In a recent decision, the High Court has held that a broadcaster was entitled to terminate a media rights agreement relating to premier club rugby union competitions in Europe as a result of the postponement of the final stages of the 2019-20 season due to the Covid-19 pandemic: European Professional Club Rugby v RDA Television LLP [2022] EWHC 50 (Comm).
The relevant clause provided that, if a force majeure event prevented, hindered or delayed performance for a continuous period of more than 60 days, "the party not affected by" the event could terminate on 14 days' written notice. The court found that the clause was triggered, rejecting an argument that it could not be relied on where (as here) both parties had been affected by the pandemic. It was also irrelevant that the party in breach had not served a notice expressly notifying force majeure. The right to terminate depended on the force majeure event having had the relevant effect for more than 60 days; it was not dependent on the party in breach having served notice of force majeure.
This decision illustrates how similar factual circumstances can give rise to very different results depending on the contractual protections parties have been able to negotiate. In this case, it was clear that the pandemic qualified as a force majeure event, as the relevant definition referred expressly to "epidemic", and in any event was drafted non-exhaustively to cover circumstances beyond a party's reasonable control including the circumstances listed. In contrast, in a recent case relating to a contract for football broadcasting rights (considered here), the clause was drafted more restrictively and neither party sought to rely on force majeure – the broadcaster seeking instead to rely (though unsuccessfully) on a material adverse change clause.
Background
The claimant, EPCR, is the governing body and organiser of the two premier club rugby union competitions in Europe (the "Competitions"). In 2018 it licensed its media rights in the Competitions for the 2018-19, 2019-20, 2020-21 and 2021-22 seasons to the defendant, RDA, under a Media Rights Agreement.
The contract contained a force majeure clause, which defined a "Force Majeure Event" as:
"any circumstances beyond the reasonable control of a party affecting the performance by that party of its obligations under this Agreement including inclement weather conditions, serious fire, storm, flood, ... epidemic, embargoes and labour disputes of a person other than such party".
The relevant clause (clause 26 of Schedule 6) provided as follows:
"26.1. If either party is affected by a Force Majeure Event
which prevents that party from performing its obligations under
this Agreement, the affected party shall promptly notify the other
of the nature and extent of the circumstances in question.
26.2. Subject only to clauses 1.7 of Schedule 2 and 26.3 of this
Schedule 6, neither party will be liable neither for any delay in
performing its obligations nor for failure to perform its
obligations under this Agreement if and to the extent that the
delay or failure is caused by a Force Majeure Event ....
26.3. If either party is affected by a Force Majeure Event, it
shall use all reasonable endeavours to mitigate and/or eliminate
the consequences of such Force Majeure Event ....
26.4. If the Force Majeure Event prevents, hinders or delays a
party's performance of its obligations for a continuous period
of more than 60 days, the party not affected by the Force Majeure
Event may terminate this Agreement by giving 14 days' written
notice to the affected party."
Clause 1.7 of Schedule 2 provided (in simplified terms) that if any relevant match feed was not delivered in accordance with the contract, for any reason including a Force Majeure Event, RDA would be entitled to a pro rata reduction of its rights fees for that season.
On 20 March 2020, EPCR wrote to RDA stating that, following the World Health Organisation's decision on 11 March 2020 to characterise COVID-19 as a pandemic, the board of EPCR had determined in the interests of safety that the quarter-finals, semi-finals and finals of the Competitions would have to be postponed.
On 30 April 2020, RDA refused to pay the final instalment for the 2019-20 season (which was due on 1 May) while the season was suspended and it was not clear whether, or when, the remaining matches would take place.
On 13 May 2020, EPCR wrote to RDA in terms which made clear that the remaining matches would not take place before the season ended on 20 June, but the aim was to hold the final stages at the beginning of the following season in September/October (and ultimately that is what happened).
