Euro-Asian Oil SA v Credit Suisse AG

Factual and Procedural Background

This opinion concerns ancillary matters following the handing down of a principal judgment in late December 2016. The issues addressed relate primarily to costs arising from complex commercial litigation involving parties referred to as Euro-Asian and Credit Suisse. The litigation concerned shipping documents, indemnity provisions, and related contractual disputes. The court previously issued a substantive judgment, and this hearing addresses consequential matters including costs, offers to settle, and conduct during the litigation.

Legal Issues Presented

1. Whether costs should be awarded to Euro-Asian on an indemnity basis pursuant to the terms of a letter of indemnity.
2. Whether Euro-Asian is entitled to indemnity costs arising from a Part 36 offer made in July 2014.
3. The appropriate basis and quantum of costs payable by Credit Suisse.
4. Whether a discount on costs payable to Euro-Asian is warranted due to conduct during the litigation.
5. The appropriate amount for payment on account of costs.
6. The appropriate interest rate to apply pre- and post-judgment on costs awarded.

Arguments of the Parties

Appellant's Arguments (Euro-Asian)

• Costs should be awarded on an indemnity basis under the letter of indemnity, emphasizing the phrase "all and any" damages, costs, and expenses, including reasonable attorney fees.
• Reliance on precedent, particularly Littlestone v Macleish, to support that indemnity provisions should be given effect even if not explicitly labeled as such.
• Invocation of CPR provisions and the decision in Chaplair Limited v Kumari to argue that contractual rights to indemnity costs should be enforced by the court.
• Indemnity costs should also arise from the Part 36 offer made in July 2014, which Euro-Asian contends Credit Suisse should have accepted.
• Seeks payment on account of costs amounting to £1.25 million, representing just under 60% of total claimed costs.
• Argues for a post-judgment interest rate possibly as high as 8% due to market uncertainty.

Appellee's Arguments (Credit Suisse)

• Contends that the letter of indemnity does not support indemnity costs due to the limitation to "reasonable attorney's fees" and the specific wording of the indemnity.
• Argues that the Part 36 offer was reasonable to refuse given the lack of disclosure and Credit Suisse’s remoteness from dealings between Euro-Asian and a third party.
• Maintains that a discount on costs payable to Euro-Asian is appropriate due to the conduct of certain individuals involved in the litigation, specifically regarding nondisclosure of commission payments.
• Contends that the total costs claimed by Euro-Asian are inflated, in part due to a 30% uplift from a conditional fee agreement and excessive hours billed.
• Suggests a lower payment on account than that sought by Euro-Asian.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analyzed the wording of the letter of indemnity, focusing on the phrase "reasonable attorney's fees," concluding that indemnity costs were not encompassed because indemnity costs would not be regarded as reasonable under the contract. The court distinguished the cited precedents on the basis of differing contractual language and factual contexts.

Regarding the Part 36 offer, the court noted the timing and circumstances of the offer, including the absence of disclosure and the remoteness of Credit Suisse from the dealings between other parties. The court found it was not unjustifiable for Credit Suisse to refuse the offer or to decline alternative dispute resolution, given the differing perspectives on the underlying transactions.

The court addressed conduct during litigation, particularly non-disclosure of commission payments by certain individuals, and concluded a discount on costs was justified but limited, awarding Euro-Asian 90% of its costs rather than the full amount.

On payment on account, the court set an amount of £850,000, balancing between the parties' submissions. For interest, the court fixed a rate of 2% both pre- and post-judgment, rejecting a higher rate suggested by Euro-Asian due to market uncertainty and borrowing evidence.

Holding and Implications

The court held that costs were to be awarded on a standard basis rather than an indemnity basis, as the contractual language limited recoverable attorney fees to those that are reasonable, excluding indemnity costs. Euro-Asian is entitled to 90% of its costs, reflecting a discount for conduct issues during litigation.

Credit Suisse was justified in refusing the Part 36 offer and declining alternative dispute resolution given the circumstances and information available at the time.

Payment on account of costs was fixed at £850,000, and interest on costs was set at 2% pre- and post-judgment.

The decision affects the parties directly in relation to costs and interest but does not establish new legal precedent beyond the application of existing principles to the facts.