UKPC 37
Privy Council Appeal No 0009 of 2014
Sheikh Mohamed Ali Alhamrani and others (Appellants) v Sheikh Abdullah Ali Alhamrani (Respondent)
Victor Joffe QC
(Instructed by David Miles, Blake Morgan)
Elizabeth Jones QC
(Instructed by Caroline Bassett, Forsters LLP)
The background to the dispute and to the Offer Letter
"all the companies, partnerships, shareholdings, funds and all trades and investments in Saudi Arabia and abroad as registered in the financial statements"
and that Sheikh Abdullah and the Sisters should have the choice of either selling their shares to or buying the shares of the Brothers
"in all the partnerships mentioned above in Saudi Arabia and abroad".
The Offer Letter and the Sale Agreement
"40. …. [T]he letter not only omits Chemtrade from the list of companies in Appendix 1, it draws the attention of the Court of Appeal to the fact that the valuation was restricted to all the funds, properties and partnerships contained in shares in the companies, real estates and movable property located inside KSA [ie the Kingdom of Saudi Arabia] in accordance with the contents of Appendix 1. That too, if read in accordance with the ordinary and common meaning of words, was not true. Chemtrade was on no sensible view 'located' in KSA. Its bearer shares were there and its administration was carried on from there, but it was a foreign company whose commercial activities were carried on and could only be carried on in territories other than KSA. It was non-resident for Saudi tax purposes and the evidence showed an anxiety amongst the family members that its non-resident status should not become open to challenge. Yet while Appendix 1 omitted Chemtrade, FOMEL had been included in the DTBA valuation.
41. Finally, because of the nature of the process in which the Court of Appeal and the parties were engaged, neither Sheikh Abdullah nor the Court of Appeal had any means of testing the accuracy of the statements made in the offer letter - or if they had such means, they were never resorted to. Certainly, and importantly, neither the Court of Appeal nor Sheikh Abdullah ever saw any of the valuations prepared by DTBA, nor were they privy to the affordability calculation which determined the price."
The correct approach to contractual interpretation
"The function of the expert witness in relation to the interpretation of foreign statutes must be contrasted with his function in relation to the construction of foreign documents. In the former case, the expert tells the court what the statute means, explaining his opinion, if necessary, by reference to foreign rules of construction. In the latter case, the expert merely proves the foreign rules of construction, and the court itself, in the light of these rules, determines the meaning of the documents."
See also paras 32-143 to 145. The point was again put with clarity by Lord Greene MR in one of the cases cited in Dicey, Rouyer Guillet & Cie v Rouyer Guillet & Co Ltd  1 All ER 244 (CA):
"I must make it clear that the evidence of French law is subject to a certain differentiation as between the evidence of the meaning of the law of 1925 and the evidence of the meaning of the articles. As I understand the law of England, evidence as to the meaning of the statute is to be obtained from the evidence of expert French witnesses and the decisions of the French courts. On a matter of French law the decision of a French court would be most persuasive. On the other hand, evidence on the construction of a private document, such as articles of association, is admissible so far as it deals with French rules of construction or French rules of law or the explanation of French technical terms, but evidence as to its meaning after those aids have been taken into account is not admissible. It is for the court to construe the document, having fortified itself with the permissible evidence."
See also, to the same effect, two more recent first instance decisions: Svenska Petroleum Exploration AB v Government of the Republic of Lithuania  EWHC 2437 (Comm), per Gloster J at para 29, and Toomey v Banco Vitalicio de Espana SA de Seguros y Reaseguros  EWHC 1102 (Comm), per Andrew Smith J at para 37.
The expert evidence
The approach of the ECCA in principle
The approach of the judge and the ECCA to the expert evidence and their conclusions on ambiguity
"I prefer the evidence of Dr Al-Ghazzawi that there is no ambiguity in the offer letter or in Sheikh Abdullah's acceptance of it to the evidence of Sheikh Al-Gasim, not only because of the authoritative manner in which it was given but also because, unless the word 'ambiguous' has some special definition for the purposes of Saudi law, which no one suggested is the case, it is plainly correct. It is not possible to read the offer letter as amounting to anything other than an offer to sell property in KSA listed in Appendix 1. Chemtrade was neither listed in Appendix 1 nor situate in KSA. The offer letter flagged up to the Court of Appeal (and thus to Sheikh Abdullah) that the offer was confined to assets within the Kingdom."
