Agreement to Agree and the limits of Reasonable Endeavours: Salem v Salem [2024] ✎

Is a contractual obligation to use “reasonable endeavours to agree a binding process for an expert determination” enforceable? In Mireille Raymond Salem & Anor v Faraj (“Freddy”) Moussa Salem & Ors [2024] EWHC 3311 (Ch), the High Court answered in the negative. The decision serves as a principled reaffirmation of the rule in Walford v Miles: that the law cannot compel parties to negotiate in good faith, nor can it supply a mechanism for agreement where none exists.

This case concerns a family dispute over a “Settlement Deed” intended to resolve litigation concerning a shared family business interests in Africa. The central conflict was in respect of a specific clause requiring parties to use “reasonable endeavours to agree a binding process for an expert determination”. Mr Justice Adam Johnson held the clause unenforceable.

The Claimant relied on Astor Management v Atalaya Mining [2017] EWHC 425 (Comm) to argue that “reasonable endeavours” clauses are sufficiently certain to be binding. In Astor, the obligation was to use reasonable endeavours to obtain a loan from a third-party bank. In Astor, the Court held that such a clause was enforceable because the object was clear, and the criteria for success were objective: a court could determine whether a reasonable commercial actor would have approached more banks or accepted specific interest rates etc.

Johnson J rightly distinguished Astor. The critical distinction lies in the target of the endeavours. In Astor, the target was an external result (securing a loan from a third party), measurable against market standards. In Salem, the target was the inter-party consent. The Court returned to the orthodox principle of Walford v Miles: an obligation to negotiate is inherently repugnant to the adversarial position of the parties. A party is entitled to act solely in its own commercial interest and to reject any proposal that does not suit its subjective preferences.

Consequently, an obligation to use “reasonable endeavours to agree” is legally illusory. There are no objective criteria by which a court can adjudicate whether a party’s refusal to agree to a specific process was “reasonable” or “unreasonable”. To hold otherwise would require the court to impose its own view of what the parties ought to have agreed, effectively drafting the contract for them; thereby safeguarding the principle of party autonomy. 

The Babanaft proviso and conspiracy liability: Lakatamia Shipping v Su [2025] ✎

The Court of Appeal has, with necessary firmness, restored legal orthodoxy in the long-running Lakatamia saga. In Lakatamia Shipping Co Ltd v Su [2025] EWCA Civ 1389, the Court clarified that the Babanaft proviso in Worldwide Freezing Orders (WFO) cannot be “repurposed” by third parties (beyond the territorial jurisdiction of the English court) as a substantive defense against a claim in unlawful means conspiracy.

Below, the Deputy Judge (Simon Colton KC), in Lakatamia Shipping Company Ltd v Su & Ors [2024] EWHC 1749 (Comm), held that a Monegasque lawyer escaped liability in unlawful means conspiracy, notwithstanding his role in facilitating the dissipation of frozen assets. The error lay in the Deputy Judge’s reasoning, which elevated the Babanaft proviso from being a procedural carve-out into a substantive shield against civil claims with respect to the same unlawful conduct.

The bifurcation of procedural immunity and substantive liability

Writing for a unanimous Court of Appeal, Males LJ has rightly identified this as a fundamental category error. By distinguishing the Supreme Court judgment JSC BTA Bank v Khrapunov [2018] UKSC 19 on thin technicalities, the Deputy Judge mistakenly translated the “expansive language” (at [87]) of the Babanaft proviso into a blanket immunity against civil litigation in respect of that breach - characterising the latter as a form of the “exorbitant, extraterritorial jurisdiction” (which Babanaft International sought to prevent). This approach effectively sidestepped the fundamental bifurcation articulated by Lord Sumption and Lord Lloyd-Jones in Khrapunov (at [23]). There, the Supreme Court drew a line between two legally distinct spheres: the court’s jurisdiction in contempt (a matter of quasi-criminal enforcement) and the independent regime of civil liability in tort.

The Deputy Judge’s reasoning (at [82]) proceeded on the faulty inference that the Babanaft proviso creates an implicit expectation of immunity. His Lordship reasoned that it would be “misleading” and legally incoherent to ground liability for assisting in a breach of an order that, on its face, expressly excluded application to the defendant. This, however, ignores the central lesson of Khrapunov: that a defendant’s immunity from the court’s jurisdiction in contempt does not translate into a shield for substantive civil wrongs against the applicant for the WFO. The Court of Appeal has now corrected this doctrinal conflation, reaffirming that the two regimes serve distinct ends and operate on separate planes of legal accountability.

The policy fallacy: comity and coercion

The Deputy Judge further reasoned (at [95]) that permitting a tort claim for the breach of a WFO would undermine the very policy that the Babanaft proviso sought to protect – namely, the restraint of the court’s “coercive effect” over foreign third parties. While Males LJ did not address this head-on, the argument is similarly doctrinally flawed.

The rationale of international comity underpinning Babanaft is concerned with the English court’s interference with the sovereignty of a foreign state. There is a fundamental distinction here that the Deputy Judge overlooked. Contempt is a coercive exercise of sovereignty. It seeks to “command” behaviour on foreign soil, backed by the penal threat of imprisonment or fine. To exert this power over a foreigner with no connection to England is indeed an “exorbitant” jurisdictional act. In contrast, a money judgment is not a “command” in the same jurisdictional sense. It is a declaratory recognition of a legal liability - i.e. a debt arising from a wrong. 

By awarding damages, the court is not “coercing” the defendant into obedience through the state’s “policing” powers; rather, it is adjudicating a private obligation to compensate a victim for loss. The Babanaft shield protects the foreigner from the court’s “stick” (jail), but it does not, and indeed should not, insulate their assets from the consequences of their own tortious acts.

