Iraqi Civilians v Ministry of Defence

Contractual success-fee provisions are construed according to the natural meaning of the agreement read as a whole. The court should not recast references to procedural stages in order to reflect the commercial consequences of group litigation or to correct an apparently disadvantageous bargain. Commercial common sense may assist where wording has rival meanings, but it does not permit retrospective insertion of terms which the parties could readily have stated. Where a conditional fee agreement is capable of operating as a standalone contract, references to pleadings ordinarily concern the individual claim governed by that agreement unless the contract clearly provides otherwise.

The claimants were Iraqi civilians whose claims against the Ministry of Defence arose from alleged maltreatment during and after the 2003 invasion of Iraq. Their claims were brought in tranches, with lead cases selected and other claims stayed pending their determination. The dispute concerned identical conditional fee agreements entered into with Leigh Day.

Clause 8 provided staged success fees of 33%, 67% or 100% depending on whether the case concluded before service of Particulars of Claim, between service of Particulars of Claim and Defence, or after service of Defence. The claimants argued that the references to the case meant the lead cases, so that the procedural progress of lead litigation could determine the fee payable in stayed claims. The defendant argued that the clause referred to the individual pleadings covered by each agreement.

1. Construction of clause 8. The reference to the pleading stages in clause 8 applied to the individual pleadings covered by each conditional fee agreement. The claimants’ proposed construction, based on the progress of lead cases, was rejected.
2. Each agreement was capable of having full contractual effect as a standalone document. That told against making the success fee depend on pleadings in other cases whose existence was not legally essential to the agreement. The claimants’ construction would either render the reference to “the case” meaningless where no group existed or give it different meanings according to whether the claimant became part of a group.
3. The agreement’s Schedule identified the reasons for the staged success fees by reference to risks inherent in the individual claim. It made no reference to the progress of lead cases. The surrounding terms therefore supported construction by reference to the individual claim.
4. The principles in Antaios Compania Neviera v Salen Rederierna [1985] 1 AC 191 and Wood v Capita Services [2017] AC 1173 did not permit the court to impose an unorthodox interpretation merely because the agreed arrangement was economically disadvantageous to one party. Business common sense could not replace clear wording or supply a term which could readily have been drafted.
5. The claimants succeeded in showing that group litigation was factually likely, but that did not alter the contractual meaning. The reference to the pleadings was accordingly construed by reference to the individual CFA, and the claimants’ interpretation was rejected.