2.1 REASONABLE ENDEAVOURS

In Rhodia International Holdings Ltd and another v Huntsman International LLC – Butterworths Law Direct 22.2.07 the issue for the Commercial Court was whether, under a sale and purchase agreement, the Defendant had used its reasonable endeavours to obtain the consent of C Ltd to the novation of the energy supply contract to HSSUK.

It held that an obligation to use reasonable endeavours was less stringent than one to use best endeavours. Where the contract specified certain steps which had to be taken as part of the exercise of reasonable endeavours, those steps would have to be taken, even if to do so could on one view be said to involve the sacrificing of a party’s commercial interests. In this case, the Defendant had been in breach of cl 15.1.2 of the agreement in not providing whatever form of guarantee was acceptable to C Ltd at the material time. It followed that the Defendant had not used reasonable endeavours to obtain the consent of C Ltd to the novation of the energy supply contract.

2.2 SETTLEMENT AGREEMENT

In Australia and New Zealand Banking Group Ltd v Compagnie Noga D’Importation et D’Exportation SA and another – Butterworths Law Direct 22.2.07 the claim between the parties was settled. Clause 9.1 of the settlement agreement provided:

‘Each of the Claimants and the Claimants’ Associates undertakes not to repeat, procure the repetition, or authorise the publication to any person of, any allegations or claims made by it or him in the Proceedings or otherwise in any way related to the Proceedings save that the Claimants shall not be prevented, in pursuing the Claimants’ claims in the Queens Bench Division (Commercial Court) of the High Court action numbers 1999 Folio 404 and 405 against all persons other than ANZ and the ANZ Associates and their respective Affiliates, from making factual statements and submissions in court regarding ANZ’s involvement in the subject matter of those actions. For the avoidance of doubt this Clause prohibits the Claimants and the Claimants’ Associates from alleging dishonesty on the part of ANZ, the ANZ Associates and their respective Affiliates.’

A dispute arose during the subsequent trial against other defendants concerning allegations Noga wished to make. The bank brought a CPR Pt 8 claim seeking a declaration that cl 9.1 was valid and effective.

The Commercial Court upheld the validity of the non-repetition of claims clause, by which the defendant (claimant in different proceedings) undertook not to make any allegations of fraud against the claimant in those separate proceedings. It held that the true construction of the policy was that: (a) the first part prohibited the repetition or publication of the allegations made in the proceedings, including folio 404; (b) the proviso, by way of exception to the first part, permitted Noga to make ‘factual statements and submissions’ in folio 404 in respect of the bank’s involvement in the subject matter of the action; and (c) given the room for misunderstanding between ‘an allegation’ on one hand and ‘a factual submission’ on the other, the second sentence (i.e. the third part) made it plain that no allegation of dishonesty against the bank was permitted. There was no basis for contending that cl 9.1 contained a restraint contrary to public policy. There was no restraint on the prosecution of a crime or anything akin thereto. There was no restraint on Noga’s pursuit of compensation in folios 404 and 405. The agreement had no public implications; it involved the arms’ length settlement of proceedings.

There would be a declaration as to the validity of the settlement agreement.