Practical effect

The practical consequence of this judgment is that the English WFO remains a potent tool with “teeth.” The respondent to a WFO cannot transfer assets to a foreign intermediary without that intermediary being liable for the loss they caused in helping flout the WFO. This direct liability for damages affirmed by the Court of Appeal means that there is a financial deterrence on foreign intermediary that assist in flouting the WFO.

Compulsory ADR and the Retreat from Halsey: DKH Retail v City Football [2024] ✎

The received wisdom in English law was that compelling unwilling parties to mediate constituted an unlawful fetter on their right of access to the court under Article 6 of the ECHR. This view, cemented by the judgment of Dyson LJ in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, has now been overturned. 

In DKH Retail Limited v City Football Group Limited [2024] EWHC 3231 (Ch), Miles J observed that the landscape had been transformed by two recent developments: the Court of Appeal’s decision in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 and the subsequent amendments to CPRs (at [29]–[30] in DKH).

The Fallacy of Halsey

In Churchill, Sir Geoffrey Vos MR exposed the central fallacy of Halsey: its reliance on the ECtHR decision in Deweer v Belgium (1980) 2 EHRR 439. Halsey had cited Deweer as authority for the proposition that compulsion violated Article 6. However, the Master of the Rolls clarified that Deweer concerned a waiver of the right to a hearing under threat of business closure. As Sir Geoffrey Vos rightly noted (at [32] in Churchill), there is a fundamental distinction between a permanent waiver of the right to a fair trial and a temporary procedural stay for the purposes of ADR. It is submitted that His Lordship’s reasoning is compelling; the Halsey view that compulsion violates Article 6 conflates a procedural stay with a substantive bar on access to the court.

The shift from Halsey to Churchill represents more than a mere correction of human rights interpretation. It reflects a practical and commercial recognition that the efficient administration of justice requires parties to be ordered to behave rationally.

The New Regime

Consequently, the absolute bar in Halsey has been displaced by a flexible 3-stage proportionality analysis (at [54] in Churchill):

“the court can lawfully stay proceedings for, or order, the parties to engage in a non-court-based dispute resolution process provided that the order made: (a) does not impair the very essence of the claimant’s right to a fair trial, (b) is made in pursuit of a legitimate aim, and (c) is proportionate to achieving that legitimate aim.”

Escaping the Baldock trap: Orion Shipping v Great Asia [2025] ✎

Orion Shipping and Trading LLC v Great Asia Maritime Ltd [2025] EWCA Civ 1210 concerned the sale of the bulk carrier The Lila Lisbon for $15m, a transaction governed by the industry-standard Norwegian Saleform 2012 (NSF 2012). The commercial context was defined by a significant appreciation in the vessel’s value: by the time of the alleged breach, the market price had exceeded the agreed contract price, creating a substantial “loss of bargain” for the Buyer. The Arbitrators found that the seller’s failure to deliver was due to “proven negligence” which did not constitute a repudiatory breach.

Nugee LJ held that a cancellation resulting from “proven negligence” as equivalent to a non-delivery. This entitled the buyer to the “loss of bargain” damages, even though the breach was non-repudiatory.

Shipping Law: interpretation of a “Sellers’ Default” under NSF 2012

Nugee LJ eschewed the binary characterisation of the “Cancelling Date” as either giving rise to an automatic breach (sounding in damages) or the right of rescission (with no secondary obligation to pay damages). His Lordship held (at [59]) that while it creates no absolute guarantee to deliver the vessel in time, it imposes a qualified obligation of reasonable diligence. Consequently, a failure to exercise such diligence transforms a mere delaying event into an actionable breach, engaging the full measure of expectation damages.

This intermediate position resolves a critical tension in the commercial architecture of the sale. To treat the deadline as absolute would impose an undue burden on the seller; conversely, to reduce it to a mere condition subsequent (triggering cancellation but engaging no damages) would improperly hollow out the buyer’s contractual rights. The Court’s solution is elegant: the right to cancel acts as a mechanical exit, separate from the right to damages which remains fault-based.

This ruling prevents “perverse incentives” in a rising market and Sellers deliberately dragging their feet to force a cancellation and capture the resale surplus, ensuring that the contract does not inadvertently reward a party for its own default.

Contract law: The scope of remedies and the Baldock principle

The decision of Dias J, in Orion Shipping and Trading Ltd v Great Asia Maritime Ltd [2024] EWHC 2075 (Comm), (at [45(iii)]) was predicated on the causation hurdle established in Financings v Baldock [1963] 2 Q.B. 104. The Baldock principle is a “trap” for the innocent party: where a contract is terminated pursuant to a contractual option for a non-repudiatory breach, the law treats the decision to cancel (rather than the breach itself) as the proximate cause of future loss. The innocent party is entitled to accrued losses up until the moment of cancellation. So, the buyer’s remedy is structurally confined to the reliance interest (wasted expenditure), effectively precluding any claim for the expectation interest (loss of bargain).

Nugee LJ disapplied this restriction through a two-stage analysis. First, as a matter of construction, he held that the parties had effectively “contracted out” of the Baldock default. Second, and more significantly for general contract theory, his Lordship (at [118–119]) distinguished the nature of the transaction. He observed that Baldock concerned a long-term instalment contract (hire-purchase), where the loss of future income streams is indeed contingent on the contract remaining alive. By contrast, a ship sale is a unitary transaction focused on the transfer of a specific asset. In this context, the failure to transfer title is the direct cause of the loss of bargain; the cancellation is merely the formal mechanism of acknowledgement.

This distinction is doctrinally compelling. The Baldock protection was designed to shield a breaching lessee from being saddled with future rent liabilities by an opportunistic lessor. It has no proper application to a single-point sale where the asset itself has appreciated. To hold otherwise would generate a commercial perversity: it would incentivise a seller in a rising market to exercise “strategic negligence” thereby retaining the asset’s increased value while paying only nominal reliance damages.

