Al Othman Holding Company v Al Rajhi Holding WLL [2025] EWHC 3078 (Comm)

[2025] EWHC 3078 (Comm)

Case No CL-2023-000532

IN THE HIGH COURT OF JUSTICE

KING'S BENCH DIVISION

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

COMMERCIAL COURT

Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NL

Date 21 November 2025

Before

THE HONOURABLE MRS JUSTICE DIAS DBE

Between

Al Othman Holding CompanyClaimant

Al Rajhi Holding WLLDefendant

Mr Tony Singla KC and Mr Vanshaj Jain (instructed by Morrison Foerster (UK) LLP) for Claimant

Mr Darragh Connell and Mr Eoin MacLachlan (instructed by Gateley Legal) for Defendant

Hearing Hearing dates: 7-9, 15 October 2025

Approved Judgment

This judgment was handed down remotely at 10am on 21 st November 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

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[1]The Claimant is a Saudi Arabian company in the family-owned and run Al Othman group of companies. Mr Abdullah Al Othman (“Mr Al Othman”) is its Vice-Chairman and acted as its principal in relation to the events giving rise to these proceedings. He was, at least until the commencement of this litigation, a close personal friend of Mr Khalid Al Rajhi (“Mr Al Rajhi”) who is the principal of the Defendant. The Defendant is a Bahraini company in the Al Rajhi Group of companies, which is likewise based in Saudi Arabia and family-owned and run. The two men were childhood friends who had been to school and university together, and the two families had a close and long-standing relationship, having done business together on a number of occasions over the years. In particular, Al Othman had invited Al Rajhi in 2005 to invest in a company subsequently known as Takween Advanced Industries (“Takween”) which was publicly listed in 2012.

[2]In about 2008, Mr Al Rajhi in turn invited Mr Al Othman to join the Defendant in investing in a company called Nutech Energy Alliance Ltd (“Nutech”). In the event, the Claimant invested around US$5.7 million for a stake of around 10%. The Defendant also invested in Nutech, as did a number of other companies connected to friends and business associates of both Mr Al Rajhi and Mr Al Othman. The investment was held through a holding company, Al Salam Energy Ltd (“Al Salam”), and the relationship between the co-investors was governed by the terms of a Shareholders’ Agreement dated 20 May 2008 (the “SHA”).

[3]The investment was not a success and by 2013, Mr Al Othman wanted the Claimant to exit. He raised the matter with Mr Al Rajhi in late 2013 but was nonetheless persuaded to wait as Al Salam was then in the process of negotiating a potential sale of Nutech to a Chinese company on advantageous terms. Unfortunately, the sale fell through and it is common ground that Mr Al Othman repeated his wish to sell the Claimant’s shares in Nutech at a meeting with Mr Al Rajhi in July 2014. Mr Al Rajhi was reluctant for the Claimant to exit unilaterally since the principle underlying the investment was that the investors would act together as a club, i.e., all in or all out, somewhat like the Four Musketeers. Mr Al Othman was insistent, however, and in view of their close friendship, the long-standing relationship between the two families, and the fact that the investment in Takween was performing strongly, Mr Al Rajhi agreed that he would try to accommodate the Claimant’s wish on the basis that any deal should be kept confidential from the other shareholders.

[4]I shall have to come back to the detailed sequence of events in due course but, for present purposes, it is sufficient to say that both principals then delegated the matter to their respective subordinates to work out a solution: Mr Georges Abraham for the Claimant and Mr Yaser Alsharifi for the Defendant. Discussions between Mr Abraham and Mr Alsharifi continued throughout the following months and eventually agreement was reached between them on a structure whereby the Defendant would make a loan of $5 million to the Claimant repayable out of any distributions, such as dividends or eventual sale proceeds. An agreement was drafted by the Defendant’s lawyers and it is not disputed that, following some further negotiations on the wording, a Loan Agreement dated 24 November 2014 was signed by Mr Alsharifi on behalf of the Defendant and by Mr Al Othman’s brother, Abdulmohsen Al Othman (“Abdulmohsen”) on behalf of the Claimant which provided for the Defendant to make an interest-free loan of $5 million available to the Claimant “on the date hereof (or such later date as may be agreed between the parties).”

[5]In the event, no payment was made under the Loan Agreement, whether on 24 November 2014 or at any date thereafter and on 6 September 2023, nearly 9 years after the date of the agreement, the Claimant issued the present proceedings seeking payment of the principal amount of the loan.

[6]The Defendant does not dispute that there was an agreement in principle between Mr Al Rajhi and Mr Al Othman for a $5 million loan to be made by the Defendant to the Claimant, but it maintains that Mr Alsharifi had no authority to sign the Loan Agreement and that in any event the company could not enter into any binding commitment without the approval of the Al Rajhi Family Council and/or Group Board. No such approval had been given, and the Loan Agreement is not binding on the Defendant. Furthermore, the Defendant contends that the Claimant’s claim is in any event time barred.

[7]In response, the Claimant asserts that Mr Alsharifi had actual or at least ostensible authority to sign the Loan Agreement but that, even if not, the agreement was nonetheless ratified by the Defendant. In relation to limitation, it avers that the Defendant acknowledged the claim in 2018 such that the limitation clock started to run afresh at that date. The Defendant joins issue on all these matters.

[8]It is fair to say that, during the course of the proceedings, the Defendant took a number of defences which were dismissed summarily. It is unnecessary to dwell on them in detail, although Mr Tony Singla KC (who appeared for the Claimant together with Mr Vanshaj Jain) relied on them in relation to the credibility of the Defendant’s witnesses, in particular that of Mr Al Rajhi.

[9]Be that as it may, by the time the trial started, the dispute had been narrowed to the questions of authority and limitation with a faintly-pressed alternative case by the Claimant that the payment date under the Loan Agreement had been varied by an exchange of emails in May 2022.

[10]It is accepted by Mr Singla that if the Loan Agreement was unauthorised and there was no acknowledgment or variation, then the claim must fail. B: THE PRINCIPAL PLAYERS (1) The Claimant

[11]The Claimant is the holding company in a family-owned and run group based in Saudi Arabia. It was founded by Mr Al Othman’s father, Mohammed, who is its Chairman. Mr Al Othman became Vice-Chairman in 2002, and he and his two brothers lead and manage the day-to-day business of the group, which they have successfully developed to become one of the most prominent family businesses in the region.

[12]Mr Abraham joined the Al Othman group in 1993. After serving in various managerial posts in one or other of the group companies, he became a director of the Claimant in 2013. Since 2000, he has been based in Sydney where he lives, although he travels regularly to Saudi Arabia as dictated by the requirements of the business.

[13]At the time of the Nutech investment, the Chief Investment Officer of the Al Othman group was Mr Tiernan O’Rourke, who also served as the Claimant’s representative on the board of Al Salam. In May 2018, Mr O’Rourke left the group and was replaced as Chief Investment Officer and Al Salam board representative by Mr Ronald Rizk. (2) The Defendant

[14]The Al Rajhi Group is also a prominent family group of companies based in Saudi Arabia. The group has two main holding companies: Abdulrahman Saleh Al Rajhi & Partners Ltd, which manages the family’s interests and activities in Saudi Arabia, and Al Salam Holdings Ltd BVI, which manages the family’s offshore interests and activities. The Defendant is a subsidiary of Al Salam. The governance of individual companies mirrors the governance arrangements at group level. Thus, Mr Al Rajhi became CEO of both the group and the Defendant in 2005. He was appointed Chairman of the Group Board in 2015 and in 2023, he became Executive Chairman. Mr Al Rajhi was and is the sole authorised signatory for the Al Rajhi group and the Defendant.

[15]Ultimate control over the direction and decisions of the group rests with the Al Rajhi family and was exercised by a Family Council and Group Board. However, the precise nature of the group’s internal governance procedures at the relevant time and the approvals processes which were required before a group company could enter into any binding commitment were disputed before me and are matters to which I shall have to return.

[16]Mr Alsharifi first joined the Defendant as Head of Corporate Finance in 2007. He became Managing Director of Investments in 2011 reporting to Mr Al Rajhi as CEO. In 2012, Dr Omar Kamal was appointed as a co-CEO as part of Mr Al Rajhi’s strategy for succession planning. Mr Alsharifi was not entirely happy with this decision and only agreed to stay with the group on the basis that he worked at the same level as Dr Kamal and continued to report directly to Mr Al Rajhi. He thus held a very senior position in the group and was nominally the third highest ranking employee after Mr Al Rajhi and Dr Kamal. When the latter resigned in 2015, Mr Alsharifi became Deputy CEO. He left the Al Rajhi group altogether in 2017 to become Group Chief Executive of the Bank of Bahrain and Kuwait.

[17]Another of the Defendant’s employees who played a part in the relevant events is Mr Khalid Mattar. He joined the Defendant in 2007 as an Investment Manager in the Corporate Finance Department, reporting to Mr Alsharifi. In 2015, Dr Kamal resigned as co-CEO, whereupon Mr Alsharifi was promoted to Deputy CEO and Mr Mattar became Director of Corporate Finance. Following Mr Alsharifi’s departure in 2017, he assumed the role of Deputy CEO and was then promoted to CEO in 2023 when Mr Al Rajhi became Executive Chairman. C: THE LOAN AGREEMENT

[18]It is convenient at this stage to set out the relevant provisions of the Loan Agreement:

“LOAN AGREEMENT This Loan Agreement (“Agreement”) is made this November 24th, 2014, by and between Mohamed Abdullah Al Othman and Sons Company Ltd, a company organized under the laws of the Kingdom of Saudi Arabia (“Borrower”), and Al Rajhi Holdings WLL, a company organized under the laws of Bahrain (“Lender”). Whereas, the Lender has agreed to make an interest free loan (“Loan”) to the Borrower in the amount of US$5,000,000 (“Principal Amount”), subject to the terms and conditions set forth in this Agreement; and Whereas, the Borrower is the holder of 2,596 ordinary shares of Al Salam Energy ltd., a British Virgin Islands company limited by shares (“Shares”); and Whereas, the Lender and Borrower have agreed that the Loan shall be repayable solely out of distributions that the Borrower may receive or be entitled to receive with respect to the Shares and that Borrower shall have no further liability to repay the Principal under the Agreement beyond the amount of such distributions, except as provided below: Now, therefore, the parties hereby agree as follows: 1. Loan. The Lender shall make available to the Borrow [sic], and the Borrower agrees to borrow, the Loan, on the date hereof (or such later date as may be agreed between the parties). 2. Interest. The Loan shall not bear interest. 3. Repayment of Principal. The Borrower shall repay the Principal of the Loan solely out of the distributions received by the Borrower (or to which the Borrower shall be entitled to receive) with respect to the Shares, except as provided in Section 7 (relating to default). Upon receipt of any such distribution, where in the form of a dividend, return of capital, liquidation proceeds or otherwise, the Borrower shall immediately retransfer the amount of such distribution to the Lender in partial or full repayment of the then outstanding balance of the Loan. 4. No Transfer of Shares; Voting of Shares. The Borrower shall not transfer or encumber the Shares prior to full repayment of the Loan. The Borrower shall vote the Shares in accordance with instructions given by the Lender. 5. … 6. Representations and Warranties. To induce the Lender to enter into this Agreement and to make the Loan, the Borrower hereby represents and warrants to the Lender as of the date hereof that: … e. This Agreement constitutes a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms… … 9. Confidentiality. The Borrower shall keep strictly confidential, and shall cause its respective employees, agents, representatives, officers, directors, shareholders, and advisors to keep strictly confidential, the existence and terms of this Agreement. Such duty of confidentiality shall remain in effect indefinitely. … 13. Governing Law and Jurisdiction. This Agreement shall be governed by, and shall be construed in accordance with, the laws of the England and Wales…”

Now, therefore, the parties hereby agree as follows: … e. This Agreement constitutes a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms…

[19]As already stated, the document was signed by Mr Alsharifi and Abdulmohsen Al Othman. D: THE ISSUES

[20]The following are the issues which fall for determination by the court:(1) Authority

a. Did Mr Alsharifi have actual authority, express or implied, to commit the Defendant to the terms of the Loan Agreement?

b. If not, did he have ostensible authority to do so?

c. If not, did the Defendant nonetheless ratify the Loan Agreement?

