Edesia Law instructed in successful strike-out of £7.5m claim against UK law firm by Saudi Arabian investors

The High Court has ruled that a £7.5m claim against a UK law firm be struck out on the basis that a Settlement Deed concluded between the Claimants and certain third parties had the effect of precluding the Claimants from bringing a claim against the law firm.

The claim arose out of the firm's, RLS Law's, retainer to act for the Claimants and other third parties in connection with a series of multi-million pound property investments. The Claimants and the KAH Parties later fell out and litigation ensued, the Claimants alleging that the KAH Parties had used the Claimants' funds to purchase properties registered in the names of the KAH Parties.

That litigation was settled by a Deed which settled all claims against the other parties and their "Affiliates" — a term defined to include the parties' professional advisers. It was common ground that RLS acted as professional adviser to one or more of the Claimants and the KAH Parties.

The Claimants then brought a claim against RLS, arguing it should have appreciated that the KAH Parties were potentially defrauding them, and claimed around £7.5m, being the costs of the earlier proceedings. RLS argued that the Deed settled all claims against the KAH Parties and their Affiliates (including RLS) and applied to strike out the claim.

Deputy Master Lampert ruled in favour of RLS, finding the clear construction of the Deed precluded the Claimants from suing RLS as an Affiliate, with no basis to imply a distinction based on the capacity in which RLS acted. The Court noted the parties could have carved out a future claim against RLS but had not, and that the approach avoided "ricochet" litigation. Evidence of the Deed's negotiation was ruled inadmissible.

The Court granted RLS's application and struck out the claim. Edesia Law acted for the successful Defendant, RLS; the Claimants were represented by Baker & McKenzie LLP.