Foreign Judgments and Bankruptcy Petitions: Servis-Terminal v Drelle [2025] ✎

In Servis-Terminal LLC v Drelle [2025] EWCA Civ 62, the Court of Appeal considered whether a foreign judgment which had not been recognised could be regarded as creating a “debt” for insolvency purposes in this jurisdiction?

Servis-Terminal LLC obtained a Russian court judgment against Mr Drelle. Servis served Drelle (resident in London) a statutory demand under the Insolvency Act 1986 on the basis of the Russian judgment. Servis later presented a bankruptcy petition against Drelle.

Newey LJ giving the leading judgment (with Popplewell and Snowden LJJ concurring) held that a bankruptcy petition could not be presented in respect of a foreign judgment which had not been recognised or registered in England and Wales (at [55]).

Territorial Competence and Statutory Construction

Phillips KC (South Square Chambers) submitted that section 267 of the Insolvency Act 1986 operates as an autonomous code, requiring merely the existence of a “debt” rather than one actionable at common law. The Court of Appeal robustly rejected this submission, reaffirming the orthodox position in Dicey: a foreign judgment has no direct operation in this jurisdiction.

Snowden LJ underscored the fundamental principle that judicial adjudication is an inherent exercise of state sovereignty (at [41]). It is submitted that this principle constitutes the conceptual fulcrum of the decision. To enforce a foreign judgment absent recognition is tantamount to enforcing the command of a foreign sovereign which is a course that the common law has historically refused to countenance.

Newey LJ buttressed this conclusion through statutory construction, noting that while section 267 does not expressly exclude foreign tax liabilities, such liabilities are plainly unenforceable. It follows, as His Lordship reasoned (at [44]), that the 1986 Act “does not exist in a vacuum” but must be construed against the backdrop of private international law. The Court correctly dismissed the submission that the “special nature” of insolvency proceedings justifies a departure from these structural principles. Accordingly, the judgment serves as a salutary reminder that the machinery of insolvency must remain subject to, and indeed constrained by, the fundamental rules of private international law.

Why Bankruptcy is enforcement

Phillips KC submitted that the exclusionary rule in Rule 45 of Dicey was inapplicable on the basis that bankruptcy proceedings do not constitute “execution” in the strict sense (i.e. asset seizure). The Court of Appeal correctly rejected this narrow distinction, preferring an analysis based on the substantive effect of a bankruptcy petition on its subject.

As Newey LJ elucidated, execution is merely a species of enforcement. This interpretation is to be preferred as a bankruptcy petition is legally predicated on the petitioner’s unpaid debt. It is plain that, by relying on the judgment to ground a petition, the creditor was unequivocally deploying it as a ‘sword’ to invoke the Court’s coercive powers.

The decision disposes of this strained construction, confirming that the exclusionary rule operates as an absolute bar: absent recognition, a foreign judgment cannot found an enforcement action in this jurisdiction, whether by way of individual execution or collective insolvency process.

Supreme Court on Declaratory Relief and Merger: Nasir v Zavarco [2025] ✎

Does a declaratory judgment extinguish the cause of action upon which it is adjudicated? In Nasir v Zavarco Plc [2025] UKSC 5, the Supreme Court considered whether a party who successfully obtains declaratory relief is barred by the doctrine of merger from subsequently suing for the substantive relief flowing from those declarations. The Court unanimously held that the doctrine of merger does not extend to purely declaratory judgments.

The facts were these. Zavarco, an English public company, allotted 30% of its share capital to Mr Nasir upon incorporation, in exchange for a commitment to invest €36 million. Mr Nasir purported to satisfy this obligation by transferring shares in another entity. Zavarco contended that this transfer did not constitute valid consideration and that the €36 million remained unpaid. Zavarco successfully sought declarations to that effect and established its right to forfeit the shares. Subsequently, Zavarco issued fresh proceedings to recover the unpaid capital. Mr Nasir challenged the court’s jurisdiction, arguing that the underlying cause of action for the debt had merged into the declaratory judgment and was, by operation of law, extinguished.

Lord Hodge (with whom Lords Hamblen, Leggatt, Stephens and Lady Rose agreed) rejected this contention. The conceptual foundation of merger is the transformation of a cause of action into a “matter of record” of a “higher nature” - specifically, an obligation backed by the court’s coercive power. A declaratory judgment merely confirms the existence of a right without creating a new obligation of this higher standing. It followed that the original cause of action survived the declaration.

While the result is pragmatically sound, it is suggested that Lord Hodge’s reasoning is analytically fragile. His Lordship anchored the decision in three principles rationales: the conceptual necessity of coercion, the historical trajectory of the doctrine, and its practical purpose. This note interrogates the conceptual argument and proposes an alternative analytical framework based on remedial exhaustion.

The conceptual necessity of coercion

Lord Hodge proceeded on the premise that it is conceptually impossible for a judgment to affirm a right while simultaneously extinguishing it. Endorsing the reasoning of Birss J. (at [26] in [2020] EWHC 629 (Ch)), His Lordship concluded that it would be “illogical” for a declaration which confirms the existence of a right to effect its destruction (at [50]).

It is respectfully suggested that this reasoning rests on a category error. It conflates the continuing existence of the factual entitlement with the survival of the substantive cause of action.

As Lord Sumption clarified in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46, cause of action estoppel is a substantive rule of law. A cause of action is a chose in action - a proprietary asset. It is a “single-use” legal instrument. Once adjudicated, that instrument is spent, regardless of whether the underlying facts (e.g., “the debt is unpaid”) remain true.

Lord Hodge postulated that a claim only merges if the resulting judgment is of a “higher nature” (i.e., coercive), thereby implying that a “weaker” declaratory judgment leaves the claim intact. However, if one accepts the Virgin Atlantic analysis that a cause of action is a finite asset that is substantively extinguished upon use, then the distinction between coercive and declaratory judgments becomes irrelevant. The legal asset is effectively “spent” the moment the court issues a final ruling, meaning the claim is destroyed by the act of judgment itself, not by the specific enforcement powers attached to it.

