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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> United Insurance Company of Libya v Aon Ltd [2007] EWHC 1583 (Comm) (05 July 2007) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2007/1583.html Cite as: [2008] Lloyd's Rep IR 166, [2007] EWHC 1583 (Comm)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		05/07/2007

The Hon. Mr Justice Langley :

INTRODUCTION UIC and AON

1. The Claimant company ("UIC") is an insurance company incorporated and carrying on business in Libya. The Defendant ("AON") is a substantial insurance and reinsurance broker incorporated in England.

NOC and INSURANCE

2. NOC is the Libyan state-owned oil corporation which requires substantial insurance of its on-shore and off-shore assets. Under Libyan law insurance of assets located in Libya must be placed with local carriers. No local carrier can carry the risk and, at least at the relevant times in 2004 and 2005, NOC required the risk to be 100% reinsured in the international markets.
3. For many years prior to 2004 NOC's insurance had been placed with Libyan Insurance Company ("LIC") as the local carrier. LIC had been reinsured using United Insurance Brokers ("UIB") as broker. The evidence suggests that the cost of cover provided by UIB/LIC was of the order of US $20 million a year.

UIC and MILLERS / MIB

4. UIC had begun writing business in 1999. At that time LIC was the only local carrier. From 2000 onwards NOC carried out a tender process for the insurance. LIC and UIC both tendered. UIC's brokers were Millers and Market Insurance Brokers ("MIB"). Millers and MIB had or developed a strong commercial relationship with UIC.

AON and NOC

5. LIC / UIB always won the NOC tender. But in 2004 Aon saw an opportunity to win the business arising, in part at least, from NOC's dissatisfaction with UIB and Aon's belief that it could obtain much more competitive rates. Aon retained two consultants to assist the pursuit of this opportunity. One, Mr Basil El Baz, plays no significant part in the material events. The other, Mr Walid El Giahmi, who was born in Libya, is central to those events. His name is spelt "Jahmi" in some of the documents.

The 2004 Tenders

6. Aon needed a local carrier. It approached both LIC and UIC. It went ahead with UIC. UIC held its own tender on 7 July 2004. Aon and MIB tendered. Only Aon tendered for the on-shore risk. The tender was US$9 million. Both Aon and MIB tendered for the off-shore risk. Aon's tender of US$ 3,176,470 was lower than MIB's. The next day. 8 July. UIC tendered Aon's figures to NOC in competition with LIC. UIC won the tender.

GCCI

7. Aon had considerable problems with placing the NOC reinsurance, but eventually succeeded. In December 2004, UIC asked Aon to quote for reinsurance of a Libyan company called General Company for Chemical Industries (''GCCI"). Aon quoted for the risk at a price dependent on it being an attachment to the NOC cover. The Aon quote won. The business was placed, UIC said that it must be placed as an independent cover. Aon then succeeded in placing it as such but at an extra cost of US$ 106,062 which UIC paid.

The 2005 NOC Renewal

8. Aon was asked by UIC to quote for the renewal again as part of a tender to UIC. In the event Aon did not do so but quoted to NOC through another local insurance company, African Insurance Company ("AIC" also referred to as Al-Afriqia). The quote was successful. By this time (June 2005) the Libyan insurance market (and other markets) were opening up to much more international interest and competition following the end of American sanctions and other political developments. AIC (and other local insurers) had been formed as a result.

THE CLAIMS

9. UIC makes three distinct but related claims against Aon arising out of the events which I have sought to summarise briefly in the Introduction to this judgment. I shall refer to the three claims as the NOC 2004 brokerage claim, the GCCI claim, and the NOC 2005 tender claim.

The NOC 2004 brokerage claim

10. It is UIC's claim that on 7 July 2004, following the tender meeting in UIC's offices that day, there was "an informal and unminuted meeting" between three representatives of UIC (Mr Ali Al Souri, the General Manager; Mr Ashour Marghani, the Head of the Fire Insurance Department, and Mr Farid Faitouri, the Chief of the Underwriting Section within the Fire Department) and two representatives of Aon, Mr Giahmi and Mr Nawaf Hasan. It is alleged that at this meeting the proposed ceding commission to be paid to UIC was discussed and Mr Giahmi "stated that UIC would receive.. 2.5%" and justified the figure by saying (amongst other things) that

"the total brokerage was 7.5% of which 2.5% went to UIC, 2.5% to Aon and the rest to the Gaddafi Charity Foundation."

11. UIC allege, however, that the question of ceding commission was not finally resolved at this meeting.
12. Paragraphs 36 and 37 of the Amended Points of Claim allege (with an amendment shown as a deletion) that:

"36. On 28 September 2004. Jahmi approached Souri and requested from him a letter in the following terms:

We are pleased to confirm as per our agreement that our (UIC) commission in respect of the above subject [ie the NOC insurance] is 2.5%.

At this time. UIC was under pressure from NOC to provide complete, signed slips as a matter of urgency. No explanation of the brokerage being earned by Aon was given at this time, and Souri was not aware of the contents of the slips so far as brokerage was concerned.—His understanding of the ceding commission position was that brokerage was 7.5%, which was shared equally between Aon, UIC and the Gaddafi Charity Foundation. He provided a letter in the terms suggested to him by Jahmi.

Secret profit by AON

"37. By misrepresenting and concealing the brokerage being earned by Aon as a result of placing the all-risks property insurance and the offshore package policy, Aon is obliged to account to UIC for all brokerage received by it as a result of these placements. The sums for which Aon is obliged to account are:

(1) US$1,459,459.50 (being 15% of US$9,729,730) less US$225,000 (being ceding commission paid to UIC) in respect of the reinsurance of the on-shore risk.

(2) US$515,103.30 (being 15% of US$3,434,022) less US$79,411.75 (being ceding commission paid to UIC) in respect of the reinsurance of the offshore risk."

13. The claim is, therefore, a somewhat remarkable one. It is that there were misrepresentations about the brokerage payable to Aon which gave rise to and were a breach of a fiduciary obligation owed by Aon to UIC and so Aon must pay UIC the entire brokerage it was paid. There is no allegation or suggestion of dishonesty. There is no claim for rescission or damages because such claims would, it is accepted, provide UIC with no worthwhile relief.
14. It is Aon's case that no misrepresentations were made about the level of commission available and that UIC were aware that brokerage would be "up to a maximum of 15% " and agreed to a commission of 2.5%.
15. Apart from legal issues, the resolution of this claim turns on a conflict of evidence between Mr Souri and Mr Faitouri on one side and Mr Giahmi and Mr Hasan on the other. As would be expected, the documents are significant in the resolution of that conflict.

The GCCI Claim

16. UIC alleges that in placing the GCCI risk as an attachment to the NOC cover Aon was in breach of contract "in placing...reinsurance that did not reflect the reinsurance that UIC wanted or required." Paragraphs 51, 52 and 53 of the Amended Points of Claim continue:

"51. ...The reinsurance placed by Aon:

(1) Exposed UIC to the risk that such cover would be avoided, by reason of the fact that (as Aon well knew) the GCCI and the NOC risks were not related.

(2) Provided cover for a period less than UIC sought. In the premises, UIC was without reinsurance if the NOC risk was not renewed.

