EXCLUSION CLAUSES AND DELIBERATE BREACHES

Mr Justice Flaux in AstraZeneca UK Ltd v Albemarle International Corporation [2011] EWHC 1574 (Comm), [2011] All ER (D) 162 (Jun) held that the question whether an exclusion or limitation clause encompasses a deliberate, repudiatory breach of contract is one of construction of the clause in question. While the authorities support the adoption of a strict approach to the construction of such clauses, it was held (in this respect declining to follow the decision of Gabriel Moss QC in Internet Broadcasting Corporation v MAR LLC [2009] EWHC 844 (Ch), [2009] 2 Lloyd’s Rep 265 (on which see our November 2009 issue, pp10-12)) that there is no presumption against a clause being construed so as to cover a deliberate, repudiatory breach.

The facts

The parties entered into a contract under which the claimant gave to the defendant the ‘first opportunity and right of first refusal’ in the event that the claimant decided to purchase supplies directly in the marketplace. In breach of this provision, the claimant entered into a contract with a third party and, on this basis, was found to be liable in damages to the defendant. The issue with which we are concerned relates to the construction of an exclusion clause in the contact. The clause was relied upon by both parties. The defendant relied upon the first part of the clause for the purpose of seeking to limit any liability which it incurred towards the claimant. The claimant submitted that the defendant was not entitled to rely on the clause because it had committed a deliberate, repudiatory breach of contract and such a breach did not fall within the scope of the clause. The final part of the exclusion clause was also relied upon by the claimant for the purpose of limiting its exposure to damages for breach of contract. Here it was the defendant who submitted that the claimant was not entitled to the protection of the clause because the effect of its application would be to render the claimant’s obligation under the contract no more than a statement of intent.