BWT Aktiengesellschaft v Force India Formula One Team Ltd & Anor (Rev 1)

Contractual interpretation is a unitary exercise addressing language, contractual context and commercial consequences. Where professionally drafted wording is clear, the court must apply it, even if the result is disadvantageous to one party. A later variation should not be treated as creating a new payment regime or altering existing termination consequences unless that is expressed or necessarily follows from the documents. Specific repayment provisions may coexist with an earlier contractual provision stating that identified payments are retained on a particular form of termination. Commercial common sense cannot justify reading down clear words or relieving a party from a bad bargain.

BWT Aktiengesellschaft appealed from the decision of Deputy ICC Judge Baister, reported at [2020] EWHC 3187 (Ch), concerning its proof of debt in the liquidation of Force India Formula One Team Ltd.

BWT had paid sponsorship fees under a Contribution and Rights Agreement. A later Deed of Variation apportioned part of the 2018 fees between Formula One races and described unpaid-for rights as advance payments repayable in specified circumstances. BWT subsequently terminated the agreement under the original convenience-termination clause and claimed repayment of part of the earlier instalments. The central issue was whether the Deed of Variation displaced the original provision that those instalments would be retained on such a termination.

1. Appeal dismissed. The judge below had correctly applied the established principles of contractual interpretation. His approach was iterative and unitary, taking account of text, context and commercial consequences. The first ground of appeal therefore failed.
2. The Contribution and Rights Agreement contained different termination rights with different consequences. Termination for specified defaults or cessation of Formula One operations triggered pro-rating under clause 18.5. Termination for convenience under clause 18.2 had a distinct consequence: payments made under clauses 17.1.2.1 and 17.1.2.2 were retained by the company, with no pro rata reimbursement.
3. Clause 2.1.2 of the Deed of Variation did not create a new payment regime. The payment dates and amounts remained those specified in clause 17.1.2 of the original agreement. Clause 2.1.2 instead divided the 2018 fees into advance-payment and income elements for the particular purposes stated in that clause.
4. The earlier instalments remained payments referred to in clauses 17.1.2.1 and 17.1.2.2 for the purposes of clause 18.2. Clause 2.5 preserved the original agreement except where expressly amended. Clause 2.1.2 created repayment rights for specified events, including insolvency-related events and failure to participate in races, but did not alter the consequences of termination under clause 18.2.
5. The provision of intended security was neutral. It was consistent with security for contingent repayment obligations under clause 2.1.2 and did not establish an immediately repayable debt overriding clause 18.2. The commercial context did not justify changing the clear wording. The clause was professionally drafted, and the court could not relieve BWT from a bad bargain.
6. The court reached a clear conclusion without applying contra proferentem. Had the wording been ambiguous, however, the canon would have operated against BWT as the proferens.

• High Court (Chancery Division): The appeal from the decision of Deputy ICC Judge Baister was dismissed.
• Insolvency and Companies List (ChD): Deputy ICC Judge Baister dismissed BWT’s appeal under rule 14.8 of the Insolvency Rules 2016 against the liquidator’s rejection of part of its proof of debt: [2020] EWHC 3187 (Ch).