Al Othman Holding Company v Al Rajhi Holding WLL

Actual authority is assessed objectively from the principal’s manifestation of assent, viewed in context. In a family-owned company, seniority and responsibility for negotiations do not ordinarily confer authority to execute an unusual transaction without approval from the relevant principal or family governance body. A party cannot establish ostensible authority merely by relying on the agent’s own signature or assertion of authority.

For limitation purposes, an acknowledgment must relate objectively to the specific debt or claim sued upon. Recognition of a different transaction or underlying commercial arrangement does not reset time under the Limitation Act 1980.

The claimant sought payment of a US$5 million interest-free loan under a written Loan Agreement dated 24 November 2014. The defendant accepted that there had been an oral agreement in principle but denied that the employee who signed the written agreement had authority, and relied alternatively on limitation.

The principal issues were whether the signatory had actual or ostensible authority, whether the agreement had been ratified, whether communications in 2018 acknowledged the debt for limitation purposes, and whether the payment date had later been extended.

1. Authority. Actual authority depends objectively on the principal’s manifestation of assent, express or implied, assessed in the context of the relationship and dealings. In this family-owned group, approval from the Family Council or Group Board was ordinarily required for binding commitments. The signatory did not possess authority merely by virtue of his senior position.
2. Nevertheless, the defendant’s sole authorised signatory had apparent authority to confer authority on the signatory. On the evidence, the principal had authorised the terms of the deal as understood between the executives. That objectively gave the signatory actual authority to execute the agreement, although neither appreciated that the wording created an immediate payment obligation. The written agreement was therefore authorised.
3. Ostensible authority and ratification. These issues were considered in the alternative. The claimant could not rely on the signatory’s own execution as a representation by the principal: an agent cannot ordinarily self-authorise. The circumstances did not establish a representation by the principal that the signatory was authorised. The cashflow records and meeting packs were equivocal and did not constitute clear evidence of ratification.
4. Limitation. Under sections 29 and 30 of the Limitation Act 1980, an acknowledgment had to relate to the claim under the written Loan Agreement. The 2018 correspondence referred to a sale and was not shown to have been made with knowledge of the signed agreement. It therefore did not acknowledge the loan debt, and the claim was time barred.
5. The alleged 2022 extension failed. An agreement to honour a non-binding verbal arrangement could not amend the written Loan Agreement. The claim was dismissed.