On 5 June 2020, RDA served notice purporting to terminate the Media Rights Agreement under clause 26.4, on the grounds that EPCR had been prevented, hindered or delayed for a continuous period of over 60 days as a result of a Force Majeure Event (the Covid-19 epidemic): from staging each Competition in a way that did not materially dilute or devalue the rights licensed under the agreement; and from making the "Available Live Matches" (defined to include the quarter-finals, semi-finals and final) available for live transmission during the relevant season.
EPCR argued that RDA was not entitled to serve notice of termination under clause 26.4 because it too was a party "affected by a Force Majeure Event" under clause 26.3 and thus was obliged instead to use all reasonable endeavours to mitigate and/or eliminate the consequences of such Force Majeure Event. EPCR's position was that, in purporting to terminate, RDA had wrongfully repudiated the agreement. EPCR served its own notice of termination on the basis of that alleged repudiation.
EPCR then brought the current proceedings for damages it said it had suffered as a result of RDA's wrongful repudiation. RDA counterclaimed for the return of certain prepayments and an adjustment of the sum paid for the 2019-20 season under clause 1.7 of Schedule 2.
Decision
The court (HHJ Pelling QC sitting as a High Court judge) dismissed the claim for wrongful repudiation, finding that RDA had been entitled to terminate under clause 26.4.
The judge noted that it was common ground, and in any event he held, that the onset of the pandemic was a Force Majeure Event as defined in the contract, since "epidemic" as used in the contractual definition includes a pandemic and in any event the pandemic was a circumstance "beyond the reasonable control of a party" which affected performance of the contract.
The judge rejected EPCR's contention that the contract permitted it to complete the Competitions in any following season as long as it fell within the overall contract term, and therefore the 60 day period under clause 26.4 never started running. On a proper construction of the contract, EPCR was required to stage each of the Competitions during each season, which for 2019-20 ended on 20 June 2020, and to make available the "Available Live Matches" for each season before that season ended. By the time RDA gave notice of termination, EPCR had made clear that this would not happen, and there was no dispute as to whether that was the result of the pandemic.
Clause 26.2 protected a party from liability for a failure to perform, or a delay in performance, caused by a Force Majeure Event. The opening words of that clause qualified the exclusion of liability by: (i) imposing under clause 26.3 a condition that the party in breach must use all reasonable endeavours to mitigate and/or eliminate the consequences of the Force Majeure Event (so that if it failed to take such steps, it could not take advantage of the protection afforded by clause 26.2); and (ii) making it clear that the right to a pro rata reduction of fees under clause 1.7 of Schedule 2 was not affected by the force majeure clause.
None of these provisions affected the right to terminate under clause 26.4 if the counterparty was prevented, hindered or delayed from performing its obligations by a Force Majeure Event for a period of more than 60 days.
The judge rejected EPCR's submission that RDA could not terminate under clause 26.4 because that right was given to "the party not affected by the Force Majeure Event" and, by its own admission, RDA was affected by the Force Majeure Event (in that some of its own partners and sub-licensees were refusing to pay their invoices due to the postponement of matches caused by the pandemic). This was a mistaken construction of the agreement. The phrase "the party not affected by the Force Majeure Event" in clause 26.4 referred simply to the party owed the performance that had been prevented, hindered or delayed. It did not matter that RDA was also affected in a general sense by the same Force Majeure Event.
He also rejected EPCR's submission that RDA could not take advantage of clause 26.4 because EPCR had not served a notice expressly referring to clause 26.1. That was an "absurd" construction because it would mean that the party in breach due to force majeure could preclude its counterparty from serving notice under clause 26.4 simply by not serving a clause 26.1 notice. There was no justification for such a construction. The obligation to give notice under clause 26.1 was not a condition precedent to the application of the remainder of the clause. In any event, clause 26.1 did not set out formal requirements and there was no reason why EPCR's letter of 20 March (referred to above) could not, if necessary, be regarded as a clause 26.1 notice.
RDA succeeded in its counterclaim for adjustment of payments under clause 1.7 of Schedule 2. EPCR was however entitled to an outstanding Minimum Guarantee payment which accrued before the notice of termination took effect.
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