Al-Subaihi & another v Al-Sanea [2022] EWCA Civ 1349 centred on the alleged personal liability of Al-Sanea to settle $US16m of unpaid legal fees claimed by two Saudi lawyers. The fees were incurred by Al-Sanea’s father and his companies, the former Saad Group which operated in the Kingdom of Saudi Arabia, not by Al-Sanea himself.
The unpaid lawyers argued Al-Sanea had signed a settlement agreement accepting personal liability for two-thirds of the original debt, to be paid within 60 days.
Allowing Al-Sanea’s appeal, Lady Justice Carr said: ‘In summary only, the court is concerned to identify the intention of the parties by reference to what a reasonable person having all the background knowledge which would have been available to the parties would have understood the language in the contract to mean.
‘It does so by focusing on the meaning of the relevant words in their documentary, factual and commercial context… While commercial common sense is a very important factor to be taken into account, a court should be very slow to reject the natural meaning of a provision as correct simply because it appears to be a very imprudent term for one of the parties to have agreed… Where the parties have used unambiguous language, the court must apply it; if there are two possible constructions, the court is entitled to prefer the construction consistent with common sense and to reject the other.’
Louis Castellani, partner at Harbottle & Lewis, acting for Al-Sanea, said: ‘This decision is a clear reminder for any party entering into a contractual relationship that if the contract is ambiguous in places, it must be interpreted in line with business common sense in the event of a dispute’.
