1. On 16 January 2026 Foxton LJ (sitting at first instance) handed down his judgment ([2026] EWHC 65 (Comm)) on the claimants’ claim for in excess of US$41.4m said to be owed by the first defendant (“KESP”) to either the first claimant (“AIML”), its assignee, the second claimant (“SAGE”), or its assignee, the third claimant (“KPHL”). KESP itself did not actively participate in the proceedings, but the other defendants challenged the existence and amount of the alleged debt claimed. In particular, the third defendant, Mashreqbank PSC (“Mashreq”), contended that a significant part of the sum claimed was comprised of a US$37m receivable (the “KESP Receivable”) which had, in fact, been assigned to Mashreq. Foxton LJ held that the KESP Receivable was indeed part of the debt claimed by the claimants and was owed, instead, to Mashreq, finding that AIML succeeded only in relation to a portion of its claim (US$4.4m).
2. In so holding, Foxton LJ found that AIML was estopped by convention from denying that the KESP Receivable had been validly assigned by Abraaj Holdings (“AH”) (AIML being a wholly-owned subsidiary of AH) to Mashreq because AIML shared the common assumption of AH and Mashreq that there had been such a valid assignment (see [120]-[121] and [179]-[194]).
3. There was no dispute at trial that the requirements for establishing an estoppel for convention were set out in Blindley Heath Investments Ltd v Bass [2015] EWCA Civ 1023 at [91]-[92] (Longmore and Jackson LJJ and Hildyard J), which had approved and elaborated on Brigg J’s summary in Revenue and Customs Commissioners v Benchdollar Ltd [2009] EWHC 1310 (Ch) (at [52]). The additional authority under consideration at trial was Rivertrade Ltd v EMG Finance Ltd [2013] EWHC 3745 (Ch) (Mann J); [2015] EWCA Civ 1285, where the relevant common assumption was held by (and the estoppel was binding on) not only the specific parties to the relevant contractual relationship or transaction, but also related group companies.
4. Foxton LJ’s finding that Mashreq had made out the estoppel by convention was, inevitably, dependent on his consideration of the specific facts of the case (see [184]-[189]). The point of wider, legal interest arises from Foxton LJ’s further judgment handed down on 27 February 2026, dealing with consequential matters [2026] EWHC 441 (Comm), including the claimants’ application for permission to appeal. One of the grounds of appeal was that the effect of Foxton LJ’s decision “was that the estoppel by convention created a new right for Mashreq, which was contrary to authority”.
5. The “estoppel cannot create new rights” point was one which “in the rather unusual circumstances of the case” Foxton LJ was persuaded to allow the claimants to take at that stage, despite having concluded that the point was not clearly or sufficiently taken at trial. Foxton LJ then proceeded to give a (further) “first instance judgment” (see [4]-[7]). As he himself observed, “…reasons given by a judge to justify a decision they have already reached may be thought to lack the forensic power of those given in the course of reaching that decision” (at [7]). However, in the circumstances, Foxton LJ did not think that the claimants could have any legitimate complaint in that respect and, in any event, given that he would grant permission to appeal on the point, his “additional reasons [would] not be the last word.”
6. There is considerable authority for the proposition that estoppel by convention cannot of itself create a new cause of action or “create new rights”. However, as Foxton LJ noted “that cannot operate simply as a slogan” (at [8]); it is instead necessary to consider what that phrase means and whether that meaning is engaged. Thus, his review and analysis of the line of authority from Amalgamated Investment v Texas Commerce Bank [1982] QB 84 onwards repays close reading. The principles he derived from those authorities might be summarised as follows:
6.1. “While a party cannot in terms found a cause of action on an estoppel, he may, as a result of being able to rely on an estoppel, succeed on a cause of action on which, without being able to rely on that estoppel, he would necessarily have failed” (Amalgamated Investment at 136 (Brandon LJ); approved as a correct statement of the law in Dumford Trading AG v OAO Atlantrybflot [2005] EWCA Civ 24 at [39] (Rix LJ) and Baird Textile Holdings Ltd v Marks & Spencer Plc [2001] EWCA Civ 274 at [88] (Mance LJ));
6.2. Estoppel by convention can defeat a defence and enlarge the effect of an agreement, in either case enabling a party to succeed where it would otherwise have failed (see Chitty at §7-206);
6.3. This includes instances in which a claim is advanced on the basis of an asserted legal relationship between the parties which does not otherwise exist. Thus, “…the claimant may formulate his cause of action on the basis of a mutually-assumed factual or legal relationship which differs from that which truly exists. The estoppel is not itself the cause of action but it prevents the party estopped from relying by way of a defence on the factual and legal basis which truly exists” (Azov Shipping Co v Baltic Shipping Co [1999] 2 Lloyd’s Rep, 159, 175 (Colman J)).[1]
6.4. Estoppel by convention can operate between parties who are not in contractual privity; mutual dealings between them might instead provide the context in which the common assumption arose (see Tinkler v Revenue and Customs Commissioners [2021] UKSC 39 at [70]-[72] (Lord Burrows)).
7. Foxton LJ also highlighted the fact that the KESP Receivable existed in advance and independently of the alleged estoppel (which was concerned with the whether there had been an effective transfer (valid assignment) of the debt from AH to Mashreq) and observed that “a Moorgate v Twitchings [2] estoppel [by acquiescence] might in some sense be said to create a new right in this sense, because the effect of the estoppel is to allow the party asserting the estoppel to prevail against the anterior right of the party estopped, but that does not prevent the doctrine operating” (at [15]).
