Commercial Disputes Weekly – Issue 23925 March 2025

Company – Fiduciary Duty
The appellants were directors of the respondent company. They were found to have breached their fiduciary duties by resigning from the company in bad faith with a view to exploiting a business opportunity for themselves, which they then did successfully. They were ordered to pay the respondents any profits they had made, less 25% allowance for their work and skill. In the lower courts, the appellants unsuccessfully objected to being required to repay the profits and how they were to be calculated. The Supreme Court rejected the appellants’ argument that the existing test should be amended to provide that the fiduciary was only required to account for the profits if they could not have made the profits without breaching their duties. The court declined to depart from two House of Lords authorities and dismissed the appeal. It emphasised the importance of the established rules to deter fiduciaries from succumbing to temptation. The court could use its discretion to take account of work and skill used by the fiduciaries and reduce their liability.
Rukhadze and others v Recovery Partners GP Ltd and another [2025] UKSC 10, 19 March 2025

Maritime
The Commercial Court has ruled on the terms of a guarantee following an LMAA award that the shipyard had wrongfully terminated the contract and that the buyer’s subsequent termination was valid. The shipyard entered insolvency part way through the arbitration and the insolvency administrator accepted the buyer’s proof of debt in the insolvency. The buyer made a claim under the parent company guarantee, which had different provisions depending on whether the alleged termination was contested or uncontested. The court held that the guarantee was a see to it guarantee but with satisfaction of certain requirements, it became almost indistinguishable from a conditional demand bond. Notwithstanding the shipyard’s withdrawal from the arbitration due to its insolvency, the termination remained contested, unless positively admitted – there was no middle ground where it was neither contested nor uncontested. The claim under the guarantee succeeded.
Chugga Chugg Pty Ltd v Privinvest Holding SAL [2025] EWHC 585 (Comm), 14 March 2025

Arbitration
The Commercial Court has decided that a football agent and a former director of a football club were bound to arbitrate their disputes. The dispute related to a fee claimed by the agent for acting as intermediary between football clubs. The agent commenced proceedings before the English court. Rule K of the FA Rules (by which the parties had declared they were bound) provided that any dispute or difference between two participants shall be referred to arbitration under those rules. The judge flagged that a horizontal contract can be implied between the parties but will depend not just on participation in the sport, but also on the other facts and circumstances. The parties were bound and the court proceedings were stayed under section 9 Arbitration Act 1996.
Alrubie v Chelsea Football Club and another [2025] EWHC 541 (Comm), 14 March 2025

Construction
Sisk was contracted by C&C under a JCT Design and Build Contract 2016 to carry out design and construction works at Weir Mill, Stockport. A dispute arose as to who was contractually responsible for the existing structures and whether they could support and facilitate the proposed works. The court was required to interpret clause 2.42 in conjunction with certain of the “contract clarifications”. The court declined to consider pre-contractual negotiations and considered only the contractual documentation. It concluded that after a lengthy contract negotiation process, C&C had accepted the suitability of the existing structures as being its contractual risk.
John Sisk and Son Ltd v Capital & Centric (Rose) Ltd [2025] EWHC 594 (TCC), 14 March 2025

Should you wish to discuss any of these cases in further detail, please speak with a member of our London dispute resolution team below, or your regular contact at Watson Farley & Williams: