Commercial Disputes Weekly – Issue 22222 October 2024

Termination of Contract
The Commercial Court held that a claimant energy company had not waived its right to terminate a long-term electricity supply contract with a six-month delay in terminating following the relevant trigger event. The event (the amalgamation of the defendant company with another organisation) occurred in April 2018 but the company owner who constituted the controlling mind of the claimant did not know that the relevant event gave rise to a right to terminate. He only gained this knowledge in October 2018 when he consulted solicitors on several issues. The notice of termination was therefore valid
URE Energy Ltd v Notting Hill Genesis [2024] EWHC 2537 (Comm), 14 October 2024

Implied Terms – LIBOR
The Commercial Court has interpreted the dividend clause in perpetual preference shares that provided for dividends to be paid by reference to LIBOR given its discontinuation. The relevant clause did not address what would happen if LIBOR was no longer available. It was necessary to give business efficacy to the contract to imply a term into the contract allowing the parties to pay dividends by reference to a reasonable alternative rate at the date the dividend falls to be calculated. The court rejected an argument that there should be an implied term that the shares would automatically be redeemed when LIBOR ceased to be published.
Standard Chartered Plc v Guaranty Nominees Ltd [2024] EWHC 2605 (Comm), 15 October 2024

Material Adverse Effect
In relation to a share purchase agreement for Brazilian mining assets, a geotechnical event after exchange but before completion did not have sufficient material adverse effect to justify the buyers not completing the transaction. The event involved the displacement of a block of rock and significant cracking. The change or event since signing/exchange of the SPA had to be material and it was irrelevant if it revealed issues that already existed on exchange. The MAE provision was part of the risk allocation under the SPA. The court considered the approach to assessing materiality against various percentage reductions in share price but concluded that the event was not material. The defendant buyers had not been entitled to terminate the SPAs.
BM Brazil I Fundo De Investimento Em Participacoes Multistrategia v Sibanye BM Brazil (Pty) Ltd [2024] EWHC 2566 (Comm), 10 October 2024

Insolvency
The Chancery Court has considered whether a former company director “carried on business in England and Wales” for the purpose of deciding whether bankruptcy proceedings could be served on him out of the jurisdiction. Mr Jones had been found liable for breaches of duty in relation to the companies that were no longer trading but had left the country. To establish a good arguable case to serve the claim form out of the jurisdiction, the court had to be satisfied that Mr Jones had carried on business in England and Wales, which was a mixed question of fact and law. Although it was possible for a director to conduct separate business of their own, even a one-off transaction may suffice, Mr Jones did not appear to have done that. There was insufficient evidence that he had acted as anything other than a director of the company and so the application for service was dismissed.
Jones v Aston Risk Management Ltd [2024] EWHC 2553 (Ch), 10 October 2024

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