CLIFFORD Chance faces High Court action after allegedly pulling out of a $1,742,800,544 court case.
Zappia Middle East Construction Co, of Abu Dhabi, and Joseph Zappia, of Rome, have issued a writ against the firm claiming damages for breach of contract and fiduciary duty.
The writ says the firm acted for the Zappias from May 1992 in their claims against the Abu Dhabi Commercial Bank, the ruler and government of Abu Dhabi and the Abu Dhabi
Investment Authority, arising out of construction work in Abu Dhabi.
It says that in July 1993
Clifford Chance wrote to the ruler of Abu Dhabi, Sheikh Zaued Bin Sultan Al Nayhan, over the claim which involved eight construction projects and which specified the amount to which the Zappias were entitled – $1,742,800,544.
In November 1993, US attorney Michael Strauss was
retained to represent the Zappias for their claims in the US on the firm's recommendation, and proceedings began in New York against the bank, the Emirate of Abu Dhabi, and the investment authority.
On 4 January this year, however, Clifford Chance told the Zappias it could not continue to act for them in connection with the New York proceedings because of an alleged “unavoidable conflict of interest”.
On 21 February the firm wrote saying it had been acting for the Abu Dhabi Investment Authority in other unrelated matters since December 1992.
In November 1993 Strauss recommended the investment authority be joined as defendant in the New York proceedings; it was joined in February 1994. In December 1994 the
investment authority protested about Clifford Chance's involvement in the action.
The writ, issued by Zaiwalla & Co, claims that the law
firm's termination of the retainer was in breach of the agreement. It says that if the firm was under a genuine conflict of interest it acted in breach of the agreement term and fiduciary duty by causing or permitting the conflict.
It claims the firm should have anticipated such a conflict would or might arise from its acceptance of instructions from the Investment Authority in December 1992 because the authority was a potential defendant in the claims through its close relationship with the bank and the government.
Clifford Chance has declined to comment.