[2022] EWHC 2461 (Comm)
Case No: CL-2020-000630
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Date: 07/10/2022
Before :
MR JUSTICE CALVER
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Between :
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Mark Beeley (instructed by Orrick, Herrington & Sutcliffe (UK) LLP) for the Claimant
Edward Cumming KC and Emma Hughes (instructed by Norton Rose Fulbright LLP) for the Defendant
Hearing dates: 11th July 2022 - 29th July 2022
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JUDGMENT
(i) The Purchase Agreements
(B) How the issue of contractual construction arises
“(a) Representatives of [Qatar Airways], including Messrs Akbar Al Baker and Rossen Dimitrov, made it clear to Optimares during the course of 2018 that if Optimares wished to win contracts from [Qatar Airways], it should not take on new business for existing clients and/or decline to take on new clients, such that [Qatar Airways] would have priority access to Optimares' production lines.
(b) The same representatives of [Qatar Airways] demanded during the course of 2018, as a condition to continuing negotiations, that Optimares secure a bigger plant and make substantial capital investments in its facilities. Optimares met such conditions”.
“This letter (this "Letter'') constitutes formal written notice that, pursuant to Clause 12.2.3 of the Standard Conditions, we hereby exercise our right to terminate the following (for our convenience and without incurring any liability whatsoever):
(a) the Purchase Agreement (together with the Standard Conditions), with such termination being effective three (3) months from the date of this Letter; and
(b) all Purchase Orders issued under the Purchase Agreement, with such termination being effective fourteen (14) days from the date of this Letter.
Without prejudice to your continuing obligations under the Purchase Agreement and pursuant to Clause 12.3.2 of the Standard Conditions, we hereby demand that you repay the following ("Costs"):
1. all sums previously paid by us to you together with Interest thereon, within ten (10) calendar days of the relevant termination; and
2. all Freight Charges paid or incurred by us for Products and Spare Parts affected by such termination”.
“The event of Excusable Delay is the outbreak of COVID-19, and in particular the Italian Government's response to it. As Qatar Airways has been aware, since 10 March 2020 the entirety of Italy has been on Government mandated 'lock down'. Further measures taken across the EU have meant that testing and other certification by third parties has been impossible. We are also receiving large number of force majeure declarations from our suppliers.
This has made all manufacturing and related processes effectively impossible, and has removed the Supplier's ability to perform the Purchase Agreement in any meaningful fashion. The circumstances fall within the definition of Excusable Delay as set out in section 13.1.1 of the Standard Conditions.
As matters stand, we are unable to provide a meaningful estimate as to when the Supplier will be able to resume its operations under the Purchase Agreement, but will update Qatar Airways as matters develop. As matters stand, we cannot identify any measures within our control to minimise or overcome the Excusable Delay, but will continue to review this in light of section 13.1.5 of the Standard Conditions…”
“6. Optimares does not dispute that Qatar had in some circumstances a right to terminate for convenience, but says:
(a) that right was not available where Excusable Delay had been invoked under the contracts (which Optimares had done so days before given the Italian shut-down of all non-essential industry due to the outbreak of COVID-19); and
(b) that right was not exercisable in order to re-award the same works to another contractor at a lower price (to the extent the disclosure has been made by Qatar, it is clear that prior to termination Qatar was deep in discussions with Adient, and it has sought to redact all pricing data in relation to this new contract from its disclosure). Adient is part owned by Boeing, who also owns BGS, who was serving as D’s integrator for the B787 and B777 programmes - and who became an increasing impediment to C’s forward works at the very time Adient was speaking with D about replacing C.
7. Accordingly, Optimares was wrongfully terminated, and should be entitled to its lost profits and its costs thrown away. In any event, even if the termination were valid, Optimares should be entitled to its costs thrown away. Qatar disputes this, and says that it has an absolute right to terminate the contract at any time prior to delivery of an actual shipset, with effectively zero financial consequence. Such payments as it had made under the contracts, it now seeks to reclaim.
8. This would be a commercially surprising bargain for any party to have entered into, not least a medium sized company whose entire annual turn-over was at risk. At the very least this arrangement would have led to Qatar being in receipt of valuable IP and unjustly enriched by the same, which it has not paid for, and which Optimares should be compensated for.
9. There are further disputes between the parties as to amount of liabilities Optimares incurred, and changes which should have been made to the contract pricing.
10. In short however, C seeks to simply claim the benefit of the bargain it struck:
(c) if the termination was wrongful, it should be entitled to the lost profits it has been denied and its wasted costs actually incurred (or which it is liable to incur),
(d) if the termination was valid, it should be entitled to the costs it has incurred or is liable to incur.”