(2) Time bar: Did the Defendant acknowledge its liability to the Claimant in 2018 so as to reset the limitation clock?

(3) Extension: Was there an agreed extension to June 2023 of the date for payment under the Loan Agreement? E: THE WITNESSES

[21]I read statements and heard oral evidence from Mr Al Othman and Mr Abraham on behalf of the Claimant and from Mr Al Rajhi, Mr Alsharifi and Mr Mattar on behalf of the Defendant.

[22]The inherent fallibility of human memory, with its tendency to reconstruction rather than recollection, is now well known and the courts have been increasingly aware of the problem since the seminal judgment of Leggatt J (as he then was) in Gestmin SGPS SA v Credit Suisse (UK) Ltd,

[2013] EWHC 3560 (Comm)

at [15]-[22]. The essential point to which Leggatt J drew attention was that all “memory” of distant events in fact depends on a process of reconstruction which is inevitably influenced, whether consciously or not, by a multitude of factors. These include the particular selection of documents from which the witness may be invited to refresh his or her memory in order to provide a witness statement (some of which may not previously have been seen), the fact that, even if their statement has not been drafted by lawyers, the matters which are included or left out will almost certainly have been dictated by legal strategy, and the fact that preparation for trial may well result in the witness becoming increasingly reliant on the reconstruction set out in the witness statement rather than on his or her original experience of events. To this I would add the very natural human instinct, when one’s past actions are the subject of critical scrutiny, to reconstruct events in the most favourable way possible.

[23]Although I do not set out the relevant passage from Gestmin in full, two paragraphs bear citation:

“18. Memory is especially unreliable when it comes to recalling past beliefs. Our memories of past beliefs are revised to make them more consistent with our present beliefs. Studies have also shown that memory is particularly vulnerable to interference and alteration when a person is presented with new information or suggestions about an event in circumstances where his or her memory of it is already weak due to the passage of time. … 20. In the light of these considerations, the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses’ recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.”

[24]In the present case, the witnesses were being asked questions about their recollection of events and discussions which took place over ten years ago. It is therefore unsurprising and not a matter for criticism that they could not always remember specific emails or conversations and that certain events may have become conflated in their minds. In particular, both Mr Al Othman and Mr Al Rajhi gave evidence that, as one might expect with busy principals of major trading groups, they did not read every email that was sent or copied to them, only those that required their specific attention. Moreover, it was clear that their only direct involvement in the genesis of the Loan Agreement was at a very high level and limited to one or two conversations with each other. These were accepted to have resulted only in non-binding verbal agreements in principle while the task of working on the details and structure of any agreement was passed to their subordinates to be reduced to writing in due course.

[25]I approached the witness evidence with all these considerations well in mind and on the basis that, where there was a conflict of evidence, the documentary record was likely to be the most reliable guide as to what occurred.

[26]Mr Al Othman: I found Mr Al Othman to be an honest and broadly credible witness, although his memory was somewhat hazy at this distance in time. As noted, his direct involvement in the negotiation of the Loan Agreement was limited and I felt that his evidence was coloured to some extent by his present views as to the justice of the case and by an element of hindsight.

[27]Mr Abraham: Mr Abraham was an unsatisfactory witness. He was combative when questioned about matters of disclosure, and on several occasions he gave evidence which he was then forced to retract or to describe as a mistake or error, for example, his evidence that the Loan Agreement provided for signature by a named individual on the part of the Claimant when in fact it provided for a signature on behalf of the company. Either he was just saying what he thought would advance the Claimant’s case, or he had not read the documents as carefully as he claimed to have done. Neither reflected well on his reliability as a witness.

[28]A further highly unattractive aspect of his evidence related to his actions in 2022 in procuring the re-signature of the Loan Agreement on behalf of the Claimant after he had mislaid the original jointly signed copy. There is no suggestion that he sought in any way to alter the terms of the agreement but he did not explain what he had done when he sent the re-signed agreement to Mr Mattar, and the latter would have been entirely justified in believing it to be the original signed agreement from 2014. Notwithstanding that Mr Abraham accepted in the witness box that this was an error of judgment on his part, he seemed entirely unrepentant, seeking to justify himself on the basis that he had made no change to the substantive terms. The very least that can be said about this is that it was far from candid behaviour and in my judgment both this and his glib (and demonstrably false) assertions as to the genesis of the original agreement in an internal text in 2022 See fn 3 below. demonstrated a willingness to disregard legal niceties when he perceived it to be in the Claimant’s interests to do so.

[29]I was also unimpressed by Mr Abraham’s attempts to explain the correspondence with Mr Rizk on the basis that the transaction agreed with the Defendant was in truth a sale of the Claimant’s shares. While this is what Mr Al Othman had first proposed, it was common ground between the parties that it had been overtaken by the loan structure (for reasons which will become apparent later) and the provisions of the Loan Agreement (set out above) were entirely clear that the agreement was for a loan not a sale. Mr Abraham is certainly not deficient in understanding but his attempt to reconcile the two by asserting that the repayment of dividends to Al Rajhi was intended to apply only after the loan had been made was frankly fanciful. The only other way in which he could justify his insistence that there had been a sale was if he was asserting that the Loan Agreement was in fact a sham – a suggestion which Mr Singla firmly and rightly eschewed.

[30]In short, there were several respects in which I found myself unable to accept his evidence save where it was consistent with the contemporaneous documents.

[31]Mr Al Rajhi: Like Mr Al Othman, Mr Al Rajhi was only involved in the transaction at high level. Like Mr Al Othman, he was a busy man, and I find it entirely plausible that neither of them read every document or email that was sent or copied to him, unless his personal attention or approval was specifically indicated. Suggestions to the contrary put in cross-examination were wholly unrealistic. I found him to be broadly credible and honest, although, like Mr Al Othman, his recollection of discussions and correspondence was far from perfect.

[32]Mr Mattar: Mr Mattar was a straightforward and competent witness. His evidence largely accorded with the contemporaneous documents, and I accept it as credible and accurate.

[33]Mr Alsharifi: Both parties were agreed that Mr Alsharifi was a thoughtful, honest and impressive witness. He was clearly in a difficult position, and he was obviously uncomfortable in having been placed in a situation of potential conflict with his erstwhile employer. However, as one would expect of a person in his position, he was truthful and transparent in his evidence, which I have no hesitation in accepting.

[34]Adverse inferences: There were two evidential areas in which I was invited to draw adverse inferences. The first related to deficiencies in the Defendant’s disclosure as to the internal governance procedures of the Al Rajhi group, in particular as regards the approvals process and whether or not the Loan Agreement had been approved by the Family Council/Group Board.It did not help that the governance structure of the group was in the process of being revised over the relevant period so as to separate family business from other business and this led to some confusion about the appropriate nomenclature for the relevant bodies. Mr Singla invited me to infer against the Defendant from the lack of disclosure that the transaction had in fact been approved by the Family Council and/or Group Board and was therefore fully authorised. This is touched on further below when discussing the issues, but since I have been able to reach clear conclusions where required on the evidence before me, I have not found it necessary to draw any inferences.

[35]The second matter related to the lack of testimony from a Mr Rizk, who was a key player in events relating to the alleged acknowledgment of the debt in 2018. Mr Rizk had left the Claimant’s employment in 2023 but was nonetheless listed as a witness on behalf of the Claimant in its CMIS. In the event he was not called. Mr Abraham gave evidence that he had refused to testify, apparently on the grounds that he travelled a lot between Jeddah and Switzerland. However, the mere fact that Mr Rizk was no longer an employee (which was in any event known when he was included in the CMIS) would not have prevented him from giving evidence remotely. Alternatively, a written statement could have been adduced under the Civil Evidence Act. As I have said, Mr Rizk was a critical witness for the Claimant on this part of the case, but no explanation was offered to the court as to why it had been unable to call him. Nonetheless, I have again not found it necessary to resort to the drawing of inferences in order to decide the relevant issues. F: THE FACTS

[36]With that preamble, I set out the facts. For the most part, the documentary record speaks for itself, but to the extent that there was any dispute, the following represents my findings on a balance of probabilities.

[37]Each of the investors in Nutech nominated a director to serve on the board. The Claimant’s nominated director was its then Chief Investment Officer, Mr Tiernan O’Rourke, while the Defendant’s nominated director was Mr Alsharifi, who also acted as Chairman since the Defendant was the largest single investor. The Board Secretary of both Nutech and Al Salam was Mr Mattar. 2013-November 2014

[38]Sometime in late 2013, Mr Al Othman had a discussion with Mr O’Rourke and Mr Abraham about the Claimant’s investment in Nutech. He considered that the management was weak and that there was no real prospect of growth, and they agreed that they wanted to exit. Mr Al Othman raised the matter with Mr Al Rajhi towards the end of 2013 but was told that Nutech and Al Rajhi were negotiating a potential sale which, if successful, would double the Claimant’s money. Mr Al Othman accordingly agreed to put the matter to one side.

[39]In the event, the proposed sale did not come to fruition and in mid-July 2014, Mr Al Othman approached Mr Al Rajhi again about selling the Claimant’s stake in Nutech and the two of them spoke orally on 21 July 2014. No notes of their meeting were taken but it was common ground that the gist of what transpired was relayed by Mr Al Rajhi to Mr Alsharifi and is correctly reflected in an email sent by the latter to Dr Kamal and Mr Mattar on 22 July. This records that Mr Al Othman had expressed a desire to exit citing weak management as the reason. As I find, Mr Al Rajhi was keen to avoid a sale and tried to persuade Mr Al Othman to remain invested. The reality was that all the shareholders wanted to exit, and a group exit was thought to be the best strategy. However, he was mindful of his friendship with Mr Al Othman and the relationship between the families, and wanted to help if he could. The investment in Takween was also doing well at that time. He therefore told Mr Al Othman that he would see what he could do to help and reassured him that Al Othman’s money would be safe. They agreed that the discussions would be kept confidential from the other shareholders and the matter was then delegated by Mr Al Othman and Mr Al Rajhi to Mr Abraham and Mr Alsharifi respectively to take the matter further. In particular, Mr Al Rajhi asked Mr Alsharifi to prepare a note on how to address Mr Al Othman’s concerns.