Consequently, His Lordship’s reasoning provides a description of the result (that merger does not apply) without offering a doctrinal explanation for how a substantive legal asset can be deployed in a final judicial process without being spent by the transaction.

A better rationale: remedial exhaustion

Lord Hodge confined the doctrine of merger to “coercive” judgments to avoid the impracticality and injustice of a declaration destroying the right to enforcement. However, although Lord Hodge’s ruling achieves the correct result, a more principled rationale lies in the concept of “remedial exhaustion”.

The legal system is designed to provide remedies (ubi jus ibi remedium). It would be internally self-defeating for a judgment to affirm a litigant’s right while simultaneously depriving them of the capacity to enforce it. To preserve the coherence of the legal order, the doctrine of merger should only engage where the “full judicial act” is consummated by the union of both declaratory and executory effects.

Under this analysis, a purely declaratory judgment is an incomplete judicial act. It performs the first function but, by definition, lacks the second. Consequently, the alchemy of merger fails to occur because the necessary ingredients for the creation of a “higher obligation” are absent. This rationale avoids the need for arbitrary distinctions between coercive and non-coercive judgments (particularly in Lord Hodge’s generous reading of the seventeenth-century authorities) and replaces them with a principled threshold: the cause of action is not consumed because the judicial process has not yet been consummated.

Supreme Court on s. 423 transactions: El-Husseiny v Invest Bank [2025] ✎

Does section 423 of the Insolvency Act 1986 extend to a transaction where a debtor arranges for a company he owns to transfer its assets to a third party for no consideration? In El-Husseiny v Invest Bank PSC [2025] UKSC 4, the Supreme Court unanimously held that it does. The decision confirms that the statutory machinery for unwinding transactions defrauding creditors cannot be defeated by the simple interposition of a corporate personality.

The facts were egregious. The respondent bank sought to enforce judgments of approximately £20 million against the appellant debtor, Mr El-Husseiny. The bank alleged that the debtor had arranged the transfer of valuable assets to his son, Ziad. Crucially, the legal and beneficial title to these assets resided not in the debtor personally, but in companies he owned and controlled. The transfer was effected by those companies for no consideration. The economic result was a diminution in the value of the debtor’s shareholding in the companies, thereby prejudicing the bank’s ability to enforce its judgment against him to the tune of £4.5 million.

The issue was whether such an arrangement constituted a “transaction” within the meaning of section 423(1). The appellant argued that the section required the disposal of property beneficially owned by the debtor himself.

Lady Rose and Lord Richards (with whom Lords Hodge, Hamblen and Stephens agreed) dismissed the appeal. They held that the statutory definition of “transaction” is broad enough to encompass an arrangement where a debtor causes a company he owns to transfer assets at an undervalue.

It is suggested that this conclusion is manifestly correct. The appellant’s case relied on a series of textual contortions which, had they succeeded, would have introduced an incoherent lacuna into the insolvency regime.

The textual analysis

The appellant’s primary submission - that a “transaction” under section 423 implies a gift, and therefore requires the transfer of a proprietary interest by the donor - was rightly rejected. As Lady Rose observed, forcing the statutory definition into the common law framework of gifts is a strained reading unsupported by authority (at [43]). As noted in Goode on Principles of Corporate Insolvency Law, while a gift involves a transfer, a transaction for no consideration need not. A surrender of rights or the release of a debt falls equally within the mischief of the section.

The appellant further argued that the bona fide purchaser defence in section 425(2) presupposed a transfer by the debtor personally. The defence protects a person who acquires an interest “from a person other than the debtor”. The appellant contended this created a logical conundrum: if the debtor never owned the asset, the recipient (Ziad) would technically be acquiring it from “a person other than the debtor” (the company), potentially triggering the defence even if he gave no value. Lady Rose correctly dismissed this as a drafting quirk rather than a definitional limit. In any event, on the facts, Ziad gave no consideration and thus could not avail himself of the defence (at [52]).

Purpose and prejudice

The Court’s analysis of the statutory purpose was equally robust. The requirement in section 423(3) is that the transaction be entered into for the purpose of putting assets beyond the reach of a claimant or prejudicing their interests. The appellant sought to read in an implied requirement that the “assets” in question must be property of the debtor.

The Court rightly accepted the submission of Mr Paul McGrath K.C. that the relevant “prejudice” is the diminution in the value of assets available for enforcement - in this case, the debtor’s shareholding. Whether the debtor strips value from his estate by disposing of personal assets or by hollowing out a company he owns is economically indifferent. To distinguish between them would be to elevate form over substance in a manner the statute does not compel.

The wider context

The decision aligns the statutory remedy with the common law’s treatment of corporate evasion. In Prest v Petrodel [2013] UKSC 34, the Supreme Court held that the corporate veil may be pierced where a person under an existing legal obligation deliberately frustrates enforcement by interposing a company under his control. El-Husseiny confirms that section 423 operates as a statutory parallel to the evasion principle, ensuring that the sophisticated debtor cannot hide behind the corporate structure to defraud creditors. The judgment is a salutary warning that the court will look to the economic reality of value extraction, not just the legal mechanics of the transfer.

Supreme Court on Reasonable Endeavours in Force Majeure Clauses: RTI v MUR Shipping [2024] ✎

Does a duty to use “reasonable endeavours” to overcome a force majeure event require a party to accept non-contractual performance? In RTI Ltd v MUR Shipping BV [2024] UKSC 18, the Supreme Court unanimously held that it does not. The decision restores a welcome degree of doctrinal coherence to the law of force majeure, reaffirming the sanctity of contractual terms against the encroachment of result-oriented pragmatism.