8. Considerable care is therefore required when addressing the general assertion often made that ‘estoppel by convention cannot create new rights’ or ‘cannot found a cause of action’ or ‘operates as a shield and not a sword’. They are no more than (and perhaps unhelpful) slogans. Instead, per Foxton LJ at [16]: “…[the authorities] suggest that the particular legal context in which the issue arises is likely to be relevant to the correct analysis. In particular, it will generally be necessary for the estoppel to operate in relation to and affect a legal relationship between the parties which exists independently of the estoppel asserted. Even that proposition cannot be stated in unqualified terms – Mance LJ in Baird contemplates the legal relationship may exist independently of the estoppel, but the estoppel can arise as to who is party to it; and both Mance LJ in Baird (see the discussion of ostensible authority at [90]) and Colman J in Azov Shipping contemplated the doctrine extending to a case when a legal relationship had ostensibly been created between two parties, and the issue arises as to whether those purporting to act for one of them had authority to do so. Finally Furness Withy (Australia) Pty Ltd v Metal Distributors (UK) Ltd (The Amazonia) [1990] 1 Lloyd’s Rep 237 would suggest that estoppel by convention can also operate in some circumstances where two parties purport to enter into a legal relationship which is legally ineffective (subject to the rule that estoppel cannot oust the effect of a statute). Alternatively, The Amazonia can be treated as a case where the independent legal relationship affected is the matrix contract.”
9. Having regard to the principles above, Mashreq’s estoppel by convention case could thus be analysed as follows (see [17]-[20]):
9.1. The primary performance interest which Mashreq asserted was not against AIML, but against KESP, and KESP’s liability did not arise by virtue of any estoppel, but pre-existed the estoppel alleged. In asserting that claim against KESP, Mashreq could point to an assignment agreement which purported to assign the KESP Receivable and a signed notice of assignment.
9.2. AIML’s response to Mashreq’s claim was that the assignment agreement did not assign the KESP Receivable because AH had no right to assign it. The result was that it was AIML, and not Mashreq, who was entitled to enforce the KESP Receivable. AIML also brought a rival claim to the KESP Receivable. In response to both AIML’s challenge to Mashreq’s claim and AIML’s own claim, Mashreq deployed its estoppel by convention.
9.3. AIML was not itself party to the assignment agreement, such that Mashreq’s case presented a potential point of distinction to cases where an agreement between A and B is given a wider effect than it would otherwise have because of an estoppel operating between A and B. Rather Mashreq’s case was one where an agreement between A and B achieves an efficacy it would not otherwise have had because of an estoppel operating between A, B and C (i.e. AIML), where C would otherwise be able to take a point negating A’s ability to do what it had promised to do.
10. On the facts, which he described as bearing a “close similarity…[but] not on all fours” with the facts in Rivertrade, Foxton LJ held (at [21]-[23]) that the fact that AIML was not a signatory to the assignment agreement did not preclude the operation of the doctrine of estoppel by convention: “it was party to a single transaction which included as an essential element the assignment of the KESP Receivable, albeit the document intended to effect that assignment was one entered into between AH and Mashreq rather than AIML and KESP.”
11. Having reached that conclusion, Foxton LJ cross-checked it against the justifications often offered for a rule that an estoppel by convention cannot create new rights, namely: (i) the need to avoid circumventing the doctrine of consideration and the concomitant principle that gratuitous promises are not enforceable (save where by deed) (Tinkler at [75], Baird at [86]-[87]; (ii) the need to avoid certainty and an intention to create legal relations being rendered irrelevant (Baird at [91]). None of those justifications were engaged on the facts: there was a single transaction, comprised of binding agreements for which consideration had been given; issues of certainty and intention to create legal relations did not arise; there was an objective intention to affect the existing rights and obligations of Mashreq and AIML under the relevant transactional documents and to affect the existing rights in relation to the KESP Receivable (and, in each case, in a manner intended to be contractually binding); and there was an existing legal relationship between AIML, AH and Mashreq under a related agreement to which they were all parties.
12. Thus, Foxton LJ confirmed (at [27]-[28]) that “…the “new rights” argument takes AIML nowhere”; it was “essentially a technical complaint”, which, had it been successful, would have enabled AIML, as a party to the overall transaction, to take the benefit of a loan and guarantee re-scheduling, without bearing the consequences of what Mashreq had made clear was the price for obtaining it – the grant of security over the KESP Receivable. Accordingly, echoing Lord Burrow’s sentiment in Tinkler at [85], “…it is entirely satisfactory that, by reference to estoppel by convention, the law has the means to avoid such a technical point from succeeding.”
13. However, as Foxton LJ himself concluded (and, it will be recalled, having granted permission on the point), “…the Court of Appeal will be able to form its own view.”
[1] See also The Henrik Sif [1982] 1 Lloyd’s Rep 456, where an estoppel by convention was established to prevent a charterer from denying that it was the contractual carrier under bills of lading (i.e. the legal relationship existed, the question was who the parties to it were and the estoppel prevented the charterer from denying they were one of the parties).
[2] See Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890, 902-903 (Lord Wilberforce). Such an estoppel arises where “…having regard to the situation in which the relevant transaction occurred, as known to both parties, a reasonable man, in the position of the ‘acquirer’ of the property, would expect the ‘owner’ acting honestly and responsibly, if he claimed any title in the property, to take steps to make that claim known to, and discoverable by, the ‘acquirer’ and whether, in the face of an omission to do so, the ‘acquirer’ could reasonably assume that no such title was claimed.” If those conditions are satisfied, the owner of the property may be estopped by his acquiescence from asserting title to the property in question.
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