Court of Appeal considers nature and implication of obligation to pay loan interest

Английский суд принял довольно интересное решение по спору Al Jaber v Al Ibrahim (Аль-Джабер против Аль-Ибрагим). Даже фабула этого спора представляется интересной. В 2001 году г-н Аль-Джабер предоставил 30 миллионов долларов США братьям и саудовским гражданам Аль-Ибрагим, с тем чтобы создать 24-часовое спутниковое вещание на арабском языке чтобы конкурировать с Al Jazeera. Кредит был согласован по телефону. Было высказано общее мнение, что кредитный договор был заключен в устной форме и ничего не было оговорено о продолжительности или сроке займа и о том, будет ли он возмездным, либо безвозмездным. В 2015 году истец подал иск о возврате основной суммы в размере USD 30 млн. и процентов. По первой инстанции английский суд (Коммерческий суд) постановил, что первый ответчик (один из братьев) был надлежащим, и Саудовская Аравия, не является самым подходящим форумом (forum non conveniens). В отношении второго ответчика суд постановил, что Англия и Уэльс были наиболее подходящей юрисдикцией, следовательно, спор может быть рассмотрен английским судом в целом. Истец обжаловал судебное решение потому, что, по его мнению, требования по телу кредита и процентам неделимы и составляют по существу единое требование. Апелляционный суд с этим в принципе согласился, признав требование по процентам акцессорным, однако суд не нашел достаточных оснований для истребования процентов в принудительном порядке. Настоящее решение Апелляционного суда не может не заинтересовать тех, кто занимается английским правом.

In Al Jaber v Al Ibrahim the Court of Appeal considered whether claims for loan principal and interest were separate claims for the purpose of an application for permission to serve a claim form out of the jurisdiction and whether an obligation to pay interest could be implied into an oral loan agreement.(1)


In 2001 the first claimant, Mr Al Jaber, lent $30 million to the defendants, the Al Ibrahims, who were brothers and Saudi nationals, in order to establish an Arabic language 24-hour satellite news broadcasting service to compete with Al Jazeera. The loan was agreed over the telephone. It was common ground that the loan was by way of oral agreement and that nothing was said about the duration or term of the loan or whether it would bear interest.

In 2015 the claimants issued proceedings seeking repayment of the $30 million principal sum and interest. The claimants attempted to serve the proceedings on the defendants within the jurisdiction. The defendants applied to set aside service of the claim form on them and, in the alternative, for a stay on the ground of forum non conveniens (ie, a more appropriate court or forum is available). The claimants accepted that the second defendant had not been properly served within the jurisdiction and so applied for permission to serve the second defendant out of the jurisdiction.

Commercial Court decision

At first instance, the court held that the first defendant had been properly served within the jurisdiction and, Saudi Arabia not being clearly or distinctly the most appropriate forum for trial, dismissed his application for a stay.

In relation the second defendant, the court held as follows:

There was a good arguable case that an oral loan agreement had been made with both defendants within the jurisdiction (ie, that the claim was within the gateways in Paragraphs 6(a) and 7 of Practice Direction 6B).(2) It followed that there was also a reasonable prospect of success (or ‘serious issue to be tried’) for the purpose of Civil Procedure Rule (CPR) 6.37(1)(b).(3)
There was a good arguable case that the second defendant was a necessary and proper party to the claim against the first defendant (ie, that the claim was also within the gateway of Paragraph 3 of Practice Direction 6B).
England and Wales was the most appropriate forum for the purpose of CPR 6.37(3),(4) a determining factor being that the claim would continue against the first defendant anyway.
Although service out of the jurisdiction against the second defendant would therefore be permitted, the court would not permit service out of the jurisdiction in respect of the claim for interest.
In relation to the last finding, the court considered that the claimants were claiming $30 million in debt and, separately, damages for breach of an implied term as to interest. The claimants had failed to show a good arguable case for the purpose of satisfying a jurisdictional gateway in relation to the second of these claims. The claimants appealed this aspect of the decision.

Court of Appeal decision

The claimants submitted that they had a single cause of action consisting of the claim for principal and interest, which was not divisible.

Citing the early 20th century case of Elder v Northcott(5) (which in turn cited the early 19th century case of Hollis v Palmer)(6) the court concluded that:

there was a single contractual claim for principal and interest; and
«the claim for interest was accessory to the claim for principal».
Accordingly, the first-instance court was wrong to treat them as separate and once it had decided that there was a good arguable case that the claim for repayment of principal fell within a jurisdictional gateway, it followed that the claim for interest did too.

Having reached that conclusion in the space of two paragraphs, the Court of Appeal considered the merits of the claim for interest based on an implied term. The court noted that pre-20th century authorities(7) clearly established that:

the making of a loan did not imply interest as a matter of law; and
an obligation to pay interest could be inferred only from trade usage, custom or special circumstances (eg, a course of dealing).
The court went on to consider whether the position was now different in the light of modern principles of the implication of contractual terms as matters of fact, as summarised in Marks & Spencer plc v BNP Paribas Securities Services Co (Jersey) Ltd ([2016] AC 742) (ie, the term to be implied must either be necessary in order to give business effect to the contract or must be obvious in the sense that it ‘goes without saying’).

The claimants submitted that it was a matter of commercial common sense that a large loan would bear interest. However, the court considered that the matter had to be looked at in light of the evidence, which it considered to be equivocal. The first claimant’s evidence had evolved over time and was ultimately that he had expected some benefit from the loan which could have taken different forms, including equity participation. It followed that an implied term to pay interest was not necessary to give business effect to the contract nor so obvious that it went without saying. The court therefore concluded that the claimants had no realistic prospect of succeeding with their claim for interest at trial.

The court recognised that, on one view, this issue should fall to be resolved by way of an application by the defendants for strike out or summary judgment after the proceedings had been served and the defendants had acknowledged service. However, given that the court had heard full argument on the point and that it was common ground that there was unlikely to be further factual material relating to it, the court took what is recognised to be the «highly unusual course of untying the forensic Gordian knot and deciding this matter now»,(8) in order to avoid the expense of the point being considered again by the Commercial Court and a potential further appeal.


Although it is not spelled out in the conclusion to the Court of Appeal’s decision, the practical consequence of it would seem to be that the claimants had permission to serve their claim for principal and interest on the second defendant out of the jurisdiction (given that the two could not be separated for jurisdictional purposes), but there would be little point in retaining the interest claim given the court’s decision that it was amenable to strike out or summary judgment. This is therefore a striking example of the Court of Appeal proactively seeking to promote the efficient use of court time and control costs by sidestepping procedural norms.

This decision also provides a helpful clarification, at appellate level, of the nature of claims for interest and the application of the modern test for implication of contractual terms to a claim for an implied term for payment of interest.



(1) [2019] EWCA Civ 1690.

(2) «(6) A claim is made in respect of a contract where the contract – (a) was made within the jurisdiction…» and «(7) A claim is made in respect of a breach of contract committed within the jurisdiction.»

(3) «6.37(1) An application for permission under rule 6.36 must set out – … (b) that the claimant believes that the claim has a reasonable prospect of success.»

(4) «6.37(3) The court will not give permission unless satisfied that England and Wales is the proper place in which to bring the claim.»

(5) [1930] 2 Ch 422.

(6) (1336) 5 LJ (CP) 266.

(7) For example, Carlton v Bragg (1812) 15 East 223, Page v Newman (1829) 9 B & C 378.

(8) Paragraph 40.

Авторы: Parham Kouchikali, Daniel Hemming


You may also like