(3) Did not allow UIC to retain 5% of the risk.

52. As a result of this breach of contract, UIC was compelled to ensure that the reinsurance of the GCCI risk was re-placed by Aon so that:

(1) That the reinsurance of the GCCI risk was placed independently of the NOC risk (to eliminate the risk of avoidance);

(2) That reinsurance of the GCCI risk was back-to-back in terms of period with UIC's insurance of GCCI.

53. In doing so, UIC incurred additional costs recoverable as damages from Aon, namely:

(1) Costs in investigating the manner in which Aon had reinsured the GCCI risk and in ensuring that the risk was correctly placed by Aon so as to ensure that UIC had adequate reinsurance protection...

(2) Cost of US$106,062, being the additional cost of the GCCI reinsurance, over and above the original Aon quotation."

17. It is Aon's case that in placing the GCCI risk as an attachment to the NOC cover Aon fulfilled the express oral instructions of UIC given by Mr Faitouri to Mr Hasan. Again, the issue largely turns on a conflict of evidence in which the documents are material. Mr Hasan's account derives support from the evidence given by Mr Andrew Raven, an underwriter at the CR O'Farrell syndicate, who later wrote a line on the GCCI attachment.

The NOC 2005 Tender Claim

18. This claim is put forward in Paragraphs 54 to 65 of the Amended Particulars of Claim:

"54. The relationship of principal and broker between UIC and Aon continued after the placement of the NOC risks. In particular, AON was instructed to act and did act for UIC as it agent in the renewal of the NOC risks. In particular, Aon began, on UIC's behalf, an engineering survey programme in respect of the NOC risks. This programme began in October 2004 and was conducted with a view to facilitating the renewal of UIC's reinsurance programme in July 2005. During the course of 2004 and the first half of 2005, UIC facilitated various visits by Aon and an Aon-related company (Hydrocarbon Risk Consultants Limited) to NOC plants and facilities within Libya.

55. The renewal date for the NOC risks was 14 July 2005. Prior to this renewal date, on 22 May 2005, UIC (at Aon's suggestion) approached NOC indicating that it would be prepared to give NOC a discount of between 10% and 15% on the premium if NOC agreed to renew with UIC without the need for a tender process. This offer was rejected, and the tender process went ahead.

56. UIC accordingly received an invitation to tender from NOC, requiring submission of tenders on 20 June 2005. UIC sent a translation of this invitation to Aon, Miller and Arthur J Gallagher on 1 June 2005 and invited them all to tender. This caused some confusion amongst underwriters in the reinsurance market, because a number of such underwriters received multiple requests to quote for the same risk. On 8 June 2005, Hasan requested that UIC confirm Aon as its sole broker with regard to the NOC renewal in order to avoid such confusion.

57. By a fax dated 9 June 2005, UIC complied with the request and wrote:

Reference to our previous \arious communiques in respect of the abo\e [the NOC programme] pleased to advise that UIC hereby and as of today Thursday 9^th June. 2005. declare that you (AON UK Limited) are the sole broker to approach the International Reinsurance Market on our (UIC) behalf in order to obtain a quotation for the renewal of NOC Insurance Program Renewal 2005, on the condition that you (AON UK Limited) do not provide any quotation in respect of the same subject to any other Insurance Company or Entity with in the Libyan Insurance Market in regards.

The other brokers previously instructed by UIC were told to cease acting.

58. UIC and Aon were unable to reach agreement as to Aon's brokerage and UIC's ceding commission. On 14 June 2005, Aon offered to increase the ceding commission to 3%, but on the same day UIC made it clear it was unwilling to accept anything less than 5%.

59. At 12.46pm on 19 June 2005, Aon sent the following (undated) fax to UIC:

Aon and UIC have had tremendous success in the last year with the highlight clearly being the successful joint bid for the National Oil Corporation (NOC) of Libya package policies 2004-2005.

UIC's request to increase their ceding commission for this year's NOC tender has not been approved by the management Board of the Energy Practice Group. Aon Limited will therefore not be able to submit terms to UIC at this year's tender June 20^th 2005.

I very much hope that we can continue working together in the future.

60. This fax was seen by UIC for the first time on 20 June 2005, the day on which tenders were due to be submitted to NOC. In the circumstances, UIC was unable to put forward any tender to NOC: Aon had demanded the role of sole broker, to which UIC had acceded, and had then declined to tender.

61. As a result, NOC decided to postpone the tender meeting until 11.00am on 25 June 2005, and it informed the tendering insurance companies (LIC, UIC, Al-Afriqia and Sahara). accordingly. This additional time was insufficient to enable UIC to obtain a reinsurance quotation via another reinsurance broker other than Aon.

62. The Al-Afriqia tender was supported by a reinsurance quotation from Aon. That quotation can only have been obtained by AON when it was acting for UIC. using information and a business opportunity provided by UIC. UIC being unable to tender, NOC awarded the renewal to Al-Afriqia.

63. In the premises, Aon has acted in breach of its contract with UIC and in breach of fiduciary duty. Aon was not entitled to use information and opportunities arising out of its position as UIC's agent for the purposes of anyone other than UIC. Specifically, it was not entitled to approach any other Libyan insurance company with regard to the renewal of the NOC on-shore and off-shore risks.

64. Aon is obliged to account to UIC for all brokerage received by it as a result of NOC's renewal of its business with Al-Afriqia.

65. Further or alternatively, Aon has acted in breach of contract and/or breach of fiduciary duty by inducing UIC to instruct it as its sole broker and then by failing to inform UIC in good time that there were circumstances in which Aon would refuse to tender. In the premises, UIC has suffered loss and damage in that:

(1) It has been deprived of the opportunity to tender for the NOC business in 2005, if necessary through another broker.

(2) Its inability to deliver a reinsurance quotation to NOC -the biggest and most important insured in the Libyan marker - has caused UIC loss in the Libyan insurance market as a whole. Particulars will be provided in due course."

19. It is Aon's case that it had no obligation to quote to UIC for the 2005 renewal, that the parties were unable to reach agreement on the level of commission, and in reality UIC overreached itself in negotiations with Aon over commission and the claim is a contrived attempt to fix Aon with fiduciary and confidence obligations which are misconceived in law and fact. Once again there are significant conflicts of evidence largely involving the same witnesses (except Mr Raven) as the other claims.

THE EVIDENCE

Factual

20. Mr Ali Souri and Mr Fatouri gave evidence at the request of UIC. Despite acquiring his qualifications in the United States of America and working in Washington for several years. Mr Souri had an Arabic interpreter available when giving his evidence. He was, however, able to give evidence substantially in English and I am sure generally understood well what he was being asked. His evidence was unreliable and unsatisfactory. It was often contradictory and inconsistent with the documents and indeed his own previous statements of truth on the original and amended Particulars of Claim. His memory was poor. His attempts to explain inconsistencies were largely incoherent and unconvincing.
21. Mr Faitouri spoke very good English and was clearly intelligent and acute. But his evidence also was often inconsistent with the documents and his explanations disingenuous. On occasion his evidence and statements of truth were exposed to be untruthful. That did not appear to trouble him.
22. The witnesses called by Aon were:

Mr Fillingham (Chairman of Aon's Natural Resources and Construction Division);

Mr Hasan (now a broker in the Division but. at the time, a trainee broker on Aon's graduate scheme);

Mr Giahmi;

Mr Humphreys, a business development director within the Division with specific responsibility for the Middle East; and

Mr Raven.

