Bank of Credit and Commerce International SA v Ali, Khan and others (No 1); BCCI v Ali: HL 1 Mar 2001

Cere Needed Releasing Future Claims

A compromise agreement which appeared to claim to settle all outstanding claims between the employee and employer, did not prevent the employee later claiming for stigma losses where, at the time of the agreement, the circumstances which might lead to a claim were unknown to either party, and such losses were not contemplated by either of them. Whilst a party may release even future claims, courts should be reluctant to say that he released claims of which he could not have known. ‘To ascertain the intention of the parties the court reads the terms of the contract as a whole giving the words used their natural and ordinary meaning in the context of the agreement, the parties’ relationship and all the relevant facts surrounding the transaction so far as is known to the parties.’ and ‘the primary source for understanding what the parties meant is their language interpreted in accordance with conventional usage’.
The relevant surrounding circumstances were those which a reasonable man would have regarded as relevant, and the court was not ‘encouraging a trawl through ‘background’ which could not have made a reasonable person think that the parties must have departed from conventional usage’.
Lord Bingham said: ‘In construing this provision, as any other contractual provision, the object of the court is to give effect to what the contracting parties intended. To ascertain the intention of the parties the court reads the terms of the contract as a whole, giving the words used their natural and ordinary meaning in the context of the agreement, the parties’ relationship and all the relevant facts surrounding the transaction so far as known to the parties. To ascertain the parties’ intentions the court does not of course inquire into the parties’ subjective states of mind but makes an objective judgment based on the materials already identified.’

Lord Bingham, Lord Hoffmann
Times 06-Mar-2001, Gazette 12-Apr-2001, [2001] UKHL 8, [2001] 1 All ER 961, [2001] 2 WLR 735, [2002] 1 AC 251, [2001] ICR 337, [2001] IRLR 292, [2001] Emp LR 359
House of Lords, Bailii
England and Wales
CitedAssociated Deliveries Ltd v Harrison CA 1984
A landlord, having forfeited the lease could not recover for damage to the property caused by third parties before possession was finally given. The election to forfeit was unequivocal, and damages were irrecoverable from the date of service of the . .
CitedMalik v Bank of Credit and Commerce International (BCCI); Mahmud v Bank of Credit and Commerce International HL 12-Jun-1997
Allowance of Stigma Damages
The employees claimed damages, saying that the way in which their employer had behaved during their employment had led to continuing losses, ‘stigma damages’ after the termination.
Held: It is an implied term of any contract of employment that . .
At First InstanceBank of Credit and Commerce International Sa (In Liquidation) v Ali and Another ChD 17-Feb-1999
A compromise of a claim involved a settlement with the value given, and a release did not import requirement for any consideration. A compromised claim could not be set aside for lack of knowledge, and no duty of disclosure of any wrongdoing . .
Appeal fromBank of Credit and Commerce International Sa (In Liquidation) v Ali and Others (No 4) CA 2-Mar-2000
The claimant and his former employers had compromised the employee’s claim for damages, but the claimant then sought to sue for stigma damages after these were awarded elsewhere. The general language of the release was sufficiently comprehensive to . .
CitedSalkeld v Vernon 1758
A party may, at any rate in a compromise agreement supported by valuable consideration, agree to release claims or rights of which he is unaware and of which he could not be aware, even claims which could not on the facts known to the parties have . .
CitedGrant v John Grant and Sons Pty Ltd 1-Jun-1954
(High Court of Australia) Contract – Deed of release – Recitals – Limitation – Claims not in contemplation unaffected – Equitable considerations affecting release – General words.
Dixon CJ said: ‘No doubt it is possible a priori that the . .
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Account taken of circumstances wihout ambiguity
The respondent gave advice on home income plans. The individual claimants had assigned their initial claims to the scheme, but later sought also to have their mortgages in favour of the respondent set aside.
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CitedAntaios Compania Naviera SA v Salen Rederierna AB (‘the Antaios’) HL 1984
A ship charterer discovered that the bills of lading were incorrect, but delayed withdrawal from the charter for 13 days. They now sought leave to appeal the arbitration award against them.
Held: Though he deprecated extending the use of the . .

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The court was asked whether, as second mortgagee on the defendant’s properties, the claimant agency had the equitable power of marshalling of prior charges. The first chargee had charges over two properties, and sold the first, satisfying it debt, . .
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Lists of cited by and citing cases may be incomplete.

Employment, Contract

Leading Case

Updated: 11 November 2021; Ref: scu.159110