The facts were these. MUR (the shipowners) entered into a contract of affreightment with RTI (the charterers) for the carriage of bauxite. The contract stipulated payment in US dollars. Following the imposition of US sanctions on RTI’s parent company, dollar transfers became effectively impossible. MUR invoked the force majeure clause, suspending performance. RTI rejected the notice, offering to pay in Euros and to indemnify MUR for any exchange rate losses, thereby ensuring MUR received the intended economic value. MUR refused, insisting on its contractual right to payment in US dollars. The issue of was whether the “reasonable endeavours” proviso in the force majeure clause compelled a party to accept non-contractual performance to “overcome” the impediment.

Lord Hamblen (with whom Lords Hodge, Lloyd-Jones, Burrows and Richards agreed) held that “reasonable endeavours” does not require the acceptance of non-contractual performance. The object of the proviso is to maintain the contract, not to rewrite it.

Interpretation as a matter of principle

Lord Hamblen acceded to the view that the interpretation of the clause should be approached as a “matter of principle” (at [29]). While the specific wording of any clause is paramount, the phrase “reasonable endeavours” to “overcome” an impediment is standard boilerplate. As such, it acts as a term of art, importing a meaning consistent with the general law rather than one shaped by the specific factual matrix.

It is suggested that this approach is sound, though it may represent a quiet departure from the strictures of Wood. Lord Hamblen notably eschewed the granular “unitary” exercise undertaken by Males L.J. in the Court of Appeal ([2022] EWCA Civ 1406), declining to rehearse what a reasonable person would have understood the specific text to mean in its specific context. The implication is that where parties employ standard commercial boilerplate, they intend to rely on established contract law principles. However, this rationale remains tacit; the judgment prioritises legal certainty over contextual nuance without explicitly articulating the doctrinal basis for doing so.

Causation and the object of the proviso

Lord Hamblen’s analysis turned on the causal purpose of the clause. Force majeure clauses are concerned with the causal effect of impediments to contractual performance (at [38]). The impediment in this case was the inability to pay in US dollars. The acceptance of Euros would not have “overcome” that impediment; it would merely have substituted a different performance. As Lord Hamblen rightly observed, “the object of the reasonable endeavours proviso is to maintain contractual performance, not to substitute a different performance” (at [38]).

It is suggested that this reasoning is unassailable. To hold otherwise would transform a “reasonable endeavours” proviso (intended as a narrow exception to the excuse of non-performance) into a perverse paradox: a mechanism for performance through non-performance. It would allow a party to bypass an impediment by compelling the counterparty to accept something other than what was bargained for.

The Gilbert-Ash principle extended

The Court reinforced its conclusion by reference to the principle in Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689: that clear words are required to forego valuable rights. Historically, this presumption applied to rights arising under the general law (e.g., set-off or tortious remedies). Lord Hamblen, however, suggested obiter that the principle applies equally to “valuable contractual rights” (at [45]).

This is a significant, albeit understated, development. It implies that a party seeking to rely on a general “reasonable endeavours” clause to alter specific contractual rights (such as the currency of payment) faces a heavy interpretative burden. If parties intend that “reasonable endeavours” should include the surrender of contractual rights, they must say so expressly.

Certainty and the freedom not to contract

Finally, the judgment is a salutary defence of party autonomy and commercial certainty. As Lord Hamblen noted, the “freedom not to contract includes freedom not to accept the offer of a non-contractual performance” (at [42]). It is surprising that this fundamental point was overlooked by the Court of Appeal and the High Court.

Regarding certainty, the Court rightly dismantled RTI’s proposed test, which would have required an assessment of whether non-contractual performance caused “no detriment” to the affected party. Such a test is inherently vague. What constitutes “detriment”? Is it purely financial, or does it include administrative inconvenience or legal risk? Over what period is it measured? These are questions of degree that yield no binary answer. By contrast, the rule affirmed by the Supreme Court provides a bright line: contractual performance is the yardstick. This restores predictability to an area where the lower courts had adopted an unhelpful and unprincipled approach.

Supreme Court on Contractual Interpretative Overreach: Sara & Hossein v Blacks Outdoor [2023] ✎

Does a clause declaring a landlord’s certificate to be “conclusive” preclude a tenant from challenging the sum payable? In Sara & Hossein Asset Holdings Ltd v Blacks Outdoor Retail Ltd [2023] UKSC 2, the Supreme Court answered “no”, but only by advancing a novel construction not advocated by either party. The decision marks a further, and perhaps troubling, extension of the “unitary” approach to contractual interpretation.

The facts were conventional. Blacks leased retail premises from Sara & Hossein (“S&H”) under a standard commercial lease which stipulated that the landlord’s annual service charge certificate was “conclusive” evidence of the amount owed, absent fraud or manifest error. When the landlord issued a certificate for over £400,000 - a drastic increase from the previous year’s £55,000 - Blacks refused to pay, arguing the sum included costs for which they were not liable. The issue was whether the certificate was “conclusive” as to the substantive liability of the tenant (the “pay now, argue never” construction) or merely evidentiary as proof of the landlord’s expense (the “argue now, pay later” construction). 

Lord Hamblen, delivering the judgment of the majority, rejected the landlord’s “conclusive” interpretation as inconsistent with the tenant’s inspection rights. Instead, he formulated a “middle ground” or “pay now, argue later” construction: the certificate was conclusive for the purpose of triggering the immediate payment obligation, but did not preclude the tenant from subsequently disputing liability and counterclaiming for repayment.

It is suggested that Lord Hamblen’s approach is doctrinally problematic. It is emblematic of the looseness that has crept into the law of interpretation following the shift from the rigorous textualism of Arnold v Britton [2015] UKSC 36 to the flexible “unitary” analysis of Wood v Capita Insurance Services Ltd [2017] UKSC 24.

