TL;DR

The Commercial Court has dismissed a claim brought by European Professional Club Rugby for wrongful repudiation by RDA Television LLP (RDA) of a media rights agreement, following RDA’s termination of the agreement pursuant to a force majeure clause when various European rugby union matches were postponed due to the COVID-19 pandemic. The court found that RDA was entitled to rely on a force majeure clause allowing termination of the agreement.

Background

European Professional Club Rugby is the governing body and organiser of the Heineken Cup and European Challenge Cup in Rugby.

RDA Television LLP is a sports rights organisation which would create the broadcast and sell its rights to broadcasters (BT Sport in the UK, for example).

The claimant rugby organisation claimed damages for the alleged wrongful repudiation of a media rights agreement by the defendant sports media broadcaster relating to two European rugby union competitions for the 2018-19, 2019-20, 2020-21 and 2021-22 seasons. The broadcaster counterclaimed for reimbursement of payments made after the purported termination of the agreement on the basis that the termination had been justified by force majeure.

Clause 26 of Schedule 6 concerned force majeure events (FMEs). Clause 26.4 provided that “if an [FME] … prevents, hinders or delays a party’s performance of its obligations for a continuous period of more than 60 days, the party not affected by the [FME] … may terminate this Agreement.”

On 11 March 2020, COVID-19 was declared to be a global pandemic. EPCR had scheduled the 2019-2020 quarter-finals, semi-finals and finals of the competitions to take place between April and May 2020. In March 2020, EPCR wrote to RDA informing it of the suspension of these matches due to the pandemic. Due to COVID-19 restrictions, none of the matches were rescheduled before the 2019-2020 season ended.

On 5 June 2020, RDA purported to terminate the agreement, based on clause 26.4. HHJ Pelling QC rejected EPCR’s claim that this amounted to wrongful repudiation of the agreement, finding that:

• EPCR was wrong to contend that, where both parties were affected (in different ways) by the same FME, the effect of clause 26.2 (which provided the hindered party with qualified protection from liability for what would otherwise be a breach of contract caused by an FME) was to deprive the parties of recourse to clause 26.4.
• This point depended on a mistaken construction of clause 26.4 that arose from a failure to adopt the applicable principles of contractual construction. The “party not affected by the [FME]” in clause 26.4 had to be construed in the context of clause 26 as a whole and the FME definition. It distinguished between the party to whom was owed the performance that had been prevented, hindered or delayed (in this case RDA) and the party whose performance has been prevented, hindered or delayed by the FME. The phrase did not have the effect of depriving RDA of the benefit of clause 26.4, simply because it had been affected in a general sense by the same FME. Such an outcome would be commercially absurd, as the facts of this case demonstrated.

The court also allowed RDA’s counterclaims for post-termination prepayments and adjustment to the rights fee paid for the 2019/2020 season.

Outcome 

What is interesting from reading the judgement is that EPCR believed RDA wanted to get out of the contract prior to the pandemic because it “was dissatisfied with the commercial terms set out in the MRA and that the purpose of serving that notice was a means by which RDA and Mr Dennis (who it characterises as being the ” alter ego” of RDA) sought to pressure EPCR into varying the financial terms of the MRA.”

While the Judge rejected that suggestion, it is always interesting to understand what is motivating parties in litigation.

In the end, ECPR had to pay RDA €205,662 plus costs, so no doubt ECPR are left with a very bitter taste in their mouth.

This case is not new law at all, but just interesting analysis of the effect of the pandemic and we expect more Covid-19 related cases to come before the Courts in the next couple of years.

If you’re involved in a contract dispute and need a disputes lawyer to assist, get in touch today with Your Business Lawyer.