Sharab v HRH Al-Saud

An oral agreement made through an authorised agent within England may give the English court jurisdiction over a commission claim, even where preliminary discussions occurred abroad. The court determines the contractual terms from the evidence as a whole, including the parties’ subsequent conduct and communications. A principal cannot avoid an accrued contractual commission by alleging that the agent later acted against his interests, particularly where that allegation is unpleaded and unsupported by loss capable of set-off. Where remuneration is not fixed, a reasonable fee may be assessed by reference to the nature, difficulty, value and circumstances of the transaction, including the intermediary’s specialist access and contribution.

Mrs Daad Sharab claimed a $10 million commission for introducing and assisting the sale of the defendant’s Airbus to a Libyan entity connected with Colonel Gaddafi. She relied on an oral agreement made in London through the defendant’s agent, later varied during discussions in Libya. The defendant denied any fixed commission and contended that any agreement was made in Cannes, or that payment remained discretionary.

A jurisdiction challenge had previously resulted in findings that Mrs Sharab had a good arguable case concerning the London agreement and the agent’s authority. The claim proceeded to trial, where the central issues were the place and terms of the contract, the agent’s authority, the effect of subsequent events, and the alternative quantum meruit claim.

1. Contract and jurisdiction. The court found that the final agreement was made at the Ayoush Restaurant in London after preliminary discussions in Cannes. Mr Alaeddin had actual authority to agree the commission terms on the defendant’s behalf. The earlier transaction in which Mrs Sharab received a fixed commission supported that conclusion.
2. Contractual entitlement. The London agreement provided for a $2 million commission for procuring the aircraft sale and a further payment connected with Project Toushca. The agreement was subsequently varied in Libya so that Mrs Sharab would receive the amount above a $110 million sale price. After she secured a $120 million transaction, the defendant confirmed that she would receive $10 million. The court accepted her evidence on these matters and rejected the defendant’s account that remuneration remained discretionary.
3. Evidence. The decision turned principally on credibility. Mrs Sharab’s evidence was consistent and supported by the surrounding circumstances. The defendant’s evidence was confused, changed materially and required independent corroboration. The judge also relied on the defendant’s willingness to send documents containing statements he knew were untrue. In assessing the evidence, the court applied the approach discussed in EPI Environmental Technologies Ltd Inc v Symphony Plastic Technologies Plc [2004] EWHC 2945 (Ch).
4. Alleged backstabbing. The allegation that Mrs Sharab had disentitled herself by acting against the defendant was rejected. Her criticism of the defendant’s conduct and support for the Libyan position was not a repudiatory breach. In any event, the point was not pleaded and could not extinguish an accrued debt without an established loss capable of set-off.
5. Alternative remuneration. If the fixed fee had not been established, the court would have awarded $10 million as reasonable remuneration. The transaction was exceptional, involved a highly restricted market and politically sensitive negotiations, and depended substantially on Mrs Sharab’s unique access to the purchaser.

Judgment was entered for Mrs Sharab for the claimed $10 million commission.

1. High Court (Chancery Division): A jurisdiction application was determined by Mr John Powell QC on 31 July 2008. He found that Mrs Sharab had a good arguable case concerning the London agreement and Mr Alaeddin’s authority.
2. Court of Appeal: On 30 April 2009 the defendant’s appeal was dismissed. The court upheld the finding that the London meeting could create a binding contract and that Mr Alaeddin had authority, subject to one point not relevant at trial.
3. House of Lords: Permission to appeal was refused.
4. High Court (Chancery Division): Following trial, Peter Smith J accepted the claimant’s case and awarded the $10 million commission.