Read the full judgment text of FACV 000009/2006 on BabelCite. This FACV judgment was delivered on 9 February 2007 before Li CJ, Bokhary PJ, Chan PJ, Ribeiro PJ, McHugh NPJ.
Civil law – contract – construction of Memorandum of Agreement dated 19 September 1992 – Special Bonus under Clause 5 payable by Egana (or failing Egana, personally by Mr Seeberger) representing 10% of monetary compensation received by ESCT in respect of 'the Arbitration' in excess of US$10 million – proper law of construction – whether Mr Seeberger's personal liability under the proviso to Clause 5 is triggered whenever Egana fails to pay, regardless of the reason – whether the proviso is conditional on Egana having first entered into liability-creating documentation – whether Clause 5 should be read as a personal guarantee of Mr Seeberger – meaning of 'the Arbitration' in Clause 1(h) – whether Final Settlement Agreement money from Benetton, settling NAI 1325, NAI 1616 and related Dutch and ECJ proceedings, constitutes 'monetary compensation received by ESCT in respect of the Arbitration' – whether the MoA is asymmetric between Mr Unruh's best endeavours (Clause 4(A)) and his reward under Clause 5 – whether Clause 4(A) compliance is a condition precedent to the Special Bonus – whether breach of best endeavours sounds in damages only – maintenance and champerty – Hong Kong common law doctrine applied via s 3 of the Application of English Law Ordinance (Cap 88) and Article 8 of the Basic Law – 'genuine commercial interest' exception – whether a genuine commercial interest justifying maintenance equally defeats a charge of champerty – whether a contract to share in the proceeds of a foreign arbitration is enforceable notwithstanding a Hong Kong champerty objection – estoppel by convention – whether mutual common assumption that Egana would pay the Special Bonus 'come what may' was established by the Deed of Acknowledgment of 5 January 1995 – construction of the DoA's set-off clause and 'Pursuant to Clause 5 of the MoA' opening words – whether the extrinsic evidence (Consultancy Agreement of 29 September 1993, side letter exercise, Haldanes fax of 7 June 1995, and 16-month delay in joining Egana) shows no common assumption – whether a 'transaction' and detrimental reliance were established – alternative unpleaded oral agreement – whether the Judge's alternative ground could sustain liability – Mr Unruh's claim against Mr Seeberger upheld and Mr Seeberger's appeal dismissed – Mr Unruh's claim against Egana based on estoppel by convention rejected – Egana's appeal allowed and orders against Egana set aside – Mr Seeberger to pay Mr Unruh's costs (order nisi) – Mr Unruh to pay Egana's costs here and below (order nisi) – written submissions on costs directed by 2 March 2007.
Legal issues: Construction of Clause 5 proviso – trigger of Mr Seeberger's liability to pay Special Bonus · Scope of 'the Arbitration' under the MoA – whether FSA settlement money counts · Whether best endeavours under Clause 4(A) is a condition precedent to the Special Bonus · Whether the MoA is champertous and void as against Hong Kong public policy · Whether Hong Kong public policy against champerty invalidates an agreement relating to a foreign arbitration · Whether estoppel by convention makes Egana liable to pay the Special Bonus · Whether an alternative unpleaded oral agreement could sustain Egana's liability
Outcome: Mr Seeberger's appeal dismissed; Egana's appeal allowed and orders of the Judge and Court of Appeal giving judgment against Egana set aside.
Cites 2 cases