On 21 March 2022, Mr Justice Calver handed down judgment in Astor & ors v Atalaya & Ors [2022] EWHC 628 (Comm) in the long-running dispute between Astor and Atalaya, and entered judgment for Astor.
In September 2008, Astor sold to Atalaya its shareholding in then-dormant Rio Tinto copper mine in Southern Spain. Payment of majority of the consideration was deferred (the Deferred Consideration) until Atalaya was able to secure a Senior Debt Facility and restart the mine at which point scheduled repayments were to be made to Astor in line with Schedule 2 of the Master Agreement between the parties. Ultimately, the mine was restarted in 2015 by way of equity financing raised by Atalaya’s shareholders. Following a trial in 2017, Leggatt J held that Atalaya’s obligations under Schedule 2 were not engaged because Atalaya had not secured Senior Debt Facility. However, Leggatt J held that Atalaya was nevertheless obliged to repay the Deferred Consideration in line with clause 6(g)(iv)(B) of the Master Agreement (the Excess Cash Clause).
In July 2021, Astor’s application for summary judgment on the proper interpretation of the Excess Cash Clause was dismissed by Charles Hollander QC, sitting as a Deputy Judge of the High Court.
The trial before Calver J concerned the proper interpretation of the Excess Cash Clause and when, in accordance with that clause, excess cash had become available for Atalaya to repay the Deferred Consideration to Astor. Calver J held, accepting Astor’s submissions, that the clause did not allow Atalaya to spend ‘excess cash’ on expanding the mine beyond a capacity of 5 million tonnes per annum before using such cash to repay Astor ([102]). The Judge disagreed with Mr Hollander QC’s conclusions on the Excess Cash Clause holding that the Deputy Judge had approached the clause incorrectly ([142]-[149]), and rejected Atalaya’s case that the Court had to adopt an ‘accounting approach’ to the clause ([69]).
Link for the judgment can be found here.
Anna Boase QC and Veena Srirangam acted for Astor at trial, instructed by Hogan Lovells.