Guidance on the interpretation of a poorly drafted confidentiality agreement has been given by the Court of Appeal in Dorchester Project Management Ltd v BNP Paribas Real Estate Advisory Property Management UK Ltd [2013] EWCA Civ 176.

Dorchester Project Management Limited (D) had detailed and commercially sensitive knowledge of a land development site.  D approached BNP Paribas (B) with a view to B finding a financial backer to help it purchase the land.  However, no details about the land would be provided by D to B until a confidentiality agreement had been signed.  That agreement stated that B could not circumvent D with a view to pursuing the opportunity directly with any third parties.  It also stated that no confidential information could be disclosed by B to any third party (e.g. one of B's clients) unless the third party was bound by similar confidentiality undertakings, and that B would be responsible for any unauthorised disclosure, whether by B or any receiving third party.  Relevant confidential information was disclosed to B's client without B first entering into a back-to-back agreement with that client. B's client was then successful in its bid to acquire the site, effectively circumventing D.

The Court of Appeal held that although the confidentiality agreement was poorly drafted, a purposive approach should be taken and the court should consider the parties' intentions at the time the agreement was signed. It said that D and B were alive to the risk of circumvention or disclosure by a third party, and it was logical for B to be liable for such circumvention and disclosure.  D therefore succeeded in its claim.

This is a logical outcome and shows that confidentiality agreements will be interpreted in a similar way to any other contractual provisions.  However, it also highlights the importance of drafting covenants carefully; D could have avoided costly litigation had the original agreement been drafted in clearer terms.