“6. Clause 12.2.3 of the Standard Conditions gave Qatar Airways an unfettered right to terminate the contracts for convenience at any time. This is the only natural and ordinary meaning that can be given to the words that the parties - who were sophisticated commercial operators - chose to use in that clause and their agreement more widely. The parties expressly stipulated that this right to terminate under clause 12.2.3 applied “[n]otwithstanding anything to the contrary contained in the [contracts]” and would be available for Qatar Airways to exercise “without incurring any liability”.
7. Notwithstanding these plain words, by these proceedings Optimares effectively seeks to re-write the parties’ negotiated bargain so as significantly to restrict Qatar Airways’ right to terminate the Contracts for convenience.
8. In seeking to re-write the parties’ bargain in this way, Optimares is forced to resort to a creative approach to contractual interpretation and, in the alternative, to arguing for the implication of unnecessary terms - although this alternative argument does not feature in its skeleton argument. In this way Optimares suggests that Qatar Airways’ right to terminate under clause 12.2.3 “[n]otwithstanding anything to the contrary contained in the [contracts]” could not be exercised if:
8.1 there was an ongoing “Excusable Delay” (within the meaning of clause 13 of the Standard Conditions); or
8.2 Qatar Airways intended to re-award the work covered by the relevant Contract(s) to another manufacturer: see APOC, ¶16(c).
9. In seeking to make these arguments Optimares’ evidence and argument seems to focus on what it considers to be fair or reasonable commercial conduct. Qatar Airways rejects much of Optimares’ assertions in this regard, but - perhaps more importantly - Optimares’ approach misunderstands the proper function for the court at this trial.
10. It is well established that the purpose of interpretation is to identify what the parties have agreed, not what the court thinks that they should have agreed…
11. Optimares’ case is, however, little more than a plea for the court to relieve it of the consequences of a decision to enter into the Contracts on terms for which Qatar Airways astutely bargained and which Optimares now regrets.
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13. If Qatar Airways is correct - such that (i) the terms of the contracts mean what they say on their face, and (ii) Optimares’ strained arguments on the interpretation of the Contracts and the implication of terms cannot get off the ground - then this should be the end of Optimares’ claims. The court will not need to be troubled by the myriad factual issues (of, at best, questionable relevance) that Optimares has insisted on raising (including why Optimares missed both the original on-dock dates for the B787 shipsets - with deliveries commencing in December 2019 - and the postponed on-dock dates for the B787 shipsets - with deliveries commencing in early 2020). It is to these issues - that Qatar Airways contends are ultimately irrelevant - which the vast majority of the parties’ disclosure and witness evidence and the entirety of the expert evidence has been directed.
14. With this in mind, it is regrettable that Optimares has throughout chosen to resist any meaningful engagement with the encouragement given by Robin Knowles CBE J, at the first CMC, for the parties to consider the trial of a preliminary issue as to the proper interpretation of the Contracts.”
“But we can see the claimant’s view and it might be very difficult to agree an assumed state of facts which would allow any sort of preliminary determination to proceed.”
(C) The proper approach to contractual construction in a case such as this
“Textualism and contextualism are not conflicting paradigms in a battle for exclusive occupation of the field of contractual interpretation. Rather, the lawyer and the judge, when interpreting any contract, can use them as tools to ascertain the objective meaning of the language which the parties have chosen to express their agreement. The extent to which each tool will assist the court in its task will vary according to the circumstances of the particular agreement or agreements. Some agreements may be successfully interpreted principally by textual analysis, for example because of their sophistication and complexity and because they have been negotiated and prepared with the assistance of skilled professionals. The correct interpretation of other contracts may be achieved by a greater emphasis on the factual matrix, for example because of their informality, brevity or the absence of skilled professional assistance.” [18]
“[The meaning of a clause]has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the [agreement] (iii) the overall purpose of the clause and the [agreement] (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party’s intentions …”
And at paragraph 20 he cautioned as follows:
“Experience shows that it is by no means unknown for people to enter into arrangements which are ill-advised, even ignoring the benefit of wisdom of hindsight, and it is not the function of a court when interpreting an agreement to relieve a party from the consequences of his imprudence or poor advice. Accordingly, when interpreting a contract a judge should avoid re-writing it in an attempt to assist an unwise party or to penalise an astute party.”
a. When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to “what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean” (per Lord Neuberger in Arnold at para. 15 quoting from Lord Hoffmann in Chartbrook Ltd v. Persimmon Homes Ltd [2009] 1 AC 1101 at [14]).