[40]Mr Alsharifi in turn asked Mr Mattar to prepare a memo on the Nutech investment with a view to running some valuations in order to assess how to respond to the Claimant if it insisted on exiting. On 28 July, Mr Alsharifi sent the memo to Mr Al Rajhi and Dr Kamal. It is clear that some internal discussion then took place between Mr Alsharifi and Dr Kamal as a result of which Mr Alsharifi undertook to redraft and resubmit the memo. An agenda for a meeting between Mr Alsharifi and Mr Al Rajhi on 22 August notes under item 2 that a note regarding a response to the Claimant had been drafted for discussion with Dr Kamal. Mr Al Rajhi could not recall that anything had been discussed with him at that stage.

[41]On 24 August, Mr Alsharifi emailed Mr Mattar with some minor changes to the memo and noted that it would be necessary to add a section on current valuation should the Claimant still want to exit. On the same day, Mr Alsharifi spoke to Mr Abraham about Takween. During the conversation, Mr Abraham mentioned that Mr Al Othman had spoken to Mr Al Rajhi about whether Al Rajhi would consider buying the Claimant out. Mr Alsharifi told Mr Abraham that he would discuss the matter internally but that if the Claimant wanted to exit, they would arrange it. Following this phone call, Mr Alsharifi sent a copy of the memo as it then stood to Dr Kamal, noting that it needed additional work and that he had asked Mr Mattar to revise it. He also updated him on the conversation with Mr Abraham.

[42]On 3 September, emails were exchanged between Mr Alsharifi and Dr Kamal. Mr Alsharifi was due to meet Mr Abraham later that day and was anxious to be able to update him. Dr Kamal’s response was to say that their preference would be for the Claimant to remain invested for a couple more quarters in order to check progress before deciding. He also told Mr Alsharifi to say that something would be shared with Mr Abraham the following week.

[43]At their meeting, Mr Alsharifi tried to persuade Mr Abraham to remain invested and explained the challenges and opportunities faced by Nutech. Mr Abraham indicated that he would discuss the matter with the Al Othman family and that in the light of their relationship, they would wait until December before revisiting the decision to exit. However, on the morning of 4 September, Mr Abraham rang Mr Alsharifi to say that he had just spoken to Mr Al Othman and Abdulmohsen Al Othman who did not wish to wait any longer and wanted the Defendant to make an offer to buy them out. Mr Alsharifi told him that he would discuss it and revert. He then emailed Mr Al Rajhi and Dr Kamal updating them on the position and informing them that Mr Mattar was running valuations so that they could decide what the stake was worth if they were required to sell.

[44]On 6 September, Mr Mattar sent Mr Alsharifi a table summarising a range of possible valuations depending on different assumptions. This table was updated by him on 9 September and forwarded by Mr Alsharifi to Dr Kamal with a request to agree on a price the next day to offer to the Claimant.

[45]In the early morning of 10 September, Mr Mattar emailed Mr Alsharifi pointing out that there were certain obligations in the SHA relating to disclosure, right of first refusal and tag-along rights which would have to be taken into account. Clearly these would present an obstacle to any sale on confidential terms. Mr Alsharifi immediately forwarded this email to Dr Kamal. A few hours later, Mr Mattar emailed Mr Alsharifi with a recommendation as to the most appropriate valuations to take and what these would produce in terms of a discount to cost. Mr Alsharifi also forwarded this email to Dr Kamal and repeated his request for a call so that they could agree what he should say to Mr Abraham.

[46]Some such discussion must have taken place, because Mr Alsharifi then spoke to Mr Abraham and told him that the Defendant had taken the Claimant’s request seriously and was working on finding a suitable solution albeit its preference was for the Claimant to remain invested. He also explained the essence of the “club deal”, of which Mr Abraham had been unaware and raised the difficulty posed by the SHA. No doubt in an attempt to persuade Al Othman not to sell, he told him that exiting the investment now would not make financial sense and that his advice would be to wait. Mr Abraham expressed disappointment and asked to be sent the relevant clauses from the SHA. He said that he would discuss the matter with the Al Othman family and revert the next day. Mr Alsharifi thereupon emailed the text of the SHA to Mr Abraham (with a blind copy to Dr Kamal, Mr Al Rajhi and Mr Mattar) identifying the relevant provisions and stating that they had been agreed at the outset “in the spirit that as a club deal we all enter and exit together”.

[47]The following morning (11 September), Mr Abraham replied to Mr Alsharifi (with Abdulmohsen, Mr Al Othman and Mr O’Rourke in blind copy) saying that he had been advised by the Claimant’s lawyers, Latham & Watkins, that the tag-along rights did not apply to a sale between shareholders and that, as he saw it, the only issue was to agree on a valuation. Mr Alsharifi asked Mr Mattar to check the legal position with the Defendant’s own solicitors, King & Spalding, and forwarded Mr Abraham’s email to Dr Kamal saying that he assumed the reference to agreeing a valuation meant that the Claimant would not agree to the Defendant’s proposed discount. I interpret this to mean a discount on the initial investment.

[48]In this email, Mr Alsharifi floated for the first time the idea that, rather than removing the Claimant as a shareholder, the Defendant could simply agree to lend it whatever value was agreed against its stake with a mechanism for adjusting any shortfall or excess on exit in the future. This would successfully achieve the Claimant’s objective of an economic exit, while still complying with the SHA and avoiding the need to alert the other shareholders.

[49]In the evening of 11 September, Mr Alsharifi reported by email to Mr Al Rajhi and Dr Kamal on his earlier conversation with Mr Abraham and his understanding that Mr Al Othman intended to speak to Mr Al Rajhi about the valuation. Dr Kamal approved the alternative structure for the transaction and Mr Alsharifi then spoke to Mr Abraham on the telephone to put the idea to him and to explain how it would avoid the problems with the SHA. By way of further reassurance, Mr Alsharifi called Latham & Watkins in Mr Abraham’s presence, and they confirmed that the proposal was viable. Mr Abraham agreed to proceed on that basis.

[50]On 14 September, Mr Alsharifi sent Dr Kamal a further updated valuation memo which had been provided by Mr Mattar. On 21 September, there was an exchange of emails internally between Mr Abraham and Abdulmohsen in which Mr Abraham asked whether Mr Al Othman had finalised the deal with Mr Al Rajhi. He was told by Abdulmohsen that Mr Al Othman kept promising to call Mr Al Rajhi but had not so far done so.

[51]I find that a discussion or meeting did eventually take place between Mr Al Othman and Mr Al Rajhi on about 25 September, during which Mr Al Rajhi agreed that the Defendant would effectively underwrite the value of the Claimant’s initial investment at US$5 million so that it at least did not lose money. Following that conversation, Mr Al Rajhi informed Mr Alsharifi that it had been agreed that the Defendant would pay the Claimant US$5 million at the end of the following month with the amount to be documented in a loan structure. Mr Alsharifi thereupon rang Mr Abraham and told him that the Defendant would prepare and provide a draft which would reflect “the downside protection and sharing upside upon exit.” The reference to “downside protection” reflects Mr Al Rajhi’s evidence that he had agreed to guarantee the Claimant’s investment. Mr Alsharifi confirmed his conversation with Mr Abraham to this effect in an email to Mr Al Rajhi and Dr Kamal.

[52]I find that it was only at this point, i.e., on 25 September, that the amount of the loan was agreed. Although both Mr Al Othman and Mr Abraham insisted in their written and oral evidence that a figure of US$5 million had been agreed at the first meeting in July, this is completely inconsistent with the contemporary documents which are quite clear that the first mention of an agreed value was on 25 September and that until then the question was outstanding. Mr Al Othman could not even remember a further discussion with Mr Al Rajhi but his memory of events so long ago was understandably hazy and I find that he is wrong about this and has honestly, but mistakenly, conflated in his mind the separate discussions he had in July and September. Mr Abraham’s evidence that US$5 million was agreed in July and that when he spoke about agreeing a value in his email of 11 September he was referring to an internal Al Rajhi valuation, was no more than an ambitious and wholly implausible attempt at ex post facto justification.

[53]On 28 September, Mr Mattar instructed the Defendant’s Finance Manager of the need to make provision in the funds payment sheet for a payment at the end of October of SR18,750,000 under Al Othman Group/Nutech. This was done and Al Rajhi’s cashflow record showing “Projected Spending in SAR Millions” was updated the same day to include the following for 31 October:

“Alothman Group loan (Nutech) 18,750,000”

. Subsequent cashflow sheets replicated the same entry.

[54]On 1 October, an online meeting of the Defendant’s Management Committee took place attended by Dr Kamal and Mr Alsharifi amongst others. Item 11 headed, “Investments: NuTech: Al Othman update: OK/YA visit to Houston [YA]” was minuted as having been discussed offline. There is no evidence as to what was discussed, and Mr Alsharifi was not cross-examined about it. Neither this nor an entry in the minutes of a subsequent meeting, when the issue was deferred, seems to me to take the matter any further.

[55]After some chasing by Mr Abraham and delay on the part of the lawyers drafting the agreement, Mr Alsharifi eventually sent a draft contract to Mr Abraham on 8 October for review and comment. This email was also copied to Mr Al Rajhi and Dr Kamal and Mr Al Rajhi forwarded it to his butler for printing. Mr Abraham responded on 9 October requesting certain deletions and Mr Alsharifi forwarded Mr Abraham’s email to Dr Kamal who asked him to wait before responding.

[56]On 15 October, Mr Abraham chased for an update and Mr Alsharifi agreed with one or both of Dr Kamal and Mr Al Rajhi Given the way in which internal discussions proceeded, it is more likely that he only spoke with Dr Kamal, although it makes little difference either way. that he would respond to say that he was working on it and would revert. It seems that a Management Committee Meeting took place that day which was attended by Dr Kamal but not by Mr Alsharifi, who was in London. The minutes recorded that discussion of the Nutech investment and an update on the Claimant had been deferred to the next meeting, no doubt because of Mr Alsharifi’s absence.

[57]On 21 October, Mr Alsharifi emailed Mr Abraham to say that he was back from his trip and due to discuss the matter with Mr Al Rajhi that week. He also asked to schedule a call on an unrelated matter. Mr Abraham replied saying, “Let us finalise the agreement so we can get the payment as agreed end October.” The two men spoke on the morning of 27 October and Mr Alsharifi confirmed in an email report to Mr Al Rajhi and Dr Kamal that he had told Mr Abraham they were reviewing his comments internally and that although the intention remained the same they might modify the structure. He also told him that the Defendant would probably require more time to settle the amount and that he would revert that afternoon with a suggested date.

