ASTOR MANAGEMENT AG AND ANOTHER V ATALAYA MINING PLC AND OTHERS

[2018] EWCA Civ 2407, Court of Appeal, Lady Justice Macur, Lord Justice Simon and Dame Elizabeth Gloster, 1 November 2018

Contract - Mining agreement obliging one party to secure senior debt finance by certain date or deferred compensation would become due - Funding obtained from intra-group loans - Whether condition remained binding - Principle of futility - Construction of agreement

Under a Master Agreement, EMED (the defendants) purchased 49 per cent of Astor's interest in a copper mine which was not being operated at the time but which had extensive reserves of copper. Astor relinquished its claims to the remaining 51 per cent. Astor received shares in Atalaya and also payment of €59.8 million on a deferred basis over six years. Payment of this "Deferred Consideration" was triggered by the granting of permission to EMED to restart mining activities and the securing by EMED of a senior debt facility. Mining restarted in July 2015 and Astor claimed the Deferred Consideration. It was common ground that permission had been given, but EMED argued that no senior debt facility had been obtained: instead, EMED had obtained funding by means of intra-group loans. Leggatt J ([2017] 1 Lloyd's Rep 476) held that the intra-group loans did not constitute senior debt finance so that the Deferred Compensation had therefore not fallen due under the Master Agreement.