Macquarie Capital (Europe) Ltd v Nordsee Offshore Meg I GmbH

Contractual fee provisions for financing an identified commercial project should be construed objectively, by reference to the agreement as a whole, its factual matrix and commercial common sense. A project or transaction may retain its identity despite substantial changes to its structure, participants, financing arrangements or technical details, where the agreement uses broad terms and does not specify those matters as essential constituents. A transaction occurs when the agreed financing process reaches financial close. An uncertainty challenge is a last resort where the contract, properly construed, has an applicable meaning.

Macquarie Capital (Europe) Ltd claimed completion and debt advisory fees from Nordsee Offshore MEG I GmbH under an engagement agreement concerning the development and financing of an offshore windfarm project. The project ultimately reached financial close through a different corporate structure, with changed contractors, turbine specifications, contractual arrangements and grid connection.

The central issues were whether the later financing constituted a “Transaction” relating to the contractual “Project”, whether the relevant provisions were too uncertain to enforce, and, if fees were payable, the appropriate currency and interest rate.

1. Construction. The court applied the objective approach to contractual interpretation summarised in Lukoil Asia Pacific PTE Ltd v Ocean Tankers (PTE) Ltd [2018] EWHC 163 (Comm). The agreement had to be read as a whole, against the reasonably available background, with commercial common sense used where appropriate.
2. Project. “The Project” ordinarily meant the projected offshore windfarm in the relevant North Sea area for which the BSH permit had been obtained, rather than a corporate entity or a collection of particular agreements. The engagement agreement did not identify the detailed agreements, contractors, turbine specifications or corporate arrangements as essential constituents. Its provisions concerning the duration of the engagement, changes to capital structure, SPVs and consortium members indicated substantial flexibility.
3. Transaction. “The Transaction” meant an equity and senior debt raising process relating to the Project, completed at financial close. The sale of existing shares in NOMEG was not an essential feature. Financing sufficient to construct the windfarm and exploit the relevant economic opportunity constituted a Transaction, even though the financing was raised through Merkur Offshore GmbH and the project had materially evolved.
4. Uncertainty. The uncertainty argument failed. Following Astor Management AG v Antalaya Mining Plc [2017] EWHC 425 (Comm), approved in Openwork Ltd v Forte [2018] EWCA Civ 783, a conclusion that a contractual provision is too uncertain is a last resort. The agreement could be construed and applied to the facts.
5. Result and quantum. MCEL was entitled to the 2% Completion Fee and the 0.5% Debt Advisory Fee. The fees were payable in sterling because no other currency was specified. Pre-judgment interest was awarded at 1% over six-month Sterling LIBOR. The VAT issue was reserved for later determination.