[58]On 6 November, Mr Alsharifi emailed Dr Kamal asking him to call back so that they could discuss a number of matters, including the response to the Claimant regarding Nutech. On 11 November, he emailed Mr Abraham saying that he had discussed the requested deletions with their lawyer and wanted further details of his precise concerns so that they could be addressed as it was not possible simply to remove the clauses in question. Mr Abraham replied to say that the clauses did not in fact apply to the particular transaction, and that if that was the only matter holding things up, then it was fine to proceed with the existing draft.

[59]On 19 November, Mr Abraham chased for an update in an email to Mr Alsharifi which was also copied to Mr Al Rajhi and blind copied to Mr Al Othman. On 21 November, Mr Alsharifi sent Mr Abraham a revised agreed agreement which he hoped would address the points raised. In his covering email he stated, “I can have it executed and returned to you early next week and can also provide you with an update on the payment date.” In an email to Abdulmohsen, Mr Abraham noted that the issue with the drafting had not in fact been addressed but that he thought they should tell Mr Alsharifi to go ahead so that they got the payment. Abdulmohsen replied affirmatively and Mr Abraham immediately responded to Mr Alsharifi, “Pls go ahead and execute. I appreciate if you can confirm by return that payment will be done before end November as previously agreed.” This email was copied to Dr Kamal but not to Mr Al Rajhi.

[60]On 24 November, Mr Al Rajhi received an email from the group CFO informing him that a receipt of SR 22 million was expected that day which it was proposed to use to defray certain payments. The last paragraph of the email noted that certain payments, including “Loan to Othaman 18.75… are some of the major commitments that will be pending.”

[61]That same morning Mr Alsharifi sent Mr Abraham an executed copy of the Loan Agreement which he had signed and asked when he would be available for a call to discuss the payment. Mr Alsharifi’s email was copied to Dr Kamal, the CFO and another member of Al Rajhi’s finance team, but not to Mr Al Rajhi. Mr Abraham forwarded the agreement to Abdulmohsen and Mr Al Othman asking them to execute it and send him a scanned copy. He also replied to Mr Alsharifi’s email, copying in the same people, and inviting him to call him on his Australian mobile. Mr Al Rajhi was not a party to these exchanges. Neither Mr Abraham nor Mr Alsharifi was cross-examined about the call that then took place, but Mr Abraham’s written evidence was that Mr Alsharifi told him that he could not confirm when payment would be made and would have to check with the Finance Department. Mr Abraham was frustrated by this but knew that Mr Al Othman would not want him to make a fuss and so simply told Mr Alsharifi to sort the matter out as soon as possible. A few hours later, Mr Abraham received a copy of the Loan Agreement signed by Abdulmohsen which he promptly forwarded to Mr Alsharifi, on the same email string and with the same people in copy. Again, Mr Al Rajhi was not copied into this email.

[62]On 27 November, Mr Alsharifi replied saying that unfortunately he did not yet have a definitive date for settlement but would revert the following day with an answer.

[63]And there, so far as concerns written communications between the parties, matters rested for a number of years. Mr Alsharifi did not come back with a proposed payment date and, in his written evidence Mr Al Othman confirms being told by Mr Abraham that Mr Alsharifi had been unable to say when the Defendant would be in a position to make payment. December 2014-April 2018

[64]In both his written and oral evidence, Mr Al Othman said that over the following two years he nonetheless raised the matter repeatedly with Mr Al Rajhi in person whenever he saw him, whether at Takween board meetings or informally. He did not press hard as Mr Al Rajhi was a trusted friend, so he did it in a polite and friendly way and at high level:

“I’m not chasing him with a hammer.”

Nor did he wave the Loan Agreement at him or threaten to go to a lawyer; rather he enquired more generally along the lines of, “what is happening about payment?” Each time he was told that Mr Al Rajhi would check and come back in the next month or so. This was substantially confirmed by Mr Al Rajhi who recalled Mr Al Othman trying on several occasions in 2015 and 2016 to restart discussions and claiming that Mr Al Rajhi had agreed to take the Claimant out of Nutech at the same price it had paid to enter. His evidence likewise was that there was never any reference to a loan agreement or to an outstanding debt and that his responses were always to the effect that he would have to investigate internally and revert.

[65]That seems to me to be entirely plausible and I am satisfied on a balance of probabilities that the question of payment was raised by Mr Al Othman on several occasions but in a deliberately informal and non-legalistic manner which did not expressly refer to the Loan Agreement or any debt due or, indeed, to any binding written agreement. Given the relationship between the two men, it would have been an awkward matter for Mr Al Othman to pursue, and it is understandable that he would have chosen his words carefully.

[66]Mr Al Othman said that by about 2016, he had got frustrated with having continually to press an old friend for payment and instead asked Mr Abraham to follow the matter up with Mr Al Rajhi as he thought this might embarrass Mr Al Rajhi into taking the matter seriously. It is common ground that at some point during Ramadan in 2016, Mr Abraham attended a dinner at Mr Al Othman’s house at which Mr Al Rajhi was also present. Mr Abraham took the opportunity to raise the matter of payment, but Mr Al Rajhi became visibly annoyed and made clear that he thought Mr Abraham was speaking out of order and that this was a matter to be dealt with at principal-to-principal level.

[67]Thereafter Mr Abraham did not speak further to Mr Al Rajhi about it, although he claims to have spoken to Mr Alsharifi on more than one occasion and been told that the Defendant had a cash flow problem and that he should be patient. Mr Alsharifi, however, had no recollection of discussing the matter again at all after his email of 27 November 2014, despite continuing to work with Mr Abraham and Mr O’Rourke until his departure from Al Rajhi in 2017. On this point, I generally prefer the evidence of Mr Alsharifi (which was not challenged in cross-examination) and I therefore find that, apart possibly from one occasion at a Takween board meeting in 2016, Mr Abraham did not take any steps to chase up payment with Mr Alsharifi, or refer to the matter, whether in writing or orally. To the extent that he did bring it up, I am satisfied that he did not refer specifically to the Loan Agreement. May 2018-October 2021

[68]In May 2018, Mr O’Rourke was replaced as Chief Investment Officer of Al Othman by Mr Rizk, and his appointment was notified to Mr Mattar, who by now was the deputy CEO of Al Rajhi following Mr Alsharifi’s departure the previous year. Mr Rizk also took Mr O’Rourke’s place on the Nutech/Al Salam board. While there was probably a conversation between Mr Abraham and Mr Mattar as to whether Mr Rizk should replace Mr O’Rourke on the Al Salam board, I reject Mr Abraham’s written evidence that Mr Mattar expressly referred to wanting to keep “the sale” secret from the other shareholders. This was not put to Mr Mattar in cross-examination, and I accept the latter’s evidence that he had never seen the signed Loan Agreement and was indeed unaware that any actual agreement had been concluded following the discussions in 2014. Moreover, he was confident that there had been no sale since, if there had been a sale of Al Othman’s shares, he would have had to know about it and record it in the books of Al Salam. To the contrary, not only had the Claimant requested an investment certificate for its shareholding in January 2018 to provide to its auditors, but Mr Rizk himself had provided a confirmation in June 2018 that no shareholders within the Claimant’s ownership structure held more than 10% of the shares.

[69]On 29 October 2018, Mr Mattar, in his capacity as Board Secretary of Al Salam announced a dividend distribution to shareholders. Mr Rizk replied the same day stating, “as you know, we already sold our shares to Rajhi Holdings but we did not get our funds yet. Will the below dividends be considered as interest?” He did not refer to any loan, or to the Loan Agreement and there was no evidence that he had it in mind or was even aware of it. Mr Abraham asserted in cross-examination that Mr Rizk knew about the Loan Agreement from meetings of the Claimant’s Investment Committee, but this had never previously been suggested and there were no documents to support the suggestion.

[70]Mr Mattar was puzzled by the reference to a sale but nonetheless double-checked with Mr Al Rajhi whether he had missed something. Mr Al Rajhi could not recall this conversation but, according to Mr Mattar, confirmed that there had been no sale and agreed that Al Othman could treat the distribution however it wanted in its own books. Mr Mattar then responded to Mr Rizk on 1 November saying, “Based on my understanding from Khalid Al Rajhi, this amount is to be considered towards the amount due as mentioned below in your email”. It was put to him in cross-examination that this was an implicit acceptance of an amount owing to the Claimant to which his answer was that, as far as he was concerned, there was no amount owing to the Claimant. Mr Rizk was not asking for payment of any outstanding purchase price, Mr Al Rajhi had confirmed that there was no sale and he was not aware of the Loan Agreement. He therefore assumed that the reference to interest must be to the Claimant wanting to treat the dividend as interest on its investment. While this might be seen as a rather strained explanation, the whole situation was undoubtedly confusing for Mr Mattar given the knowledge that he had and, more particularly, did not have. I therefore accept that this represented his honest and genuine belief as the only way he could make sense of Mr Rizk’s question. Since there was no subsequent follow-up, it is understandable that he did not find it necessary to pursue the matter further either internally or with Mr Rizk.

[71]Mr Rizk then tried to arrange a call with Mr Mattar and meanwhile emailed Mr Abraham on 2 November asking for his thoughts and saying that he wanted to consider the distribution as interest not a capital repayment. In his written evidence, Mr Abraham claimed that he had already discussed the matter with Mr Rizk and agreed that they should ask for the amount to be treated as interest before Mr Rizk sent his email to Mr Mattar on 29 October. I do not accept this. In his oral evidence, Mr Abraham said he could not in fact remember whether there had been such a discussion and the tenor of Mr Rizk’s email to Mr Abraham on 2 November indicates strongly that this was the first contact between them on the subject of the dividend. In the absence of any contrary evidence from Mr Rizk, I so find. On being sent Mr Mattar’s response of 1 November, Mr Abraham told Mr Rizk just to get the money and that it would then be handled at a higher level. As he conceded in his oral evidence, he was more concerned about getting the payment in than about how it would be categorised. Mr Rizk accordingly emailed Mr Mattar providing Al Othman’s bank details and nothing more. The distribution was then made without anything further being said on either side. November 2021-February 2023

[72]Following that, things continued as normal and there were no further relevant communications between the parties until 3 November 2021, when Mr Mattar circulated a proposal by the management of Al Salam to liquidate the company at a 90% loss on invested capital. Upon receipt of this proposal, Mr Rizk immediately emailed Al Othman’s Assistant CEO, Mr Ajazuddin, asking urgently for “the contract signed with Rajhi Holding related to our exit. George signed an agreement relating to this transaction securing our investment in Nutech.” Mr Ajazuddin supplied Mr Rizk with a document although the evidence does not disclose precisely what that document was, and it does not appear to have been sent or mentioned by Mr Rizk to Mr Mattar.

