Citicorp Trustee Company Ltd & Anor v Al-Sanea & Anor

A court may lift the automatic stay under CPR rule 15.11 where the claimant gives an adequate explanation for delay, the claim has real prospects, and the balance of prejudice favours continuation. Permission to seek summary judgment may be granted where proceedings and the application have been validly served and the defendant has had a proper opportunity to participate but has not done so. Summary judgment is appropriate where the defendant has no real prospect of successfully defending the claim and there is no other compelling reason for trial. Contractual indemnities are construed in the context of the transaction as a whole. An indemnity linked to entering into a transaction may cover losses arising under an interconnected agreement forming part of that transaction.

The claimants brought two actions concerning a US$650 million sukuk financing transaction involving a head lease, sub-lease and promissory note. They applied to lift the automatic stay, obtain permission to apply for summary judgment, and obtain summary judgment against the defendants, who had not acknowledged service, filed defences or participated.

The court considered service through contractual process agents, the effect of English jurisdiction agreements alongside proceedings in Saudi Arabia, the claimants’ contractual rights following defaults under the sub-lease, and the scope of indemnities under the head lease and costs undertaking. The central questions were whether the applications could proceed and whether the claims were suitable for summary determination.

1. Applications permitted. The court held that the proceedings and application documents had been validly served through the contractually designated process agent, including service at the liquidators’ offices. The claimants had also taken all reasonable steps to bring the proceedings to the defendants’ attention. The automatic stay under CPR rule 15.11 was lifted because the delay was short and explained, there was no apparent prejudice to the defendants, and continuation avoided substantial prejudice to the claimants.
2. Permission to apply for summary judgment was granted under CPR rule 24.4(1). The defendants had been served and given a proper opportunity to participate. Their failure to do so did not justify preventing a legitimate application.
3. Under CPR rule 24.2, summary judgment was granted against Saad on the sub-lease claims. Non-payment constituted Events of Default and Termination Events. The sub-lease was validly terminated, the Termination Sum became immediately due, and the evidence disclosed no real prospect of a defence or other compelling reason for trial.
4. The indemnity in clause 13.1 of the head lease was not confined to losses arising directly under that lease. Read in the context of the interconnected sukuk transaction, it covered Golden Belt’s losses under the sub-lease and its enforcement costs, because those losses resulted from entering into the head lease and the transaction of which it formed an integral part.
5. Citicorp could not enforce the head lease or sub-lease indemnities because it was an agent, not an assignee or transferee of Golden Belt’s contractual rights. It could, however, enforce the costs undertaking, which was expressly made for its benefit.
6. The court declined to grant summary judgment on the alternative warranty or misrepresentation claim concerning the validity of the promissory note. The evidence was insufficient to determine the effect of the allegedly laser-printed signature under Saudi Arabian law.
7. Judgment was entered for Golden Belt against Saad for US$668,271,643.19 and £465,554.15, and against Mr Al-Sanea for US$588,651,324.60 and £465,554.14, with the principal sums not cumulative. Judgment was also entered for Citicorp against Saad for US$1,273,637.09 and £465,554.15, plus independent sums of US$39,000 and £854,848.55.