Abraaj Investment Management Limited (in liquidation) & Ors v KES Power Limited & Ors (No 2)

Estoppel by convention cannot be treated as a slogan that automatically prevents relief whenever a new right is alleged. The court must examine the legal context and the relationship affected. The doctrine may enable a party to succeed on an existing cause of action where, without the estoppel, it would fail, including where an existing debt is effectively transferred or its enforcement is redirected. A binding transaction, an existing legal relationship, and an objectively intended legal allocation of rights are important considerations. Where all relevant parties are before the court, the debtor may be ordered to pay the party entitled to enforce the debt directly.

This was a consequential judgment following the trial judgment in [2026] EWHC 65 (Comm). The claimants sought permission to appeal on issues concerning estoppel by convention, the relief available against KESP, and the form of the order. The court also determined declarations, interest, costs and whether enforcement should be stayed pending appeal. The central issues were whether the alleged estoppel impermissibly created new rights, whether an argument concerning the legal effect of the assignment had been raised too late, and whether Mashreq could obtain payment directly from KESP.

1. Permission to appeal. Permission was granted on the argument that estoppel by convention could not create new rights. The point had not been clearly taken at trial, but it was sufficiently arguable and allowing it caused no unfairness because the relevant law and facts had already been explored. Permission was refused on the proposed argument based on Keen v Holland because Mashreq had been deprived of the opportunity to develop evidence about subsequent mutual dealings. The argument was in any event without merit: the assumption concerned AH’s ability to provide effective security over an existing receivable, not merely the legal effect of an admitted contract.
2. Estoppel by convention. The authorities require care in applying the statement that an estoppel cannot create new rights. The doctrine may affect an independently existing legal relationship, enlarge the effect of an agreement, defeat a defence, or enable recovery where the claimant would otherwise fail. Here, the Assignment Agreement and Second Amendment formed one transaction. AIML was party to that transaction and to an existing legal relationship with Mashreq. The estoppel could therefore operate despite AIML not signing the Assignment Agreement.
3. Relief. Since AIML, Mashreq and KESP were before the court, and KESP’s liability for the receivable pre-existed the estoppel, the court could require KESP to pay Mashreq directly. This avoided circular recovery and the risk of double payment. KESP was ordered to pay Mashreq US$37,030,000 plus interest. Alternative claims against KESP were dismissed.
4. Interest, costs and stay. Interest was awarded under Senior Courts Act 1981, s.35 A, at the default Commercial Court US-dollar rate. AIML was not entitled to statutory interest on the balance for which it obtained neither judgment nor pre-judgment payment. Costs were apportioned and interim payments ordered. Enforcement of Mashreq’s monetary judgment was stayed pending appeal, conditional on AIML accepting a corresponding stay.

This was a first-instance consequential judgment following the trial judgment in [2026] EWHC 65 (Comm). Permission to appeal was granted on one ground and refused on two others. Enforcement was stayed pending determination of the appeal.