[73]It was, however, common ground that Mr Abraham contacted Mr Mattar by WhatsApp on 11 April 2022 to request a telephone call. The two men spoke, and Mr Abraham told Mr Mattar that there was an agreement that Al Rajhi would purchase the Claimant’s position so that money would be owing to it on an exit from Nutech. I accept Mr Mattar’s evidence that he was still unaware that any agreement had been signed following the discussions in 2014, still less that there had been any sale. Unsurprisingly, he asked to see the agreement and on 12 April Mr Abraham sent him a document which he described as “the requested agreement about Alothman Exit deal from Nutech which is now over 7 years old.” He asked if the matter could be sorted out as quickly as possible.

[74]It is accepted by the Claimant that the document sent to Mr Mattar was not the original agreement which had been signed in 2014. In fact, Mr Abraham had been unable to find the original document countersigned by Abdulmohsen and only had a document bearing Mr Alsharifi’s signature. He therefore procured this document to be re-signed on behalf of Al Othman by Mr Al Othman’s father, Mohammed Al Othman, and sent that to Mr Mattar instead. As I have already commented, it reflects adversely on Mr Abraham’s credibility as a witness that(a) he engaged in this behaviour at all; and

(b) never volunteered the true position until after the original document had emerged during the course of these proceedings. However, it is common ground that the Claimant had indeed signed the original agreement and that no changes were made to the substance of the text sent to Mr Mattar. Accordingly, it does not bear directly on any of the issues I have to decide.

[75]Following receipt of this agreement, Mr Mattar spoke to Mr Abraham on the phone saying that this was the first time he had seen the document. He later emailed Mr Abraham saying that the Loan Agreement only seemed to address the routing of funds back to the Defendant when Nutech was sold or distributions were made. He enquired whether there were any other agreements signed at the time which would support Mr Abraham’s claim that the Defendant had purchased the Claimant’s position. Mr Abraham responded that this was the document agreed with Mr Al Rajhi to find a way to pay the Claimant US$5 million since it wanted to exit. He said that Mr Alsharifi was well aware of it.

[76]Mr Mattar immediately approached Mr Al Rajhi. Mr Al Rajhi had no recollection of what he said to Mr Mattar and was not cross-examined about it. According to Mr Mattar, however, he expressed surprise as he had never previously seen any written agreement. He told Mr Mattar that he recalled a verbal discussion with Mr Al Othman in the summer of 2014 but said that no conclusion had been reached. If necessary, he was prepared to speak to the family but thought they were unlikely to approve such a transaction since the loan was only repayable from the Nutech exit proceeds which would now be far less than had been anticipated in 2014. He asked Mr Mattar to explain the position to Mr Abraham.

[77]Mr Mattar accordingly emailed Mr Abraham saying that, on his reading, the arrangement contemplated a loan with the Defendant as lender and the Claimant as borrower but with repayment only to be made from the Nutech exit proceeds. He expressed the view that the purpose of the agreement seemed to have been to provide comfort on the value of the Claimant’s investment rather than to schedule any actual payments in either direction. He suggested a meeting between them and said that he could seek a fresh approval from the Defendant’s Executive Committee/Board but that he could not take any action on the basis of the existing documents. In response, Mr Abraham expressed surprise that this was Mr Al Rajhi’s position and insisted that it had been agreed that the Claimant would be paid US$5 million for its share interest-free against any future proceeds from Nutech on condition that no other shareholders knew about it.

[78]Mr Mattar then undertook to speak further internally. He forwarded the exchanges to Mr Al Rajhi and spoke to him again to explain Mr Abraham’s response. Mr Al Rajhi told Mr Mattar that he would consider helping the Claimant, but that Board approval would be required where the investment had performed poorly and only a fraction of the loan was likely to be recovered. Since no payment had been budgeted, it would be necessary to obtain the family’s approval and this was more likely to be forthcoming if payments were structured in a way to allow maximum flexibility.

[79]On the basis of this discussion, Mr Mattar drafted a response to Mr Abraham which he sent to Mr Al Rajhi for approval on 8 May. This confirmed that there had been a verbal agreement to pay $5 million in exchange for the Claimant relinquishing any proceeds from Nutech in the future. It stated that the Defendant would honour this agreement which had been made as a special concession to Mr Al Othman and not to the other investors. The draft also contained three possible options to be put to Mr Abraham regarding settlement on the basis that payment had not been budgeted for 2022:(i) payment would be included in the 2023 cashflows to be settled in 12 equal instalments;

(ii) settlement in 18 equal payments from September 2022;

(iii) ad hoc payments based on investment cash flow movements over the coming months with the aim of settling the full amount by June 2023.

[80]Mr Al Rajhi approved the third option and Mr Mattar replied to Mr Abraham, accordingly, copying in Mr Al Rajhi. In an email the next day, also copied to Mr Al Rajhi, Mr Abraham expressed his thanks and provided the Claimant’s bank account details. The question of payment by June was then listed for discussion internally by the Defendant’s Investments Committee at its May meeting.

[81]When no payment was made, Mr Abraham started to chase Mr Mattar to find out when payment might be made. It is clear from the documents that Mr Mattar deliberately did not respond until he had had spoken to Mr Al Rajhi. On 11 October 2022, he sought Mr Al Rajhi’s feedback on one of two possible stalling responses. Mr Al Rajhi approved one of them and Mr Mattar accordingly emailed Mr Abraham on 20 October apologising for the delayed response and saying that all investment related outflows had been delayed by the Board until the end of the year and that he would provide an update after the next Board meeting. He noted that the Nutech team was continuing to work on an exit. It is clear from Mr Mattar’s written evidence that he was finding it extremely difficult to formulate any proposal to put before the Group Board which was likely to be approved given the disappointing performance of both Nutech and Takween. February 2023 onwards

[82]By February 2023, payment had still not been made and Mr Abraham continued to chase. Further holding responses were given by Mr Mattar who said that he had raised the matter with the Board and would be in touch when he had spoken to them. In an email of 10 February, he explained that the basis of any agreement appeared to have been based on compensating the Claimant for its paper loss on Nutech at a time when the Takween valuation was high and there was therefore a fair argument for reallocating some of the gain on Takween against that loss. However, Al Rajhi was now looking at a loss of SR 70 million on Takween.

[83]Around this time, Mr Al Othman also spoke directly to Mr Al Rajhi who maintained that there had only ever been a verbal non-binding gentlemen’s agreement.Mr Al Othman was surprised and annoyed by this and, on a balance of probabilities, I find it was at this time that he forwarded to Mr Al Rajhi a text received from Mr Abraham which attached the re-signed copy of the Loan Agreement. There were several clear errors in Mr Abraham’s text regarding the identity of the lawyer who had drafted the document, who had given instructions to the lawyer and who the signatories were but, again, they do not directly touch on the issues before the court. When payment was still not forthcoming, he met personally with Mr Al Rajhi on 28 May 2023. On this occasion, he took a copy of the agreement with him This was still the re-signed agreement. The original did not come to light until after the commencement of proceedings. and gave it to Mr Al Rajhi who read it briefly and then handed it back, telling Mr Al Othman to keep it and asking for another 10 days to sort something out. Both Mr Al Rajhi and Mr Mattar confirmed in their written evidence was that they attempted to obtain approval from the Group Board for the payment to Al Othman but that Mr Al Rajhi’s brothers on the Executive Committee did not agree and so there was no point in pursuing the matter up to the Group Board.

[84]At this point, Mr Al Othman lost patience and a letter before action was sent on 30 May 2023 referring to the Loan Agreement and to Mr Mattar’s confirmation that the verbal agreement would be honoured. Mr Mattar replied clarifying that he had only confirmed the verbal agreement between Mr Al Othman and Mr Al Rajhi and not the Loan Agreement which he believed to be a separate matter.

[85]Proceedings were issued on 6 September 2023. G: DISCUSSION AND ANALYSIS

[86]It has never been in dispute that an agreement was reached orally between Mr Al Othman and Mr Al Rajhi in 2014 for the Defendant to make a loan of US$5 million to the Claimant as a way of allowing it to monetise its stake without actually selling it, such loan to be repayable out of future distributions in respect of Nutech. It is likewise not in dispute that this was an agreement in principle only and was not intended to be binding until all the details had been agreed and a written document signed.

[87]The present claim is not founded on this verbal agreement but on the written Loan Agreement purportedly signed on behalf of the Defendant by Mr Alsharifi. The critical issue for the court is as to Mr Alsharifi’s authority to sign that agreement. Issue (1)(a): Did Mr Alsharifi have actual authority, express or implied, to sign the Loan Agreement on behalf of the Defendant?

[88]Unsurprisingly, there was no dispute between the parties as to the applicable law, which for present purposes can be taken as set out in Bowstead & Reynolds on Agency (23rd ed.) §3-003.

[89]Actual authority is the authority which the principal has either given the agent, or is regarded by the law as having given the agent because of the interpretation put by the law on the relationship and dealings of the two parties. The focus is on the relationship between the principal and the agent and requires the manifestation of assent by the principal that the agent should represent or act for him. Such manifestation can be made expressly or implied from their relationship and dealings. Whether or not authority has been granted is judged objectively in accordance with the usual principles of construction on the basis of all the relevant circumstances considered in their context.

[90]The most obvious examples of ways in which express actual authority can be conferred are by power of attorney or by Board resolution or by express written authorisation to do a particular act. However, in appropriate cases, the court can also draw an inference from the evidence that authority has been expressly granted.

[91]By contrast, implied actual authority most usually exists where the act in question is necessarily or normally incidental to tasks that the agent is expressly authorised to perform, or where it is an act which an agent of that type would normally have authority to do. It will therefore be appreciated that although there is a conceptual distinction between inferred express authority and implied authority, they can easily merge into one another and may well depend on the same evidence.

[92]The question of actual authority in this case requires some consideration of the internal governance of the Al Rajhi group. In this regard, Mr Singla mounted a sustained and forthright attack on certain inconsistencies in the Defendant’s evidence and its failure to disclose pertinent governance documents and invited me to draw adverse inferences in consequence. However, I decline to be drawn into the weeds of the disclosure exercise on this occasion since ultimately the point seemed to me to generate more heat than light and, in any event, I have been able to reach my conclusion without needing to resort to any adverse inferences.

[93]As it is, the Al Rajhi witnesses spoke with one voice to the following effect, and I accept their evidence:(a) The activities of the group were overseen by the Al Rajhi family in the form of the Family Council acting through the Group Board. Ultimate authority rested with these bodies;

(b) Express approval from the Family Council/Group Board was required before any binding commitment could be entered on behalf of the Defendant;

(c) Mr Al Rajhi was the sole authorised signatory for the Defendant but even he did not have authority to commit the company to any agreement without such approval;

(d) Mr Alsharifi certainly did not have authority to commit the Defendant to an agreement such as the Loan Agreement without the approval of Mr Al Rajhi which in turn required the approval of the Family Council/Group Board;

(e) The Loan Agreement was an unusual and untypical transaction for the group, being effectively a deal between two families rather than an arm’s length commercial transaction.

