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David Lascelles victorious in resisting US$31million summary judgment

Arab v Merchantbridge & Oths (2015)
Commercial Court

David Lascelles is acting for Mr Samir Arab
in this commercial fraud dispute arising out of a joint venture relating to a
valuable Iraqi telecoms licence.

Mr Arab is claiming over US$31
million on the basis that he was induced by fraudulent misrepresentations to
sell his shares in Merchantbridge, a Middle Eastern private equity firm, at a
gross undervalue.

David is instructed by Fox Williams,
led by Stuart Ritchie QC and Ali Malek QC. The Defendants are represented by a
team from Brick Court instructed by Allen & Overy and a team from King
& Spalding.

In late 2014, the Defendants made
an application for summary judgment on the claims seeking to rely upon the
terms of a compromise agreement settling earlier proceedings.

In particular, the Defendants
contended that the claims were barred by words within a clause providing that
Mr Arab accepted the sums payable under the compromise agreement in full and
final settlement of “…any claim
” Merchantbridge. The
Defendants further relied upon a clause which stated that the claims were
settled irrespective of whether or not Mr Arab had them in his express
contemplation at the date of the compromise.

On behalf of Mr Arab, it was
argued that the words were insufficient to settle a claim that the compromise
agreement had been procured by fraudulent or negligent misrepresentations. In the alternative, he argued that as a
matter of public policy it is not possible for an agreement to exclude a claim
that the agreement itself was procured by fraud: – a release procured by fraud
cannot trump that fraud.

The Defendants’ application came
before the Commercial Court on 10 February 2015.

Dismissing the application, Walker
J held that Mr Arab had a real prospect of successfully contending that the
claims brought in these instant proceedings were not within the words of the
compromise agreement.

The Judge declined to rule on the
separate question of public policy. Noting that it was unnecessary for him to resolve
the question given his primary ruling, the Judge held that it was better not to
rule on the question where the underlying facts are disputed and where there is
an ongoing debate in the Courts as to the ability to exclude misrepresentations
including in the context of contractual estoppel arguments.

Accordingly, the Judge ordered that Mr Arab’s claims may now
proceed towards trial.

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