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.”