b. The court should focus on the meaning of the relevant words in their documentary, factual and commercial context. That meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause (ii) any other relevant provisions of the [agreement] (iii) the overall purpose of the clause and the [agreement] (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed and (v) commercial common sense, but (vi) disregarding subjective evidence of any party's intentions (Arnold at [15])
c. Commercial common sense is not to be invoked retrospectively. The mere fact that a contractual arrangement, if interpreted according to its natural language, has worked out badly, or even disastrously, for one of the parties, is not a reason for departing from the natural language. Commercial common sense is only relevant to the extent of how matters would or could have been perceived by the parties, or by reasonable people in the position of the parties, as at the date that the contract was made (Arnold at [19]).
d. While commercial common sense is a very important factor to take into account when interpreting a contract, a court should be very slow to reject the natural meaning of a provision as correct simply because it appears to be a very imprudent term for one of the parties to have agreed, even ignoring the benefit of wisdom of hindsight. The purpose of interpretation is to identify what the parties have agreed, not what the court thinks that they should have agreed. … Accordingly, when interpreting a contract, a judge should avoid re-writing it in an attempt to assist an unwise party or to penalise an astute party (Arnold at [19]).
e. The court is required to undertake an iterative approach. This involves checking each of the rival suggested interpretations against other provisions of the document and investigating its commercial consequences (Wood per Lord Hodge at [12] Sigma per Lord Mance at [12] and Lord Collins at [37], and Rainy Sky per Lord Clarke [28]).
“If I was given a time machine and could go back to when we were negotiating the contracts, and I was told that "If you sign this contract as it is drafted, Qatar can walk away at any time of their option and not pay you a penny", I would not have signed the contracts.”
(D) Proper Construction of the Purchase Agreement, Standard Conditions and Purchase Orders
The issues of contractual construction to be determined
i) Whether the existence of an “excusable delay” which would give rise to a termination right in accordance with clause 13.1.7 of the Standard Conditions precludes reliance by Qatar Airways on the termination for convenience provision in clause 12.2.3 of the Standard Conditions.
ii) What are the financial consequences of a termination in accordance with clause 12.2.3? In particular, (i) what is the meaning of “without incurring any liability” in clause 12.2.3 and (ii) do the consequences in clause 12.3.2 apply to a termination for convenience?
iii) Whether clause 12.2.3 of the Standard Conditions creates an unfettered right to terminate at will or whether the clause is qualified by other contractual provisions, notably the duty of good faith in clause 16.13 of the Standard Conditions.
iv) Having construed the contracts, is there scope for a claim for unjust enrichment or restitution in respect of the IP provided by Optimares to Qatar Airways?
I shall address each of these issues in turn.
(i) Does the existence of a right to terminate in accordance with clause 13.1.7 preclude reliance on clause 12.2.3?
(i) Clause 12.2.1 provides - again “without in any way limiting or derogating from any other provision hereof” – that Qatar Airways shall be entitled but not obliged to forthwith cancel the Standard Conditions and Purchase Agreement at any time with written notice, essentially if (a) Optimares suffers serious financial impairment; (b) Optimares is in breach of contract which it fails to remedy; (c) Optimares undergoes a change in control; (d) a 30 day force majeure event occurs; (e) Optimares is guilty of a breach of warranty or representation; or (f) Optimares loses or fails to gain necessary authorisations from the relevant aviation authorities.
(ii) Clause 12.2.3 separately provides, “notwithstanding anything to the contrary contained in these Standard Condition[s] or the applicable Purchase Agreement”, that Qatar Airways shall be entitled, upon notice, to terminate the Standard Conditions, Purchase Agreement and/or any purchase order for its convenience and without incurring any liability.
Clause 12.2.3
Clause 13.1.7
i) Example 1: Where a purchase order has been raised and there has been delivery, the Supplier can raise an invoice on delivery (clause 4.9.1 of the Purchase Agreement) which would fall due in 45 days in accordance with clause 4.9.2 of the Purchase Agreement. When notice is given in accordance with clause 12.2.3, Qatar Airways would still be liable for that invoice.
ii) Example 2: Where a purchase order has been raised, but no delivery has been made at the time of notice in accordance with clause 12.2.3, the Supplier would have 14 days to make delivery before the purchase order would be terminated. If such delivery was made then (as above) the Supplier can raise an invoice on delivery (clause 4.9.1 of the Purchase Agreement) which would fall due in 45 days in accordance with clause 4.9.2 of the Purchase Agreement. Therefore, Qatar Airways would still be liable for that invoice.
iii) Example 3: Where a purchase order has been raised, there has been no delivery at the time that the notice was made in accordance with clause 12.2.3 and there was no subsequent delivery, no invoice would be raised and, at the point of termination, Qatar Airways would not incur any liability on termination.
