Drax Energy Solutions Limited (formerly Haven Power Limited) v Wipro Limited

Contractual limitation clauses are construed by applying ordinary principles of contractual interpretation in their documentary, factual and commercial context. The fact that a clause limits liability may inform the context, but does not create a special rule requiring a strained or narrow construction. Clear words are needed before valuable common-law or statutory rights are treated as surrendered.

Where a sophisticated commercial agreement limits total liability by reference to charges in the preceding twelve months and refers to when the claim first arose, the clause may impose one aggregate cap for all claims. The expression “claim” is context-specific and is not necessarily equivalent to either a cause of action or liability.

Drax brought a substantial claim against Wipro arising from the failed provision of an Oracle-based software system under a Master Services Agreement. Its claims comprised misrepresentation, quality, delay and termination claims. Wipro relied on clause 33.2, which limited total liability to 150% of charges paid or payable in the preceding twelve months.

The parties asked the Technology and Construction Court to determine whether clause 33.2 imposed one aggregate cap or separate caps for each claim, and, if separate caps applied, how the claims should be identified. The central issues were the proper construction of the limitation clause and the meaning of “claim” in that contractual context.

1. Preliminary Issue 1. Clause 33.2 imposed a single aggregate cap on Wipro’s liability for Drax’s claims. The language of “total liability”, “limited to” and “the claim first arose” favoured that construction. The use of “per event” in clause 33.1 showed that the parties knew how to create multiple limits when that was intended. The related wording in clause 33.3 was a significant indicator, although the drafting contained linguistic imperfections.
2. The court applied ordinary contractual interpretation. It considered the clause’s language, the other provisions of the MSA, its commercial purpose, the circumstances known to the parties and commercial common sense. The parties were sophisticated corporations assisted by professional advisers. Commercial considerations did not justify departing from the linguistic outcome.
3. The modern approach to limitation clauses does not employ a special rule of construction. Nevertheless, because such clauses may derogate from ordinary legal rights and obligations, the absence of clear words is relevant context. That consideration carried little weight here because the cap did not produce the extreme disparity seen in Triple Point.
4. Preliminary Issue 2. “Claim” was not coterminous with “cause of action”. Authorities concerning limitation amendments, including Letang v Cooper and Lloyds v Rogers, did not establish the meaning of “claim” for a contractual limitation clause. Nor did “claim” mean “liability”. In the alternative analysis required by the second issue, the four relevant claims were misrepresentation, quality, delay and termination.
5. The Preliminary Issues were answered in accordance with those conclusions.