“WHEREAS: 1. PFE has acquired the right to tender for the buy back contracts with NIOC for the Soroosh and Balal fields in the Persian Gulf and BVE is actively seeking oil and gas production interests worldwide. IT IS HEREBY AGREED: 1. PFE has received certain data from NIOC regarding the Soroosh and Balal fields which NIOC regard as confidential and PFE have entered into a confidentiality agreement with NIOC in respect of such data. A copy of the confidentiality agreement is attached and will form part of this agreement and should be signed by BVE. 2. BVE undertakes to treat all data provided to PFE by NIOC and subsequently sent to BVE, as confidential and BVE will enter into the same agreement with PFE as PFE with NIOC. 3. BVE will work on the Soroosh and Balal project exclusively with PFE and undertakes not to carry out any work on its own or with other parties. 4. BVE undertakes that all information received from PFE will be kept strictly confidential and will not divulge same to any third party without the express written consent of PFE. 5. BVE will not use PFE advisors in Iran without the permission of PFE. 6. BVE undertakes not to approach NIOC directly on these projects without the express written consent of PFE. 7. It is the intention of PFE and BVE to enter into a joint venture agreement in the near future which will define the relationship of PFE, BVE and other participating parties, including Fallingbrook Commodities Limited.”
“We mention these two bilateral sets of communication with Bakrie, because both [PFE] and [BVE] accuse one another in these proceedings of bad faith and deceitfulness in conducting these private discussions with Bakrie; in truth, neither side was alone in having such discussions.”
“A constant theme of [PFE’s] case was that from an early stage [BVE] and Bakrie had affected, in their dealings with [PFE] to be at arm’s length, when in fact they were secretly working in association with one another, with a view to stealing [PFE’s] contract. As we make plain elsewhere, the suggestion that they had such intent is unfounded. But quite apart from that, it is hard to accept that Dr. Frischmann was really unaware that [BVE] and Bakrie were more closely associated with one another than [PFE] was with either of them or was ever likely to be.”
“I waited for you to contact me all day yesterday … NIOC has been very annoyed with continuous delays and the fax from Spain [about a bond offered by a bank which proved unacceptable to NIOC] annoyed them further”
“Mr Blair accepted that he had prepared his summary minutes sometime after the meeting itself from rough contemporary manuscript notes; as he said in evidence, it is not easy to take a full note when you, yourself are actively engaged in the discussion. He denied the suggestion that they were not a genuine and fair record. The fact that the original manuscript version was no longer available appears to us to be unremarkable, given that it may well have been discarded once the typed version had been completed. And the idea that the final notes were deliberately “sanitised”, stripped of anything vaguely incriminating, is wholly at odds with [PFE’s] innumerable complaints that the notes reveal statements which, they say, represent half-truths, falsehoods, remarks made to NIOC which were derogatory of [PFE] and breaches of confidentiality by [BVE], little or none of which would be expected to have been there if the document had been prepared for the purpose suggested by [PFE]. To examine, seriatim, the numerous points at which, according to [PFE], the informed reader can detect signs of deliberate falsification would not be justified; overall we consider the thesis wholly improbable and unpersuasive.”
“From your letter (and our earlier discussion by telephone) it is evident that the parties involved have significantly different perceptions of value relative to the Balal contract. I also note from your letter, however, that you retain some optimism that a resolution might be reached between our companies. While I too hold out hope that an accommodation may be possible, support for the project amongst our directors has been eroded by the lack of an agreement and the requirement to finalise disclosure documentation for our initial public offering.”
“We … write to inform you that unless we receive the following documents from your end within 15 days from the date hereof, NIOC shall be left with no alternative but to take the appropriate action which might be deemed necessary. A - letter of guarantee as per NIOC’s instruction based on the exact proposed text and issuing bank. B - your final financing agreement. C - your final JV agreement with the consortium partners previously introduced to NIOC. D - regarding your request for 75% of early production of oil produced up to the completion of development plan, there is no objection and it can be allocated.”
“But much of the letter was devoted to emphasising Monument’s current activities in Iran and Turkmenistan, future co-operation with NIOC generally, and oil swap arrangements in particular. The strong impression given by the letter is that Monument saw the forthcoming visit as a valuable opportunity to discuss future relations with NIOC at least as much as a chance to secure participation in the Balal project. Mr Mohandes evidently felt much the same way.”
“JP [Dr Pendered of PFE] apologised for the delays incurred so far and Monument presented their corporate background and intentions for Iran. Mr Hosseinian advised, in a pointed manner, that issue of the bond alone would not be sufficient and he would require to be satisfied on all three points of the letter, ie the bond, the JV agreement and a firm indication of finance availability. He also mentioned that he considered it now to be a mistake that a contract had been signed with PFE; he blamed his team for this and said they should have signed with the JV or preferably with an oil company. He addressed AB [Mr Andris Blankenburgs of Monument] directly and told him that, as far as he was concerned, Monument was acceptable and they could approach NIOC directly if they so wish, either with or without PFE. He also said that he did not consider it was essential to use PFE as their capabilities were available from a large number of consultants and contractors. According to him there are a number of companies lined up ready to sign, with finance arranged, including [BVE]. He felt he had been misled by PFE with promises that had not been honoured (he did not specifically mention the bond issued).”