(ii) What are the financial consequences of a termination in accordance with clause 12.2.3? In particular, (i) what is the meaning of “without incurring any liability” in clause 12.2.3 and (ii) do the consequences in clause 12.3.2 apply to a termination for convenience?
The meaning of “without incurring any liability” in clause 12.2.3
“In the normal course, a party depriving the other of the right to complete its works would be liable for damages (Abbeywell, as noted above at paragraph 35(c)(ii)) being its lost profits and its recovery of sums spent in reliance to that date. The clear intention was that Qatar should be forgiven from damages arising from the act of termination itself, but such language falls a long way short of the express language which would be required to say that Qatar should be excused making good Optimares’ costs up to the point of termination. The natural consequence without such language is that it would be exposed to a claim for loss of profits in addition to the costs which Optimares would have been paid - this waiver operates only to excuse the full claim for expectation damages, but not reliance damages, being Optimares’ wasted costs which have been thrown away.” (emphasis added)
Are the consequences in clause 12.3.2 applicable to a termination for convenience?
(iii) Does clause 12.2.3 create an unfettered right to terminate at will or is it qualified by the duty of good faith in clause 16.13 of the Standard Conditions?
Clause 16.13
The interaction between clause 12.2.3 and clause 16.13
i. The Authorities
“[1] The Partnering Team members shall work together and individually in the spirit of trust, fairness and mutual co-operation for the benefit of the Term Programme, within the scope of their agreed roles, expertise and responsibilities as stated in the Partnering Documents, and [2] all their respective obligations under the Partnering Contract shall be construed within the scope of such roles, expertise and responsibilities, and [3] in all matters governed by the Partnering Contract they shall act reasonably and without delay.”
“I have formed the view that properly construed Clause 1.1 does not require Anglia to act reasonably as such in terminating under Clause 13.3…There can be no doubt that if either party had applied their mind to this prior to the contract being signed it was clear that there was such an unqualified right available to either party; it was obvious to each that the other could terminate at any time. Clause 1.1 is primarily concerned with the assumption, deployment and performance of roles, expertise and responsibilities set out in the Partnering Documents and the parties in so doing must ‘work together and individually in the spirit of trust, fairness and mutual cooperation for the benefit of the Term Programme’ and act reasonably and without delay in so doing.”
I entirely agree with this approach.
“Absolute rights conferred by professionally drawn or standard form contracts including but not limited to absolute rights to terminate relationships and roles within relationships are an everyday feature of the contracts that govern commercial relationships and extending Braganza to such provisions would be an unwarranted interference in the freedom of parties to contract on the terms they choose, at any rate where there is no fiduciary relationship created by the agreement.”
ii. Interpretation
“Hi Ruyma
On the B787-9 the only candidate for this acquisition is Adient, others were just to comply with formalities and make Adient aware that we are not only talking to them for price negotiation reasons, please arrange for the Adient seat to be viewed by GCEO ASAP, many thx
Kadri Muhiddin”
(iv) Is there scope for a claim for unjust enrichment in respect of the IP provided by
Optimares to Qatar Airways?
“However, as demonstrated by Roxborough (considered further below), invalidity of a relevant contract is not a necessary prerequisite to a successful claim in unjust enrichment. That is not to say that claims in unjust enrichment must not respect contractual regimes and the allocations of risk agreed between the parties. On the contrary, as explained by Professor Burrows in The Restatement (at 3(6)), an ‘often overlooked but crucial’ element of the unjust factors scheme is:
‘...that an unjust factor does not normally override a legal obligation of the claimant to confer the benefit on the defendant. The existence of the legal obligation means that the unjust factor is nullified so that the enrichment at the claimant’s expense is not unjust...’
This orthodox position in England was articulated in Kleinwort Benson (at 407-408). Lord Hope identified that a third question for consideration was ‘Did the payee have a right to receive the sum which was paid to him?’ That question was relevant as follows:
‘The third question arises because the payee cannot be said to have been unjustly enriched if he was entitled to receive the sum paid to him. The payer may have been mistaken as to the grounds on which the sum was due to the payee, but his mistake will not provide a ground for its recovery if the payee can show that he was entitled to it on some other ground.’”
“Optimares transferred the relevant intellectual property on the basis and in consideration for the continued operation of the B787 Contract, pursuant to which it expected to deliver the Shipsets in exchange for payment by [Qatar Airways]. That basis having failed (by the termination of the B787 Contract), Optimares is entitled to restitution for unjust enrichment”.
