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Case Update: Alhamrani v Alhamrani

14 December 2015

Harneys acted for the Alhamrani brothers, namely Sheikhs Mohamed, Siraj, Khalid, Abdulaziz, Ahmed and Fahad (the Brothers) who were defendants to a claim brought by the oldest brother Sheikh Abdullah Ali Alhamrani (Sheikh Abdullah) concerning a dispute as to the ownership of shares in a BVI registered company called Chemtrade Limited (the Ownership Claim).

There was a related action heard concurrently and initiated by Chemtrade Limited (Chemtrade) against Fuchs Petrolub AG and Fuchs Oil Middle East Limited (FOMEL). Chemtrade and Fuchs Petrolub AG were the 50:50 per cent shareholders in FOMEL and were entitled to appoint equal numbers of directors to FOMEL’s board. Fuchs Petrolub AG had been avoiding FOMEL board meetings thereby causing FOMEL to be without a functioning board of directors for almost 3 years. Chemtrade contended this conduct was unfairly prejudicial to Chemtrade. (the Unfair Prejudice Claim).
The main issue underlying the ownership claim was whether the 75 per cent share interest held by the Brothers in Chemtrade (the Chemtrade Shares) was intended to form part of an offer Letter dated 12 April 2008 from the Brothers to Sheikh Abdullah (the Offer Letter) which was accepted on 5 August 2008, both governed by the laws of Saudi Arabia. The Brothers denied that the Chemtrade shares formed part of the Offer Letter whereas Sheikh Abdullah contended that the Chemtrade shares were sold to him by the Brothers. Sheikh Abdullah’s claim was therefore to enforce the sale agreement and require the Brothers to transfer the Chemtrade shares to him. In the event he was successful, the Unfair Prejudice Claim would fall away because firstly, the conduct complained of by the Brothers as being unfairly prejudicial would not be so if Sheikh Abdullah were the rightful owner of Chemtrade and secondly, Sheikh Abdullah would cause the existing directors of Chemtrade to be replaced to ensure the Unfair Prejudice Proceedings are discontinued.
There were over 30 lever arches of material placed before the Honourable Justice Edward Bannister for a trial of the Ownership Claim and the Unfair Prejudice Claim which spanned 29 days, from 20 September 2012 to 27 November 2012. In the Commercial Court, judgment was issued in favour of the Brothers with the finding that inter alia, the Chemtrade shares did not form part of the Offer Letter.

Sheikh Abdullah appealed the commercial court’s decision before the Eastern Caribbean Supreme Court of Appeal (ECCA) in July 2013. The ECCA allowed the Sheikh Abdullah’s appeal finding that the Offer Letter was ambiguous and did include the Chemtrade shares.

The Brothers therefore appealed to the Privy Council which was heard in July 2014. The Privy Council noted that there was a distinct role that expert evidence played when analysing foreign statutes versus analysing contracts governed by foreign law. The Privy Council found that the trial judge had erred in the manner in which he relied on the expert evidence as it was not for the experts to interpret the Offer Letter but merely to indicate what questions according to Saudi law should be asked and what evidence was relevant to answer the questions. The Court would then have to apply those principles to interpret whether the contract was ambiguous or not. If ambiguous then the Court would have to consider all the underlying evidence to ascertain what the parties intended.

The Privy Council after analysing  the evidence found that the Offer Letter was ambiguous and they therefore needed to consider the evidence to see whether it was intended for the Chemtrade shares to form part of the Offer Letter. The Privy Council ruled in favour of Sheikh Abdullah finding that the Offer Letter did include the Chemtrade shares and therefore dismissed the Brothers’ appeal awarding costs in favour of Sheikh Abdullah.
Harneys’ lawyers involved in the case were Partners Phillip Kite, Ian Mann and Andrew Thorp and Associate Marcia McFarlane.