“[PFE] claims that Dr Hosseinian’s uncompromising stance at the meeting on 24 June reflected the “chilling” effect of [BVE’s] success in sabotaging [PFE’s] reputation at their own meeting with the minister in Kuala Lumur earlier in the month. But this is wholly implausible. Dr Hosseinian had every good reason to have been disenchanted with [PFE] by the time of the meeting on 24 June: reasons that had nothing whatever to do with [BVE] or Bakrie. [PFE] had bid for, and been awarded, the service contract as part of a consortium without, as it turned out, having agreed terms with its partners; it had given the impression that the necessary finance was available when it was not; it had repeatedly pressed NIOC to accept a performance bond from a ‘bank’ which was not among those on the NIOC-approved list and which was so private that no one could readily establish its credentials; it had dropped [BVE] as their prospective oil company partner in favour of Monument and asked for NIOC’s formal approval of this substitution.”
“Our offer reflects the reality that recent pressures related to the US sanctions have made it more difficult and more costly for us to secure project financing. In addition, our Iran advisers point out that the large reductions which were renegotiated in the remuneration fee and capital cost have significantly compromised the value of the contract. Should you find our offer acceptable, we would be prepared to move forward immediately to finalise documentation with you and provide the requisite bank guarantee to NIOC.”
“There was every good reason why [BVE] and Bakrie should want to reach an agreement with Dr Frischmann. The contract was in [PFE’s] name. If [BVE] and Bakrie had ever harboured any idea of trying to persuade NIOC to revoke its award to [PFE] (and, while there may have been some hard-liners in either camp who would have like to do that, we find no evidence of any considered decision, or attempt, to do so), it can only have been very short-lived. By the beginning of June, NIOC had made it abundantly clear that they would continue to work with [PFE] unless and until it dropped out . . . the imposition by NIOC of a time-limit for conclusion of an agreement was going to, and did, operate as a spur to both parties to sort out their differences or face the risk of both losing the Balal contract altogether.”
“It is also very difficult to imagine how Dr Frischmann could have thought that a letter in these terms would produce anything other than an unfavourable reaction from NIOC, let alone how he could have brought himself to send it knowing that [BVE] would or might be writing to NIOC with news of a completely different kind: as regards the latter point, we can only assume that Dr Frischmann had not expected [BVE] to write so quickly. At all events, we have little doubt that this letter must have sealed [PFE’s] fate as regards Balal. Looking at the matter from NIOC’s perspective, on opening their offices on Saturday 5 July . . . they - or at least Mr Rahimi and Mr Jalilian - would have found two wholly inconsistent faxes: one from [BVE] telling them that they were on the verge of an agreement with [PFE] and one from [PFE] making no reference to any such negotiations and asking for substantially more time in which to find a banker-partner for the project.”
“In the course of that weekend [5-6 July 1997 ] NIOC decided that they were no longer prepared to deal with Pell Frischmann on an exclusive basis - or, in all probability, at all; they did not include them in the list of selected contractors who were going to be invited to re-bid; and they required Pell Frischmann to collect the performance bond previously lodged with them.”
“We are ad idem with the Royal Court in concluding that it was Pell Frischmann’s own fault that it lost its exclusivity, and any hope of obtaining the Balal contract.”
“Indisputably, the message in the 7 July fax was that Pell Frischmann had lost the service contract. To adopt the language of the Royal Court, it is self-evident that at that point in time there was no longer a service contract in existence and that no substitution, assignment or novation was then possible. The whole sub-stratum of the buy-out had gone. In our view, the release of the obligations of [BVE] and Bakrie under their respective confidentiality agreements was nothing more than an inevitable and necessary concomitant.”
“We believe that what could reasonably have been demanded must be assessed after, rather than before, Pell Frischmann lost exclusivity. The breaches of contract, for which these Wrotham Park damages are being claimed, continued through to28 July 1997 and possibly beyond. It would be illogical to assess them at an artificial mid-point in the factual sequence.”
“27. It is obviously unwise to try to lay down any firm general guidance as to the circumstances in which, and the degree to which, it is possible to take into account facts and events that have taken place after the date of the hypothetical negotiations, when deciding the figure at which those negotiations would arrive. Quite apart from anything else, it is almost inevitable that each case will turn on its own particular facts. Further, the point before us today was not before Brightman J or before Lord Nicholls in the cases referred to by Mr Mann. 28. Accordingly, although I see the force of what Mr Mann said in [13] of his judgment, it should not, in my opinion, be treated as being generally applicable to events after the date of breach where the court decides to award damages in lieu on a negotiating basis as at the date of breach. After all, once the court has decided on a particular valuation date for assessing negotiating damages, consistency, fairness, and principle can be said to suggest that a judge should be careful before agreeing that a factor that existed at that date should be ignored, or that a factor that occurred after that date should be taken into account, as affecting the negotiating stance of the parties when deciding the figure at which they would arrive. 29. In my view, the proper analysis is as follows. Given that negotiating damages under the Act are meant to be compensatory, and are normally to be assessed or valued at the date of breach, principle and consistency indicate that post-valuation events are normally irrelevant. However, given the quasi-equitable nature of such damages, the judge may, where there are good reasons, direct a departure from the norm, either by selecting a different valuation date or by directing that a specific post-valuation-date event be taken into account.”
“For these reasons, the starting point in this case can legitimately be taken as being the cost of producing the information.”
“Even if we are wrong in these conclusions and [BVE] and Bakrie were in breach of their respective confidentiality agreements, it would be wholly artificial to speak of each one having procured the breach of the other (another way in which [PFE] puts its many claims in tort). Each entity was well capable of making its own decision for itself and no doubt did.”