QUEENS BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL | ||
B e f o r e :
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INTERNATIONAL FINANCE CORPORATION | Claimant | |
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UTEXAFRICA S.p.r.l. | Defendant |
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Andrew Popplewell Q.C. (instructed by Linklaters & Alliance for the defendant)
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Crown Copyright ©
Mr Justice Moore-Bick:
Equitable estoppel
“2. UTEXAFRICA
The representatives in Zaire from the World Bank have sent a memo to Washington in which they report that Utexafrica was abandoning its factory and repatriating its staff
Formal denial by TEXAF
. . . . . . . . . . . . . . . .
Question from Mr. Hafez:
What can we do to help you, given that we are suspending the legal situation? This situation will be reviewed and a moratorium will need to be discussed when Zaire’s situation in general and that of Utexafrica in particular has been clarified.
Reply from TEXAF:
1. Release, for the benefit of Utexafrica, the 10.5 Million BEF blocked in the escrow account.
2. Arrange, via the World Bank, for the pressures put on Utexafrica by SNEL to cease.
3. As regards the World Bank, cultivate the idea of aid through private representative companies and with whom Washington maintains relations: medical care in particular.
Mr. Hafez will support these requests to Washington
. . . . . . . . . . . . . . .. . .
CONCLUSIONS
We will be at peace with the [IFC] for a while.
There has been absolutely no question in Mr. Hafez’s mind of Texaf’s performance of the contractual obligation to pay the 1st capital tranche (821,500 ECU). We intimated that Texaf had put up to its last penny into Utexafrica and that we had thought that this had the most merit.
Mr. Hafez, whom the Kinshasa’s Department of the World Bank had told that Utexafrica had snuffed it, appreciated our financial and physical determination to preserve the plant.
Mr. Hafez’s position is clear:
1. Safeguard the employees
2. Safeguard the plant
3. He is aware that the economic environment is currently completely flat. Rebuild the cashflow as soon as reasonably possible.
4. Rediscuss. He himself talked about rescheduling the debt.
. . . . . . . . . . . . . . . . . . . . ”
“. . . . . given that we are suspending the legal situation”.
He submitted that, taken together with the evidence of Mr. Croonenberghs and Mr. Froissard, it provided sufficient evidence for the purposes of this application of a representation by Mr. Hafez that IFC would not enforce its legal rights under the Investment Agreement until economic stability had returned to the Congo. When considering this submission, however, it is important to remember that the discussions were conducted in French (the original note reads “. . . . . sachant que nous gelons la situation juridique”) and that the passage on which he relies forms one small part of what passed between the parties. When considering the meaning and significance to be attached to a note of this kind it is obviously important to bear in mind the overall context in which it is found.
“it was not only at the meeting that Mr. Hafez confirmed that IFC would not be taking any action to pursue repayment of the loan. Mr. Hafez confirmed to myself and to my colleagues at Utexafrica many times over the telephone and in person that no further action would be taken.”
Mr. Froissard, the managing director of Utexafrica’s factory between 1991 and 1999, says in his witness statement
“Throughout these times [Mr. Hafez] repeatedly assured me that Utexafrica had his complete support [and] that no action, aggressive or not, would be taken by IFC with regards to its loan until the country had stabilised. I always regarded that fact as established.”
“any demand from [IFC] at the present time would be particularly unwelcome”.
“It turns out that we have to ask our creditors for a consequent abatement of the financial charges and of all or part of their debt. As far as you are concerned, this interest and penalty charge currently runs to 10.9 million Ecus for a principal debt due of 9.86 million Ecus. This charge is increasing monthly by 194,000 Ecus and the whole of the debts due represent one and a half year’s turnover.
Without a debt-corrective measure as soon as possible, we will lose – once and for all – the confidence of our bankers and suppliers, who are essential in providing the financing of our working capital”.
“It does not appear very likely that the [IFC] will seek to levy execution against Utexafrica”.
Frustration
Limitation