The retreat from textual primacy

The doctrinal tension is familiar. Arnold established that the clearer the natural meaning of the words, the more difficult it is to justify departing from them. Context and “commercial common sense” were not to be invoked to undervalue the language of the provision. In Wood, however, Lord Hodge softened this hierarchy, positing that textualism and contextualism are not conflicting paradigms but tools to be used in a unitary exercise. This shift provided the majority in Blacks with the necessary interpretative latitude.

In Blacks, both Richards L.J. in the Court of Appeal ([2020] EWCA Civ 1521) and Lord Briggs in his dissent accepted that the landlord’s interpretation reflected the natural and ordinary meaning of “conclusive”. Although Wood affirmed that the court should privilege the textual analysis in detailed agreements between sophisticated parties, the Supreme Court permitted ‘commercial common sense’ - specifically, the aversion to making one party a judge in their own cause - to displace that presumption. The decision represents a departure from the rigour of Arnold (‘rescue from a bad bargain’) and, it is suggested, a misapplication of the sophisticated-party textualism guidance in Wood.

The illusion of inconsistency

Lord Hamblen justified this departure by identifying a purported inconsistency between the conclusiveness of the certificate and the existence of inspection rights and dispute resolution mechanisms for apportionment (at [48]). This reasoning is unpersuasive. As Lord Briggs noted in dissent, it is a non-sequitur to assume that a mechanism for resolving disputes about apportionment (a distinct exercise) necessarily entails a commensurate right to dispute the quantum of costs. Nor is it “surprising” that a landlord would bargain for certainty and finality to avoid “disproportionate litigation” over service charges (at [69]).

Commercial common sense or judicial fairness?

The majority’s rejection of the landlord’s construction relied heavily on the assertion that it was “uncommercial” to deprive a tenant of recourse. This engages Lord Sumption’s trenchant warning that “judges’ notions of common sense tend to be moulded by their idea of fairness” (Harris Society Annual Lecture, 2017). This admonition is apposite. Commercial parties are frequently unfair; they bargain for advantage, not equity. By labeling the landlord’s strict contractual right as “uncommercial”, the Court arguably substituted its own view of a reasonable lease for the bargain actually struck.

The danger of the “middle ground”

Perhaps the most significant concern is the Court’s willingness to adopt a “pay now, argue later” construction that neither party had advanced. As Lord Briggs rightly observed, this gives the court “carte blanche simply to make up a solution of its own” (at [61]). Respect for party autonomy requires the court to interpret the contract the parties wrote, not the one a reasonable judge thinks they should have written.

The result in Blacks undermines certainty. If a word as definitive as “conclusive” can be read down to mean “conclusive for the purpose of cash flow but not liability”, the drafting of commercial leases becomes an exercise in prediction rather than precision. It is suggested that the dissent of Lord Briggs is to be preferred. The Supreme Court in Blacks purported to apply the unitary test of Wood; in reality, it reverted to a pre-Arnold interventionism.

Interpretation of Adjectives and Lists: Cantor Fitzgerald v Yes Bank [2024] ✎

In Cantor Fitzgerald & Co v YES Bank Limited [2024] EWCA Civ 695, the Court of Appeal considered the extent to which an adjective paired to a list of nouns qualifies them all.

In this case, the relevant word can be found in the letter of engagement:

We have been advised by the Company that it contemplates one or more financing(s) through the private placement, offering or other sale of equity instruments in any form, including, without limitation, preferred or common equity, or instruments convertible into preferred or common equity or other related forms of interests or capital of the Company in one or a series of transactions (a “Financing”).

Falk LJ held that the adjective at the start of a list of nouns qualifies them all. 

It was held that the “reader will naturally tend to assume that an adjective or determiner at the start of a list qualifies the entirety of it.” I agree with this formulation. In a sentence that reads “I would like to sponsor intelligent charities, people and plans”, as a matter of English ordinary usage, the word “intelligent” can only rationally apply to each item.

A further point was made by Falk LJ that to avoid such an interpretation, “parties did nothing to counter that natural interpretation, whether by omitting the word “private”, including the word “public”, changing the order of the list or otherwise.” It must stand that to avoid a list of nouns being modified by the first adjective, you could change the word order or introduce a different adjective to the second noun (thereby breaking the pattern).

Merits Test for Worldwide Freezing Injunctions: Dos Santos v Unitel [2024] ✎

What standard of merits must an applicant satisfy to obtain a worldwide freezing injunction (WWFI)? In Dos Santos v Unitel [2024] EWCA Civ 1109, the Court of Appeal was invited to jettison the established Niedersachsen test (“more than barely capable of serious argument”) in favour of the more rigorous Brownlie standard (“better of the argument”) derived from the jurisdiction cases. The Court declined the invitation. In doing so, it reaffirmed the distinction between interim remedies and jurisdictional gateways, and usefully rationalised the nomenclature of interlocutory relief.

The appellant, Ms Dos Santos, argued that the requirement for a “good arguable case” on the merits should be aligned with the three-limb test formulated by Lord Sumption in Brownlie v Four Seasons Holdings Inc [2017] UKSC 80. This would require the court to be satisfied that the applicant had “the better of the argument” - a standard significantly higher than the traditional formulation in The Niedersachsen [1983] 2 Lloyd’s Rep 600, which demands a case “more than barely capable of serious argument” but not necessarily one with a greater than 50 percent chance of success. The appellant relied on dicta of Haddon-Cave L.J. in Lakatamia Shipping v Morimoto [2019] EWCA Civ 2203 to suggest the law had already shifted.

The Court of Appeal unanimously rejected this contention. Sir Julian Flaux (with whom Popplewell and Phillips L.JJ. agreed) held that the Niedersachsen test remains the correct standard. Furthermore, the Court suggested that, to avoid future confusion, the merits threshold for freezing injunctions should henceforth be described as a “serious issue to be tried” - harmonising it with the American Cyanamid principles.

