Edgeworth Capital (Luxembourg) S.À.R.L. v Aabar Investments PJ

Commercial Court dismisses claim by SPV associated with Robert Tchenguiz

On 29 June 2018, following a three-week trial, the Commercial Court handed down its judgment in the high-profile proceedings between Edgeworth Capital (Luxembourg) S.à.r.l. v Aabar Investments PJS.

Edgeworth is a Luxembourg SPV associated with the well-known businessman Robert Tchenguiz. Aabar is an Abu Dhabi investment company, which is now wholly owned by Mubadala Investment Company.

The case related to €200m investment by Edgeworth and Aabar in defaulting loans. Aabar and Edgeworth bought equal 50% shares in the loans. Aabar funded Edgeworth’s purchase in return for which Edgeworth gave Aabar security over its share of the loans. The funding and security arrangements were documented on the terms of a number of written deed and agreements between the parties which had been drafted by Linklaters LLP.

Ultimately, the transaction ran into difficulties and Aabar eventually made demand for the sums owed to it by Edgeworth. When it did so, Edgeworth obtained an interim injunction preventing Aabar from exercising its security rights.

At trial, Edgeworth sought to continue the injunction and claimed damages of up to €2bn. The essence of Edgeworth’s case was that the written agreements did not represent the totality of the legal relationship between the parties. Instead, Edgeworth contended that Mr Tchenguiz had entered into a series of oral agreements with Aabar’s Chairman in 2010, 2011 and 2014. These oral agreements were said to prevent Aabar from recovering the sums due, enforcing its security or even selling its own investment. Aabar counterclaimed for the sums due under the written agreements.

Mr Tchenguiz was Edgeworth’s lead witness. He was cross-examined for five days. After hearing his evidence, and the evidence of other Edgeworth witnesses, Mr Justice Popplewell dismissed Edgeworth’s claim in its entirety and allowed Aabar’s counterclaim in full. He concluded “without any real hesitation that there was no express agreement on the terms of any of the three alleged Oral Agreements” adding that the alleged oral agreements “are an ex post facto creation for the purposes of these proceedings designed to meet the current circumstances in which Mr Tchenguiz finds himself.” The Judge held that Mr Tchenguiz’s evidence in particular was unreliable and that Mr Tchenguiz was “prepared to say whatever he thought would assist Edgeworth’s case, without any regard for its truth”. 

The Judgement is notable in that it shows the approach that the Court will take to allegations of oral agreements. The Judge placed significant weight on the inconsistency between the terms of the alleged oral agreements and the written agreements between the parties – and on the absence of any documented record of the alleged oral agreements. Of particular relevance to future oral agreement cases are the Judge’s observations that:


in the twenty-first century the prevalence of emails, text messages and other forms of electronic communication is such that most agreements and discussions which are of legal significance, even if not embodied in writing, leave some form of electronic footprint. Moreover where parties contemplate that they will instruct lawyers to draft detailed written agreements between them, there is a presumption that they intend the terms of their bargain to be those reflected in such carefully drafted agreements, not those in any prior or contemporaneous oral conversation, even in the absence of a boilerplate entire agreement clause.”


Sonia Tolaney QC, James MacDonald and Sophie Weber (instructed by Freshfields Bruckhaus Deringer LLP) acted for Aabar. Alain Choo Choy QC (instructed by Stephenson Harwood LLP) acted for Edgeworth.

A copy of the judgment is available here.