retired all the Bills subject of the dispute at a market Price of 45% of Face Value, the FGN agrees to withdraw its claim against the defendants. In return, Noga agrees to waive and hereby waives all its claims against the Federal Government of Nigeria;
2. Noga, having agreed to receive a settlement amount from Mecosta, agrees to withdraw its claims under the dispute against the Defendants. Furthermore, Noga waives all rights and claims to the Bills;
3. Mecosta agrees to pay a settlement sum to Noga in consideration of the above;"
"586. With the insertion of an agreed settlement sum in clause 3, however, I would on balance conclude, while recognising there is much to say on both sides of the argument, that the tripartite agreement was intended to bind. It would then seem to me that its language was sufficiently certain and redolent of an intention for agreement within the four walls of the document, that it would be wrong to deny it legal effect. For these purposes, my inclination would be to construe the document by itself, and without reference to prior negotiations or drafts: Prenn v Simmonds [1971] 1 WLR 1381. Of course, to the extent that collateral representations, agreements or stipulations are relied on as indicating that, whatever its effect as a matter of its own true construction, the agreement was not intended to amount to a document imposing legal relations on its parties, then, on equally classical principles, the court can admit evidence of such collateral matters. I will revert to those considerations below. For the present, however, I am simply asking whether the tripartite agreement (with insertion of an agreed settlement sum) would be legally binding on its own terms, or whether it is a mere agreement to agree, or a document which is to be construed as being subject to contract. On that basis, and on the current hypothesis about clause 3, it would seem to me to be legally binding. It has every appearance of formality, with its title setting out the three actions concerned, its "PREAMBLE", its repeated language of agreement, its use of legal jargon such as "hereby" (in two places), its language of settlement (in three places) and, to my mind an important pointer, its description of the very agreement in question as "this Settlement" (clause 4), and its cautious reference to the possibility of a further agreement only "if required". That is not a "subject to contract" clause, which could so easily have been there inserted. That is not the language of "subject to contract". Once the sum of $100 million is assumed to be inserted into clause 3, there is nothing in the language of the contract which to my mind renders it a mere agreement to agree."
"124. It is Noga's case and evidence that Mr Bagudu told Mr Schmidt that he had seen the Attorney General on the previous evening with the draft MOU, and that the latter had given his informal approval to it. Mr Bagudu then (at his meeting with Mr Schmidt) signed the document, and, while he waited in Mr Schmidt's room at the hotel, Mr Schmidt went with it to the Gaons' suite. There Mr Gaon read through it and noted that it did not contain any reference to $100 million as the agreed sum between Noga and the SJ Berwin defendants. Mr Schmidt assured him that the sum had been agreed, but had been omitted to avoid offending any political sensitivities. Mr Gaon's evidence was that for his part he was not concerned about the confidentiality of the agreed sum, indeed part of the idea of the MOU was to record the FGN's approval to the settlement between Noga and the SJ Berwin defendants, which would have suggested that the sum ought to have been mentioned in the document. However, he allowed himself to be persuaded that all was in order. It is Mr Gaon's evidence that this was achieved by Mr Schmidt taking Mr Gaon down to Mr Schmidt's own room, where Mr Bagudu was waiting. There Mr Bagudu confirmed at Mr Gaon's request that the agreement was for $100 million (Mr Schmidt's evidence did not refer to this meeting between Mr Gaon and Mr Bagudu on 10 August and was possibly inconsistent with it, although he did refer to another meeting between Mr Gaon and Mr Bagudu on the following day, 11 August, this time in Mr Gaon's suite.) Mr Gaon then returned to his suite and signed the MOU. Mme Gaon's evidence supported that of her husband, save that she did not go with her husband to see Mr Bagudu: but she said that on her husband's return, he told her that Mr Bagudu had confirmed the settlement sum of $100 million."