Conclusions in respect of the construction issues:
i) Issue 1: The existence of an “excusable delay”, giving rise to a termination right in accordance with clause 13.1.7 does not displace clause 12.2.3 of the Standard Conditions. Qatar Airways was contractually entitled to terminate for its convenience.
ii) Issue 2: Clause 12.2.3 creates an unfettered right to terminate for convenience. Clause 16.13 is not applicable to clause 12.2.3 since the exercise of a right to terminate does not constitute a “responsibility” or “obligation”.
iii) Issue 3: The financial consequences of termination in accordance with clause 12.2.3 are that Qatar Airways does not incur any liability on termination save that it is liable for any contractual liability to pay the purchase price for completed shipsets. Clause 12.3.2 is applicable to a termination for convenience such that Optimares will be required to “repay or credit to Qatar Airways, at Qatar Airways’ option, within ten (10) calendar days after the date of termination, expiry or suspension, all sums previously paid by Qatar Airways to the Supplier together with Interest thereon.” Further, Optimares will be required to “reimburse to Qatar Airways all Freight Charges paid or incurred by Qatar Airways for Products and Spare Parts affected by such termination, expiry or suspension.”
iv) Issue 4: There is no scope for an unjust enrichment claim in respect of the IP since the legal right to receive the IP in accordance with clauses 8.4.4.3 and 8.7.1-8.7.5 of the Purchase Agreement and clause 15.3 of the Standard Conditions nullifies the allegedly unjust factor.
Quantum findings on facts of the present case
“12.3.2 The Supplier shall repay or credit to Qatar Airways, at Qatar Airways' option, within ten (10) calendar days after the date of termination, expiry or suspension, all sums previously paid by Qatar Airways to the Supplier together with Interest thereon. The Supplier shall also reimburse to Qatar Airways all Freight Charges paid or incurred by Qatar Airways for Products and Spare Parts affected by such termination, expiry or suspension”.
“156. The total sum due and payable to Qatar under clause 12.3.2 (as fully detailed in Schedule 1) hereof will be substantially more than US$3,754,526.21 and €115,500 (the “Reimbursement Sum”). The Reimbursement Sum comprises:
156.1. US$3,004,976.91, being the repayment due and payable in respect of all Previous Payments paid by Qatar as non-recurring costs in accordance with the payment schedule at clause 4 of the Contracts;
156.2. interest (calculated at the Contractual Rate of Interest) due in respect of all Previous Payments and payable for the period from when each of the Previous Payments was made to Optimares until the 17 April 2020 inclusive (the date by which the Previous Payments were required to be repaid to Qatar), after which interest began to accrue on the Reimbursement Sum as a whole (as pleaded below) (alternatively, Qatar claims interest on the Previous Payments for this period (under clause 12.3.2) calculated by reference to the statutory rates of interest under either the Late Payment Commercial Debts (Interest) Act 1998 or the Senior Courts Act 1981);
156.3. US$352,056.54 representing the costs incurred by Qatar in shipping BFE to Optimares prior to termination, due as a Freight Charge paid or incurred by Qatar in relation to Products (as defined by clause 1.1 of the Standard Conditions to include BFE) affected by termination;
156.4. US$45,338.00, representing the cost to Qatar of an insurance guarantee in respect of import duties and taxes for BFE which was shipped to Optimares, as a Freight Charge paid and incurred by Qatar in relation to Products (as defined by clause 1.1 of the Standard Conditions to include BFE) affected by termination;
156.5. €115,500 and US$352,154.76, representing the costs that Qatar paid to Optimares on or around 19 July 2021 and which Qatar has incurred in arranging for the return of the BFE to Qatar in accordance with the BFE Agreement set out above, due as a Freight Charge paid or incurred by Qatar in relation to Products (as defined by clause 1.1 of the Standard Conditions to include BFE) affected by termination …”
“NRC Payment Schedule
4.9.4 A down payment in the amount of twenty-five percent (25%) of the non-recurring costs shall be invoiced by the Supplier upon completion of the Initial Technical Coordination Meeting (ITCM);
4.9.5 A progress payment in the amount of twenty-five percent (25%) of the non-recurring costs shall be invoiced by the Supplier upon completion of the Critical Design Review (CDR);
4.9.6 The payment in the amount of twenty-five percent (25%) of the non-recurring costs shall be invoiced by the Supplier upon completion of the First Article Inspection (FAI); and
4.9.7 The remaining payment in the amount of twenty five percent (25%) of the non- recurring costs shall be invoiced by the supplier upon rectification of all defects as raised in FAI or on production of a commitment letter with a target date of closure at the time of delivery of aircraft.
