Global Coal Ltd v London Commodity Brokers

A standard-form commercial agreement should be interpreted objectively, by reference to its language, the agreement as a whole and the relevant background. Where uniform meaning is intended across different counterparties, the factual matrix should be considered at an appropriately general level.

On its proper construction, a contractual restriction on using specified products may regulate use of the products themselves, rather than only use of intellectual property rights in them. The practical commercial context, including the simplicity and enforceability of the restriction, may support that construction. Potential competition-law or restraint-of-trade issues should not alter the interpretation where the parties agree that those issues are to be considered separately.

Global Coal developed the SCoTA standard terms and licensed traders and brokers to use its products and trade marks. Its standard Product Licensing Agreement restricted use of the products, including entering into, arranging or facilitating transactions with persons who were not licensed.

Global Coal alleged that London Commodity Brokers had brokered two coal trades on SCoTA terms involving unlicensed counterparties. The preliminary issue was whether the restrictions concerned use of the products themselves or only use of Global Coal’s intellectual property rights in them. The court also considered the agreement’s standard-form character, its surrounding circumstances and its termination provisions.

1. Interpretation principles. The court applied the objective approach stated in Investors Compensation Scheme Limited v West Bromwich Building Society [1998] 1 WLR 896 and summarised in Chartbrook Limited v Persimmon Homes Limited [2009] 1 AC 1101. The meaning was to be determined from the language used, the agreement as a whole and the background reasonably available to the parties.
2. Uniform meaning. Because the PLA was a standard form intended for different types of market participant, it was intended to have a uniform meaning in all important respects. The relevant background was therefore to be assessed at a high level of generality. The bespoke commission arrangement between the parties was not given significant interpretative weight.
3. Construction of the restrictions. The words “use the globalCOAL Products” naturally referred to the Products themselves, not merely to intellectual property rights in them. This reading was supported by the recitals, the definitions of “Purpose” and “Transaction”, clauses 2.1, 2.2, 4.1, 5.2 and 6.2, and the commercial purpose of creating a market confined to licensed participants.
4. Contractual convention. Although strict intellectual-property law did not give Global Coal complete control over every use of the SCoTA contract or its specifications, the parties had adopted a contractual convention that Global Coal had practical control over use of the Products. Clause 2.2 therefore prohibited a licensee from entering into, arranging or facilitating a transaction on SCoTA terms involving an unlicensed counterparty, whether or not the conduct separately infringed intellectual property rights.
5. Termination and enforcement. Clause 8.2 was construed consistently with clause 2.2 as requiring cessation of use of the Products after termination. The simplicity and practicality of enforcing a restriction based on licensing status and SCoTA terms supported Global Coal’s construction. Potential issues under Article 82, the Competition Act 1998 and the common-law restraint-of-trade doctrine were left for determination separately and did not affect interpretation.
6. Global Coal succeeded on the preliminary interpretation issue. The court directed that the appropriate order and further case-management directions be addressed subsequently.

This was a first-instance decision on a preliminary issue. No appellate history was stated in the judgment.