Deepak’s plant was built with know-how derived from ICI via one of ICI’s licensees, Davy. The contract between Davy and Deepak contained (it was assumed) a promise by Deepak to indemnify ICI. The plant was severely damaged by an explosion and Deepak sued. ICI was one of the defendants. Davy claimed to be entitled to a stay of the proceedings against ICI in so far as the claims were covered by the indemnity. One of the many questions argued on appeal was the question when a promise by A (Deepak) to B (Davy) that A will indemnify and hold harmless C (ICI) will be enforced at the suit of B for the ultimate benefit of C. Deepak submitted that there were two cumulative requirements for such a promise to be so enforced: (a) The promise involves, expressly or impliedly, a promise by A not to sue C, and (b) B has a substantial interest of his own in the enforcement of the promise.
Held: An agreement to indemnify contained an implied promise not to sue. On the second part of the submission they held: ‘From these cases (the facts of which do not matter) we think the following propositions emerge.
1. Equitable fraud (something which is unconscionably unfair) is the basis upon which the Courts will restrain or stay the proceedings on the application of a stranger to those proceedings. The power to do so is discretionary.
2. Something more than a promise not to sue is required. The applicant must show that he has some interest of his own to protect. This has been expressed in various ways viz.: ‘Some other good reason’, ‘the real possibility of prejudice’ and ‘some legal or equitable right to protect such as an obligation to indemnify the defendant’.
3. Whether the applicant has shown that he has such an interest depends upon the facts of each case. Where for example there is an issue as to whether the applicant will be required to indemnify the defendant if the proceedings continue the Court must consider the likelihood of a claim for indemnity being made and its merits if it is said to be obviously unsustainable, but no prolonged investigation of the issues or potential issues is called for.’
[1999] 1 Lloyds Rep 387, [1998] EWCA Civ 1752, [1998] EWCA Civ 1753, [1999] BLR 41, (1999) 1 TCLR 200, 62 Con LR 86, [1999] 1 All ER (Comm) 69
Bailii
England and Wales
Citing:
Appeala from – Deepak Fertilisers and Petrochemicals Corporation v ICI Chemicals and Polymers Ltd and Another ComC 30-Sep-1997
Trial of preliminary issue – Negligent Misrepresentation – Breach of Collateral Warranties – Breach of duty of care – Breach of contract (Davy Mckee only). . .
Cited by:
Cited – Barrett v Universal-Island Records Ltd and others ChD 15-May-2006
The claimant was entitled to share in the copyright royalties of Bob Marley and the Wailers, and claimed payment from the defendants. The defendants said that the matters had already been settled and that the claim was an abuse of process, and also . .
Cited – Rock Advertising Ltd v MWB Business Exchange Centres Ltd SC 16-May-2018
The parties disputed whether a contract (licence to occupy an office) had been varied by an oral agreement, where the terms prohibited such.
Held: The ‘no oral variation’ clause applied. Such clauses were in common commercial use and served a . .
Lists of cited by and citing cases may be incomplete.
Updated: 20 July 2021; Ref: scu.145231