Qatar Airways will make payments in US Dollars for the NRC charges to the bank account detailed on the Supplier's invoice within forty-five (45) days from receipt of the Supplier's original invoice following completion of each of the above NRC payments schedule.”
“… all charges, fees and expenses related to the import, export, freight, insurance, packaging, customs duties, handling and all other cost to transport a Product or Spare Part in terms of these Standard Conditions and the Purchase Agreement including the cost to remove and install a Product from an Aircraft.”
“Optimares is asking us to pay full NRE (Non-Recurring Engineering) of USD 970,000 for previous design of B787-9 BC seat. This project was halted at CDR stage and then we embarked on to the new design.
Our NRE payment terms as per contract are:
25% at ITCM - Already Paid
25% at CDR - Agreed to pay
25% at FAI - Not materialized
25% upon rectification of all defects raised during the FAI - Not materialized
I have advised Optimares that as per the contract they are eligible for 50% of NRE, i.e., USD485,000. Since we have already paid them 25% of NRE at ITCM, we will now pay them another 25% for CDR.
Mr. Marco Tonucci is insisting on full 100% NRE payment, for which I have informed him that we will check internally whatever is contractually due and will revert accordingly.”
Mr. Al Baker replied on 16 December 2019 as follows regarding the full sum of US$970,000:
“I think it's a small amount and we should pay them soonest.”
“11.3.1 The Supplier shall issue invoices for the purchased Products, Services or Spare Parts in accordance with the terms set forth in these Standard Conditions (and where applicable the Purchase Agreement).
11.3.2 Qatar Airways shall effect payment of the undisputed portion of a Supplier's invoice within forty-five (45) days after the date the invoice is received by Qatar Airways following delivery and acceptance of the Products, Services (or Spare Parts) to which such invoice relates.”
By clause 1.1 of the Standard Conditions, the definition of “Services” includes the design of the Product.
“29. I was not involved with the financial aspect of the Optimares projects and I did not participate in the invoicing or payment processes. However, while preparing for this interview and statement, I have discussed the payments made by Qatar Airways to Optimares with our finance department and they have confirmed the following to me:
…
30. The Qatar Airways finance department also confirmed that a payment of USD 352,056.54 for logistics relating to the Optimares projects was made to Panasonic.”
Conclusion
ANNEX 1
The Standard Conditions
The Standard Conditions which were incorporated into each of the Purchase Agreements provided in particular as follows:
“2.2 SALE AND PURCHASE
The Supplier shall design, manufacture, sell and Deliver to Qatar Airways and Qatar Airways shall buy and take Delivery of the Products (and the Spare Parts to maintain and support the Products) on the Delivery Date(s) and at the Delivery Location(s) and upon the terms and conditions contained in these Standard Conditions and the Purchase Agreement.”
2.3 LIMITATION ON CHARGES
2.3.1 All Materials, Products, Aircraft Software, Proprietary Information, copyright licenses, Product Support, Product Assurance Services and other forms of support provided by the Supplier to Qatar Airways under these Standard Conditions are provided at no charge except as otherwise specifically set forth in these Standard Conditions or the Purchase Agreement.
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5.3 CERTIFICATIONS
5.3.1 The Supplier shall obtain all Aviation Authorities' certificates and all other required governmental approvals as may be required upon delivery of the first Product of each type to Qatar Airways. In addition, the Supplier shall at no cost assist Qatar Airways, the Installer or the Aircraft Manufacturer in obtaining any supplemental Aviation Authorities' certificates or other governmental approvals, which may be required by Qatar Airways, the Installer or the Aircraft Manufacturer in order for Products to be installed and certified in the Aircraft and for Qatar Airways to operate and maintain the Products.
5.3.2 The Supplier shall be responsible for all certification, testing, data submission and any Modifications or changes as may be required by the applicable Aviation Authorities, the Installer or the Aircraft Manufacturer. Any failure by the Supplier to obtain the necessary certification shall be considered a Non- Excusable Delay.
The Supplier, at its cost and expense, shall comply with all production, installation and certification requirements and regulations of the Aircraft Manufacturer. Specifically, the Supplier shall comply with the following:
(a) All applicable FAA and EASA design and certification requirements;
(b) All Aircraft Manufacturer's design requirements;
(c) All Aircraft Manufacturer's Product interface requirements;
(d) All Aircraft Manufacturer's installation requirements;
(e) All Aircraft Manufacturer's data submittal requirements.
