Validity - Settlement agreement

Gaydamak v Leviev: Chancery Division (Mr Justice Vos): 29 June 2012

During the 1990s, the claimant, G, was involved in the diamond trade in Angola, one of the largest diamond producers in Africa. During that time, he became influential with the government and president of Angola. G claimed to have made suggestions to the government that it should control the diamond industry more effectively to prevent Angolan Rebels continuing to obtain funding from 'blood diamonds', and that that had led to the establishment of a diamond trading company (Ascorp), in which the defendant, L, an internationally renowned diamond trader, also had an interest.

G contended that he had introduced L to front for him in the diamond business venture in Angola as G was experiencing reputation problems in France at a time when an international arrest warrant had been issued against him. G contended that he had made an oral agreement with L that L would hold half of L's interest in Ascorp for G, and that they would spilt their interests in all their respective Angolan businesses 50/50. That deal was worth millions of dollars. G contended that that oral agreement had been recorded in a written agreement in 2001 (the 2001 agreement), which was, according to G, handed for safe-keeping to the Chief Rabbi of Russia, who was the head of the Jewish community in Russia, of which both G and L were leading members or sponsors. Subsequently, a settlement agreement was signed by G and L on 6 August 2011, which provided, inter alia, that: ’[t]his agreement has been entered into on the date stated at the beginning of it’. G brought the instant action against L to enforce the 2001 agreement.

L contended that the 2001 agreement had never been signed and that the claims under it had been compromised by the settlement agreement. G contended that the 2001 agreement was valid and he contested the enforceability of the settlement agreement; contending that it had not been intended to come into force until a date had been agreed for it to do so and that it had been induced by fraudulent misrepresentations by L.

The court ruled: It was settled law that businessmen often recorded important agreements in crude and summary fashion and that the duty of the court was to construe such documents fairly and broadly, without being too astute or subtle in finding defects (see [217] of the judgment). On the facts of the instant case, the 2001 agreement had been signed by G and L and was a valid and enforceable agreement. However, it was clear, as a matter of construction of the settlement agreement, that it had to be taken as having been entered into on 6 August 2011, the date on which it had in fact been signed by the parties and that it had been intended by the parties to take effect on that date.

Accordingly, the parties had entered into a valid and binding settlement agreement which had taken effect on 6 August 2011, whereby each party had released all claims against the other (see [225], [257] of the judgment). The claim would be dismissed (see [258] of the judgment). Hillas & Co Ltd v Arcos Ltd [1932] All ER Rep 494 considered; Quinn v CC Automotive Group Ltd (t/a Carcraft) [2011] 2 All ER (Comm) 584 considered.

David Wolfson QC and  Zoe O'Sullivan (instructed by Mishcon de Reya LLP) for G; Justin Fenwick QC and Neil Mendoza (instructed by Stewarts Law LLP) for L.