Europa Plus SCA SIF & Anor v Anthracite Investments (Ireland) Plc

Defined contractual terms are construed by reference to their wording, the contract as a whole, the relevant background and commercial consequences. A definition carries less weight where the parties use the term inconsistently elsewhere in the agreement. Interpretation remains an iterative exercise and may lead to a meaning different from the defined meaning where the contractual language and commercial context require it.

A term may alternatively be implied where it is reasonable and equitable, necessary for commercial or practical coherence, obvious, capable of clear expression and consistent with the express terms. Applying those principles, a provision requiring payments received in respect of defined shares to be paid over included payments relating to predecessor shares.

Europa Plus SCA SIF and, contingently, Anthracite Balanced Company (R-26) Ltd claimed sums from Anthracite Investments (Ireland) plc under a 2012 Termination Agreement concerning total return swaps and investments in Duemme hedge funds.

The disputed payments had been received in 2008 in respect of shares in two funds which were later merged into a different fund. The principal issue was whether paragraph 14 of the Termination Agreement, referring to payments received in respect of the defined “Duemme Shares”, covered those earlier payments. A contingent claim and a counterclaim concerning repayment of a further payment also arose.

1. Construction. The court construed the Termination Agreement objectively, using the language, the agreement as a whole, the factual background reasonably available at the date of contracting and the commercial consequences of the rival constructions. The use of a defined term is important but is not conclusive where the term is used inconsistently elsewhere in the document.
2. “Duemme Shares” was used in different provisions to refer both to the shares then held in the New HP Fund and to the earlier Series 2 Fund and Old HP Fund shares. Paragraph 14 was a separate provision dealing with AII’s liability for payments received before or after transfer registration. Its purpose was to transfer to Europa the economic benefit previously belonging to Balco, rather than confer a windfall on AII.
3. The commercial structure, paragraphs 10 to 14, the trust imposed by paragraph 13, the limited-recourse provision in paragraph 18 and the carve-out in paragraph 15 all supported inclusion of the earlier shares and their proceeds. AII was therefore obliged to pay Europa the July 2008 payments.
4. If that construction were wrong, a term referring also to predecessor shares would have been implied. Without it, the agreement would lack commercial and practical coherence. The term was necessary, obvious, reasonable, capable of clear expression and consistent with the express terms.
5. Europa’s claim for €1.3 million succeeded. Balco’s contingent claim did not arise. AII’s counterclaim for €1.6 million failed because the payment had not been made by mistake. The judge stated that, if necessary, the payment would have been recoverable as money paid under a mistake of law.