Jurisdiction(s):
United Kingdom

Interpretation of settlement releases: fraud and unknown claims; ‘sharp practice’ rejected; third-party reliance—Commercial Court (England and Wales) in Tchenguiz v Johannsson

Published on: 21 April 2016

Published by a LexisNexis Dispute Resolution expert

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Mr Justice Knowles CBE reviewed how releases in a settlement agreement should be read, with a particular focus on provisions addressing fraud-based claims. He applied the approach articulated in BCCI and in Satyam. Allegations of ‘sharp practice’ levelled at those relying on the settlement to shut out future claims were rejected. Here, the releases were expressly identified and did not amount to a general release, the type of clause where any ‘sharp practice’ might call for relief. How did this construction issue arise? Kaupthing Bank had advanced a loan in exchange for security that was already, directly or indirectly, encumbered in favour of senior lenders. Mr Johannsson was appointed first to Kaupthing’s Resolution Committee and subsequently to its Winding Up Committee. Following Kaupthing’s collapse, the Serious Fraud Office opened investigations concerning Mr Tchenguiz and others, which included Mr Tchenguiz’s arrest and searches of his home and of the company advising his family trust. Those investigations were later discontinued. Nonetheless, proceedings were brought in both the Commercial Court and the District Court of Reykjavik. Those cases were compromised and the present claimants (Mr Tchenguiz, the...

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