It is suggested that the judgment is manifestly correct for three reasons.

The functional distinction

Sir Julian Flaux correctly rejected the appellant’s attempt to conflate the tests for jurisdiction and freezing orders. His Lordship reasoned that they served distinct functional purposes. The jurisdictional inquiry determines conclusively whether a defendant can be brought before the English court (at [99]). It serves a ‘gatekeeping’ function. Conversely, a WWFI is an interlocutory protective measure granted pending a future trial. By keeping these two tests separate, the court correctly prevents the respondent to a WWFI from using the interlocutory proceedings to set it aside through exhaustive evidentiary battles over the “merits” under the guise of a jurisdiction challenge. 

Misreading Lakatamia

Sir Julian Flaux then dismantled the appellant’s reliance on Lakatamia. His Lordship clarified that Haddon-Cave L.J. had not intended to import the Brownlie test into the freezing jurisdiction (at [103]). However, it is not clear, on a close reading of Lakatamia, that Sir Julian Flaux’s contention stands. Haddon-Cave L.J. expressly referenced the Brownlie “good arguable case” test in the context of freezing injunctions in the passage immediately preceding it (at [38]). On the other hand, Haddon-Cave L.J. also referenced the test in the “context of jurisdictional gateways”. It would appear ambiguous.

Notwithstanding the above, Sir Julian Flaux correctly reasoned that Lakatamia does not expressly support a conflation of the merits test for jurisdiction in the context of freezing injunctions. 

The balance of safeguards

A further argument in support of the lower threshold for freezing injunctions is the panoply of safeguards absent in the jurisdiction context. The applicant must give a cross-undertaking in damages - often fortified - and owes a “high duty” of full and frank disclosure (Alliance Bank JSC v Zhunus [2015] EWHC 714). These mechanisms militate against the “invasive nature” of the WWFI. To superimpose a heightened merits threshold would tilt the balance unduly in favour of a potentially elusive respondent.

Terminological Rationalisation

Perhaps the most enduring contribution of Dos Santos is its tidy-up of the vocabulary. Sir Julian Flaux noted that the difference between the Niedersachsen “good arguable case” and the American Cyanamid “serious issue to be tried” is “imperceptible” (at [106]). Popplewell L.J. agreed, finding them “no different in substance” (at [122]). Thus, Sir Julian Flaux reasoned “the two tests should be equated” (at [106]). 

This is a sensible clarification. The proliferation of labels - “more than barely capable of serious argument”, “serious issue to be tried”, “realistic prospect of success” - obscures the reality that these tests aim at the same conceptual target: a claim with “substance and reality”. As Popplewell L.J. concluded, it is preferable to restrict the phrase “good arguable case” to the specific context of jurisdictional gateways where it now bears a technical meaning under Brownlie. For freezing injunctions, “serious issue to be tried” is the safer, and now orthodox, label. 

Supreme Court on the Death of the ‘Notional’ Market and the Supremacy of Mitigation: Sharp v Viterra [2025] ✎

How are damages to be assessed where a buyer defaults on the acceptance of unique goods? Specifically, does the valuation of those goods require the positing of a hypothetical substitute contract on the original terms, or a valuation of the goods in the seller’s hands “as is where is”? In Sharp Corp Ltd v Viterra BV [2024] UKSC 14, the Supreme Court addressed this tension in the context of the GAFTA Default Clause. While the dispute arose from a standard form commodity contract, the judgment serves as a significant restatement of the relationship between the available market rule and the compensatory principle across the law of contract.

The facts were these. Viterra (sellers) contracted to sell lentils and peas to Sharp (buyers) on C&FFO Mundra terms. Following the buyers’ failure to pay, the parties agreed that the goods would be discharged and stored in a warehouse at Mundra to the order of the sellers pending payment. Crucially, after customs clearance but prior to the date of default, the Indian government imposed significant import tariffs on such pulses.

Lord Hamblen, delivering the unanimous judgment of the Court, upheld the “as is where is” approach. Where a seller retains unique goods following a breach, damages cannot be assessed by reference to a theoretical substitute contract on the original terms if that market is impossible in reality. Instead, damages must reflect the value obtainable by a reasonable seller mitigating their loss in the actual market. It followed that the relevant value was the warehouse price at the time of breach, rather than a notional C&FFO price which ignored the intervening tariffs. To hold otherwise would detach the assessment from the compensatory principle, either awarding the seller a windfall or denying them recovery for their actual loss.

This note focuses on the Supreme Court’s treatment of mitigation and the “available market”.

The “Normative Hierarchy” of Damages

Where there is an available market, the notional “substitute contract” is the starting point. However, that measure cannot prevail if the market it posits is impossible or unreasonable in reality. The Supreme Court used Sharp to clarify the normative hierarchy of damages.

Lord Hamblen held that damages are assessed according to a hierarchy where fundamental principles govern specific rules (at [83]-90]). At the apex reside the fundamental principles: the compensatory principle and the duty to mitigate (at [83]). Subordinate to these is the “market rule” (or the GAFTA default clause) which is a mechanism to enforce reasonable mitigation, effectively “deemed mitigation” (at [90]). 

However, this “market rule” mechanism is a servant, not a master. As Lord Hamblen observed, a rigid application of the market rule could, for example, rely on “sales to a related company” which are not arms-length transactions, thereby undermining the compensatory principle (at [89]). It follows that evidence of actual reasonable mitigation must displace the presumption of the “market rule” to give effect to the twin pillars of compensation and mitigation. This clarification privileges commercial substance over legal fiction. 

