Confidentiality and ‘non-circumvention’ agreements are widely used by intermediaries in financing and M&A transactions. In ICBC Financial Leasing Co Ltd v Consultants Group Commercial Funding Corporation (trading as CG Commercial Finance) [2016] EWHC 1683 (Comm), the Commercial Court highlighted the importance of clear drafting of such provisions when it decided that a party providing finance had not breached the non-circumvention provision by entering into a direct transaction with the party seeking funding.


In April 2013, Consultants Group Commercial Funding Corporation (“CGCF”), a Californian company specialising in the provision or arranging of finance for “big ticket” capital equipment, was mandated by Golar LNG Ltd (“Golar”), one of the leading owners and operators of Liquefied Natural Gas (“LNG”) owner operator carriers, to arrange financing for the first of thirteen vessels on order from two Korean shipyards (the “Mandate”). These vessels comprised eleven LNG carriers and two Floating Storage and Regasification Units (“FSRUs”).

In turn, CGCF approached ICBC Financial Leasing Co Ltd (“ICBCL”), which is the financial leasing subsidiary of the Industrial and Commercial Bank of China, as a potential provider of finance.  So as to allow CGCF to pass certain confidential information to ICBCL and protect CGCF’s position as financial arranger, CGCF and ICBC executed a confidentiality letter (the “Confidentiality Letter”). 

The Confidentiality Letter contained confidentiality and non-circumvention provisions that required:

Clause A3 

ICBCL and its Representatives all agree (i) to hold Confidential Information of the Company and/or Customer in confidence, (ii) not to disclose Confidential Information to any third party, except as specifically authorized herein or as specifically authorized by the Company in writing, (iii) not to use any Confidential Information for any purpose other than in connection with participating with the Company in the Financing, and (iv) not to circumvent the Company with respect to the Financing”.

“Financing” was defined as “one or more possible loan or lease financings … for Company’s customers and subsidiaries and affiliates (each of which will be referred to hereinafter separately as the ‘Customer’)”.        “Confidential Information” was widely defined, but the Confidentiality Letter made clear that the definition did not extend to information which “at the time of disclosure or thereafter is in the public domain or generally known by the public (other than as a result of its disclosure by ICBCL … in violation of this Agreement)” or which is already known to ICBCL prior to disclosure by CGCF.

When CGCF failed to provide Golar with a funding offer, Golar decided to fund the first eight vessels through Korean export credit banks and told CGCF to stop work.  CGCF hoped for a role providing finance for subsequent vessels and continued to press ICBCL for terms.  However, CGCF did not inform ICBCL that the Mandate had expired or that Golar had obtained funding elsewhere. 

In August 2013, ICBCL provided offer terms, subject to CGCF obtaining an exclusive mandate from Golar.  CGCF did not present the offer terms to Golar and discussions between CGCF and ICBCL eventually ceased.

In October 2013 ICBCL was separately approached (not by CGCF) in relation to five later vessels in Golar’s newbuilding schedule, which led to signature of a term sheet in November 2013 in respect of four of those vessels (the “November Transaction”).

CGCF contended that ICBCL was in breach of the Confidentiality Letter in four respects, including amongst other things, that by entering into the November Transaction ICBCL “circumvented” it with respect to a “Financing” in breach of clause A3 (iv).


The Commercial Court decided that ICBCL was not in breach of the Confidentiality Letter.

ICBCL contended that on a fair reading of the agreement as a whole, the obligation in clause A(3)(iv) was to not circumvent CGCF by misusing Confidential Information. Thus circumvention was permitted, or at any rate was not prohibited by clause A3(iv), provided that it did not use Confidential Information provided by CGCF.

The Commercial Court agreed.  Notwithstanding the fact that clause A3(iv) did not use the words “Confidential Information”, a fair reading of the agreement as a whole leaded to the conclusion that the obligation in clause A3(iv) was “not to circumvent CGCF by misusing Confidential Information” rather than a stand-alone general obligation not to circumvent CGCF regardless of such misuse.

The Commercial Court accepted that CGCF had a legitimate interest in protecting its business connections and ensuring that it was not cut out of any deal. But that interest should not be taken too far. If the identity of the Customer or the fact that it is looking for finance is not generally known and only comes to ICBCL’s attention as a result of disclosure by CGCF, a direct approach by ICBCL to the Customer cutting out CGCF would involve a misuse of Confidential Information and will fall foul of the clause.

However, if the fact that a shipowner is looking for finance is widely known in the market and there is nothing special or distinctive about its requirements, there is no necessary commercial reason why ICBCL should not deal with that shipowner without CGCF, at any rate if (as in the present case) it is the recipient of an entirely separate approach authorised by the Customer through another intermediary. The Commercial Court considered there was no valid reason to approach the construction of the Confidentiality Letter with a predisposition to find that it prevented ICBCL from doing so in such circumstances.

As the Commercial Court found, as a matter of fact, that ICBCL had not misused Confidential Information in entering into its financing transaction there could be no breach of the non-circumvention provision in clause A3(iv) of the Confidentiality Letter.

The Commercial Court also found that there were further reasons for ICBCL not being in breach. Although “Customer” and “Financing” were not carefully defined in the Confidentiality Letter:

  1. Golar was not a “Customer” as required by the relevant clause of CGCF at the relevant time, as Golar ceased to be a “Customer” of CGCF when CGCF was told by Golar to stop work.
  2. The transaction undertaken by ICBCL was not covered by the meaning of “Financing” within the Confidentiality Letter, as the “Financing” which the parties discussed did not extend to the financing either of the Golar newbuilding programme as a whole or of any of the four 2014 vessels which became the subject of the November transaction. 

As a consequence CGCF’s claim for “circumvention” failed. In the words of the Commercial Court circumvention “involves an element of going around or avoiding an obstacle of some sort. If there is no obstacle to be avoided, it is hard to see that any question of circumvention could arise. That is the straightforward position which applied here. The November Transaction was entirely independent of any discussions which had taken place with CGCF.”


Confidentiality and ‘non-circumvention’ agreements are widely used by intermediaries in financing and M&A transactions. It is critical that parties to such agreement properly draft and understand the scope of the obligations contained in such agreements.

In the context of global financial and M&A transactions, information concerning ‘opportunities’ for transactions may be gained from numerous sources. Some of these may be public sources; others may be confidential. In seeking to agree a ‘non-circumvention’ provision parties should consider what it is that the party receiving information is disentitled to ‘circumvent’. The scope of the restriction should then be clearly drafted into the agreement to seek to avoid future disputes.

In drafting any restriction, it is important for intermediaries relying on such clauses to ensure that the scope of any restriction is legitimate in relation to the confidential information or interest that it seeks to protect. A provision that seeks to entirely prevent a transaction taking place absent the involvement of the intermediary, even where there is no legitimate interest of the intermediary to protect, might well be void as a restraint of trade.