23. Aon also served two witness statements from Simon Wynn, an account executive in the Division, whose evidence was directed to the receipts and payments into and out of Aon's accounts and the earnings generated by Aon from the business the subject of these proceedings, Mr Wynn's evidence was admitted without UIC requiring him to attend for cross-examination.
24. Aon also served a witness statement of Allan Murray who was, during part of the relevant time, a Managing Director in the Division. The documents show that Mr Murray was, with colleagues, responsible for marketing the NOC risks to London reinsurance underwriters, preparing the 2004/5 tender, and placing the business after the tender succeeded. He was also involved with the GCCI placement. He left Aon in June 2005 and was not involved in the 2005/6 tender. In the event, I do not think the evidence he might have given on these subjects would have been of any real significance to resolution of the issues and claims.
25. The trial began in the afternoon of Tuesday 5 June and openings were completed that day. Mr Souri's evidence was given on 6 June and for about half an hour on 7 June. Mr Faitouri's evidence followed and was completed on 7 June. Mr Hasan's evidence was given on 11 and 12 June. Mr Giahmi's evidence was given on 12 and 13 June and Mr Fillingham and Mr Humphreys' short evidence was given on 13 June. After court hours on 13 June, Mr Nash QC, for Aon, informed the court that Aon did not intend to call Mr Murray as a witness. The evidence concluded on Monday 18 June when Mr Raven gave evidence as did the experts.
26. All Aon's witnesses, in my assessment, were honest and truthful. Their evidence was given in a straightforward, impressive manner and was consistent with, and where relevant, provided satisfying explanations for the documents.

The Experts

27. Expert evidence was directed primarily at reasonable commission levels, what would represent a reasonable return for Aon. and what might be an "equitable allowance" for Aon should Aon be liable to UIC for a breach of fiduciary duty. Both Broker experts, Mr Liam Mulhall (instructed by UIC) and Mr Andrew Stammers (instructed by Aon) were well qualified to express the opinions the)' did and each gave evidence in accord with their duty to the court and the statements of truth signed by them.

THE NOC 2004 BROKERAGE CLAIM

Aon and UIC

28. UIC were asked by NOC to tender for the risks by letters dated 10 May 2004. Originally tenders had to be in by 24 May and cover had to be effective on 14 June. 40 to 50% of the reinsurance had to be in place at the time of tender and each reinsurer had to have an A rating from Standard & Poors. The reinsurance had to be "on the basis of a quota share basis in full (from 2-500 million) without any other arrangements (no fronting, layers...)".
29. It was the intervention of Aon and concerns about UIB which led to the tender period being extended to 7 July with cover to incept on 15 July. Aon sought to work first with LIC whilst UIC, on 19 May, agreed that Miller should be "the only Broker fully authorised to approach the market on behalf of UIC." That was repeated to "MIB/Miller" in a fax sent on 28 June.
30. On 26 May Aon entered into a fee agreement with Mr Giahmi. The target of the agreement was for Mr Giahmi to try to secure Aon's appointment as sole reinsurance broker for NOC but it was soon realised that NOC would not give up the tender process. Mr Giahmi was entitled to 40% of all Aon's retained commissions. Mr El-Baz was entitled to 10%.
31. Mr Hasan, Mr Giahmi and a Mr Scott (a senior employee of Aon) were in Libya in June. Both LIC and UIC invited Aon to quote. But LIC only wanted Aon to place 10% of the reinsurance. That was unacceptable to Aon.
32. On 16 June, and notwithstanding its correspondence with Miller/MIB (paragraph 29), UIC, in a letter dated 16 June, signed by Mr Souri, wrote "to whomever it may concern in respect of NOC" stating:

"Subject to receipt of instruction from [NOC], UIC hereby confirms the exclusive appointment of Aon to handle reinsurance programme in respect of the above named accounts for the policy period incepting 2004."

33. Mr Giahmi said, and I am sure he was right, that UIC were "hungry" to win the NOC account (one of the, if not the, most prestigious accounts in Libya) and he had made it clear to UIC that working with Aon would give UIC the best chance of doing so.

Build-up to the Tender

34. It was Mr Giahmi's strong advice (as I accept) to Aon that Aon should tender at the lowest possible total fixed gross premium price which would include all commissions and other payments so that NOC would know precisely what they had to pay by way of premium. It was also left to him and Mr Hasan to discuss with UIC UIC's commission. On 2 July Mr Scott (now back in England) and Mr Murray had suggested 5% for UIC but also sought Mr Giahmi's advice about it.
35. On 3 July, Mr Souri wrote to Mr Scott expressing displeasure that Aon had approached Ace "our existing underwriters" and saying that he had been advised that Aon "will not be the sole Broker."
36. Nonetheless, Ace quoted exclusively to UIC and Aon for a 20% lead line on 5 July. There is an Aon slip, scratched by Ace on that date, for the onshore risk, which included:

'"NET PREMIUM RATE 100%	US$8,500,000 (to be grossed up by brokerage as stated below)
BROKERAGE	up to a maximum of 15%
OTHER DEDUCTIONS FROM PREMIUM	7.5% RIB wording T.B. Adv Agree allow up to 2.5%Engineering Fee..."

"

37. The words "5% local insurer Ceding Ceding Commission" were crossed through. $8.5 million grossed up by 15% gives a figure of $10 million. 8.5 million less deductions of 10% is 7.650 million albeit it is illogical to deduct the 2.5% Engineering Fees as these have to be funded from premium, 7.650 million grossed up by 15% is 9 million.
38. There is also a slip for the off-shore risk with a Net Premium of US$3 million showing Brokerage up to a maximum of 15% and a "7.5% RIB". "RIB" is short for renewal incentive bonus. The slips with numbers on appear to have been sent to Mr Hasan and Mr Giahmi in Libya on 5 July. They were also told that "if absolutely necessary" the RIB could be "paid at inception of the policy."
39. It was Mr Faitouri's evidence that the slip which was available for the tender had "no numbers" in it. But he signed the statements of truth for the original and Amended Points of Claim in which it was stated that the slip presented by Aon on 7 July did have the figure of 8.5 million and brokerage of up to 15% on it. There is a copy of the slip with the Premium and Brokerage figures blanked out but that seems to have been sent on 17 July. At some stage Mr Faitouri undoubtedly had a copy of the slip with the numbers on it because he wrote above the figure of US$8,500,000 the figure 9,000,000.
40. Mr Hasan was in constant contact with Mr Murray and others in London on the tender price. He was told, probably on 7 July itself, as I accept and is borne out by the documents and the improbability of someone of his junior status putting forward such figures otherwise, that the on-shore risk quote should be US$9 million with a minimum absolute net premium of 7.65 million, and US$3,176,470 should be quoted for the off-shore risk. By this time it was known that there was to be a double tender process; a tender to UIC on 7 July and to NOC on 8 July. Millers/MIB were expected to compete with Aon at the UIC tender.
41. On 5 July, the Aon team in London had sent to Mr Giahmi and Mr Hasan "a sheet providing a summary of the coverages provided, limits, deductible, etc." There was a sheet for both the on-shore and off-shore risks in materially the same terms apart from the premium. The on-shore risk sheet contained two "Options" said to be "based on net premium to underwriters of USD 8,000,000" (which the figures show was a typo for 8,500,000). The first option showed 7.5% commission "being 2.5% UIC 5% Aon" and the second 15% commission "being 5% UIC/10% Aon." The 7.5% RIB and 2.5% Engineering Fee were also stated.
42. It was these figures that led Mr Smith, for UIC, to prepare some imaginative calculations of his own designed to show that it was Option 1 with total commission of 7.5% which was the basis for the 9 million quote which undoubtedly came to be made. But Mr Smith's figures don't work either of themselves or as Mr Nash demonstrated. They involve a partial use of the RIB which is irrational and has no justification in the evidence. There are simple ways to get to 9 million: paragraphs 37 and 44.
43. It was Mr Giahmi's evidence (which I accept) that these sheets were just the sort of thing he did not want (or, as he frankly said, understand). What he wanted was a figure to give to UIC for UIC to give to NOC, RIB was ''Japanese" to him.

