Global Coal Ltd v London Commodity Brokers
| Jurisdiction | England & Wales |
| Judge | Mr Justice Briggs |
| Judgment Date | 11 June 2010 |
| Neutral Citation | [2010] EWHC 1347 (Ch) |
| Docket Number | Case No: HC08C03713 |
| Court | Chancery Division |
| Date | 11 June 2010 |
[2010] EWHC 1347 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Briggs
Case No: HC08C03713
Mr Michael Silverleaf QC and Mr Brian Nicholson (instructed by Mishcon de Reya) for the Claimant
Mr Duncan Matthews QC and Mr Nicholas Saunders (instructed by Ince & Co, International House, 1 St Katharine's Way, London E1W 1AY) for the Defendant
Hearing dates: 20 th, 21 st & 24 th May 2010
INTRODUCTION
This judgment determines, as a preliminary issue, a question of interpretation of the standard form Product Licensing Agreement ("PLA") used by the claimant Global Coal Limited ("Global Coal") in connection with its attempt to establish and maintain a standard form contract for the international trading of coal, called the Standard Coal Trading Agreement ("SCoTA"). The issue of interpretation lies at the heart of proceedings by Global Coal against one of its licensees, the defendant London Commodity Brokers Limited ("LCB") for breach of restrictions undertaken in the PLA, for which the remedy primarily sought is an injunction to restrain further breaches in the future. In order to make both the issue of interpretation and the PLA itself intelligible, it is necessary to say something about the background, as at 2005, when the PLA was made.
THE BACKGROUND—TRADING IN COAL
Historically, most coal has, since time immemorial, was in 2005 and still is consumed in the country in which it is mined. In 2005 some 6 billion tonnes of coal was mined, of which all but approximately 650 million tonnes was consumed in its country of origin.
Nonetheless, a significant amount of coal has for many years, going back at least to the 19 th century, been traded internationally. At least until the late 1990s, specific obstacles prevented coal from being traded as a commodity, and hindered the development of any significant market in coal derivatives. Apart from difficulties of transportation (for which see Joseph Conrad's early novel Youth, written in 1898) the particular difficulties relevant to the present case lay in the widely varying quality and specifications of coal available for export, even from a single country or port, and in the absence of any generally recognised standard terms and conditions for the sale and purchase of physical coal. Contracts tended to be both complex and bespoke.
An early attempt to 'commoditise' coal was made by Enron, in the form of the Standard European Coal Agreement but, although promoted by Enron with some success, it did not long survive Enron's spectacular collapse, and had fallen out of widespread use by 2005.
Following a memorandum of understanding signed on 23 rd October 2000 between the major coal producers Anglo American, BHP Billiton, Glencore International and Rio Tinto, Global Coal was formed in 2001 as an English limited company by a group of leading producers and consumers of coal, in order to facilitate trading both in physical coal products and in their associated financial derivatives, with a view to creating a liquid, commoditised market in such products. The devising and promotion of SCoTA was designed to deal with both the obstacles to which I have referred. SCoTA provided both standard terms of purchase and sale and, most importantly, a growing set of precise specifications for different types of coal, by reference to its physical properties, such as calorific value, moisture content, volatile matter, ash and sulphur content. Thus, by reference to SCoTA terms and conditions, and abbreviations for the specifications set out in SCoTA's many schedules, traders in physical coal could make ready comparison of price for equivalent amounts and specifications, enabling purchases and sales to be made with (by comparison with early periods) relative ease, speed and efficiency, thereby bringing both liquidity and transparency into the physical coal market.
The creation of that physical market was the essential foundation for the development of a market in coal derivatives, which Global Coal sought also to facilitate by the creation of an electronic trading platform through which both physical coal and its derivatives could readily be traded by buyers and sellers. Global Coal also became one of the (but not the only) publishers of data and indices about the coal market, and in particular about prices and volumes sold on SCoTA terms. It is common ground that, by 2005, SCoTA had become the only standard term contract upon which coal was traded internationally in significant volumes.
