Savchenko v Davletyarov

A later agreement supersedes an earlier agreement where the two are necessarily inconsistent and preserving part of the earlier bargain would lack commercial or practical coherence. A repayment right cannot survive in isolation where it is intrinsically linked to a share-transfer right and to reciprocal interim obligations which the later agreement makes impossible or commercially unreal. The court must interpret the written agreements objectively; the parties’ subjective intentions do not determine their legal effect.

The claimant sought US$3.3 million under a 2014 agreement requiring the defendant to repay that sum if the claimant terminated before a deferred share transfer. The defendant argued that subsequent agreements in 2015 and 2016 superseded the relevant obligation and brought a counterclaim alleging breach of those later agreements. The issues were whether the 2014 repayment obligation survived the subsequent transactions, whether the July 2016 agreement remained effective after the September 2016 agreement, and whether the claimant was a party to the September agreement.

1. Claim dismissed. The repayment obligation in clause 5 of the 2014 Agreement ceased to exist when the parties agreed to the 2015 Agreement.
2. The court applied the approach to implied terms explained in Marks & Spencer plc v BNP Paribas [2016] AC 742. A term may be implied where necessary to give the contract business efficacy, understood as requiring commercial or practical coherence. The Court of Appeal’s approach in Baird Textile Holdings Ltd v Marks and Spencer plc [2001] CLC 999 was also noted.
3. The 2015 Agreement involved the sale of the entire interest in the Bank. It was therefore inconsistent with the claimant retaining a deferred right to acquire an indirect interest in the Bank under the 2014 Agreement. The repayment right was not severable. It formed one side of an inseparable bundle with the share-transfer right, board and profit rights, treasury-management role, and capital-funding obligation.
4. Preserving clause 5 alone would materially vary the bargain. It would convert a contingent repayment obligation, linked to termination of the continuing agreement and its reciprocal obligations, into a freestanding right to demand US$3.3 million without those obligations. That result would lack commercial coherence.
5. The July 2016 Agreement would independently have superseded the 2014 Agreement because it provided for transfer of the defendant’s entire Rosgas shareholding, including the shares covered by the earlier agreement. The evidence did not establish an agreement that the July 2016 Agreement lacked legal effect. The September 2016 Agreement then superseded the July 2016 Agreement because it provided for the sale of a different and larger shareholding.
6. The counterclaim also failed. The claimant was not a principal party to the September 2016 Agreement, and the alternative claim based on the July 2016 Agreement failed because that agreement had been superseded by the September agreement.