2013 will undoubtedly be known as the year of the Jackson Reforms. The landscape has been dominated by the court demanding increasingly exacting standards of procedural compliance, in particular in relation to case management and costs budgeting and often with Draconian consequences.
Yet while attention has been focused on this higher profile procedural litigation, developments in the substantive law, although perhaps more subtle, should not be overlooked. In particular, the court's attitude towards certain substantive doctrines and long-standing principles in the law of contract appears by contrast to have relaxed over the course of 2013.
Yam Seng PTE Ltd v International Trade Corp Ltd [2013] EWHC 111 (QB)
In this case the court went against the grain of hundreds of years of contract law and the "traditional English hostility" towards the doctrine of good faith to recognise, firstly, a duty of good faith to perform contracts honestly and, secondly, general standards of fair dealing.
The court considered other legal systems, both common and civil, and legislation such as the Unfair Terms in Consumer Contracts Regulations 1999, to conclude that refusing to recognise a core value of honesty would be "swimming against the tide". It stopped short of finding a default duty implied by law into all commercial contracts but found a duty could be implied in fact based on the presumed intention of the parties.
Although it concerns the performance rather than negotiation of contracts, this decision nonetheless appears avant garde in the context of the court's historic reluctance to interfere in the freedom of commercial parties to strike their own bargains with one another.
Ust-Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorsk Hydropower Plant LLP [2013] UKSC 35
The emphasis of the court was again on protecting the rights of the contracting parties – here to have their dispute resolved through arbitration and not to be sued. It found that where a valid arbitration agreement exists it has the power (s37 Senior Courts Act 1981) to grant an anti-suit injunction to prevent the continuation or commencement of proceedings in a jurisdiction outside the Brussels Regulation / Lugano Convention regime, including where proceedings are not yet even contemplated.
The court's deployment of arguably its most powerful tool on the basis of the paternalistic reasoning of protecting parties' contractual rights again represents a progressive approach, given its usual position that commercial parties should themselves bear the risk of their contractual arrangements.
Telford Homes (Creekside) Ltd v Ampurius Nu Homes Holdings Ltd [2013] EWCA Civ 577
Our final case is a further example of the court calling into question a principle previously well accepted. Years of authority suggested that a repudiatory breach of contract entitling the innocent party to treat itself as discharged from its contractual obligations is not capable of cure by the breaching party (with the exception of anticipatory breaches). However, the Court of Appeal has now cast doubt upon this principle: it held here that an otherwise repudiatory breach that can be – and is – cured such that the innocent party suffers no actual loss, may prevent that breach from being held repudiatory. Cure therefore goes towards the question of whether a breach is considered repudiatory in the first place – ie whether it deprives the innocent party of substantially the whole benefit of the contract.
Following this decision it will be important to consider with clients potentially facing a claim for breach of contract whether there is any course of action available to them through which they may cure an otherwise repudiatory breach. This is particularly relevant to the situation where a party has suspended or delayed performance of its contractual obligations (increasingly common in the current financial climate).
Conclusion
On the one hand the court's approach to procedure appears increasingly strict. Yet in the context of contract law (an area in which the court has traditionally been conservative) it has by contrast taken a more progressive approach and relaxed its attitude towards doctrines of which it has historically been nervous. The court's approach at the turn of the new year thus appears, appropriately, Janus-faced.