The UIC Tender

44. There is a further sheet which Mr Faitouri completed at the 7 July UIC tender to record the quotes. Mr Giahmi had insisted on an independent Libyan Government representative being present to see fair play and the tenders were opened in his presence. Mr Giahmi and Mr Hasan were present for Aon and Mr Souri and others were present for UIC. Millers/MIB produced a written quote but were not present. They did not quote for the on-shore risk and their quote for the off-shore risk was a little less than $250,000 higher than Aon's quote. Mr Faitouri's schedule (signed by Mr Hasan) for the on-shore risk shows a Gross Premium of $9 million which, it is agreed, was the figure quoted. Adjacent to that figure Mr Faitouri has also written "Net to Reinsurers 8.5m US$7,650,000." The reference to "8.5" is obscure both in its location on the sheet and origin. Mr Faitouri agrees that at the tender the net figure to reinsurers was stated to be $7,650,000. He said the 8.5 million figure was given in answer to the question what was the lowest figure Aon could put forward. But if it had been I think it would have been used which it was not. The likelihood, I think, is that the 8.5 million figure was derived from the slip. The schedule has no figure against "UIC Comm." Minutes were prepared of the tender meeting. They only record, in effect, that Aon had won. Mr Faitouri acknowledged that he understood that the difference between the gross premium of 9 million and the net premium of 7.650 million was 15% but he said he had been told of the RIB of 7.5% and had therefore "assumed" that brokerage was 7.5%. But the RIB was to be earned at inception and was included by way of deduction from the gross premium.
45. Mr Giahmi is shown in the Minutes as a representative of the "Gaddafi Charity Organization". He was not. He had assisted the Foundation before and had used that contact to assist in persuading NOC to meet him to promote Aon. He arranged to include, as part of Aon's tender, an offer for a number of Libyans to come for training at Aon's offices in London at Aon's expense and to explore with Aon health insurance which was of interest to the Foundation. No doubt this connection was thought by both UIC and Aon to be and was of some significance but, insofar as it may have been suggested otherwise, I am sure Mr Giahmi did not mislead anyone as to his true role as a consultant or adviser to Aon.
46. There is a further document which Mr Faitouri said that he and Mr Hasan had prepared together and which is signed by Mr Marghani. Mr Faitouri may well be right. Mr Hasan was sure that a document was prepared for the NOC tender which had prices on it. The document shows premiums of USD 9 million (on-shore) and 3.176,470 (off-shore) and 2.5% Engineering fees.

UIC's Commission

47. It will be seen that apart from suggestions from Aon in London that would support a 5% or one-third/two thirds split of commission for UIC / Aon, and the fact that the matter was left to Mr Giahmi, none of the documents record anything about, let alone any agreement upon UIC's commission.
48. It was Mr Giahmi's evidence, which again, despite Mr Souri's denials, I accept, that in the lead up to the tender he had several meetings with Mr Souri in which the question of commission was discussed. It would be surprising if that had not happened. Mr Giahmi said it was the first thing to be asked. It was part of the local culture to know how much you were to be paid before setting out on business. Mr Giahmi said Mr Souri had first tried for 25% or a 50:50 split. Mr Giahmi had started at 0.5%, explaining that UIC's role was limited to printing the wordings on its letterhead and that it took no risk, and he had finally said and insisted that Aon was only prepared to pay 2.5%. He said he had no idea at the time what the actual commission available would be and he knew it would depend on what could finally be achieved with underwriters. He came to the 7 July tender on the basis that 2.5% had been agreed.
49. Save that Mr Souri denied any agreement had been reached, he, Mr Faitouri, Mr Hasan and Mr Giahmi are all agreed that after the tender meeting on 7 July as Mr Giahmi would put it, Mr Souri "wanted to re-open the whole debate again." They are also agreed that UIC's commission was debated at some length. Mr Giahmi said he told Mr Souri the deal was 2.5% "take it or leave it." He knew it was too late for UIC to get terms from anyone else better than Aon's. His evidence, and Mr Hasan's evidence, was that Aon had the upper hand and eventually the 2.5% was accepted. On 8 July Mr Scott and Mr Murray sent a fax to Mr Souri stating that "we understand that UIC's ceding commission will be 2.5%..."
50. Both Mr Giahmi and Mr Hasan deny that the former made any reference to only 7.5% brokerage being available or referred to an equal three-way split between Aon, UIC and the Gaddafi Foundation. Mr Giahmi (and Mr Hasan) were wholly convincing in their evidence. The justification given for 2.5% was the very limited role of UIC. I accept that Mr Giahmi did not know even now what commissions would be available. He did know 60% of the cover had yet to be placed and that expense would be incurred by Aon for the training programme. It is agreed that references were made to payment of a higher commission if UIC put further business Aon's way but if he had said what is alleged by UIC it would have been an outright lie: no commission was ever to be paid to the Foundation and such evidence as was available to both Mr Giahmi and Mr Hasan (paragraph 36) was that brokerage would be "up to 15%". As will be seen. UIC's case is not consistent with the subsequent correspondence and documents. I regret to say that I formed the view that both Mr Souri and Mr Faitouri's evidence on this aspect of the dispute was contrived and untruthful.

Presentation to NOC

51. Only representatives of LIC and UIC were allowed to attend the tender meeting on 8 July at NOC's offices. Mr Giahmi and Mr Hasan had to wait outside the meeting. Even then the meeting was inconclusive as, so Mr Souri informed them, LIC had come up with an oral offer of a 10% discount at the meeting.

Aon/UIC win

52. On 12 July UIC was informed by NOC that their offer was accepted. On the same day UIC informed Aon.

More on Ceding Commission

53. On 17 July , in a letter prepared by Mr Faitouri and signed by Mr Souri, Mr Souri wrote with reference to a telephone conversation between Mr Faitouri and Mr Murray setting out the Premiums to be paid for the covers, asking "urgently" for a list of the Security and adding:

"More over please advise total percentage of brokerage for both On-shore and Offshore."