[94]I do not find it at all surprising in the context of a Middle Eastern family company that family approval would be required in order to enter into any commitments. The evidence suggested that the Al Othman group operated in much the same way. For example, Mr Al Othman gave evidence that a loan commitment for US$5 million by his company would likewise require approval from the family.

[95]Whether the ultimate fount of authority was the Family Council or the Group Board does not seem to me to make much difference in this case. A lot of confusion during the questioning of the witnesses arose because of changes in the governance structure of the group which were introduced by Mr Al Rajhi over the period 2013-2015 in order to separate purely family business from the other activities of the group. However, what was abundantly clear was that approval from the family organ at the top of the group was required before any binding commitment could be entered.

[96]Mr Singla argued that, in so far as such approval was required, the court could safely conclude that it was given. He relied on a number of matters.

[97]First, the provision for SR18,750,000 entered into the cashflow sheet showing projected spending as at 28 September 2014. This recorded a projected disbursement of this amount on 31 October 2014 in line with the agreement in principle reached between Mr Al Othman and Mr Al Rajhi on 25 September. However:(a) I accept the evidence of Mr Mattar and Mr Al Rajhi that these were budgeting documents intended to include projected spending for planning purposes and not necessarily reflecting actual approved commitments. This is supported by the fact that the balance at the bottom of the sheet was negative which makes it inherently improbable that each and every entry represented an actual obligation.

(b) Even more compelling, the entry was made on 28 September when on any view the Loan Agreement had not been finalised and would not be finalised for another two months. Mr Connell, who appeared for the Defendant with Mr Eoin MacLachlan, put it well when he described the entry as “unrelated and untethered to the execution of the Loan Agreement.” The fact that an identical entry appeared in all subsequent cashflow sheets does not take the matter further. If anything, it is more consistent with a position of “no change” than indicative of any subsequent positive approval.

(c) Moreover, there was considerable force in Mr Mattar’s evidence that if it had been a binding commitment, it would have had to be recorded as such in Al Rajhi’s audited accounts.

(d) Thus, while – as at 28 September – this was a payment which was it was expected would need to be made at the end of October, the mere fact of its appearance in the cashflow sheet cannot be taken as any indication that the necessary approval had been obtained.

[98]Secondly, the email from the CFO on 24 November referring to the Al Othman loan as a major commitment still pending. However, to regard this as evidence that Family Council/Group Board approval had been given to the transaction would be to place an unrealistic amount of weight on the use of the word “commitment” by the CFO who was likely to have been basing his email on what was contained in the cashflow sheets.

[99]Thirdly, the references in the meeting packs for various Al Rajhi Family Council meetings over the subsequent months. Again, however, these do not provide compelling support for the Claimant’s case:(a) The minutes of Family Council Meeting No. 24 which took place on 28 October referred under the heading “Corporate Update: Group Finance and Investments” to “PE/RE Investments including acquisition of addl shareholding in Nutech $7 mio (slide 30)”. I agree that this is likely to have been a reference to the loan transaction but since the Loan Agreement had not been finalised at this stage, it could not have been approved at this meeting. Furthermore, only two resolutions were passed at the meeting and neither had anything to do with any of the updates which were presented. I therefore find that this was simply an update and not a request for approval.

(b) The meeting packs for Family Council Meeting No. 25 (originally scheduled for December 2014 but in fact taking place on 8 January 2015) and No.26 (11/12 March 2015) both contained a Key Updates slide which included “Other Updates: Agreed loan structure with Alothman Group against their stake.” The meeting pack for Meeting No. 27 (31 May/1 June 2015) contained the same note except that it referred to a “loan buyout”.

(c) It is clear from the evidence that Mr Al Rajhi approved the packs to go to the Family Council and would have looked through them for that purpose. But approving the contents of a pack for the purpose of presentation to a meeting is not equivalent to substantively approving each and every item in that pack. In any event, it was the Family Council which needed to give the approval and there is nothing to suggest that the signed Loan Agreement was ever appended to the pack. Moreover, as I find below, although a loan structure had indeed been agreed with Mr Al Othman in principle, Mr Al Rajhi was unaware that a Loan Agreement had been signed.

(d) Furthermore, the fact that this item kept appearing in the meeting packs as an update indicates, if anything, that approval was still needed for a payment date so that the transaction could be finalised. Obviously, no reliance can be placed on the Loan Agreement itself as setting the payment date since that begs the question of whether it was authorised or not.

[100]I do not draw any adverse inferences from the lack of disclosure as I was invited to do by the Claimant’s counsel. Having heard the witnesses, I do not doubt that if the transaction had been approved by the Family Council, then the money would have been paid, and the matter would never have come to court. I do not regard Mr Al Rajhi as a duplicitous man. He has never denied that he reached an agreement in principle with his “brother”, Mr Al Othman, to help the latter in a way which would underwrite the Claimant’s investment in Nutech and allow it to monetise the stake pending a sale. However, he has always been adamant that there was no binding commitment. Whether or not he was wrong in law that there could be no binding obligation without family approval does not mean that his belief was not genuinely held.

[101]For these reasons, I am satisfied on a balance of probabilities that there was no formal approval of the loan transaction by the Family Council/Group Board.

[102]That by no means concludes the point, however, as it is not disputed that Mr Al Rajhi had apparent authority as the sole signatory of the Defendant to authorise transactions on its behalf and it was accepted by Mr Connell that signature by Mr Al Rajhi himself would have been sufficient to bind the Defendant. It follows that it cannot seriously be disputed that authorisation by Mr Al Rajhi would likewise be sufficient to confer authority on Mr Alsharifi to sign the agreement, even if Mr Al Rajhi himself had not obtained approval from the Family Council/Group Board.

[103]I do not accept Mr Singla’s argument that Dr Kamal was in the same position as Mr Al Rajhi by virtue of his position as co-CEO. Dr Kamal was plainly subordinate to Mr Al Rajhi and, unlike Mr Al Rajhi, was not an authorised signatory for the Defendant. Although nominally senior, he operated in practice at the same level as Mr Alsharifi and there is no evidence to suggest that Mr Al Rajhi delegated authority to him to approve or sign the Loan Agreement.

[104]I also reject the suggestion that either Dr Kamal or Mr Alsharifi had implied authority to authorise or sign the agreement by virtue of his senior position in the company. The context is important here and in the context of a family company of this nature, I am satisfied that neither Dr Kamal, nor Mr Alsharifi, nor indeed any other employee of the Defendant would normally have authority to act on behalf of the Defendant without the approval of Mr Al Rajhi. In this regard, it is noteworthy that neither Mr Al Othman nor Mr Abraham considered that Mr Alsharifi would have had authority to sign the Loan Agreement on his own initiative without such approval.

[105]Accordingly, I find authority to sign the Loan Agreement could only have been conferred by Mr Al Rajhi himself.

[106]The five-million-dollar question is therefore whether Mr Al Rajhi said or did anything in this case which had the effect of authorising Mr Alsharifi to sign the document on 24 November 2014.

[107]Mr Alsharifi’s evidence was to the following effect:(a) This was a unique transaction in his experience and different from the group’s usual transactions because of the relationship between the two families.

(b) Any commitment authorised by the family would usually have to be signed by Mr Al Rajhi.

(c) His understanding was that separate discussions would be taking place at principal level between Mr Al Othman and Mr Al Rajhi in parallel to the negotiations that he and Mr Abraham were conducting at executive level about the details. Any deal would ultimately depend on what was agreed at principal level since this would naturally supersede any agreement that had been reached at executive level.

(d) Despite much anxious thought, he could not now remember how or why he came to sign the Loan Agreement. In particular, he could not recall whether he had been given express approval to sign by Mr Al Rajhi. However, he was positive that he must have had some conversation with him or been given some indication that gave him the confidence to sign and that he would not have signed without believing that he was authorised to do so. He agreed that it was “inconceivable” that he would have signed unless the terms had been discussed with Mr Al Rajhi and he was aware of them.

(e) It was possible that he signed only to confirm that those were the key terms of the deal which would in due course be concluded on that basis, but he accepted that he never said this expressly. Moreover, he agreed that he would have understood that he was signing a document which purported to commit the Defendant to a binding obligation to make a loan of US$5 million on 24 November 2014 unless some different date was agreed.

(f) During his negotiations with Mr Abraham, he was always careful to make clear that he needed to discuss matters internally before agreeing to anything.

(g) He did not copy Mr Al Rajhi or even Dr Kamal into all his communications, but he copied them into what he considered necessary to keep them abreast of what was happening or on matters which required a decision or an agreed position. He would not necessarily have expected either of them to respond in writing; Dr Kamal tended not to use email and Mr Al Rajhi would only reply in writing if he needed to approve something. Otherwise, they would speak on the telephone. However, both of them would tell him if they did not agree with something. He tended to consult first with Dr Kamal in order to reach a consensus before approaching Mr Al Rajhi.

[108]As for Mr Al Rajhi:(a) He agreed that Mr Alsharifi kept him updated on the progress of the discussions with Mr Abraham, although he was not copied into all of those discussions.

(b) He would not have responded unless his input or approval was specifically required. He did not consider that silence was equivalent to positive approval. Thus, if his approval was required of a particular step which he did not in fact approve, he did not consider it necessary to reply expressly saying that he did not approve.

(c) He agreed that he had asked his butler to print out the draft Loan Agreement sent to him by Mr Alsharifi on 8 October 2014, although he could not recall reading it and would not necessarily have done so in detail, particularly if he was travelling at the time (which was when he tended to ask his butler to print out everything so that he did not have to look at it all on his phone).

(d) He could not recall any discussion with Mr Alsharifi following the latter’s email to Mr Abraham on 21 October saying that he was due to discuss the matter with Mr Al Rajhi that week. Nor could he recall Mr Alsharifi’s email of 27 October reporting on his conversation that morning with Mr Abraham in which he said that the Defendant would probably require more time to settle the amount.

(e) He would have had to approve the Loan Agreement expressly himself. He did not authorise Mr Alsharifi to sign it, and he was unaware that it had been signed.

[109]On the basis of this evidence together with the documents before the court, both contemporaneous and subsequent, and the inherent probabilities, I find that the most likely explanation for what occurred is as follows.

[110]When he was first approached in July 2014, Mr Al Rajhi was reluctant for the Claimant to sell its stake because that would rock the boat as far as any potential sale of Nutech was concerned. On the other hand, he wanted to help his old friend. While Family Council/Group Board approval would be required, he felt that it might be possible to secure approval given that Al Rajhi had made a significant gain on the Takween investment introduced by Mr Al Othman and he could present it as an effective reallocation of that gain against the loss that the Claimant was facing on Nutech.

[111]He therefore agreed to see what he could do to help, and both he and Mr Al Othman delegated the matter to Mr Abraham and Mr Alsharifi to work out the details. Neither of them was involved in the detailed negotiations or in the drafting of any agreement.

[112]Following the further discussion with Mr Al Othman in September, agreement was reached in principle that the Defendant would make the Claimant an interest-free loan of US$5 million repayable out of future distributions in relation to Nutech. However, although a payment date of the end of October 2014 was provisionally agreed, this was never set in stone, and by the end of October it had been made clear to the Claimant that the Defendant would need more time.

