Edgeworth Capital (Luxembourg) SARL v Aabar Investments PJS

An alleged oral agreement which conflicts with carefully drafted written transaction documents is unlikely to be established without compelling evidence. The absence of contemporaneous electronic or documentary support may weigh heavily against its existence, particularly where commercially experienced parties expected lawyers to prepare formal agreements. Commercial documents must be construed objectively, as a whole and in their commercial context, but the court cannot rewrite clear language to achieve what appears fair or commercially desirable. An express term in a later agreement may prevail over an inconsistent term incorporated by reference from an earlier document. A liability cap expressed to apply to obligations and liabilities under an indemnity “in aggregate” limits the liabilities within that indemnity, but does not necessarily limit distinct obligations created by a later agreement.

Edgeworth claimed declarations, injunctive relief or damages, alleging that three oral agreements restricted Aabar’s rights under a Counter-Indemnity Deed and a Security Assignment of Agreements concerning financing for a joint investment in property-related loans. Aabar denied the agreements and counterclaimed for repayment, interest and expenses. The trial concerned liability and whether the claimed sums were capped at €91,275,000 under the Counter-Indemnity Deed.

The central issues were whether the alleged oral agreements had been made and, if not, how the written agreements operated and whether the liability cap applied.

1. The claim was dismissed, and judgment was entered for Aabar on the counterclaim. The court found that none of the three alleged oral agreements had been expressly made.

2. The requirements for an enforceable oral contract include agreement of the alleged terms, agreement between the relevant parties, an intention to create legal relations, consideration, and sufficiently certain and complete terms. The approach in Blue v Ashley [2017] EWHC 1928 (Comm) was respectfully adopted. The absence of a contemporaneous written record may count heavily against an alleged oral contract. Where parties expect detailed written agreements, there is a presumption that their bargain is reflected in those documents, even without an entire agreement clause.

3. The evidence, written agreements and surrounding documents established only an agreement in principle to work together on the investment. The formal agreements were intended to record the parties’ complete legal relationship. References to the parties as “partners” or a “joint venture” were insufficient, since such expressions may describe many forms of commercial co-operation.

4. The written documents were construed objectively, as a whole and in their commercial context, applying the principles summarised in Lukoil Asia Pacific Pte Ltd v Ocean Tankers Pte Ltd [2018] EWHC 163 (Comm). Clear language could not be rewritten to produce a supposedly fairer bargain.

5. Clause 2.5 of the Counter-Indemnity Deed imposed an aggregate cap of €91,275,000 on liabilities under that indemnity. However, the later Letter Agreement created or acknowledged obligations to repay the full indemnified amount, including accrued interest, and to pay further interest. Those obligations were not limited by the cap. Transaction and enforcement expenses were likewise payable in addition to the capped amount.

6. The court therefore rejected Edgeworth’s cap argument. It was unnecessary to decide the remaining challenges to the alleged oral agreements or Aabar’s estoppel case. Permission to make one proposed amendment was refused because the allegations were unsustainable in light of the findings; the remaining amendments were unnecessary to determine.