54. This request does not lie well with UIC's case that on 7 July they were told that the total brokerage was 7.5%. Neither Mr Souri nor Mr Faitouri could offer a satisfactory explanation when cross-examined about it.
55. Mr Murray replied on 19 July sending a list of the Security and adding that original reinsurance slips would be sent as soon as possible.
56. On 21 July Mr Souri repeated the request for "total brokerage percentages." NOC were pressing UIC at this time for the slips and wording. UIC pressed Aon. On 3 August UIC set a "deadline" of 5 August for submission of original documents.

The Protection Policies

57. In the course of a difficult placement Aon had been compelled to agree with some underwriters on the on-shore cover a no claims bonus and, on the off-shore cover, a profit commission arrangement in order to persuade them to write the business at the prices Aon had tendered. They would not agree to the same RIB terms as Ace. Both the no claims bonus and profit commission represented a potential liability to repay reinsurers if NOC did make claims under the policies. That liability would fall on Aon. Aon themselves purchased protection policies to meet the liability should it arise. Aon paid the premiums for these policies from its earnings but the policies were (probably wrongly) taken out in the name of UIC.
58. Miller got to hear of Aon's placement of the protection policies in UIC's name and wrote on 5 August 2004 to UIC asking if they could quote for them. That, as may-have been intended, provoked a strong reaction from UIC who were unaware of the placement.

The Ace Slips

59. On 8 August UIC once again pressed Aon to provide the original slips and wording and "Brokerage percentage." Aon's response was that "it would be in UIC and NOC's interest" for the documents to be handed over in person. A new "deadline" of 15 August had been set by NOC.
60. On 10 August Aon sent Mr Souri by courier copies of the marketing slips scratched by Ace. The letter and enclosures were, as he accepted, seen by Mr Souri when they were delivered. These slips undoubtedly contained the reference to brokerage of 15%. They also showed the on-shore premium to be "USD 9,729,730" and a deduction from premium of "7.50% Renewal Incentive Bonus, payable at Inception subject to renewal being offered to the same Slip Leader / Aon Limited."
61. The 7.5% RIB "payable at inception" accounts arithmetically for the difference between 9 million and 9,729,730. The same occurred on the off-shore slip where the premium was shown as USD3,434,033 but the 7.5% RIB was shown as a deduction. Aon said, and I accept, that the higher premium had been deployed as a marketing tool, albeit it made no difference in reality because of the RIB, and indeed was not very successful as a marketing tool either. The market was not pleased that Ace had accepted a premium amount lower than the previous year.
62. NOC saw and were concerned by the level of stated premiums. They raised the matter with UIC seeking confirmation that the premiums payable were those tendered. On 2 September UIC passed the request to Aon. Aon responded the next day. The tendered premiums were confirmed. So, too, was "UIC ceding commission of 2.5% as discussed and agreed in Libya." The placing of the protection policies was also explained.

Ceding Commission Again

63. It was these exchanges which led to further references to the ceding commission. On 6 September, Mr Marghani sent a fax to Messrs Scott and Hasan which was drafted by Mr Faitouri. The fax raised a number of issues but also stated:

"UIC ceding commission (i.e. 2.5% of total commission 15% is very low and should be increased to 5% minimum)."

64. It was Mr Souri's evidence that he was shocked and concerned to see that total brokerage was 15%. If UIC's case is right he had been seriously misled and had agreed to 2.5% on a false basis. But if that was so this letter would I think inevitably have taken a very different form. There is no reference to anyone being misled. It is a request for what is said to be a more equitable split. It fits Mr Giahmi's evidence that on any occasion when Aon wanted something or some problem arose UIC would try to re-open the amount of ceding commission. Neither Mr Souri nor Mr Faitouri came close to giving a satisfactory explanation of the terms of the letter.
65. Aon responded on the same day. In relation to ceding commission, they wrote:

"The UIC ceding commission of 2.5% was negotiated and agreed upon in your offices in Libya. The people present at that meeting were Mr Ali Souri, Mr Farrid Faitouri and the representative from the tenders committee as well as Mr Nawaf Hasan from Aon and Mr Walid El-Giahmi of the Ghadaffi Charity Organisation. The ceding commission of 2.5% was agreed upon by all parties concerned which we trust is evidenced in your records."

66. Mr Marghani replied on 7 September. Mr Faitouri could not be sure he had drafted this response, but it was one of his roles to produce drafts in English for Mr Marghani. The fax stated:

"We appreciate your advice as to the breakdown of 15% Brokerage as we feel that our commission is too low for such a business."

67. The previous comment applies with, if anything, greater force. The agreement to 2.5% was expressly asserted by Aon; the response is, in effect, only that we should have more. There is no reference to 7.5% or being misled.
68. A further response was sent, also signed by Mr Marghani, on 9 September. Mr Faitouri agreed that there was "a good chance" he drafted it. The fax included:

"When the ceding commission of 2.5% was agreed total brokerage of 15% was not disclosed therefore and in view of certain considerations (i.e. Scholarships, Training and Health Insurance Schemes) we see that our commission should be at least 5%."

69. Mr Faitouri said this was "just putting it nicely." But, again, it is inconsistent with the case that UIC were positively told and misled that brokerage was 7.5%.

The Slips Again

70. NOC were unhappy with the slips which had been provided to them for a number of reasons which were passed on by UIC to Aon on 9 September. On 21 September the Ace underwriter and Mr Hasan met NOC in Libya. UIC were annoyed asserting that they had not been told about the meeting. On 26 September Mr Souri wrote to Mr Fillingham to complain and also expressing NOC's concern about not receiving the slips, Mr Fillingham replied on 30 September explaining that the visit concerned an engineering survey programme and neither Mr Souri nor Mr Faitouri had been in Libya at the time. He also said that the original slips had been "passed" to NOC on

27 September when Mr Faitouri was present. NOC still had questions about the slips.

Ceding Commission Confirmed

71. Mr Souri signed a fax form addressed to Mr Murray. Mr Scott, and Mr Hasan dated
72. September 2004 which Mr Hasan also initialled on that date. The fax was short and to the point. It was entitled "NOC Insurance". It read:

"We are pleased to confirm as per our agreement that our (UIC) Commission in respect of the above subject is 2.5%."