"135. Noga's evidence as to the events of 11 August was as follows. The Attorney General presented the tripartite agreement for signature with the explanation that he had amended the previous draft in order to put it into proper form as an agreement. After signature, the Attorney General said that he believed that a settlement had been reached between Noga and Mr Bagudu, and Mr Schmidt confirmed that it had and that a settlement sum had been agreed. The Attorney General remarked that he did not expect that either party would back out of that agreement, but that he wanted a letter signed by both to be brought to him as soon as possible, to put the matter beyond doubt. Back at the hotel, Mr Gaon showed his copy of the signed agreement to his wife. He and Mr Schmidt then proceeded to draft a letter for the Attorney General: Mr Schmidt still required the amount of the settlement to be kept confidential, but confirmed again to Mr Gaon that it was agreed at $100 million. Mr Schmidt left with the manuscript draft to get the letter typed up on Mr Bagudu's word processor. Mr Bagudu approved the draft, but at his request the word "irrevocably" was inserted ("have irrevocably reached the principals of an agreement"). Mr Schmidt then returned with the printed letter, and with Mr Gaon's permission invited Mr Bagudu, who had also returned with Mr Schmidt to the latter's hotel room, to come up to the Gaons' suite. The letter was signed by Mr Gaon and Mr Bagudu in Mr Gaon's suite. Mme Gaon heard Mr Bagudu arrive and leave, but was not present at the signing of the letter, which was done in the dining room. Mr Gaon there remarked, after the letter had been signed, that although it still left the settlement sum unspecified, Mr Schmidt was witness to it having been agreed at $100 million: there was no dissent. After the others had left, Mr Gaon rejoined his wife and showed her a copy of the letter. He told her that the matter had been finally resolved. She was happy and relieved, and phoned her children in Geneva to give them the good news. David Gaon confirmed speaking at that time to his mother, and said that she told him that Mr Bagudu had definitely settled. Danielle Coen Gaon gave evidence to similar effect, and also said that her mother had told her of Mr Bagudu's visit to their hotel suite and of his confirmation of the sum of $100 million to her father."
"570….In any event Mr Gaon and Mr Bagudu signed the letter of 11 August at the Attorney General's request: Mr Gaon, Mr Schmidt and Mme Gaon all say that Mr Bagudu visited the Gaons' suite on 11 August to sign that letter. It was in the context of that signing that Mr Gaon and Mr Schmidt both say that Mr Bagudu did not dissent from Mr Gaon's reference to the $100 million as agreed. I accept that evidence. Mr Bagudu denies even going to the Gaons' suite. I do not accept that evidence. In the circumstances Mr Gaon may well have felt that, with Mr Schmidt himself as a witness, the matter was secure. In these circumstances it hardly matters all that much whether or not there was the earlier meeting on 10 August between Mr Gaon and Mr Bagudu in Mr Schmidt's room at which Mr Gaon says that Mr Bagudu confirmed the $100 million as well. Mr Schmidt's evidence does not confirm that meeting, but Mme Gaon's does, and so does Mohammed Abacha's (para 126). In any event, I would accept that evidence too. ….."
"138. However, Mr Schmidt's evidence developed in cross-examination and then again in re-examination. When cross-examined, he accepted that Mr Bagudu's agreement to $100 million was conditional on the FGN's position both in law and practice. The SJ Berwin defendants were only to be bound if the FGN itself agreed to take nothing (other than the existing $50 million promise) for Ajaokuta, and lived by that promise (see also below under paras 152/3). If the tripartite agreement was broken by the FGN, then Noga would not be paid. Moreover, the tripartite agreement was substantially the same as the MOU, and was so understood by the parties – and he had already described that as "something less than an agreement". Bilateral negotiations were ongoing and would continue, and he assented to the proposition that the tripartite agreement "reflected no more than an intention to settle in the future" and that "a further and more detailed document or documents would have to be drawn up and agreed" (Day 8.29). Moreover, the fact that the Attorney General had asked for the additional letter showed that he could easily have formed the impression that no agreement on figures had yet been reached between Mr Gaon and Mr Bagudu. "
"584. The agreement for $100 million was an oral agreement, nowhere reduced to writing. Noga must satisfy me that the agreement was a legally binding one, but lacks a definitive document whose terms can be identified and construed for the purpose of seeing whether it meets the requirement of legal effectiveness. I have been satisfied, on a hard fought issue, that the sum of $100 million was agreed: but the improbability that a sum of that importance should have been agreed without that agreement being recorded in writing, if the agreement is to be legally effective, creates a particularly difficult hurdle for Noga to surmount. For these purposes, it seems to me that it is not sufficient for Mr Gee merely to point to the tripartite agreement and say that, with $100 million thought of as being inserted into clause 3 in place of or alongside the words "a settlement sum", that documentary agreement is complete and binding. This is because the inserted term, of $100 million, has to be imported from outside the tripartite agreement as an orally agreed term, and as soon as that needs to be done the question arises whether that term is the sum total of the oral part of the parties' agreement.
