On 20 December 2023, the Commercial Court (Dame Clare Moulder DBE sitting as a High Court Judge) gave judgment in the first of several disputes to be tried between companies in the Al-Roumi group (in this instance Aston Martin MENA Limited (“AMMENA”)) and Aston Martin Lagonda Limited (AML”)[2023] EWHC 3285 (Comm).  AML is the well-known luxury car manufacturer and AMMENA is its exclusive distributor in the MENA region.  Between 2018 and 2021 AML acted as AMMENA’s agent in the MENA region under the terms of an Agency Agreement and the trial concerned disputes as to its proper construction, whether AMMENA had been entitled to terminate it and the extent of any duty of good faith arising under it (either express or implied).

AMMENA’s claims arose out of AML’s failures to pay AMMENA contractually guaranteed minimum payments in 2019 and 2020 amounting to around £5.7 million.  AML claimed it was entitled to set-off against those claims expenses it had incurred in relation to a dispute with the Aston Martin dealer in Saudi Arabia.  The judgment rejected AML’s case in that respect and concluded that AMMENA had been entitled to terminate the Agency Agreement.  Subject to certain other set-offs, AML was held liable to pay AMMENA around £5.3 million.  Interest and costs will be determined at a further hearing on 12 January 2024.

The Court went on to consider, applying Re Compound Photonics Group Ltd [2022] EWCA Civ 1371, whether in 2021 after the termination of the Agency Agreement and before AMMENA started operating as the MENA distributor on 1 October 2021, AML had acted in breach of a duty of good faith, either express or implied, and the extent of any such duty.  The Court concluded that AML was entitled not to take into account the effect of its actions on AMMENA and therefore was not in breach of the duty.  The case is an interesting addition to the developing law of contractual duties of good faith in England.

The judgment is available here.

Jeff Chapman KC and Sam Ritchie acted for AMMENA, instructed by Ben Trust at CMS Cameron McKenna Nabarro Olswang LLP.