73. The letter was typed on the day of a meeting between Mr Giahmi, Mr Hasan, Mr Souri and Mr Faitouri. It is Mr Giahmi's evidence (and the evidence of Mr Hasan) that Mr Souri had tried to start bargaining again over the commission seeking a 50:50 split. Mr Giahmi and Mr Hasan felt that at a face to face meeting Mr Souri would have to honour his word. Mr Giahmi told him at the meeting he could not re-open the matter now; he had made an agreement and must honour it. He and Mr Hasan insisted on the letter to confirm it and put an end to the matter. They were concerned that upon payment to UIC of the premium UIC might otherwise take whatever commission they felt UIC was entitled to.
74. The evidence of Mr Souri and Mr Faitouri concerning this meeting and the letter has gone through a remarkable and unacceptable transformation. The current claim (see paragraph 12) alleges no more than that UIC was under pressure to get the slips and "no explanation of the brokerage being earned by Aon was given at this time."
75. The claim was signed with a statement of truth by both Mr Souri and Mr Faitouri. They had also signed the original claim. That, as can also be seen (paragraph 12) had alleged that Mr Souri was unaware of the brokerage at the time and still understood it was 7.5% split three ways as he alleged he had been told in July. The deletion of this allegation no doubt followed consideration of the documents which clearly demonstrated that Mr Souri was aware well before 28 September that the total brokerage was \5%.
76. Mr Souri's Witness Statement is dated 26 February 2007. Mr Faitouri's Witness Statement was signed by him on 22 February 2007. Those statements allege (in paragraphs 58 and 61 respectively) that at the meeting on 28 September Mr Giahmi had said that whilst the total brokerage was 15% there was only 5% available to be shared between Aon and UIC because the Gaddafi Foundation was going to take 10%.
77. Both Mr Giahmi and Mr Hasan denied that anything of this sort had been said. I am quite sure they were telling the truth and that Mr Souri and Mr Fatouri were not. Faced with the unanswerable evidence that UIC had agreed 2,5% in full knowledge that the total brokerage was 15%, a new explanation was invented to seek to meet it. If it had been true, it would have been at the forefront of the claim and correspondence. In fact it first appeared in the witness statements over two years after the supposed events.
78. The legal relevance of the assertion that UIC was under pressure over the slips has not been explained. It is not suggested that Aon said they would not provide slips if UIC did not agree 2,5%. UIC was under some pressure as is borne out by the correspondence but it has, I think, been exaggerated. Aon was annoyed that UIC was not doing more to explain to NOC that the placing was difficult whilst cover was (as it was) in place.
79. The problem with the slips was primarily Aon's problem. Mr Giahmi said NOC staff were very excited about the prospect of training in England and NOC, when the problems were explained, were content to give Aon more time.
80. On 4 October Mr Hasan and Mr Giahmi met NOC and UIC. Mr Hasan reported back to London on the meeting the same day. Problems were well on the way to being resolved. Aon was given a further two weeks to address such matters (including production of originals of all stamped slips) as were still outstanding. The report has the air of parties working sensibly to obtain what they want, not of crisis or confrontation. The cover was accepted in October and the first instalment of premium paid. The tendered premiums were the premiums paid by NOC.

Conclusion

81. It will be appreciated from the foregoing that I unhesitatingly reject UIC's case on the facts. UIC was not misled in any way. The total commission was disclosed. UIC agreed freely, if reluctantly, to a ceding commission of 2.5% and was paid it. The attempts to re-open the rate of commission were fairly and firmly dealt with, largely by Mr Giahmi. The documents support Aon and are not consistent with UIC's case. The oral evidence was demonstrably of a different quality as I have stated.

THE GCCI CLAIM

82. The GCCI Claim is summarised in paragraphs 16 and 17. Requests to Quote
83. On 8 December, Mr Souri sent a fax for the attention of Mr Murray, Mr Scott and Mr Hasan, with the "Subject: GCCI All Risks Quotation 01.04.2005." The fax advised Aon that GCCI had asked UIC for their best quotation for cover for GCCI's Petrochemical Plant for 12 and 24 months as from 01.04.2005. Quotations were to be presented to GCCI on 20 February and UIC sought a quotation from Aon.
84. Mr Murray responded on 10 December expressing delight at the request to quote and seeking further underwriting information and tender requirements much of which was provided by UIC on 15 December. At this time the GCCI risk was presented as an independent stand alone risk.
85. Aon started to seek to place the risk early in the new year. Mr Hasan said, and I accept, that there was conflicting information in the market. For example, both Mr Faitouri and Mr Souri understood (paragraphs 66 and 70 respectively of their witness statements) that in prior years the GCCI and NOC risks had been linked with the former being endorsed on the latter's cover. Mr Raven, in contrast, who had written a line on the risk brokered by UIB in prior years, had done so as a separate risk.
86. Mr Hasan spoke to Mr Faitouri about GCCI on 5 January 2005. He made a note of the conversation. He did so because of the "conflicting information." The note reads:

"Farid (Faitouri) has advised us that we should attach GCCI to the NOC programme in order to win the tender. Apparently this is how the tender has been won in previous years. Also advised that the link with NOC is, the fact that no Libyan energy related entity can exist without the involvement of NOC."

87. The note records that Mr Hasan passed on the information contained in it to Mr Murray.
88. Mr Faitouri said this note was "incorrect." I cannot imagine why Mr Hasan should make an incorrect record, particularly in the context in which he made it. I am quite satisfied the note accurately records what was said. The rate available to NOC, if applied to the GCCI cover, would indeed be likely to produce the winning tender. Mr Giahmi, who was not involved with the placement, also said that Mr Faitouri had mentioned GCCI to him and suggested the way to win the tender was to attach the risk to the NOC programme as had been done in previous years. I am sure that was truthful despite Mr Faitouri's denial.
89. But the confusion persisted. On 25 January Mr Souri sent a fax to Aon for the attention of Mr Murray stating:

"Further to our previous various communiques in respect of the above named subject, pleased to advise and confirm that GCCI plant in Abukammash. subject of sought insurance coverage, is an independent risk from any other in Libya including NOC. Therefore rates, terms and conditions should also be independent."

90. Unsurprisingly, Mr Hasan said he was perplexed when he saw this fax. Disclosure has revealed that Mr Souri wrote in similar terms to at least two other brokers, including MIB. In that context the letters make little sense; the brokers had no NOC cover to which the GCCI risk could be attached.
91. Mr Hasan spoke again on the telephone to Mr Faitouri on 26 January. His note of this conversation reads:

"I asked Farid to explain the fax dated 25/01/05 and Farid's response was that MIB/Millers had put pressure on UIC to issue this letter, Farid advised us to continue with the strategy of attaching it to the programme."

92. Again, the note records that this information was passed on to "the team" at Aon.
93. Mr Faitouri said the note was wrong. Indeed he said he would have told Mr Hasan "the exact opposite" of what the note records. I am sure the note is accurate. The reference to MIB/Millers was entirely credible and readily believed by Aon. It is not suggested nor pleaded that Mr Faitouri did not have authority to give such instructions to Aon on the GCCI tender.
94. It was at this time that Aon were arranging for Mr Faitouri to visit London. A programme of visits was set up for him, including a visit to Mr Raven in his Box in Lloyds on Friday 11 February. Mr Raven had been concerned that it was not appropriate for the GCCI risk to be attached to the NOC cover unless there was an ownership or affiliation connection between the two companies. After the visit to the Box. Mr Raven and Mr Faitouri went with Mr Hasan and Mr Murray to Starbucks for a coffee. Mr Hasan said, and I accept, that at an earlier meeting in the morning with the Ace underwriters and at the meeting with Mr Raven in the afternoon. Mr Faitouri repeated that GCCI and NOC had some form of cross-ownership and/or one was the subsidiary of the other and that the GCCI risk should be attached to the NOC on-shore policy and benefit from the same premium rate. Mr Raven, whilst not recalling the words used, gave evidence clearly and convincingly to the same effect.

The Tender

95. The tender date was postponed to 1 March. Aon's tender was dated 25 February 2005. It was in the sum of US$389,971 based on the NOC rate.
96. Four brokers tendered to UIC. Aon's quote was far and away the lowest. The nearest competing figure was from MIB at US$926,076.72. Mr Faitouri could not explain why Aon's figure was so low if it was not based on attachment to the NOC cover.

