Interactive Investor Trading Ltd v City Index Ltd

A contractual reference to performance during this agreement ordinarily covers the contractual term, not a post-termination wind-down period, where the document consistently distinguishes the two. That construction governs commission sharing and marketing restrictions unless the agreement clearly provides otherwise.

Confidentiality clauses must be read coherently with obligations to retain records and with the commercial purpose of the arrangement. Client names, addresses and contact details supplied by an introducer were not confidential information to which post-termination return and non-use obligations applied. Courts will not imply a term that contradicts express wording or is unnecessary. A migration obligation requiring reasonable assistance is triggered by a request; a client’s choice to remain does not itself establish a breach.

Interactive provided online financial information and operated websites. City Index provided CFD and spread-betting trading services. Under two similar agreements, Interactive introduced clients to City Index, which supplied branded trading services and shared commission with Interactive.

City Index terminated both agreements. Each contained a six-month Wind Down Period. The parties sought declarations concerning commission during that period, the use of client information, marketing and solicitation, migration obligations, and whether City Index had to terminate its contracts with clients at the end of the Wind Down Period.

His Honour Judge Mackie QC, sitting in the Commercial Court, decided most issues in Interactive’s favour but rejected the proposed obligation to terminate client contracts: [2010] EWHC 2509. City Index appealed, and Interactive cross-appealed. The central issue was the proper construction of the agreements and the scope of the parties’ obligations during and after the Wind Down Period.

1. Disposition. Lord Justice Tomlinson gave the leading judgment. Lady Justice Black and Lord Justice Ward agreed. The appeal was allowed and the cross-appeal dismissed.
2. The agreements distinguished between the period before termination, the notice period and the six-month Wind Down Period following termination. The carefully drafted language was presumed to be used consistently within the four corners of each agreement. The expression during this agreement therefore referred to the contractual term and did not extend to the Wind Down Period.
3. Under clause 9.1 of the CFD agreement, Interactive was not entitled to commission on trades executed during the Wind Down Period. The result was not absurd, particularly because Interactive could introduce clients to competing providers during that period. The equivalent provision in the spread-betting agreement had the same effect. Its inclusion among provisions surviving termination preserved accrued payment rights but did not extend the commission-sharing obligation to later trades.
4. Clauses 13.1 and 13.2 of the CFD agreement imposed mutual and co-extensive restrictions. Clause 13.2 did not prohibit City Index from marketing non-branded services during the Wind Down Period. The spread-betting agreement contained no equivalent prohibition, so solicitation during the Wind Down Period was not barred under that agreement. No term could be implied to prevent such solicitation: it was unnecessary and, in the CFD agreement, would contradict the express wording.
5. Client names, addresses and contact details supplied by Interactive were not confidential information for the purposes of the agreements. Reading clauses 10.2 and 10.3 as requiring City Index to cease using and return all such records was incompatible with the need to retain regulatory and commercial records. The electronic transfer process did not alter the conclusion that the information was imparted by Interactive.
6. Clause 15.4.5 did not require City Index to terminate its contracts with clients at the end of the Wind Down Period. Branded Trading would cease when the link to the branded platform was severed, and the court had no evidential basis for imputing a compulsory termination obligation. Clause 15.4.6 required reasonable assistance with migration when assistance was requested. A client who actively wished to remain with City Index did not make City Index’s failure to assist a breach. The court declined to grant City Index’s broad marketing declaration because the enforceability of clause 15.4.7 remained to be determined.

1. Court of Appeal (Civil Division). Allowed City Index’s appeal and dismissed Interactive’s cross-appeal.
2. High Court of Justice, Queen’s Bench Division, Commercial Court. His Honour Judge Mackie QC resolved the construction issues broadly in Interactive’s favour, while rejecting the proposed obligation to terminate client contracts at the end of the Wind Down Period: [2010] EWHC 2509.