Excluding fraud-based claims

From The TimesMay 27, 2008

Excluding fraud-based claims
Court of Appeal

Published May 27, 2008

Satyam Computer Services Ltd v Upaid Systems Ltd

It would only be through the use of the clearest possible specific language that parties to a settlement would be taken to have excluded fraud-based claims.

The Court of Appeal (Lord Justice Waller, Lord Justice Lawrence Collins and Lord Justice Rimer) stated on May 9, 2007, when dismissing the appeal of Satyam Computers Services Ltd against a decision by Mr Justice Flaux in the Queen’s Bench Division ([2008] 1 All ER (Comm) 737) on preliminary issues of interpretation of commercial agreements between Satyam and Upaid Systems Ltd.

LORD JUSTICE LAWRENCE COLLINS said that it would only be through using the clearest possible specific language that parties to a settlement agreement would be taken to have excluded fraud-based claims. The principle extended to causes of action of which dishonesty was not a necessary ingredient but which had been committed dishonestly.

Where the claims in question were based on fraud or involved allegations of dishonesty, very clear and specific language in an agreement was required to settle such claims or exclude their subsequent pursuit, a fortiori, if they were unknown at the time that the settlement agreement was entered into.