Visa Inc & Ors v Luxottica Retail UK Limited

Contractual meaning is determined from the words used in their relevant context. Commercial purpose cannot justify replacing a deliberate categorical definition with a more convenient open-textured limitation. A settlement agreement may validly extend to unknown, future and unforeseen claims, including claims of companies that later become associated with a contracting party, where its language clearly produces that result.

Sharp practice is not established merely because one professionally represented commercial party may have misunderstood the breadth of a release. The court may refuse enforcement of a release where reliance on it would be unconscionable, but an expressly assumed risk of unknown claims ordinarily prevents that conclusion. Specific performance of a general obligation to ensure that third parties act in a particular way is inappropriate where the required steps are insufficiently certain.

Visa settled a competition claim brought by Luxottica Retail UK Ltd concerning multilateral interchange fees. The settlement agreement referred to the claim and to any and all other MIF-Related Claims of Luxottica and its Associated Companies. GrandVision NV brought a separate MIF claim before it was acquired by Luxottica’s corporate group. After the acquisition, Visa contended that the settlement required Luxottica to procure withdrawal of GrandVision’s claim and to indemnify Visa against resulting liability.

The court had to determine the agreement’s construction, whether enforcement would constitute unconscionable sharp practice, and what relief was appropriate.

1. Construction. The settlement agreement’s primary focus was Luxottica’s UK claim, but its language deliberately extended beyond that claim. “MIF-Related Claim” was defined in exceptionally broad and categorical terms, covering claims of any nature, in any jurisdiction, whether past, present or future, and whether known, unknown, contemplated or unforeseen. That wording was to be respected rather than reduced by an assumed commercial objective.
2. The agreement covered claims unrelated to Luxottica UK’s own business. It also covered future claims of companies which became Associated Companies after the agreement, including existing claims of such companies. The distinction between claims which a future Associated Company already had and claims arising after it became associated was not justified by the language or the agreement’s general tenor.
3. Sharp practice. The court accepted that Visa’s lawyers knew of a risk that Luxottica might not appreciate the agreement’s effect on the US claim. That did not establish unconscionable conduct in relation to GrandVision’s claim. The agreement expressly addressed known and unknown claims, Luxottica was professionally represented, negotiations were at arm’s length, and Visa was entitled to leave Luxottica to assess the consequences of the words proposed.
4. The court treated the sharp-practice reasoning in BCCI v Ali as requiring careful limits. Where parties expressly settle on the basis that one may be aware of claims unknown to the other, silence is not ordinarily sharp practice. Any such doctrine would generally operate in relation to the specific claim affected, rather than invalidate the entire agreement.
5. Relief. Visa was entitled to declaratory relief and damages for breach of the obligations in clauses 7.1 and 7.5. The indemnity did not cover the costs of enforcing the settlement agreement. Specific performance was refused because a general obligation to “ensure” withdrawal by a third party did not identify sufficiently clear steps by which compliance could be judged fairly.