Commercial Court upholds jurisdiction challenge to claim brought in relation to a major Libyan Construction Project

19/07/12

The first and second defendants (‘D1' and ‘D2'), part of the Ranhill Group of companies, applied to set aside service of the proceedings on them out of the jurisdiction. D1 was a Malaysian company which was negotiating with the Libyan authorities for a contract to design and build large numbers of apartments in Libya under a potentially very lucrative contract. The claimant, Unaoil limited, a BVI company, was well connected in Libya, and the Defendants had sought its assistance to improve D1's prospects of securing the contract. An agency agreement was accordingly concluded between the Claimant and the third defendant (D3), which was at the time a wholly-owned subsidiary of D2, and incorporated in the United Arab Emirates. However, D3 was no longer part of the Ranhill Group.

In allowing the applications of D1 and D2 challenging jurisdiction, the Commercial Court held that the agency agreement could not be construed as creating a contract between the Claimant and D1 or D2. In addition, the terms of the agreement, which identified D3 as the "principal", were inconsistent with the Claimant's submission that D3 had entered the agreement as an agent for D1 or D2. Finally, the Court rejected the Claimant's contention that the agency agreement was a sham; the parties did not have a common intention that the agreement was not to create the legal rights and obligations which it gave the appearance of creating.

Service of proceedings on the First and Second Defendants was accordingly set aside.

The judgment is here.