Correcting the Interpretation of Bunge

Lord Hamblen’s judgment brings welcome clarity to Bunge v Nidera [2015] UKSC 43. The Court of Appeal (and lower courts post-Bunge) had interpreted Lord Sumption’s judgment in Bunge as establishing a strict canon: that damages must be assessed based on a “notional substitute contract” on the exact same terms. Lord Hamblen criticised this approach, noting that the lower courts had applied the measure ‘robotically’, engaging in a search for an identical contract that was divorced from principles of mitigation and compensation (at [118]). His Lordship clarified that while the starting point is the value of the contractual rights (i.e., a “true substitute” on the same terms), if that market is non-existent or inaccessible, the overriding principles require the valuation of the actual goods.

Lord Hamblen’s two-stage valuation method is sound in principle and practice. It privileges commercial substance over legal fiction. A hypothetical valuation of warehoused goods as if they were still afloat, on an abstracted ship, invites speculation and detaches the assessment from the evidence. Conversely, a focus on the actual goods aligns legal incentives with economic efficiency, encouraging the prompt realisation of assets for the highest available value to minimise waste and economic loss for all parties.

In Bunge, Lord Sumption warned against treating a damages clause as a purely financial instrument independent of real-world events (at [21]). Sharp acts as a necessary corrective since then, ensuring that the logic of Bunge is applied practically rather than merely theoretically.

Supreme Court on the Immovables Rule and Foreign Bankruptcy Orders: Kireeva v Bedzhamov [2024] ✎

Can a Russian bankruptcy order, recognised at common law, force the sale of a property owned by the debtor in London? In Kireeva v Bedzhamov [2024] UKSC 39, the Supreme Court unanimously held that it cannot. The judgment, delivered jointly by Lord Lloyd-Jones and Lord Richards, reaffirms the supremacy of the “immovables rule” and marks another significant retreat from the high-water mark of “modified universalism” in cross-border insolvency.

The facts were stark. The respondent, Mr Bedzhamov, was a Russian national who had been domiciled in England since 2017. He owned a valuable property in Belgravia. In 2018, a Russian court declared him bankrupt and appointed the appellant, Ms Kireeva, as his “financial manager” (functionally equivalent to a trustee in bankruptcy). Having obtained recognition of the Russian bankruptcy at common law, the appellant sought an order vesting the Belgravia property in her for the benefit of creditors.

The issue was whether the English court could, or should, exercise its discretion to assist the foreign trustee by effectively handing over title to English land. In the Court of Appeal ([2022] EWCA Civ 35), Arnold LJ had characterised the immovables rule - which generally provides that rights to land are governed by the lex situs - as a choice of law rule (at [110]). Following Dicey, Morris & Collins on the Conflict of Laws (Rule 132), he viewed it as a procedural hurdle that could potentially be overcome by the court’s in personam jurisdiction over the debtor.

The Supreme Court dismantled this analysis, restoring a welcome degree of orthodox certainty to the law of property and insolvency. The Court held that the immovables rule is not merely a choice of law rule but a substantive rule of English law founded on the principle of territorial sovereignty (at [69]). A foreign court simply has no jurisdiction to make orders affecting title to land in England. It followed that the respondent’s proprietary interest in the property remained “unaffected by the Russian bankruptcy order”. 

This conclusion is sound in principle. The Court of Appeal’s characterisation of the rule as procedural was doctrinally incoherent. If the rule were merely procedural, it would invite a discretionary weighing of connecting factors, thereby subordinating the lex situs to foreign judicial fiat. The rule provides a singular and definitive answer because land possesses a unique status in English law, inextricably linked to the sovereignty of the state. Lord Richards’ analysis rightly restores the orthodoxy that rights in rem over English land are immune to alteration by foreign decree, notwithstanding the exigencies of universalist insolvency policy.

The rejection of the appellant’s alternative argument - that the court could exercise its in personam jurisdiction to compel the respondent to deal with the property - was equally emphatic. To allow an in personam order to strip a debtor of property rights that the foreign order could not reach directly would be to countenance an impermissible subversion of the substantive law. In doing so, the Supreme Court overruled Re Kooperman [1928] WN 101, an anomaly that has long troubled the commentators. Its removal from the canon is a welcome rationalisation of the law.

Modified Universalism

Perhaps of greatest significance is the judgment’s treatment of “modified universalism”. The appellant relied on the expansive assistive principles articulated by Lord Hoffmann in Cambridge Gas. That decision posited a common law power to assist foreign officeholders by doing whatever the court could properly have done in a domestic insolvency, even if it meant bypassing standard conflict-of-law rules.

Kireeva confirms that the judicial tide has definitively, and rightly, turned against the Hoffmann-ian vision. The retreat began with Rubin, where the Supreme Court rejected the proposition that foreign insolvency judgments were subject to a sui generis “universalist” enforcement regime. It then continued in Singularis in which the Privy Council clarified that the common law power to assist foreign liquidators was strictly circumscribed by local law and public policy. Lord Richards’ judgment in Kireeva reinforces this trajectory: the power to assist must yield to the substantive rules, including the immovables rule.

The decision in Kireeva resolves a tension between universalist aspirations and established conflict-of-laws rules (rooted in territorial sovereignty). It establishes that while the English courts remain amenable to recognising foreign insolvencies, such recognition does not provide a license to bypass the fundamental tenets of conflict-of-laws rules, and rightly so.

Introduction ✎

What better way to start this blog than with a quote I love?

It comes from Chapter 2 of John Stuart Mill’s On Liberty: 

“He who knows only his own side of the case knows little of that. His reasons may be good, and no one may have been able to refute them. But if he is equally unable to refute the reasons on the opposite side, if he does not so much as know what they are, he has no ground for preferring either opinion... Nor is it enough that he should hear the opinions of adversaries from his own teachers, presented as they state them, and accompanied by what they offer as refutations. He must be able to hear them from persons who actually believe them...he must know them in their most plausible and persuasive form.”

The conclusion: if you cannot refute the other side, you have no right to your own opinion.