Astor Management AG (formerly known as MRI Holdings AG) v Atalaya Mining Plc (formerly known as Emed Mining Public Ltd)

JurisdictionEngland & Wales
CourtCourt of Appeal
JudgeDame Elizabeth Gloster,Lady Justice Macur,Lord Justice Simon
Judgment Date01 Nov 2018
Neutral Citation[2018] EWCA Civ 2407
Docket NumberCase No: A3/2017/1169 & 1170

Neutral Citation Number: [2018] EWCA Civ 2407





The Hon Mr Justice Leggatt

[2017] EWHC 425 (Comm) and [2017] EWHC 680 (Comm)

Royal Courts of Justice

Strand, London, WC2A 2LL


The Rt. Hon. Lady Justice Macur

The Rt. Hon. Lord Justice Simon


The Rt. Hon. Dame Elizabeth Gloster DBE

Case No: A3/2017/1169 & 1170

(1) Astor Management AG (formerly known as MRI Holdings AG)
(2) Astor Resources AG (formerly known as MRI Resources AG)
Appellants (Claimants)
(1) Atalaya Mining Plc (formerly known as Emed Mining Public Limited)
(2) Atalaya Riotinto Minera SL (formerly known as Emed Tartessus SL)
(3) Emed Holdings (UK) Limited
(4) Emed Marketing Limited
Respondents (Defendants)

Mr Stephen Smith QC and Mr Christopher Lloyd (instructed by Hogan Lovells International LLP) for the Claimants/Appellants

Mr Stephen Moriarty QC and Mr Alexander Milner (instructed by Fieldfisher LLP) for the Defendants/Respondents

Hearing dates: 9 and 10 May 2018

Judgment Approved

Dame Elizabeth Gloster

Lord Justice Simon and



These are appeals against judgments and orders of Leggatt J (‘the Judge’) dated 6 March 2017, ‘the principal judgment’, [2017] EWHC 425 (Comm), and 31 March 2017 ‘the supplementary judgment’, [2017] EWHC 680 (Comm), in which he determined a number of questions relating to the proper construction of a contract between the parties dated 30 September 2008, which was subsequently restated and novated (‘the Master Agreement’). Under the terms of the Master Agreement, the respondents (whom it is convenient to refer to collectively as ‘EMED’) purchased the interests of the appellants (‘Astor’) in a copper mine, known as the Rio Tinto Project in southern Spain (‘the Project’). The mine was not being operated at the time but had extensive proven and provable reserves of copper.


Under the terms of the Master Agreement Astor sold its 49% interest in the Project to EMED and relinquished its claims to the remaining 51%. Astor received shares in the first respondent (‘Atalaya’) and was to be paid €43.8 million (subsequently increased by amendment to almost €59.8 million) on a deferred basis over six years (‘the Deferred Consideration’). The nature of the contractual trigger for the payment of the Deferred Consideration is one of the issues that arises on the present appeal.


In summary, the payment of Deferred Consideration under Schedule 2 paragraph (b) was triggered by two events. First, the grant of authorisation from the local authority (the Junta de Andalucia) to EMED to restart mining activities (‘permit approval’); and second, the securing by EMED of a ‘Senior Debt Facility’ in a sum sufficient to enable the restart of the mining operations (‘the senior debt facility’).


It was Astor's case at trial that, since mining restarted in July 2015, EMED's obligation to pay the Deferred Consideration had been triggered. EMED accepted that by July 2015 permit approval had been given by the Junta; but argued that no senior debt facility had been obtained. On the contrary the sums required to restart the mine had been procured by EMED by means of intra-group loans by which the necessary funds were made available to the second respondent (‘EMED Tartessus’), which owned the Rio Tinto Project. It was this injection of funds which enabled the mining operations to restart and not any senior debt facility. It followed that Astor was not entitled to the Deferred Consideration. The Judge accepted EMED's argument and that conclusion is the subject of Astor's appeal. Mr Smith QC submits that the Judge should have found that the obligation to pay the Deferred Consideration had been triggered and that in reaching the contrary conclusion he was in error.


Astor's first ground of appeal is that the Judge should have found that, in circumstances where there was no need for a Senior Debt Facility, the operation of that particular contractual trigger was rendered unnecessary and the Deferred Consideration became due and payable. Astor characterised this basis of recovery as the proper interpretation of the relevant term of the Master Agreement and the application of the ‘principle of futility’. Its second ground of appeal is that the procuring of the necessary finance other than by means of a senior debt facility was never contemplated by the Master Agreement and that, in such circumstances, the intra-group injection of funds should be treated as the second trigger event. Astor's third ground of appeal is that on proper analysis the intra-group loans constituted senior debt facilities.


