Abraaj Investment Management Limited (in liquidation) & Ors v Kes Power Limited & Ors

Deferred contractual sums become payable on expiry of the contract where the agreement treats expiry as a form of termination and provides no contrary indication. A clause referring to assignment or novation of the agreement does not ordinarily make an assigned debt immediately payable. Consent requirements for assignment are not subject to an implied reasonableness qualification in every case, and consent must generally be obtained before assignment. An estoppel may bind a party to a shared assumption that security is effective where the assumption was communicated, relied upon and acted upon. A contractual assignment must identify the assigned property with sufficient certainty. A notice of assignment does not create an independent debt obligation without consideration. The common-law acknowledgement principle does not extend to a mere debt owed by the defendant to the transferor.

The claim concerned a disputed debt of US$41,446,114 allegedly owed by Kes Power Limited to the Abraaj group. The claimants asserted rights successively held by AIML, SAGE and KPHL. Mashreq contended that the debt had been assigned to it as security under an assignment agreement and notice of assignment entered into by Abraaj Holdings.

The court determined whether deferred service fees and expenses were due, whether the debt was owed to the claimants or Mashreq, the effect of the purported assignment and estoppel arguments, and whether Mashreq could recover additional sums directly from KESP.

1. Debt due and payable. The words “date of termination” in clause 3.3 of the CSA included expiry by effluxion of time. The deferred service fees therefore became payable when the extended CSA expired on 31 December 2016. The alternative argument concerning non-deferred fees for 2015 and 2016 would also have succeeded.
2. Assignment to SAGE. Clause 3.3 contemplated assignment or novation of the CSA itself, involving substitution of a contracting party, rather than a simple assignment of an accrued debt. Even if it covered assignment of a debt, it applied only to an assignment complying with clause 22. Clause 22 extended to accrued debt claims, but no general term that consent could not be unreasonably withheld was implied. Consent had to be obtained before assignment, and a later request for consent to an assignment already made did not satisfy the clause.
3. Expenses. The expenses claimed were predominantly expenses of operating KEL and facilitating the investment exit, rather than expenses of providing consultancy services under clause 3.1 of the CSA. The 18 May 2009 Letter and the parties’ conduct established an agreement that AIML could recover expenses paid on KESP’s behalf, provided they were notified with supporting evidence. KESP’s recorded approvals and the absence of particularised challenges supported recovery of US$8,446,114.
4. Mashreq’s security. The KESP Receivable was the Disputed Debt as recorded in the Abraaj group’s consolidated accounts. There was no express or implied assignment from AIML to AH. Nevertheless, AIML, AH and Mashreq entered the loan extension arrangements on the communicated common assumption that the assignment created effective security. Mashreq relied on that assumption, and it would be inequitable for AIML to resile from it. Mashreq therefore succeeded in respect of US$37,030,000, the amount specified in the Assignment Agreement and Notice of Assignment. The assignment did not extend to later expenses or the larger balance.
5. Additional claims and limitation. The Notice of Assignment did not impose an independent debt on KESP for want of consideration. The common-law acknowledgement principle did not apply where KESP merely owed a debt to the transferor. The claims were otherwise brought within time or supported by acknowledgment where applicable.
6. Orders. Mashreq succeeded against KESP for US$37,030,000 plus interest. AIML succeeded for US$4,416,114 plus interest. The balance of the claimants’ claims and Mashreq’s additional claims failed.