[113]Although Mr Al Rajhi saw the draft agreement circulated on 8 October, he probably only read it cursorily. Like the final version, it did not set out a specific date for payment but only referred to “the date hereof (or such later date as may be agreed between the parties).” He therefore did not appreciate that in the absence of any further agreement, it created an immediate obligation to pay on the date of signature.

[114]I am satisfied that Mr Alsharifi was not the sort of man who would have signed the Loan Agreement without honestly believing that he had Mr Al Rajhi’s authority to do so. A discussion must therefore have taken place on about 24 November in which Mr Al Rajhi gave Mr Alsharifi to understand that he could agree to the terms as they then stood. However, crucially:(a) Even though Mr Alsharifi would have explained to him the principal terms of the deal, Mr Al Rajhi did not see the final written agreement and did not have a written document in mind;

(b) He had not seen the email exchanges between Mr Alsharifi, Mr Abraham and Dr Kamal on 21 and 24 November regarding execution;

[115]Accordingly, in Mr Al Rajhi’s own mind, by telling Mr Alsharifi that he could agree to the terms of the deal as explained to him, he was not committing the Defendant to actual payment on any particular date as this would still require Family Council/Group Board approval. Nor did he appreciate that any immediate payment obligation would be created. Mr Al Rajhi never saw the executed version of the Loan Agreement and was unaware that it existed until it was sent to him in 2022.

[116]As far as he was concerned, therefore, no commitment binding on the Defendant was ever entered into. This is entirely consistent with what he told Mr Mattar in 2022 and explains his insistence(a) that he was unaware of any signed document until April 2022 and

(b) (once he was aware of it) that it was unauthorised in so far as it went any further than the non-binding verbal agreement in principle that he had reached with Mr Al Othman in September. It also explains how Mr Alsharifi came to execute the document believing that he was authorised to sign it as it stood. It may be, although it is unnecessary to make any finding on the point, that Mr Alsharifi likewise had not focused fully on the fact that signature of the document necessarily created an immediate payment obligation.

[117]I find this to be the most plausible interpretation of all the evidence, and I find on a balance of probabilities that this is what occurred.

[118]As already noted, the test for the existence of authority is an objective one and Mr Al Rajhi’s subjective state of mind is irrelevant. He clearly had apparent authority to authorise Mr Alsharifi to sign, and Mr Alsharifi would have been entitled to assume that the requisite approval from the Family Council/Group Board had been obtained, if only informally. In my judgment, that is sufficient for me to infer on an objective basis that Mr Alsharifi had actual authority to sign up to the terms of the deal as they then stood, even if neither he nor Mr Al Rajhi subjectively understood that they would thereby be creating a binding obligation to make payment immediately if no later date was expressly agreed.

[119]On that basis, I am satisfied that Mr Alsharifi had actual authority to sign the Loan Agreement on 24 November 2014. Issue (1)(b): If Mr Alsharifi did not have actual authority, did he have ostensible authority to sign the Loan Agreement on behalf of the Defendant?

[120]Given my finding that Mr Alsharifi had actual authority, it is strictly unnecessary to consider ostensible authority or ratification, although I do so briefly for the sake of completeness.

[121]Ostensible authority exists where the principal represents (or permits it to be represented) by words or conduct that the agent is authorised to act on his behalf. He is then bound by the agent’s acts with respect to any third party acting on the faith of that representation as if the agent did indeed have that authority.

[122]The principal can make such a representation by allowing the agent to act in certain ways, for example by entrusting him with the conduct of a particular business or by placing him in a position which usually carries certain authority. There may also be a sufficient representation where the principal is aware that the agent is purporting to carry out certain acts on his behalf but fails to object, and the third party is aware of the lack of objection: see, generally, Bowstead & Reynolds (op. cit.) §8-009.

[123]However, there must be some representation by the principal himself or by another agent authorised to act for the principal. An agent cannot ordinarily self-authorise in the sense of making a representation as to the extent of his own authority: Bowstead & Reynolds (op. cit.) §8-019; The Ocean Frost,

[1986] AC 717

[124]It is therefore necessary to see whether, on an objective basis, it can be said that there was any direct representation made by Mr Al Rajhi to the Claimant that Mr Alsharifi was authorised to sign the Loan Agreement.

[125]Mr Singla relied on the following:(a) A representation by Mr Al Rajhi that Mr Alsharifi would be conducting the negotiations on behalf of the Defendant;

(b) Mr Alsharifi’s senior position in the company;

(c) The lack of objection by Dr Kamal (or any of the other recipients) to Mr Alsharifi’s emails on 21 November 2014 (referring to having the agreement executed) and 24 November 2014 enclosing the signed document;

(d) The fact that Mr Alsharifi told Mr Abraham that he was discussing matters with Mr Al Rajhi and other senior management and that it would have been absurd in those circumstances for the Claimant to have attempted to verify directly with Mr Al Rajhi whether Mr Alsharifi was acting with authority.

[126]However, I am unable to spell out of any of these matters a representation by someone with sufficient authority to bind the Defendant that Mr Alsharifi was authorised to sign. This is largely for the reasons already given which I recapitulate briefly as follows: (a) The mere fact that Mr Alsharifi occupied a senior position in the company and had been entrusted with the detailed negotiations at executive level goes nowhere when Mr Al Othman and Mr Abraham knew that he would not have authority to act on his own without the approval of Mr Al Rajhi. The lack of objection by Dr Kamal or any other employee likewise cannot amount to any representation in circumstances where only Mr Al Rajhi had apparent authority to bind the company: see paragraphs 102-105 above.

[127]I accept that Mr Al Othman and Mr Abraham may have assumed from what they were told by Mr Alsharifi that Mr Al Rajhi was aware of what was going on and that he would not have permitted Mr Alsharifi to sign the Loan Agreement without authority, or would have objected if he was not happy about something. For this reason, I reject Mr Connell’s suggestion that they should have been put on enquiry by the fact that the document had been signed by Mr Alsharifi rather than Mr Al Rajhi himself. Whether they noticed it or not (and Mr Al Othman almost certainly did not), they would both have assumed that he would never have signed without authority and it would therefore not have occurred to them to question it. They were certainly never told that he did not have authority and, as Mr Al Othman said in cross-examination, “I didn’t have a bad intention of Al Rajhi, okay, to let somebody who is not authorised from his side to sign a document that we agreed and we did him a favour to have the amount of the payments as a loan.”

[128]However, this would have been entirely a matter of assumption on their part. They were never expressly told by Mr Al Rajhi that Mr Alsharifi was authorised to sign, and I find it impossible to spell out any actual representation to that effect by Mr Al Rajhi when he was not a party to the relevant correspondence about execution.

[129]The highest that the Claimant can put its case is to argue that Mr Alsharifi’s signature was equivalent to a representation that he was authorised to sign. However, that is tantamount to a representation by Mr Alsharifi himself and the clear authority of the House of Lords in The Ocean Frost is that an agent cannot self-authorise; there must be a relevant representation as to the agent’s authority by the responsible management of the principal. The House rejected the argument that an agent who had no ostensible authority to enter into a contract could nonetheless be imbued with ostensible authority to say that he had obtained actual authority. As they pointed out, it is necessary not to confuse “reliance by a third party on a representation by the principal that the agent had authority with an assumption by the third party that it would in the circumstances be safe to rely on the agent’s representation that he had authority.” That, with respect, is precisely what in my judgment the Claimant is seeking to do here.

[130]Mr Singla nonetheless sought to pray in aid the Court of Appeal decision in First Energy (UK) Ltd v Hungarian International Bank Ltd,

[1993] BCC 533

. Having endorsed the proposition laid down in The Ocean Frost that the idea of a self-authorising agent was not recognised in English law and that it was necessary to find some representation by the principal, the court nonetheless accepted that there could be situations where the principal held the agent out as having authority to make representations as to his own authority. It went on to find that the case before them was such a case, although they were careful to confine their decision to the particular facts.

[131]The first point to note is that this is not the basis on which the Claimant puts its case here. It is not suggested that Mr Al Rajhi ever represented that Mr Alsharifi was authorised to make representations as to his own authority. It is also fair to note that Bowstead doubts this decision as being contrary to principle and justifiable only on its specific facts. In any event, the situation in this case is far removed from that in First Energy which concerned the senior manager of a bank sanctioning a loan facility which was very much in the usual course of business of the bank generally. By contrast, the transaction at issue here was a specific and unusual transaction between families where decisions of principle fell to be decided at principal level, not at executive level.

[132]The burden of proving ostensible authority is on the Claimant and, had it been necessary to decide the point, I would have held that there was no representation at any stage by Mr Al Rajhi that Mr Alsharifi had authority to sign the Loan Agreement and that he accordingly did not have ostensible authority to do so.

[133]The question of reliance by the Claimant does not arise but Mr Connell did not argue that the claim would have failed on that ground. Issue (1)(c): If Mr Alsharifi did not have actual or ostensible authority to sign the Loan Agreement, did the Defendant nonetheless ratify it?

[134]Again, I address this only briefly.

[135]Ratification occurs when the principal on whose behalf an unauthorised act has purportedly been done adopts the act and treats it as authorised. Ratification may be express or implied from conduct. It may also be implied from acquiescence or inactivity provided that there is clear evidence that the transaction is adopted and recognised. The person ratifying must, moreover, have full knowledge of all material circumstances in which the act was done, unless it can be said that he intended to ratify it and take the risks whatever the circumstances. The test for ratification is objective. See, generally, Bowstead (op. cit.) §§2-071ff.

[136]In support of the Claimant’s case on ratification, Mr Singla relied on the cashflow sheets and meeting packs. However, for the reasons already given above when discussing actual authority, these were entirely equivocal and cannot in my judgment amount to any evidence, let alone ‘clear evidence’ that the Loan Agreement was being independently adopted and recognised.

[137]Moreover, as I have found, Mr Al Rajhi was unaware of the existence of the signed document until April 2022 and his exchanges thereafter with Mr Mattar only referred to a verbal commitment and put forward a payment option which was different to that in the written agreement. On no possible basis can this be construed as a ratification of the written Loan Agreement.

[138]In so far as it was argued that Mr Mattar had somehow ratified the transaction, not only did he not have authority to do so, but he also was unaware of the written Loan Agreement until 2022 and so cannot have ratified it merely by virtue of having given instructions to include the loan amount in the cashflow sheets. The exchanges he had with Mr Rizk in 2018 did not refer to the Loan Agreement at all and cannot therefore objectively be construed as nonetheless ratifying it.

[139]For all these reasons, the argument based on ratification is hopeless. Issue (2): Did the Defendant acknowledge its liability to the Claimant in 2018 so as to reset the limitation clock?

