Compagnie Noga D’Importation et D’Exportation v Abacha (No. 4) [2003] EWCA Civ 1100
Tripartite settlement agreement between parties not binding and an “agreement to agree”
Facts
The claimant Swiss company entered into a tripartite agreement with the defendants (the estate, family and business associates of the deceased former military leader of Nigeria) and the Nigerian Government which purported to settle a dispute between the parties. The claimant had originally commenced an action claiming that it had a beneficial interest in bills of exchange bought by companies associated with the defendants and then sold to the Nigerian Government.
Issues
The claimant appealed against an earlier decision which found that the tripartite agreement which purported to settle the dispute had not been intended to be binding and was rather conditional or an agreement to agree.
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Decision/Outcome
The claimant’s appeal was dismissed (Laws, L.J. dissenting). The tripartite agreement had not been a binding contract. When considered against the background of the entire negotiations, the evidence relied upon by the claimant did not prove that clauses referring to a “settlement amount” should be taken to refer to the sum of $100m which the trial judge found had been agreed orally during the negotiations before signature, but not unconditionally. Subsequent conduct of the parties also suggested that the agreement was not intended to be binding. Laws, L.J suggested that the settlement sum could be supplied by evidence of what was said at a stage when the parties were still in negotiation or had arrived at partial agreement. Tuckey, L.J. explained that this approach did not work because the references to “a” settlement amount were deliberately inserted into the agreements because no final agreement had yet been reached between the parties.
The court also unanimously dismissed the defendants’ appeal concerning a separate agreement of 16 August 1999 with the Nigerian Government. That agreement rescinded and replaced an earlier agreement of 13 August, rather than merely varying it. Each side’s release of the other’s outstanding obligations supplied consideration, together with the promises in the replacement agreement. Rescission and replacement could occur simultaneously.
Source: Court of Appeal judgment.