585. Even if that were the case, so that the tripartite agreement could and should simply be read as though it had referred to "a settlement sum of $100 million", there is an issue as to whether such an agreement should be construed as final and binding. Obviously, the tripartite agreement without agreement of the quantum of clause 3's settlement sum could not be complete. I also accept the submission that the tripartite agreement could not be unbundled into a series of bilateral agreements, two of which were binding, viz an agreement between Noga and the FGN and a separate agreement between the SJ Berwin defendants and the FGN, while the third, an agreement between the SJ Berwin defendants and Noga was incomplete. Moreover, without a binding agreement to pay $100 million as a settlement sum, I do not see what consideration the SJ Berwin defendants would have provided to bind them into any agreement. Even without the point about lack of consideration, however, I do not think the agreement can be picked apart. As the preamble states – "The three parties…hereby agree to settle their dispute…
588. Finally, however, I come back to the actual facts of the case, under which there was no reference to $100 million in the tripartite agreement, and Noga bears the burden of satisfying me that when that figure was agreed orally, it was agreed on terms and in circumstances such that the tripartite agreement which, without an agreed sum could not be effective, became a final and binding agreement. It is at this point that the evidence of Mr Schmidt becomes critical. After all, it was he who agreed the $100 million with Mr Bagudu. For all that there were, as I am prepared to find, two brief meetings between Mr Bagudu and Nessim Gaon at which reference was made to the $100 million, there is no witness whose evidence as to the circumstances in which the $100 million was agreed is of greater importance than that of Mr Schmidt."
"592 On the basis of Mr Schmidt's evidence, therefore, I am not satisfied that he and Mr Bagudu had reached an unconditional agreement intended to be binding in terms of the tripartite agreement. It would seem that Mr Bagudu was prepared to pay $100 million to Noga provided that he had to pay nothing to the FGN for Ajaokuta (other perhaps than the $50 million promissory note, the status of which was rather left up in the air as of the time of the tripartite agreement). I take the liberty of repeating a passage cited at para 145 above: as Mr Schmidt said (at Day 7.17):
"Q. Because that agreement was conditional on the Government taking nothing. Is that not right? A. I am afraid so, yes. Very clearly.
"Q. So if the Government went back on their part of the deal, the whole thing unravelled and you had to start again? A. Yes.
"Q. Now did you pass this news on to Mr Gaon? A. I do not think I passed it completely on to him, that the deal was off, but I said that Mr Bagudu was having problems.
"Q. So you warned Mr Gaon that the whole thing might fall apart? A. I am afraid I did not."
"569. (14) ….Finally, if it be the case that the agreement as to amount was in any event conditional (as to which see below), then another possible reason for confidentiality of the amount would be the fact that setting out the amount might have necessitated setting out more of the conditions of the agreement: which would not have assisted the joint strategy of Noga and the SJ Berwin defendants."
Second that in so far as the figure had been agreed during negotiations up to the signing it was only on offer if FGN did not demand money. Third that the totality of the negotiations show that FGN within a very short space of time from the signing demanded money from the SJ Berwin Defendants. This is so whether one concentrates on the 13th August or disregards that agreement and goes straight to the 16th August Agreement. Furthermore no-one appeared to suggest that in making a demand for money FGN were acting in breach of contract.
"In order to implement the Agreement, we hereby inform you that Noga and Mecosta have irrevocably reached the principals of an agreement and will proceed to their respective lawyers in the United Kingdom ("UK") in order to execute the Agreement and at the same time order their lawyers to discharge the present suits in the High Court of England.
