Last year, the English Court of Appeal in Talal El Makdessi v Cavendish Square Holdings [2013] EWCA Civ 1539 considered the enforceability of penalty clauses under English contract law, and was one of the few decisions in recent times to have concluded that the clauses in question were penal and therefore unenforceable. The decision was notable for affirming that the English law rule against the...
Share buybacks – cause for concern?
Several recent articles (in The Economist, the Financial Times and the Wall Street Journal) highlight the spate of buybacks by blue chip companies over the last year, and raise some concerns arising out of this seemingly shareholder-friendly trend. The companies in the S&P 500 index bought US$500 billion of their own shares in 2013, close to the high reached in the bubble year of 2007. This...
Good faith in multi-tier dispute resolution clauses – Part I
One of the more significant contract law decisions to emerge from the English High Court in 2013 was the decision of Leggatt J in Yam Seng, which held that ‘good faith’ was a concept not limited to civilian legal systems and could be put to use in the interpretation of contracts in the common law world. Another decision of the High Court last month has now extended the dictum of Yam...
Arbitrability of fraud in India – a postscript
Following a post last month regarding the Supreme Court’s decision in World Sport, it is interesting to note that the question of the arbitrability of fraud has also been considered in great detail by the Bombay High Court in HSBC v Avitel Post Studios, in a judgement delivered just two days before the Supreme Court’s judgment in World Sport. In the previous post, we argued that the...
The arbitrability of fraud in India
Last month, the Supreme Court decided an important point relating to the arbitrability of fraud. Against the backdrop of a complicated set of facts, the Court was called on to consider whether Indian Court proceedings could be stayed pursuant to section 45 of the Arbitration and Conciliation Act 1996 in favour of a foreign-seated arbitration, in cases where allegations of fraud fell to be...
Bombay High Court on Sovereign Immunity
Earlier this year, the Bombay High Court decided an interesting question relating to proceedings against foreign-state owned corporations. Section 86 of the CPC provides that “No foreign State may be sued in any Court otherwise competent to try the suit except with the consent of the Central Government certified in writing by a Secretary to that Government”. ‘Foreign...
Licensee’s rights and remedies against third parties
Earlier this week, the Court of Appeal revisited the very interesting issue of the rights of a licensee and the remedies available against third parties. Leaving aside the tax-context of the case, the two issues before the Court were (i) whether a licensee can enter into a contract with a third party in relation to a right not conferred on the licensee by the license; and (ii) whether a licensee...
The ‘Construction’ of Exclusion Clauses
Late last year, we discussed the interesting approach adopted by English courts to the application of exclusion clauses to deliberate repudiatory breaches of contract. A couple of weeks back, the Court of Appeal decided Kudos Catering v MCCC considering very similar issues and making some highly relevant observations. Kudos Catering involved a catering contract between the claimant caterer and...
Long term contracts and dispute resolution clauses – Part II
(Part I outlined the facts of Interserve v Katowice, and discussed its findings on variation). After holding that the side/supplemental agreement in this case did not form part of the sub-contract, the High Court movies on to consider the alternative argument based on the implication of terms. Without referring to A-G Belize or any other cases on the implication of contractual terms, the Court...
Long term contracts and dispute resolution clauses – Part I
Dispute resolution under long-running contracts with continuing obligations can often pose issues which do not commonly surface in other scenarios. Often when disputes arise under a long-running contract, it is in the interest of both parties to not terminate the ongoing relationship, but settle the dispute either by themselves or by using some form of ADR. Such a settlement may take the form of...
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