The Aircraft Manufacturer's or Qatar Airways' approval or agreement on the Supplier's drawings or designs does not relieve the Supplier of the responsibility to comply with the Aircraft Manufacturer's applicable TSOs and all FAA/EASA regulations or other regulatory requirements.”
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6.3 TECHNICAL DATA
6.3.1 Prior to delivery of the Products, the Supplier shall provide free of charge to Qatar Airways the technical Data required to support the installation of the Product. The technical Data to be provided shall include (but not be limited to) Product descriptions, dimensions, weight, operational characteristics, envelope, assembly and installation drawings, and installation instructions.
6.3.2 The Supplier shall not revise, reissue or amend any Supplier Data that may be required by these Standard Conditions or the Purchase Agreement when the sole reason for the revision, reissue or amendment is to correct minor errors which do not alter the technical content of the Data.”
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7.1 PURCHASE ORDERS
7.1.1 Qatar Airways shall issue Purchase Orders to the Supplier when purchasing any Product, Spare Part or Services covered under these Standard Conditions or the applicable Purchase Agreement.
7.1.2 Each Purchase Order shall be governed by the terms and conditions of these Standard Conditions and the applicable Purchase Agreement.”
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7.4 INSPECTION AND ACCEPTANCE
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7.4.2 Inspection and acceptance by Qatar Airways shall be subject to the Products, Spare Parts and Services being to the satisfaction of Qatar Airways and in full compliance with the requirements of the Specification and the terms set forth in these Standard Conditions, the applicable Purchase Agreement and/or the applicable Purchase Order.”
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8.3 DATA AND MATERIALS
8.3.1 GENERAL
(a) Data and Materials as detailed under this provision shall be provided at no charge to Qatar Airways.”
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8.3 DATA AND MATERIALS
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8.3.3 COPIES AND REPRODUCTION COSTS
The Supplier is required to provide at no charge to Qatar Airways copies of Data and Materials as specified by Qatar Airways or the QCAA.”
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11.3 INVOICING
11.3.1 The Supplier shall issue invoices for the purchased Products, Services or Spare Parts in accordance with the terms set forth in these Standard Conditions (and where applicable the Purchase Agreement).
11.3.2 Qatar Airways shall effect payment of the undisputed portion of a Supplier's invoice within forty-five (45) days after the date the invoice is received by Qatar Airways following delivery and acceptance of the Products, Services (or Spare Parts) to which such invoice relates.”
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12. DURATION AND TERMINATION
12.1 DURATION
These Standard Conditions shall be become effective from the Effective Date and shall, subject to the terms set forth in the Agreement, continue for the Support Period.
12.2 TERMINATION
12.2.1 Without in any way limiting or derogating from any other provision hereof, Qatar Airways shall be entitled, but shall not be obliged, to forthwith to cancel these Standard Conditions and the Purchase Agreement at any time by addressing written notice to that effect to the Supplier (without prejudice to any other rights of Qatar Airways in law or in terms of these Standard Conditions or the Purchase Agreement and in particular, but without limitation, its right to claim damages), if:
(a) the Supplier compromises or attempts to compromise or defer payment of its debts owing by it to its creditors generally or the Supplier is not able to pay its debts generally as they become due; or
(b) the Supplier is provisionally or finally liquidated, wound-up, removed from the register of companies or placed under judicial management or any administration order whatsoever or takes any steps for its voluntary winding-up or liquidation; or
(c) the Supplier generally does or omits to do or suffers anything to be done which may in any way potentially prejudice Qatar Airways' rights under these Standard Conditions or the Purchase Agreement; or
(d) the Supplier commits any breach of any provision of these Standard Conditions or the Purchase Agreement and fails to remedy such breach within 14 (fourteen) calendar days of the date of written notice from Qatar Airways requiring the breach in question to be remedied; or
(e) the Supplier undergoes a change of control, in that the shareholders who have the right to vote the majority of the votes attaching to its entire issued share capital cease to control such votes for any reason whatsoever (in which event, the Supplier shall forthwith notify Qatar Airways of such change of control in writing); or
(f) the Supplier undergoes a material adverse change in financial position (as determined by Qatar Airways within its reasonable discretion); or
(g) in the event that performance of these Standard Conditions or the Purchase Agreement by Supplier shall have been rendered impossible for a period of thirty (30) calendar days by reason of a Force Majeure Event; or
(h) any representations or warranties to Qatar Airways in terms of these Standard Conditions or the Purchase Agreement or otherwise in terms of the provision hereof, which proves to be incorrect in any material manner or respect whatsoever; or
(i) any consent, authorisation, licence or approval from amongst others, the FAA, EASA, QCAA or any other applicable Aviation Authority or the Aircraft Manufacturer necessary in order to enable the Supplier to comply with its obligations in terms of these Standard Conditions or the Purchase Agreement is modified or is not granted or is revoked, suspended, withdrawn or terminated or expires and is not renewed .
