United Company Rusal Plc v Crispian Investments Ltd & Anor

A contractual right of first refusal must be construed by applying ordinary principles of commercial contract interpretation. A special presumption requiring unusually clear language to restrict share transfers does not apply to a shareholders’ agreement made for the parties’ own commercial purposes.

Where a right of first refusal is granted jointly, it must be exercised jointly unless the agreement provides otherwise. A purchaser who is itself a beneficiary of the right, or an affiliate or concert party, is not a bona fide third-party purchaser. The triggering offer must be genuine and made at arm’s length for the shares alone.

The claimant and defendants were parties to a shareholders’ agreement governing their shareholdings in Norilsk Nickel. The agreement required Crispian, when selling shares, to grant Rusal and Whiteleave a joint right of first refusal based on the price proposed by a bona fide third-party purchaser.

Crispian served a notice based on an offer from Bonico, an affiliate of Whiteleave, for approximately 3.99% of the shares. Rusal challenged the notice, arguing that the offer did not trigger the right of first refusal and that the notice misstated the contractual rights and completion period. Following an expedited trial of preliminary issues, the central question was whether the notice validly commenced the contractual procedure.

1. Interpretation. The Framework Agreement was a detailed commercial contract between sophisticated parties. It fell to be construed according to the ordinary unitary principles applicable to commercial contracts, considering the language, the agreement as a whole, the relevant background and commercial consequences. No special presumption or heightened clarity requirement applied merely because the contract restricted dealings in shares.
2. Nature of the right. Clause 2.5(5) granted a single joint right of first refusal to Rusal and Whiteleave. The language consistently referred to the right and its exercise in joint terms. The clause expressly allowed one party to proceed after the other refused, which confirmed that joint exercise was otherwise required.
3. Third-party purchaser. A beneficiary of the right could not be a bona fide third-party purchaser. That interpretation was required by the natural meaning of “third party”, its consistent use elsewhere in the Framework Agreement, and the commercial purpose of preserving an independent investor and the balance between the principal shareholders. The exclusion extended to affiliates and entities acting in concert with Rusal, Whiteleave or their affiliates.
4. Trigger and notice. The court considered, without needing to decide the point, that the wording suggested an executed but conditional contract of sale with a third party was required to trigger the mechanism. In any event, the notice was invalid because it offered each recipient an obligation to buy the entire block rather than its pro rata share, and attached contractual terms that created material uncertainty. The incorrect 60-day completion period also conflicted with the six-month period required for the block in question.
5. Bona fide price. Alternatively, the Bonico offer was not arm’s length. The fixed premium and surrounding evidence established an agreement or understanding that the premium on the first tranche would be related to further transactions concerning the balance of Crispian’s stake and the Baimskoye interests. The offer was therefore not a genuine offer for the shares alone.
6. Disposition. The Contested Notice was invalid and ineffective. Crispian was precluded from disposing of shares pursuant to it. Rusal was entitled to declarations to that effect, with consequential matters reserved.