The first issue was whether or not the parties entered into a EUR 169 million transaction to acquire a 50% stake in a business. The Court ruled that they did not. The document recording the transaction was not signed by the defendant. In M&A practice, which the parties are thoroughly familiar with, the bar for agreement to be expressed through other channels is high. The communications relied on by the claimant do not clear that bar. Although advisers did indeed make reassuring statements, there is not a sufficient factual basis in the record to attribute the advisers’ statements or conduct to the defendant. There is nothing to show that the defendant itself said or did anything that a reasonable person in the same circumstances would have understood to mean that certain advisers were responsible for conveying final approval to the claimant.

The second issue was whether the defendant’s alternative obligation (pay the EUR 30 million fee) should be modified, mitigated or reduced in some way in light of the current COVID-19 circumstances. The Court rejected this change-of-circumstances defence. The Court noted that the fee allocates risk and expresses commitment, and caps the defendant’s exposure. This purpose would not be accomplished if the fee were to be reduced based on a decline in the value of the business. In that scenario, any downturn would make it that much easier to walk away. It makes sense to demand strict performance in a scenario where this preserves the contractual risk allocation and puts the defendant in an enviable position in a crisis: walking away with capped exposure, even at a high upfront price. The payment of the fee is the best way to preserve the parties’ contractual equilibrium. The best course is to rely on the parties’ judgement and enforce the fee as written.

The judgment is available on our website www.ncc.gov.nl (see: Judgment List).

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