Springwell Navigation Corporation v. JP Morgan Chase & Others  EWCA Civ 1221. The Court of Appeal ended 11 years of litigation with its recent decision in Springwell.
Aikens LJ’s substantial lead judgment dealt with several questions, including the extent to which expressions of trading opinion may give rise to actionable misrepresentations. However, perhaps the most significant issue was the affirmation of contractual estoppel as a discrete doctrine.
In the mid-1990s, Springwell and JP Morgan were engaged in the trading of securities in emerging markets-particularly Russia. Following the Russian financial crisis of 1998, Springwell alleged that JP Morgan had breached various contractual, tortious and fiduciary duties in giving investment advice. Springwell sought damages of over $700m in respect of these breaches but saw all but its most minor claims dismissed by Gloster J in two judgments in 2007. It was against these judgments that Springwell appealed.
The estoppel issue arose in relation to the ‘relevant provisions’ which formed part of the parties’ terms and conditions. These provisions contained the following statement: ‘[Springwell] has not relied [on], and acknowledges that [JP Morgan] has not made, any representation or warranty with respect to the advisability of purchasing this [security]'.
Springwell contended that, whilst this statement could constitute an estoppel by representation requiring proof of reasonable reliance, crucially, it could not operate as a contractual estoppel where both parties knew of representations which had been relied on.
Aikens LJ disagreed. He held that parties could agree to assume a certain state of affairs when contracting-even if the actual state of affairs differed. On that basis, Springwell was contractually estopped from alleging actionable misrepresentations and/or reliance upon the same. Further, Aikens LJ distinguished contractual estoppel from estoppel by representation by holding that the former does not require the party relying on the estoppel to prove that it would be unconscionable for the other party to resile from the agreement.
Rahul Varma / 1st Dec 2010
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