The 23 March E-Mail

97. Mr Raven asked for written confirmation of what Mr Faitouri had said.
98. On 23 March Mr Murray sent an e-mail to Mr Faitouri (copied to Mr Hasan and others at Aon) saying:

"I know that Nawaf has had a number of conversations with you regarding the above. You will recall that on your visit to our office you explained to Ace the relationship between GCCI and NOC. We will need some clear language from you stating the relationship in order to add this to the NOC programme. We do not have to use complex words about shareholdings. What I would like you to do is to use the following language.

"Please add the GCCI assets to the NOC programme with effect from the 1^st April 2005. GCCI is a subsidiary company of NOC."

After you had your coffee with Andrew Raven of the O'Farrell Syndicate you will appreciate how important a clear statement such as the above is.

Please ensure you use this language."

99. Mr Faitouri could think of no explanation for this e-mail consistent with his evidence. Nor can I. There was no reply.

The Order

100. On 27 March UIC placed a firm order with Aon for the cover. At that time UIC must have been aware that the price was based on attachment to the NOC cover.

The Dispute

101. On 30 March. UIC wrote again to Aon stating that the premium was "subject to two instalments payment": "we wish to retain a 5% for our own placing arrangement" and to remind Aon that inception was l April 2005 for 12 months. Mr Murray replied on 1 April. He wrote:

'Thank you for your fax of 27 March confirming our firm order. I also acknowledge receipt of your fax of 30^th March.

As was discussed with Mr Faitouri, the placement has been achieved at such reduced rating basis by adding this to the NOC package policy. For this reason it is not possible to accommodate the clients' requirement for two instalments of premium. The rates and premium are pro-rated for the period from 1^st April to the 14^th July. The balance of the period will attach to the renewal of the package policy.

As this has been placed by way of endorsement, I am sure you will appreciate that you will not be able to place 5% with the ARIG, although we will bear the ARIG in mind upon renewal of the Oil Package Policy.

Finally I am pleased to confirm that all required underwriters have agreed to the addition."

102. Mr Marghani replied:

"Thank you for your fax dated 01/04/2005 in respect of the above captioned account and please consider the following:

• The GCCI plant at Abu Kammash as previously advised in our fax dated 25/01/2005 is a Stand Alone risk independent of that of NOC.

• According to the above this account can not be attached to NOC program, hence all client requirements are to be met solely on the merits of this Risk, including those concerning payment arrangements.

• The period you have assigned to the cover should be 12 months from 01/04/2005 making the premium a non prorated one, and not as advised by your good selves of 3.5 months.

• We never advised placing the 5% required by UIC retention with the ARIG. never the less, please kindly confirm UIC retention of 5% to be ceded as UIC see fit.

Needless to remind you that inception is midnight tonight 01,04/2005 for twelve months."

103. The parties stood their ground thereafter. UIC stated explicitly that GCCI was "completely independent" from NOC. Aon. at the request of UIC's solicitors, later re-placed the risk on this basis at the further cost of US$ 106.062 referred to in paragraph 16. Whilst UIC paid that cost (and there is some evidence that it was not repaid by GCCI but not why not) it withheld Aon's commission of US$22,900. By this time UIC had appointed Millers to take over the account.

Conclusion

104. I have no doubt that Mr Faitouri did instruct Aon to place the GCCI risk as an attachment to the NOC on-shore cover. The documents and credible oral testimony support it. The business was of itself of no great value and there would be no sensible reason for Aon to place it as it did unless instructed to do so with the risk of reinsurers avoiding what might have been huge claims. In my judgment UIC has no one but itself to blame for what happened and there is no basis on which it can bring the claim it makes in respect of the GCCI cover.

THE NOC 2005 TENDER CLAIM

105. I have referred to this claim in paragraphs 18 and 19. Request to Quote
106. The 2004/5 cover was due to expire on 14 July 2005. On 31 May 2005 NOC requested renewal quotes from UIC in terms which UIC passed on to Aon on 1 June for Aon's "immediate attention and action."
107. On 2 June, Mr Humphreys received a telephone call from someone he knew at AIC in which the question was raised of AIC working with Aon "on the NOC account at renewal." There was a proposal to meet in London and Mr Humphreys reported the call to Mr Hasan (and others at Aon) saying that he had said Aon had "an existing relationship with UIC" of which the caller was "obviously aware."
108. This contact from AIC led to some debate within Aon, but the conclusion was reached that Aon was committed to UIC for the NOC renewal but should explore the possibility of working with AIC on other business. Notwithstanding the various problems experienced with UIC, both Mr Hasan and Mr Giahmi thought and advised that Aon should go forward with UIC on the NOC renewal, albeit NOC had asked all local companies to quote and, on 5 June, AIC wrote asking Aon to quote.
109. Aon learnt, at latest by 6 June, that UIC was approaching other brokers (MIB and Gallaghers) for quotes. Mr Souri was planning to visit Aon in London (the visit was cancelled, by UIC on 13 June). On 9 June UIC put forward two items as an agenda for discussion in London. One was GCCI; the other was "NOC cover including our ceding commission." On the same date, Mr Souri sent a signed fax to Aon for the attention of Mr Murray which read:

"Reference to our previous various communiques in respect of the above pleased to advise that UIC hereby and as of today Thursday 9^th June, 2005 declare that you (AON UK Limited) are the sole broker to approach the International Reinsurance Market on our (UIC) behalf in order to obtain a quotation for the renewal of NOC Insurance Program Renewal 2005. on the condition that you (AON UK Limited) do not provide any quotation in respect of the same subject to any other Insurance Company or Entity with in the Libyan Insurance Market in regards."

110. Mr Souri said Mr Giahmi had asked for this letter. Mr Hasan said he had asked for some sort of commitment from UIC and that Mr Faitouri had drafted the letter because he knew other local insurers were approaching Aon. There is a note of a conversation between Mr Humphreys and Mr Hasan on 8 June, forming part of a report on the situation made by Mr Humphreys after his meeting with AIC, which accords with Mr Hasan's evidence. But Mr Faitouri said he was not aware that AIC had approached Aon at this time. Once again, I regret to say, I did not believe Mr Faitouri.
111. In any event, Aon did not reply or agree to the terms of the letter. Its terms are not consistent with any pre-existing exclusive agency. There is no reliable evidence that UIC ever told Millers to cease seeking quotes and, although there is a document to that effect dated 9 June addressed to Gallaghers, it was Aon's case that the document was not genuine. I agree. Its appearance and language are wholly inappropriate. It was disclosed only in May 2007. Yet Mr Souri said he had seen it at the time.