As a matter of history, Astor had an alternative case which was that, if the obligation to pay the Deferred Consideration had not been triggered due to the fact that no senior debt facility had been obtained, this was due to EMED's breach of its contractual obligation under clause 6(f) of the Master Agreement to use ‘all reasonable endeavours’ to obtain the senior debt facility and to procure the restart of mining activities in the Project on or before 31 December 2010. The Judge held that there was a contractual requirement to use best endeavours, but that EMED was not in breach of the obligation (principal judgment [59]–[96]). There is no challenge to that finding on this appeal. The argument before us focussed primarily on the proper construction of a number of the contractual provisions.


The Judge also held in favour of Astor that, on the correct construction of clause 6(g)(iv) of the Master Agreement and subject to certain exceptions, EMED Tartessus, which operates the mine, was not permitted to repay any monies to the third respondent (‘EMED Holdings’) in respect of its loan from the latter, nor to make any distributions until the Deferred Consideration had been paid. He also held that EMED Tartessus was required to apply any excess cash towards paying the Deferred Consideration to Astor; see paragraphs 100–110 of the principal judgment.

The parties


The first appellant is the parent company of the Astor group, a private investment group operating from Switzerland. The second appellant is a wholly-owned subsidiary of the appellant.


The first respondent, formerly known as EMED Mining Public Ltd, is a Cypriot company whose shares are listed on the Alternative Investment Market of the London Stock Exchange. It is the ultimate parent company of the other three respondents: EMED Tartessus, EMED Holdings and EMED Marketing. EMED Tartessus is a Spanish company which both owned and operated the Rio Tinto copper mine.

The background and terms of the Master Agreement


The Judge set out the background to the Master Agreement and its evolving terms at [5]–[33] of the principal judgment, and for present purposes, the position can be summarised as follows.


Astor first became involved in the project in 2004, when it lent money to the Spanish company which then owned the project, Mantenimiento en General del Sur, Mantesur Andevalo SL (‘MSA’). The copper mine was dormant at the time but potentially very valuable, with 123 million tonnes of proven and probable reserves. Astor made loans to MSA amounting in total to some €6.7 million for the purpose of restarting mining operations. The loans were secured by a pledge over the entirety of MSA's shares. The pledge was governed by Spanish law. Astor also entered into a contract known as the ‘life of mine contract’ with MSA's parent company, which gave Astor the right to purchase all the copper produced by the Project at a preferential price.


In 2006 Astor enforced its pledge. MSA disputed Astor's right to do so and there was litigation in the Spanish courts. While the litigation was continuing, MSA purported to transfer the project to EMED Tartessus in exchange for a 49% shareholding in EMED Tartessus, the remaining 51% of the shares in EMED Tartessus being held by EMED Holdings.


Ultimately, Astor was successful in the Spanish litigation and was declared to be the owner of all of MSA's shares. The transfer of the Project by MSA to EMED Tartessus was therefore open to challenge on the ground that it was made without authority.


It was against this background that Astor and the EMED companies entered into the Master Agreement dated 30 September 2008. The broad commercial effect of this was that Astor gave up its 49% stake in EMED Tartessus and its right to claim ownership of the Project in return for an agreement to receive consideration of up to €63.3 million, payment of most of which was deferred. This reflected the fact that the EMED companies did not have the resources available to pay a sum commensurate with the value of Astor's interest in the Project in cash and that, until mining restarted, no revenue would be generated from which payments could be made to Astor.


The Master Agreement was amended in March 2009 and again in November 2009. Following these amendments, the Deferred Consideration provisions in Master Agreement provided as follows:

i) Clause 6(b):

The Deferred Consideration shall be payable by EMED Tartessus in accordance with the terms and conditions set out in Schedule 2 in consideration of [Astor] providing the acceptances set out in Clause 3, the agreements set out in Clause 4 and the indemnities and undertakings set out in Clause 11 and in consideration for the agreement of [Astor Resources AG] not to pursue any potential litigation as set out in Clause 11.(l).

ii) Schedule 2(a) provided for the Deferred Consideration to be paid in 18 instalments over 6 years, with the first instalment of €7,313,897.11 to be paid within 20 business days of the First Payment Date (see schedule 2(d). Schedule 2 also provided that the Deferred Consideration might be increased by ‘Up-tick Payments’ of €662,500 per instalment after the first two instalments (and up...

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