"The whole foundation, as expounded in his Report, of Sheikh Al-Gasim's evidence that material outside the four corners of the offer letter would be admissible in a Saudi Court to identify the parties' intentions was based upon the contention that because the Court of Appeal in February 2008 was looking for a settlement covering all jointly owned property, both within and outside the Kingdom, the terms of the offer letter were ambiguous, because it did not enable the reader to know whether or not Chemtrade was included in the offer. Although his acceptance of the fact that the parties were free to contract or otherwise following the February meetings with the Court of Appeal largely destroyed the factual basis for this proposition, it is inherently specious, because it is based upon an a priori assumption that Chemtrade ought to have been among the assets sold. Without that assumption, there is no ambiguity at all. An otherwise unambiguous contract may require to be rectified to include property not referred to within it, but no claim for rectification is made in this case. As elsewhere, Sheikh Al-Gasim is relying upon what is required to be proved as a step in reasoning."
"That the price per share proposed in the Offer Letter was based on the inclusion of the Alhamrani Group's share of FOMEL's assets should have been clear. First the Brothers had agreed to include all the assets in arriving at a valuation and a price. Second, [DTBA] had come up with a valuation per share of SR150m on the basis that FOMEL was included. Third, the income of FOMEL was demonstrated by [DTBA] in the evidence to be necessary for the Brothers to be able to afford to buy out Sheikh Abdullah and the Sisters. Fourth, the Offer Letter stated throughout its body that it was a valuation of all the assets inside KSA. It seems clear that the list of companies that had been valued by the Brothers given at Appendix 1 was mistaken in omitting Chemtrade/FOMEL The resulting contradiction between the body of the Offer Letter and the list in Appendix 1 created an ambiguity. The agreement and the judgments that followed were all affected by the same ambiguity."
"It goes without saying that the valuation was restricted to all the funds, properties and partnerships contained in shares in the companies, real estates, and movable property, located inside the Kingdom of Saudi Arabia in accordance with what is stated in the enclosed appendix No 1."
One construction of that sentence is that only the Sharia properties identified in Appendix 1 were to be included, whereas it had originally been intended that they should all be included, including FOMEL, which meant that Chemtrade would also be included. Yet on the face of it the list of companies in Appendix 1 does not include FOMEL. It was not included by name in Appendix 1 and could only have been included if it could properly be described as a Saudi company. Yet if it was not a Saudi company (and it was certainly not formally a Saudi company) it appears that investment in it (or Chemtrade) it could not properly be described as a "foreign investment" because that expression was limited to the Jersey Trusts.
(1) The February arrangements
(2) Only the Jersey Trusts were excluded
(3) Agreement on the price
(4) The 10 May 2009 letter
"I am in receipt of your letter dated 27th April 2009 referring to the above subject. I regret to inform you that we will not be able to meet in the capacity of Board Directors of the aforementioned company - Fuchs Oil Middle East Co - for we were forced to transfer the assets and all shares of CHEMTRADE and therefore the 'Company' to Sheikh Abdullah A Alhamrani.
On the other hand, I believe the relationship we built for the past two decades is a solid relation far beyond a normal business relation. Together we have witnessed growth and successes and set the stage to grow even further, it is unfortunate that we had to part for extenuating circumstances.
Accept our apologies for any inconvenience the above may have cause, wishing you continued success and good health."
(5) Concurrent findings
"73. It was evident from the conduct of the Brothers and their correspondence, both prior to and subsequent to the agreement to engage in the process of takharuj, that they expected FOMEL to be included. The evidence accepted by the learned trial judge was that the Brothers at all times prior to and subsequent to their agreement intended to include FOMEL This evidence included not only the May 2009 Letter in which the Brothers indicated to Fuchs that they had sold Chemtrade, but also their other statements and writings related above in which the same admission was made. They allowed Sheikh Abdullah to take possession of the FOMEL premises and assets in KSA without once raising an objection until a year had passed. The experts were agreed that such acknowledgments are admissible by a Saudi court as proof of original intention, though Dr Al-Ghazzawi was more cautious in applying the principle given that he had already made up his mind that there was no ambiguity. The learned trial judge not only disbelieved the explanations of the Brothers as to their erroneous statements to Fuchs that they had included Chemtrade in the sale, but he held they were deliberately false. He also found as a fact that the Brothers had campaigned to stop Sheikh Abdullah from buying rather than selling. This included, he found, their putting together false evidence in Saudi Arabia in order to make them appear to be the victims of a serious wrong. These findings were compelling evidence of the unreliability of the testimony of the Brothers that they had never intended to include Chemtrade.