Ceding Commission

112. Mr Giahmi said, and I accept, that as the tender date approached, Mr Souri had made it clear to him that the Chairman of UIC (Mr Abdulhafid Jarjar) wanted UIC to earn a higher ceding commission on the renewal. Mr Giahmi said, and again I believe him, that he told Mr Souri 2.5% was not negotiable. When Mr Giahmi asked why UIC were still asking other brokers to tender Mr Souri insisted it was UIC's right to do so and Mr Giahmi had warned him that in that case Aon was entitled to tender to other local brokers. Both Mr Hasan and Mr Giahmi warned that if ceding commission was not agreed Aon would not quote to UIC,
113. There was a meeting at UIC's offices in Libya between Mr Jarjar, Mr Souri and Mr Giahmi on 14 June. Mr Giahmi gave a vivid account of it. He felt insulted by Mr Jarjar's conduct. He made it "very clear" Aon would not re-negotiate UIC's commission and that he was prepared to take Aon's tender terms to another local insurer.
114. Mr Giahmi called Mr Fillingham from the meeting. Mr Fillingham was prepared to offer 3%. Mr Giahmi told Mr Souri but made it clear that he was simply not prepared to work with UIC after the way he had been treated.
115. Mr Fillingham sent a fax that day (14 June) to Mr Souri offering 3%. Mr Giahmi went to see AIC whose offices were in the same building in Tripoli as the offices of UIC. AIC were happy with 2.5%. They sent a fax to Mr Humphreys that day saying so. UIC replied to Mr Fillingham. also on 14 June, saying:

"please be informed that the board of directors confirmed to accept a ceding commission not less than 5% which please confirm."

116. That, as Mr Fillingham put it. was a "deal breaker". I have no doubt that UIC recognised as much. Mr Souri and Mr Faitouri had. as I accept, been told by both Mr Giahmi and Mr Hasan that if the commission could not be agreed Aon and UIC could not proceed together and Aon would not quote to UIC. There is a UIC document signed by Mr Jarjar and Mr Souri referring to the meeting on 14 June with Mr Giahmi which is consistent with what Mr Giahmi says and also and rightly refers to him as "Aon consultant."
117. On 15 June Aon took steps to ensure the slips they were preparing referred to "cedant to be agreed."

The 19 June Letter

118. On 19 June a letter to Mr Souri. approved by Mr Fillingham but drafted by Mr Hasan and signed in Mr Fillingham's name, was faxed to UIC. The letter read:

"Aon and UIC have had tremendous success in the last year with the highlight clearly being the successful joint bid for the National Oil Corporation (NOC) of Libya package policies 2004-2005.

UIC's request to increase their ceding commission for this year's NOC tender has not been approved by the management Board of the Energy Practice Group. Aon Limited will therefore not be able to submit terms to UIC at this year's tender June 20^th 2005.

I very much hope that we can continue working together in the future."

119. It is, I think, an understandable complaint by UIC that this letter came so late in the day that UIC was unable, even with an extension of time for the NOC tender to 25 June (which they obtained) to put together a quote for the renewal. But after 14 June they were not in any real doubt about the position. They may have thought Aon would have to accept their terms. They were wrong. They may have thought Aon could not tender to and through AIC or another local insurer. They were wrong. They also may have thought that NOC would not accept a tender from AIC. They were wrong about that too, What is clear is that Aon and UIC were never agreed on terms on which they could go forward together. If there is brinkmanship, both or one may lose out.

The Order

120. Aon quoted to and through AIC. On 6 July AIC received a firm order from NOC and notified Aon accordingly.

Conclusion

121. The difficulties UIC faced in formulating a legal basis for any claim arising out of the NOC 2005 Tender are apparent from the Amended Particulars of Claim quoted in paragraph 18.
122. There was a continuing "relationship" between Aon and UIC only in the sense of seeking to work together on the tender. But there was never an agreement on the terms on which that might occur. UIC's case depends on Aon being under an obligation to quote only to UIC. In fact the relationship was no different from 2004. UIC itself chose to seek competitive tenders again and not to establish or continue any broking relationship with Aon. Ceding commission was an issue at an early stage which was never resolved. It would be a commercial nonsense for Aon to agree to quote only to UIC without agreeing on the commercial terms to apply should the quote and subsequent tender to NOC succeed, particularly so when the terms were known to be in dispute. UIC could then have held Aon to ransom on the ceding commission. Aon would have had to agree or lose the business.
123. There was nothing confidential to the terms NOC were seeking. The "business opportunity" was generally available. All local insurers (including AIC) were asked to tender and a number of brokers and reinsurers were approached. There was no relevant contract nor did Aon owe any fiduciary duty to UIC. Both knew other brokers and local insurers were interested. Neither agreed to exclusivity. Mr Giahmi was quite open about the position; UIC indeed overplayed their hand, as Mr Faitouri acknowledged.
124. It follows that I also reject this claim by UIC.
125. It was part of UIC's case in relation to the NOC 2005 Tender Claim that even if there was not (as I have held) a contract between UIC and Aon there was a "consensual" relationship. This expression was derived from Henley, the Law of Insurance Broking, 2^nd Ed (2004) at 2-006. It depends on a broker agreeing "to execute the agency" but without agreement as to his remuneration. In such a case the authors state, in contrast to a contractual agency, that the broker "need not actually perform that agency provided that he informs the principal accordingly."
126. I do not think, even if (which I doubt) this is a correct statement of the law, that it has any application to a tender process or circumstances in which the parties were seeking but failing to reach a consensus on the terms on which they might proceed. Further, as I have also held, I am quite satisfied that Aon did inform UIC on and after 14 June that Aon would not proceed with them.
127. UIC's claim is that Aon is obliged to "disgorge its secret profit to UIC" and "it must pay damages for any losses that UIC has suffered as a result of Aon's breach of contract."
128. As Mr Smith acknowledged:

"The Court will, no doubt, have concerns that the evidence that UIC has been able to adduce as regards UIC's loss in this regard is limited. It is obviously very difficult to prove the reasons why business is. or is not. brought to a given insurer in the market where there is competition between several different insurers. Nevertheless, there is some evidence, and UIC is at any rate entitled to a finding that Aon has acted in breach of contract and to at least nominal damages."

129. There is no basis for either claim.

QUANTUM

130. Issues of quantum do not arise on my findings. Aon is entitled to the sum it claims (paragraph 102) for brokerage on the GCCI placing.
131. So, also, there is no need to address the Expert evidence. I will therefore comment only shortly. Essentially (and unsurprisingly) in my judgment, the best evidence of fair remuneration is what the parties agreed. I do not think any of the figures (15% brokerage; 2.5% for UIC) are out of the range of what is reasonable in the circumstances of this placement. Nor do I think that Aon's actual return from the NOC programme was in any way excessive.

THE LAW

132. Submissions have been made on a number of legal questions. In my judgment, in view of my findings, none of them arise nor do they need to be addressed. UIC's case is not improved by reference to "fiduciary" duties. There is no basis on which Aon should be ordered to pay to UIC either the "profits" made by it or its entire receipts. For 2004/5 Aon participated in a competitive tender and bound itself to obtain the price it tendered if it did tender and the tender was successful. It was entitled to agree with UIC commission should the tender succeed and UIC instruct Aon to place the business. That was the contract. The position was no different for 2005/6 except that there was no tender because there was no agreement on the nature of the relationship nor on the commercial terms which would apply should a tender succeed.

CONCLUSION

133. UIC's claims all fail. They are unsustainable on the facts as I find them to be. Aon's counterclaim succeeds. I will hear the parties on the form of order and any ancillary matters when this judgment is handed down. It was supplied to the parties in draft on 27 June 2007.