[140]Sections 29 and 30 of the Limitation Act 1980 provide as follows:

“(5) Subject to subsection (6) below, where any right of action has accrued to recover— (a) any debt or other liquidated pecuniary claim; or (b) any claim to the personal estate of a deceased person or to any share or interest in any such estate; and the person liable or accountable for the claim acknowledges the claim or makes any payment in respect of it the right shall be treated as having accrued on and not before the date of the acknowledgment or payment. … (7) Subject to subsection (6) above, a current period of limitation may be repeatedly extended under this section by further acknowledgments or payments, but a right of action, once barred by this Act, shall not be revived by any subsequent acknowledgment or payment. 30(1) To be effective for the purposes of section 29 of this Act, an acknowledgment must be in writing and signed by the person making it. (2) For the purposes of section 29, any acknowledgment or payment— (a) may be made by the agent of the person by whom it is required to be made under that section; and (b) shall be made to the person, or to an agent of the person, whose title or claim is being acknowledged or, as the case may be, in respect of whose claim the payment is being made.” (a) any debt or other liquidated pecuniary claim; or (b) any claim to the personal estate of a deceased person or to any share or interest in any such estate; and the person liable or accountable for the claim acknowledges the claim or makes any payment in respect of it the right shall be treated as having accrued on and not before the date of the acknowledgment or payment. (a) may be made by the agent of the person by whom it is required to be made under that section; and (b) shall be made to the person, or to an agent of the person, whose title or claim is being acknowledged or, as the case may be, in respect of whose claim the payment is being made.”

[141]It was not in dispute that the primary limitation period for a claim under the Loan Agreement expired on 24 November 2020 and that the Claimant’s claim was prima facie time barred unless it could establish an acknowledgment pursuant to these provisions prior to that date.

[142]As well as having to be in writing signed by the person making the acknowledgment, it is clear on authority that the acknowledgment must be of “the claim”, in other words of the claim to the debt which is being asserted in the proceedings. Thus, in Surrendra Overseas Ltd v Government of Sri Lanka,

[1977] 1 WLR 565

, Kerr J held that the acknowledgment must acknowledge the indebtedness and legal liability to pay the claim in question. In practical terms, the debtor must have “admitted his legal liability to pay that which the plaintiff seeks to recover.” The reasoning in this case was adopted and followed in LJR Interiors Ltd v Cooper Construction Ltd,

[2023] 1 WLR 1715

where the Deputy Judge held that there must be “an acknowledgment of ‘the claim’ which is constituted by the accrual of a right of action to recover ‘any debt or other liquidated claim.’”

[143]Whether there has been an acknowledgment is judged objectively by reference to what would have been reasonably understood by the recipient in the context in which the alleged acknowledgment was made. For this purpose, however, it is also necessary to look at the position as the parties understood it at the time, irrespective of whether the law might place a different analysis on the payment.

[144]In Kleinwort Benson Ltd v South Tyneside MBC,

[1994] 4 All ER 972

, a claim was in restitution, and it was necessary to decide whether certain payments made by the defendant amounted to an acknowledgment of that claim. It was common ground that when the payments were made, the defendant thought that it was discharging a legal liability under an interest rate swap contract (subsequently held to have been ultra vires and void) and was unaware that the plaintiff might have any restitutionary right against it. The question for the court was whether it should have regard to the position as actually understood by the parties at the time, or the analysis which the law placed on the payment, notwithstanding that the parties were unaware of that analysis.

[145]Mr Justice Hobhouse followed Re Footman Bower & Co. Ltd,

[1961] Ch.443

and Surrendra in holding that it was necessary to look at the “act and intention of the debtor to see whether the payment was made in respect of the particular debt.” Since the payments had been made in supposed discharge of a liability under an interest rate swap contract and not in respect of any restitutionary claim, there had been no acknowledgment, and the claim was accordingly time barred.

[146]Applying these principles to the present case, the claim asserted by the Claimant is for a debt arising under the written Loan Agreement dated 24 November 2014. It is not a claim for any amount allegedly due under a verbal agreement or a non-binding in principle agreement. It follows that any acknowledgment would objectively have to have been in respect of a claim under the Loan Agreement.

[147]The evidence set out above demonstrates that any attempts to obtain payment prior to 2017 were not pressed hard and were never made by reference to the written Loan Agreement. It is unnecessary to consider why the Claimant left it so long to bring a claim. A plausible explanation is that, having chased unsuccessfully in 2015/2016, it was content to wait while efforts were being made to sell Nutech on the most advantageous terms possible and that it only turned to the Loan Agreement in early 2022 when it became apparent that any sale was likely to be at a 90% loss. As I have found, that was the first time that the Loan Agreement was expressly mentioned.

[148]However, that is clearly too late for the Claimant’s purposes, and it is therefore not in dispute that the only basis on which an acknowledgment can be founded is the exchanges between Mr Mattar and Mr Rizk in 2018.

[149]This is most unpromising territory for the Claimant.

[150]First, I have found that neither Mr Mattar nor Mr Al Rajhi was aware of the signed agreement in 2018. Mr Singla submitted that I should disbelieve Mr Mattar’s evidence on the grounds that he was closely involved in the negotiations in 2014. However, in 2014, Mr Mattar was much more junior than he was in 2018 and I accept that he was only recruited to perform certain discrete tasks as directed by Mr Alsharifi – for example, running valuations and giving instructions to put the anticipated payment into the cashflow sheet in September 2014. There is no evidence that he was any more widely involved. He was not routinely copied into the correspondence, and he had no reason to know what eventually transpired. In short, there is nothing in his involvement in 2014 which justifies an inference that he was aware that the Loan Agreement had been agreed and executed. Thereafter, as I have said, any attempts by Mr Al Othman and Mr Abraham to procure payment did not involve Mr Mattar and did not reference the Loan Agreement specifically. In any event, those attempts stopped altogether after 2016.

[151]Secondly, Mr Rizk referred expressly in his email to a “sale”, not to a loan and his use of the words “capital repayment” were wholly inapposite to apply to a loan transaction. He certainly did not refer to the Loan Agreement. Clearly, he understood that there had been some transaction whereby the Claimant had effectively divested itself of its interest in return for payment and it may have been described to him and thought of internally as a sale. But it could not properly have been described as such if he was referring to the Loan Agreement and it is inherently unlikely that he would have used these words if he had had the written agreement in mind since, on any view, the Loan Agreement did not provide for a sale, whatever Mr Abraham and Mr Rizk may subjectively have thought the transaction represented.

[152]Thirdly, there was no evidence, whether written or oral from Mr Rizk and no contemporaneous documentation to show that he was even aware of the Loan Agreement at this stage. He did not refer to it expressly. He did not give a date for the supposed transaction. The reference in his email of 3 November 2021 to “George [having] signed an agreement relating to this transaction” overwhelmingly suggests that even then he had not seen the Loan Agreement and was solely reliant on what he was told about it by Mr Abraham which probably explains why he misdescribed it in 2018. Given that the countersigned version could not be found in 2022 it is quite possible that it had already been lost or mislaid in 2018. Certainly, it never seems to have been relied on expressly for any purpose after it was executed.

[153]Fourthly, Mr Rizk never subsequently clarified to Mr Mattar that he was in fact referring to a loan transaction, no doubt because Mr Abraham told him that he should just concentrate on getting hold of the money and that it did not matter how it was categorised because that would be sorted out at a higher level.

[154]In these circumstances, there was no objective reason whatsoever for either Mr Mattar or Mr Al Rajhi to suppose that Mr Rizk was referring to a Loan Agreement of which they were both subjectively unaware. The claim which is asserted in the proceedings and in respect of which the Claimant needs to interrupt the limitation period is a claim under the Loan Agreement. Even on the most expansive view as to what constitutes an acknowledgment, there is therefore no objective basis for construing Mr Mattar’s response to Mr Rizk as an acknowledgment of a valid claim under that agreement.

[155]It is not good enough in my judgment to argue that both parties had in mind an agreement whereby Al Othman could achieve an economic exit. The statute is quite clear that what is required is an acknowledgment of the claim being asserted and Kleinwort Benson really puts the matter beyond all doubt. In the same way that payment to discharge a liability under a swap contract is not an acknowledgment of a claim in restitution, acknowledgment of a claim in respect of a sale can hardly amount to acknowledgment of a claim under a contract of loan.

[156]The inevitable consequence is therefore that the Claimant’s primary claim under the Loan Agreement is time barred. Issue (3): Was there an agreed extension to June 2023 of the date for payment under the Loan Agreement?

[157]It was the Claimant’s pleaded case that the payment date under the Loan Agreement was amended by the discussions which took place in 2022 so as to extend the date for payment under to 1 June 2023.

[158]It could hardly be said that Mr Singla pursued this alternative case with any vigour, and rightly so, because it is hopeless. Mr Mattar’s email of 8 May 2022 referred only to a verbal non-binding agreement which, construed objectively in context, is clearly not a reference to an executed binding Loan Agreement. Moreover, there is no way in which an agreement to honour a non-binding verbal agreement can conceivably be interpreted as an agreement to amend a written loan agreement.

[159]For these reasons, the alternative case also fails, and the question of quantum does not arise. Postscript

[160]I wish to address two further matters.

[161]First, Mr Singla laid great emphasis in both opening and closing on the number of pleaded defences that the Defendant had taken which were either struck out or abandoned. He relied on these as evidence of, in particular, Mr Al Rajhi’s bad faith. They included defences that:(a) On its true construction, the Loan Agreement was subject to further authorisation;

(b) Mr Alsharifi lacked authority to execute the Loan Agreement under Bahraini or Saudi law;

(d) The purpose of the Loan Agreement was to provide a guarantee as to the value of the Claimant’s investment;

(e) There was an implied term that the obligation to pay only subsisted for so long as Al Othman remained invested in Nutech;

(f) The Loan Agreement was unenforceable because of its inconsistency with the SHA;

(g) Performance was impossible or frustrated.

[162]There can be no doubt that all of these defences were unsustainable as a matter of English law and were rightly struck out. Indeed, I struck out the implied term defence myself. However, it would be wrong not to note that on the basis of the findings that I have made after hearing much fuller evidence, there was a sufficient substratum of fact which enables me to acquit the Defendant of bad faith or disingenuousness in raising them. They may have been misconceived in law, but one can see how they came to be put forward.

[163]Secondly, it is always sad to see old friends fall out to the extent that they feel they have to embark on expensive and uncertain litigation – particularly over what is a comparatively small sum in Commercial Court terms. As will be apparent from this judgment, I do not regard this as a matter of bad faith. I therefore profoundly hope that Mr Al Othman and Mr Al Rajhi may be able to put their differences behind them and resume at least some semblance of their former relationship which I am sure will be of much greater benefit to their respective families than continued recriminations and bitterness.

[164]I am grateful to counsel for the quality of their submissions although it is a matter of some regret that I could not be addressed at some point by their respective juniors. The opportunities for advocacy at the junior end of the bar are considerably more limited than in previous times which means that junior barristers all too seldom have the chance to develop and hone their advocacy skills. It goes without saying that today’s juniors are tomorrow’s leaders and I would encourage all concerned to give them as many opportunities for oral advocacy as possible so as to prepare them for that day.