News & what's on - Written by on Sunday, November 16, 2014 4:25 - 0 Comments

Didn’t get a contract because of a bribe & want to sue. We tell you how.

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By Stuart McNeil, Partner Pinsent Masons a man who knows his onions…

The decision is out in the follow-on damages claim brought by Jalal Bezee Mejel Al-Gaood & Partner against Innospec mentioned in my last post.

In a nutshell, in the increasingly litigious environment that is the UK, those who have lost out on a contract as a result of anothers bribery can sue for loss as a result of conspiracy to injure by unlawful means .

If a competitor can prove that the bribe was a means of inflicting harm and that it otherwise had a “substantial chance”, in percentage terms, of being awarded the contract, it may be able to sue for that percentage of anticipated profit.  The lost opportunity can be less than 50% and still be “substantial”.  

Delivering a 116 page judgment Mr Justice Flaux held that the claim, in this case, failed.

For those that cannot face such a long read, you can simply skip to the end.  In short, the claimants did not prove on the balance of probabilities that their contract for a fuel additive product was replaced by Innospec’s product due to the promise of bribes or that but for the bribery they would have made substantial sales.

So is this good news for parties that pay bribes?

No.  The claim failed on its facts, not on the law.   There is nothing in the decision that casts doubt on the principle that a disappointed bidder or counterparty in a bribe situation will be able to recover damages under the tort of unlawful means conspiracy.   Damages claims based on bribes are very much alive, they just did not get off to the best of starts.

There are however a few take aways from the Innospec case:

  • the mere fact that a bribe is paid does not automatically mean, in every case, that someone else can claim that but for the bribe they would have secured a prospective contract and made a huge profit.
  • civil courts in England will adopt a “much more rigorous and analytical approach… to the critical question of whether the [contract complained about] was induced by bribery” than might appear to the claimant, or have been the case in the criminal action.  This may turn out to be a tough thing to prove.
  • in a case of two wrongs don’t make a right – the claimant better make sure it has no skeletons in its cupboard.   The Judge was prepared to discount the claimant’s claim by 30% because it was also engaging in unlawful payments to the government of Iraq.   Accordingly, had that behaviour been discovered its prospective contract would have been brought to a premature end.
  • evidence is critical of the decision making process of the bribe receiver, especially as shown in documentary evidence.  This case was largely being reconstructed from documents as events were between six and fourteen years prior to the trial.  Where witness evidence was in conflict with the documents, the judge (as is often the case) preferred the documentary evidence.

The Innospec defence was led by Jeffery Onions QC…


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