Besides devising SCoTA in its original form, Global Coal has continued to monitor and develop it both by amendments and revisions to take account of market concerns, and by the addition of further specifications in its schedules. Global Coal also developed its own active coal brokerage. The cost of its activities was by 2005 funded both by brokerage commission and by payments made by coal traders for access to its electronic trading platform, and to the data and indices to which I have referred. Nonetheless, some significant international coal traders still continued to trade between each other on bespoke, mutually agreed, terms.
Inevitably, the creation and development by Global Coal of the SCoTA contract, of its trading platform and of the data and indices relating to trading in coal on SCoTA terms gave rise to a variety of intellectual property rights. Furthermore, Global Coal registered as trade marks a number of the acronyms and abbreviations used in connection with SCoTA including, but not limited to, the word "SCoTA" itself. As a result, Global Coal's ambition to promote SCoTA as the basis for an international commoditised market in physical coal and coal derivatives necessitated that it licence both traders and brokers to make use of its intellectual property rights for that purpose.
Global Coal developed a standard form of licence agreement, namely the PLA, which it used for licensing both traders and brokers wishing to participate in the market for dealing in physical coal and coal derivatives on SCoTA terms. I shall, for convenience, refer to it as the SCoTA market.
THE PLA
The PLA is a relatively concise document by modern standards and, although the issue of interpretation which I have to decide relates only to one part of it, the parties' submissions left virtually no other part of it untouched, so that it is convenient to set it out as a whole:
"THIS AGREEMENT is made on
THE PARTIES AGREE as follows
WHEREAS
(A) globalCOAL has developed certain products, indices and standards to facilitate the trading of coal both in physical form and by means of various financial instruments..
(B) The Licensee wishes to use these products, indices and standards on the terms set out in this Agreement for the purpose of entering into or arranging transactions for the trading of coal with third parties licensed on the same terms as in this Agreement.
AGREED TERMS
1.1 "globalCOAL Licensees" means any third party who is licensed by globalCOAL on the same terms as set out in this Agreement and who is listed as such by globalCOAL on its website at "www.globalcoal. com/general/marketmembers.cfm"
"globalCOAL Products" means any instrument, data, standard, price, graph, product, index, contract, agreement, methodology or quality specification developed and published by globalCOAL and intended to facilitate the trading of coal (whether in physical form or by means of a financial instrument);
"Intellectual Property Rights" means patents, trade marks, service marks, registered designs, applications for any of those rights, trade and business names (including internet domain names and e-mail address names), unregistered trade marks and service marks, copyrights, database rights, know-how, rights in designs and inventions, trade secrets, rights in confidential information and rights of the same of similar effect or nature in each case in any jurisdiction;
"Purpose" means the use of globalCOAL Products as the basis for, or as an integral part of, arranging, broking or entering into a Transaction;
"Trade Marks" means SCoTA, RB, RB1, RB2, ARA INDEX, BOL, RB INDEX, NEWC INDEX and NEWC and such other trade marks as globalCOAL may use from time to time in connection with globalCOAL Products;
"Transaction" means a transaction for the trading of coal in any form of instrument involving globalCOAL Products or Trade marks with a globalCOAL Licensee.
1.2 In this Agreement, unless the context requires otherwise, the following words shall have the following meanings:
1.2.1 the clause headings are included for convenience only and shall not affect the construction of this agreement;
1.2.2 words denoting the singular shall include the plural and vice versa;
1.2.3 words denoting a gender shall include a reference to each gender;
1.2.4 a person includes a corporate or unincorporated body;
1.2.5 a reference to a party is a reference to globalCOAL and/or the Licensee;
1.2.6 a reference to writing or written includes faxes but not email.
2, Grant
2.1 globalCOAL hereby grants to the Licensee on the terms set out in this Agreement, a non-exclusive, non-assignable license (the "Licence") under its Intellectual Property Rights in the globalCOAL Products to use the globalCOAL Products and the Trade Marks:
2.2 The Licensee undertakes that it will not:
2.2.1 use the globalCOAL Products or the Trade Marks other than for the Purpose;
2.2.2 grant any sub-licences in relation to the globalCOAL Products or the Trade Marks;
2.2.3 use the globalCOAL Products in an on-screen trading environment other than globalCOAL's;
2.2.4 use the globalCOAL Products to enter into, arrange or facilitate any Transaction with third parties who are not globalCOAL Licensees.
3. Duration
3.1 This...
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