We, further, request that you kindly direct your lawyers in the UK to implement the Agreement and discharge the FGN's injunction in accordance with the terms of the Agreement."
The confirmation is not of a concluded binding agreement but of irrevocably reaching "the principles of an agreement".
Consideration
Lord Justice Tuckey:
Tripartite agreement – is it binding?
Consideration
If the question is whether the 13th August agreement was varied or rescinded and replaced by the agreement of 16 August, it seems to me that there can be only one answer, which is that it was rescinded and replaced….. The later contract expressly states that it "supercedes" the earlier; the parties agreement is entirely contained in the later agreement, which stands on its own as a self contained agreement.
So he found consideration for the 16 August agreement.
The parties to a contract may agree to rescind it at a time when each has outstanding rights under the contract against the other. In such a case each party generally provides consideration for the others promise to release him by giving up his own rights under the contract. It is of course essential that each party should promise to give up his rights. If only one party does so, the other making no counter-promise, the former party's promise will be entirely unilateral and unsupported by any consideration.
Nor does any difficulty arise, from the want of consideration for the [buyer's] agreement to consent to the change of days; for the same consideration which existed for the old agreement is imported into the new agreement which is substituted for it.
Mr Flint submits that this case does not support what is said in Chitty. There was no issue about consideration and no difficulty about finding it because the delay in delivery resulted in a corresponding postponement of the date on which the buyer had to pay for the goods. Mr Flint may be right about this, but nevertheless Lord Denman's statement does support the rescission and replacement theory.
Rescission in full or in modification being intended, it should be effective although the result benefits only one party and places a burden only on the other. It is the fact of rescission rather than the effect of it that determines its legal quality. The difference between a rescission unrelated to a new contract and one interdependent with a new contract, with the result the same in each case, signifies no failure of consideration in the latter case. The result, whatever it may be, is indecisive of the contractual character of the transaction. The steps taken being pointed out by the law, the result should not be held an idle one. Merger of the rescission and promise into one transaction does not destroy them as elements composing the transaction.
A promise modifying a duty under a contract not fully performed on either side is binding
(a) if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made;
The comment which follows says:
The same result called for by paragraph (a) is sometimes reached on the ground that the original contract was "rescinded" by mutual agreement and that new promises were then made which furnished consideration for each other. That theory is rejected here because it is fictitious when the "rescission" and new agreement are simultaneous, and because if logically carried out it might uphold unfair and inequitable modifications.
Lord Justice Laws:
Tripartite agreement – is it binding?
"The agreement for $100 million was an oral agreement, nowhere reduced to writing. Noga must satisfy me that that agreement was a legally binding one, but lacks a definitive document whose terms can be identified and construed for the purpose of seeing whether it meets the requirement of legal effectiveness. I have been satisfied, on a hard fought issue, that the sum of $100 million was agreed: but the improbability that a sum of that importance should have been agreed without that agreement being recorded in writing, if the agreement is to be legally effective, creates a particularly difficult hurdle for Noga to surmount. For these purposes, it seems to me that it is not sufficient for Mr Gee merely to point to the tripartite agreement and say that, with $100 million thought of as being inserted into clause 3 in place of or alongside the words 'a settlement sum', that documentary agreement is complete and binding. This is because the inserted term, of $100 million, has to be imported from outside the tripartite agreement as an orally agreed term, and as soon as that needs to be done the question arises whether that term is the sum total of the oral part of the parties' agreement."
In my judgment, with great respect to the learned trial judge, this reasoning conflates the two questions I have identified. It proceeds upon the implicit basis that if the evidence showing that "settlement sum" meant $100 million (question 1) also demonstrated that, at the time when that understanding was arrived at, the parties had not concluded an unconditional contract – because, for instance, it was contemplated that the $100 million would only be paid if FGN sought to recover nothing more for Ajaokuta – then question 2 would fall to be answered affirmatively: it would be proved that at the moment of signing the tripartite agreement the parties were in fact agreed that they should not be bound by it. But this is a non sequitur.
Consideration
ORDER: Appeals dismissed. Further orders to be minuted by counsel and costs to be dealt with by written submissions.