Zaha Hadid Limited v The Zaha Hadid Foundation

The Court was asked to determine (i) the proper construction of Clause 12 of a trade mark licence (the Licence Agreement) and in particular whether the Licensee (Zaha Hadid Limited) had a unilateral right to terminate on reasonable notice, and (ii) whether the Licence Agreement (or parts of it) operated as an unlawful restraint of trade. The Licence Agreement granted a non-exclusive licence to use registered "Zaha Hadid" trade marks, imposed quality control and best endeavours marketing obligations, and required payment of a 6% royalty of "Net Income for the Licensed Services" by the Licensee and its group.

The Court construed Clause 12 as providing an indefinite licence which could be brought to an end only by the express termination rights in Clause 12 (which give the Licensor the right to terminate on 3 months' notice and to terminate for specified causes). The Court held there was no unilateral right for the Licensee to terminate on reasonable notice implied into Clause 12. On the restraint of trade point, applying the three‑step analysis derived from Quantum Advisory, the Court held that the Licence Agreement did not operate as an unlawful restraint of trade: the contractual obligations (including Clause 5.1 best endeavours and the 6% royalty in Clause 6) constituted a commercial bargain conferring valuable benefits on the Licensee and did not, in substance, unreasonably fetter the Licensee's freedom to trade. Accordingly the Company’s claim was dismissed.

Background and parties:

• The Licence Agreement (dated 1 May 2013) granted Zaha Hadid Limited (the Company / Licensee) a non-exclusive licence to use registered trade marks consisting of the name "Zaha Hadid". Dame Zaha Hadid was the original Licensor; by her Will the Zaha Hadid Foundation (the Foundation) became Licensor. The licence provided for a 6% royalty on "Net Income for the Licensed Services" payable by the Licensee and its Group Companies.
• The Company brought a first instance claim seeking declarations effectively entitling it to terminate the Licence Agreement on reasonable (12 months) notice. Notice had already been served by the Company in March 2024. The Foundation accepted 12 months would be reasonable but denied any power of the Company to give such notice.

Issues for decision:

1. Construction: whether Clause 12.1 should be read as including a mutual right to terminate on reasonable notice (or whether termination rights are limited to those expressly conferred by Clause 12, which are exercisable by the Licensor only).
2. Restraint of trade: if the Company had no unilateral termination right, whether the Licence Agreement (or parts of it, notably Clause 5.1 and Clause 6) operated in restraint of trade and were unenforceable on public policy grounds.

Procedure and evidence:

• The matter proceeded to a short trial. Witnesses called included Mr Patrik Schumacher and Mr Charles Walker for the Company; an uncontested witness statement from Diane Unwin (Head of Finance) was admitted. The Foundation relied on a statement from Sir Brian Clarke (an executor and chair of the Foundation) who did not attend for cross-examination due to illness.

Key contract provisions and factual matrix:

• Clause 12 provided the agreement would continue indefinitely "unless terminated earlier in accordance with this clause 12"; Clause 12.2 gave the Licensor a right to terminate on 3 months' notice; Clause 12.3 provided for immediate termination in specified circumstances. Clause 6 required payment of 6% of Net Income for Licensed Services by the Licensee and its Group Companies. Clause 5.1 obliged the Licensee and its Group Companies to use their best endeavours to promote and expand the supply of Licensed Services worldwide. Definitions of "Licensed Services", "Group" and "Net Income" were wide so the royalty effectively applied to worldwide taxed income of the Company and associated entities.

Court’s reasoning:

• On construction the Court applied modern principles of contractual interpretation, reading the Licence Agreement as a whole and considering the factual matrix. The express wording of Clause 12 read with the balance of the contract indicated the parties intended the Licensor to retain termination rights; there was no sensible role for an additional unilateral right for the Licensee to terminate on reasonable notice. Authorities that recognise implied or construed termination rights where none are expressed were considered, but the Court concluded that, on the wording and surrounding commercial context, Clause 12 did not carry a mutual termination right.
• On restraint of trade the Court applied the three‑stage test (whether a restraint in practical terms; whether the restraint is excluded from the doctrine; and, if engaged, whether the restraint is reasonable). The Court found no substantial practical restraint of trade: the Company had obtained a valuable and continuing commercial benefit (use of the Zaha Hadid name), the contractual obligations were commercially rational, and the complaints amounted to a desire for different commercial terms rather than a legally objectionable restraint. The Court declined to subject the overall bargain to a qualitative public policy rebalancing and concluded Clause 5.1 and Clause 6 were not unlawful restraints. The Court dismissed the Company’s claim.

Relief sought:

• The Company sought declarations that Clause 12 was unenforceable as an unlawful restraint and, pursuant to Clause 18.1, that Clause 12.2 be modified to give the Licensee the right to terminate on up to 12 months' notice. The Court refused that relief and dismissed the claim.

Claim dismissed. The Court construed Clause 12 as creating an indefinite licence terminable only by the express rights set out in Clause 12 (notably the Licensor's right to terminate on 3 months' notice and immediate termination for specified breaches). There was no implied or construed mutual right for the Licensee to terminate on reasonable notice. Applying the three‑stage restraint of trade analysis (following Quantum Advisory), the Court held the Licence Agreement did not operate as an unlawful restraint of trade: its obligations were commercially justified and not unreasonable in public policy terms.