The High Court has issued a stinging judgment against Clifford Chance client Excalibur, ordering it to to surrender the £17.5m it put up as security for costs to its courtroom opponents, Texas Keystone and Gulf Keystone, as an interim payment.
All claims bought by Excalibur over disputed rights to oil blocks in Iraqi Kurdistan were thrown out for completely lacking merit and key witnesses were slammed in the 323-page judgment handed down today.
It marks a triumph for Jones Day and Memery Crystal who were instructed for the defendants. Jones Day partner Stephen Pearson instructed Fountain Court’s Michael Crane QC for Texas Keystone, while Memery Crystal partners Harvey Rands and Nicholas Scott instructed 7KBW’s Jonathan Gaisman QC for Gulf Keystone (10 September 2013).
Clifford Chance partner Alex Panayides – who had secured $50m in litigation funding to get the case to court – led the case for Excalibur instructing 7KBW’s Simon Picken QC.
Panayides raised the funding from New York hedge fund Platinum and New York litigation funding specialist BlackRobe, as well as Andonis and Filippos Lemos, two brothers involved in the shipping business. It later emerged that Panayides’ brother was a Lemos employee (11 September 2013).
Key to Mr Justice Clarke’s ruling was his condemnation of key claimant witnesses in the case. He slated Excalibur founder and witness Rex Wempen who he said “implausibly claimed to have forgotten” about a key element in the case.
He said Wempen’s “evidence in the course of the trial has shown that he is long on assertion and confidence, but short on analysis and understanding” and added that his analysis of the situation was ”seriously unbalanced”.
Former Baker & McKenzie lawyer and Wempen’s brother Eric Wempen was also criticised in reference to various of his activities, which included “devising litigation strategies, one of which contemplated the use of unacceptable tactics such as the idea of blackmailing Mr Kozel, and a suggestion to his brother that they “pull a fast one” by “deleting wording in…a draft confidentiality agreement”.
Excalibur’s key expert, former Norton Rose and Harper Macleod lawyer Jay Park QC also came in for intense criticism by Clarke J, who said he had “considerable doubts” about the “suitability as an expert” and his independence.
Clarke J’s findings that Park’s expertise was “markedly inferior to that of the experts called by the defendants”, he gave “inaccurate” evidence on Excalibur’s ability to raise funds, had a “tendency to act as an advocate for Excalibur” and failed to mention important facts of which he would have been aware.
The 57-day trial over a ‘collaboration agreement’ between Excalibur and Gulf Keystone has one of the longest cases of 2012-2013. Excalibur bought 14 claims in total under English and New York law including breach of contract, conspiracy to defraud and fradulent concealment but the court ruled the agreement did not give rise to, or recognise any entitlement of Excalibur to an indirect interest in the fields.
Clarke J threw out the fraudulent representation claim saying it “bears all the hallmarks of a lawyer’s artefact. Mr Wempen, on whose authority the plea was entered, was unable when giving evidence to explain how, if the meeting happened and he was not told about it, he had been deceived”.
He concluded: “Neither Texas nor Gulf owed to Excalibur the duties of a fiduciary whether under the law of New York or that of England and Wales.”
The ruling said the company had actually withdrawn from the relevant bid and that its decision to withdraw with ”inconsistent with the retention of any interest in the fruits of the bid”. The court also ruled the claimant had not proved itself “ready, willing and able to put up the finds to cover payment of the costs and liabilities referable to its interest”.
Excalibur has confirmed that it will not seek permission to appeal the Judgment but battle may now commence over the costs in the case, with hearings now underway.
Should the £18m held on account by the court be insufficient to cover the total claimant spend there is a possibility that the third-party funders will be drawn into the dispute.
The firm did not submit a costs budget to the court before the hearing which would have been essential if Clifford Chance was to recover any costs in the event of a win. A court hearing today will decide what costs.
For the claimant Excalibur Ventures
7KBW’s Simon Picken QC, Timothy Kenefick, Jessica Sutherland and Keir Howie, all of the same set, for Excalibur Ventures, instructed by Clifford Chance partner Alex Panayides
For the first d efendant Texas Keystone
Fountain Court’s Michael Crane QC leading Tamara Oppenheimer and Richard Power, also of Fountain Court, instructed by Jones Day partner Stephen Pearson
For the second defendant for Gulf Keystone Petroleum Ltd
7KBW’s Jonathan Gaisman QC leading Richard Waller QC also of 7KBW, instructed by Memery Crystal partners Harvey Rands and Nicholas Scott
For the third defendant Gulf Keystone Petroleum International
Brick Court’s Harry Matovu QC leading Richard Eschwege of the same set instructed by Memery Crystal partners Harvey Rands and Nicholas Scott
For the fourth defendant Gulf Keystone Petroleum (UK) Ltd
4 Stone Buildings’ Nicola Timmins instructed by Memery Crystal partners Harvey Rands and Nicholas Scott