74. It is the function of a Saudi court, and therefore of the court below, to determine from the context what the intention of the parties was at the time they made the contract, and not to place reliance on some of the words of the contract to the exclusion of the context. There was no dispute between the experts on Saudi law on the importance of the court discovering intention of the parties in the formation of a contract. The preponderance of the evidence was that the effect of the Buy/Sell Agreement did not depend on the clearly erroneous list of companies in Appendix 1 which omitted FOMEL/Chemtrade. The essence of the agreement was for total disassociation in respect of everything recorded in the financial statements, ie everything in which the siblings were partners. The Brothers had at all times done what the Board of Grievances had proposed and what they had agreed to do, as their actions subsequent to Sheikh Abdullah's acceptance indicated. There was no evidence, other than the Brothers' assertion that their valuation of a share at SR150m depended on the exclusion of FOMEL to produce an affordable price. The documentary evidence was clear that [DTBA's] original variation of SR168m was reduced to SR150m solely to take account of various uncertainties and other considerations put forward by the Brothers, which at no time included the omission of FOMEL. Judgment 1080 says that the Offer Letter was the 'required assessment' by the Brothers of all the companies and other property in which the persons concerned were partners. This was powerful evidence that the Offer Letter did not flag up to the Board of Grievances that it was something different from the agreement which had been reached in February."
(Paragraph numbers have been added by the Board for ease of reference)
Date: 6.4.9 AH
corresponding to: 12.4.2008 AD
From: The children of Ali Mohammed Alhamrani
To: His Excellency Father Sheikh Mohammed Alamin Ashanqiti, the Chairman of the Board for the Settlement of Complaints, may Allah preserve him,
(1) May peace and the mercy and blessings of Allah be upon you.
(2) We would like to start by expressing our great attitude and abundant thanks for the amicable attention which His Royal Highness Crown Prince Sultan Abdulaziz, may Allah preserve him, granted to us in making a blessed effort to mend the rift which posed a threat to a giant national economic organization, namely the Alhamrani Group of Companies, because His Royal Highness, may Allah guard him, believed that it was necessary to protect and maintain the great national economic entities and to provide every assistance and support in order to ensure that they prosper and continue. We point this out in order to show that we highly appreciate and esteem the positions adopted by His Royal Highness.
(3) We would also like to submit, to Your Excellency personally, our sincerest tokens of gratitude and appreciation for the candid effort which Your Excellency has undertaken in the interests of achieving rightness and establishing justice, and for Your Excellency's endeavours to achieve reconciliation, reunification and the avoidance of estrangement. All we can do is ask Allah, the All-Powerful, the Sublime, to confer upon Your Excellency the best reward on behalf of all of us.
(4) Last but not least, we would like to extend – to Their Excellencies the members of the Auditing Department of the Board of Grievances, who are in charge of the undertaking to effect reconciliation between the children of Ali Mohammed Alhamrani, may Allah have mercy on his soul – abundant thanks and great gratitude for their rapid efforts aimed at achieving the lofty objectives which were entrusted to them in the form of apposite and rational instructions issued by the Crown Prince, may Allah preserve him.
(5) We would like to refer to the conclusions which the members of the Seventh Auditing Department, acting in their capacity as the reconciliation committee, arrived at on the fifth day of the month of Safar 1429 AH, to entrust Mohammed Ali Alhamrani - in his capacity as the Chairman of the Alhamrani Companies, in charge of managing them, and who knew more about the affairs of the companies than anyone else - with the task of valuing the companies and funds which are jointly owned by the parties in the dispute, so that he might submit, within sixty days of the date mentioned, the value corresponding to a single share, with the result that Abdullah Ali Alhamrani, and two sisters Noura and Adawiah Ali Alhamrani, would have the option of either selling their shares to Mohammed Ali Alhamrani and his brothers Siraj, Khalid, Abdulaziz, Ahmed and Fahd Ali Alhamrani, or of purchasing for them.
