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Branch News

Interpreting Contracts – Where is the Supreme Court leading us?

24 November 2017 Branch News
Amanda Lee, PRO, CIArb London Branch

The London Branch and the LMAA held a joint seminar on the topic “Interpreting Contracts – Where is the Supreme Court leading us?” at Holman Fenwick Willan on 20 November 2017. 

LMAA L to R: Paul Rose, David Brynmor Thomas, Clare Ambrose, The Rt Hon the Lord Clarke of Stone-cum-Ebony & Brian Perrott

The session, which was chaired and moderated by The Rt Hon the Lord Clarke of Stone-cum-Ebony, comprised presentations from a distinguished panel of speakers, namely Brian Perrott (HFW), Clare Ambrose (20 Essex Street) and David Brynmor Thomas (39 Essex Chambers). 

Following an introduction from Ian Gaunt (LMAA) Brian Perrott provided an overview of contractual interpretation under English law, drawing inspiration from Lord Sumption’s lecture ‘A Question of Taste: The Supreme Court and the Interpretation of Contracts’. Addressing four key concepts: words or language; the factual matrix; the notion of intention; and business or commercial common sense, he provided a concise overview of the key case law before observing that what commercial parties seek from contractual interpretation is recognition that things are not black and white, certainty, respect for the autonomy of the words used and for the court not to rewrite their bargains or search for ambiguity. Brian Perrott concluded that stability was key and that there would be more to come on this issue in future judgments. 

Turning to implied terms, Clare Ambrose focused on terms that are implied on the basis that they are necessary for contracts to work and/or as a matter of presumed objective intention, outlining the traditional approach to interpretation of such terms and discussing the approaches taken by Lord Hoffman, Lord Neuberger and Lord Sumption. She concluded by noting that the test of whether a term was necessary for the contract to work remained central before highlighting a number of practical difficulties as to what evidence should be admissible when interpreting implied terms: market practice, the parties’ own views, subsequent conduct or pre-contractual negotiations.   

David Brynmor Thomas concluded the presentations by discussing the interpretation of dispute resolution clauses, with particular reference to Premium Nafta. Noting that historically fine distinctions had been recognised by English courts in respect of English arbitration clauses, he observed that Premium Nafta appeared to render the interpretation of such clauses rather more straightforward: a robust approach to interpretation was adopted by Lord Hoffman, moving away from narrow semantic distinctions. Addressing difficulties arising in cases where the court was required to consider whether a clause was intended to apply to different contracts, different types of claim and other parties, David Brynmor Thomas highlighted the need to consider the parties’ intentions. 

After a lively question and answer session led by The Rt Hon the Lord Clarke of Stone-cum-Ebony, Margaret Bickford-Smith (Immediate Past Chair, London Branch) concluded the session with a note of thanks on behalf of the Branch, following which HFW welcomed the speakers and attendees to a reception.