(6) It was on that basis that all of us, headed by our brother Mohammed Ali Alhamrani, took part in the work of compilation and valuation. From the data arrived at in our accurate analysis of the results of the valuation, we agreed, with complete conviction, that the price corresponding to all the shares of the partners is 1.2 billion Saudi Riyals (one billion two hundred million Saudi Riyals). Therefore, the price corresponding to the share of a female, that is to say the share of each sister, is seventy-five million Riyals, and the price corresponding to the share of a male is the share of two females, is the share of each brother, and one hundred and fifty million Riyals. Thus, the brother Abdullah Alhamrani, and the two sisters Noura and Adawiah, have the option of either selling to us, or purchasing from us, at that price. We for our part are very ready to accept either of the two options and to put it into effect to the letter.
(7) Because we are doing this, we are guided by what was said by Allah the most High, namely "Don't belittle the things of others" and by the saying of our Prophet "No harm no prejudice". Because we are offering this price as an unambiguous and final offer, let us adhere to it irrespective of whether we are sellers or purchasers. We are thus acting in accordance with the proverb "Anyone who makes you equal to himself is not treating you unjustly," and are at the same time confirming that we arrived at this price solely on the basis of the data obtained from a fair valuation of the share, including not only the rights linked to this share, but also the obligations and guarantees attached to this share for the benefit of third parties.
(8) It goes without saying that the valuation was restricted to all the funds, properties and partnerships contained in shares in the companies, real estates, and movable property, located inside the Kingdom of Saudi Arabia in accordance with what is stated in the enclosed appendix No 1. As regards the foreign investments, it was difficult, or rather it was impossible, for us to carry out a valuation which was fair and satisfactory for all the partners in those investments, because the amount which will be included in the joint ownership, and the amount which each partner will receive of that ownership, is still the subject of a legal dispute being examined by the competent foreign Courts. The determination of that ownership will remain pending until the final judgment is passed regarding it. This is in accordance with the enclosed appendix No 2, drawn up by the Court which is competent to examine the dispute. At the time when the final judgment is passed regarding that ownership, then, the value of the share in the foreign investments can be determined.
(9) We shall also not omit to point out here that, in the event of sale or purchase, the purchasers or sellers, acting together, must carry out all the legal and regulatory procedures required in order to transfer the ownership of the shares. The purchasers, whoever they may be, are obliged to submit all the guarantees to the authorities concerned and to release the sellers from any obligations. In addition, all the parties to the final contract of sale or purchase are to correct the ownership of some of the real-estate items in the required legal and regulatory manner, since some of the real-estate items are formally registered in the name of one or more partners, including the transfer of the. The ownership of the land located in the Rawda district if the city of Jeddah, with title deed No 687/3 dated 1394 AH, is to be transferred to Mr Mohamed Ali Alhamrani in the event of either sale or purchase.
(10) For the reason that we are abiding by this unambiguous and definite offer before Allah the Eternal One, the Most High, on the basis of His saying: "O you believers, fulfil your contracts," let us ask Him, the All-Powerful, the Sublime, to put in readiness for you the reasons for ending, in a just and satisfactory way, this dispute which has continued among the parties to it for more than seven years.
(11) May Allah, the Most High, grant success to Your Excellency in achieving rightfulness, justice and good sense.
(12) May peace and the mercy and blessings of Allah be upon Your Excellency.
Siraj Ali Mohammed Alhamrani
Acting on his own behalf and by the power of attorney granted to him by his brothers
Mohammed, Khalid, Abdulaziz, Ahmed and Fahd, the children of Ali Mohammed Alhamrani
1. Alhamrani United Company "Mohammed Ali Alhamrani and Brothers", (Joint Venture Company).
2. Alhamrani Trading and Import Company, (Joint Venture Company).
3. Alhamrani International Company Limited.
4. Alhamrani Group Industrial Company Limited.
5. Alhamrani Saudi Arabian Fox Petroleum Company Limited.
6. Alhamrani Commercial Investment Company Limited.
7. Alhamrani Industrial Company Limited.
8. Alhamrani Chemicals Company Limited.
9. Alhamrani Real Estate Development Company Limited.
10. International Airport Services Company Limited.
List of lands and real estate owned by the children
NOT REPRODUCED HERE