12.2.2 Without in any way limiting or derogating from any other provision of these Standard Conditions or the Purchase Agreement, if the Supplier fails to comply with or breaches any of its obligations in terms of these Standard Conditions or the Purchase Agreement, Qatar Airways shall be entitled, but shall not be obliged, to without prejudice to any other remedies available to it at law or in terms of these Standard Conditions or the Purchase Agreement arising from such failure or breach, to remedy such failure or breach on behalf of the Supplier and to recover, on written demand, from the Supplier all costs of whatsoever nature and howsoever arising incurred by Qatar Airways by reason of or pursuant to it having remedied such failure or breach as aforesaid.
12.2.3 Notwithstanding anything to the contrary contained in these Standard Condition or the applicable Purchase Agreement, Qatar Airways shall be entitled to terminate these Standard Conditions, the Purchase Agreement and/or any Purchase Order for its convenience and without incurring any liability by providing three (3) months prior written notice to the Supplier for termination of these Standard Conditions and/or Purchase Agreement and fourteen (14) days prior written notice for termination of the Purchase Order.
12.3 EFFECT OF TERMINATION
12.3.1 Except as expressly provided herein, the expiration or termination of these Standard Conditions and the Purchase Agreement shall not affect or impair the rights of Qatar Airways or the liabilities and obligations of the Supplier pursuant to these Standard Conditions and the Purchase Agreement existing prior to such expiration or termination, nor shall such expiration or termination relieve the Supplier of any obligation or liability accrued under these Standard Conditions and the Purchase Agreement prior to such expiration or termination.
12.3.2 The Supplier shall repay or credit to Qatar Airways, at Qatar Airways' option, within ten (10) calendar days after the date of termination, expiry or suspension, all sums previously paid by Qatar Airways to the Supplier together with Interest thereon. The Supplier shall also reimburse to Qatar Airways all Freight Charges paid or incurred by Qatar Airways for Products and Spare Parts affected by such termination, expiry or suspension. All such payments shall be in addition to any liquidated damages payable or claimable pursuant to these Standard Condition and the Purchase Agreement.
12.3.3 The remedies provided in this clause shall be in addition to any other contractual, legal or equitable rights or remedies Qatar Airways may have against the Supplier.”
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13 DELAYS AND LIQUIDATED DAMAGES
13.1 EXCUSABLE DELAYS
13.1.1 DEFINITION
Neither Party shall be responsible to the other Party for any excusable delay ("Excusable Delay") in the performance of their respective duties and obligations under these Standard Conditions or the Purchase Agreement. An Excusable Delay shall be deemed to have occurred if a Party's delay in performance is due to causes such as an act of God, acts of public enemies, acts of a government war, natural disaster, insurrection or riots, civil commotion, fire, floods, plagues, epidemics or any other causes beyond such Party's reasonable control and not occasioned by the intentional acts, omissions or negligence of the relevant Party.”
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13 DELAYS AND LIQUIDATED DAMAGES
13.1 EXCUSABLE DELAYS
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13.1.6 RECOVERY PROGRAMME
(a) Upon the occurrence of an Excusable Delay event, the Supplier and Qatar Airways shall meet as soon as possible at Qatar Airways' facilities to discuss whether a recovery programme, both in terms of delivery dates and content, is possible or not.
(b) If such recovery programme is agreed as feasible by both Parties, then Qatar Airways and the Supplier shall define and act in good faith to agree the terms and conditions of such recovery programme. In doing so, the Supplier commits to treat its obligations under these Standard Conditions and the Purchase Agreement as its first priority amongst its various activities in order to ensure the most efficient and prompt recovery programme for Qatar Airways.
(c) Should the milestone chart be extended as consequence of such recovery programme then any predelivery payment schedule shall be extended accordingly.”
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13 DELAYS AND LIQUIDATED DAMAGES
13.1 EXCUSABLE DELAYS
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13.1.7 TERMINATION OR CANCELLATION FOR EXCUSABLE DELAYS
If (i) such Excusable Delay lasts or could reasonably be expected to last for more than thirty (30) calendar days; or (ii) the recovery programme is in the sole opinion of Qatar Airways regarded as not being feasible; or (iii) if no agreement is reached on the recovery programme within thirty (30) calendar days from the date of commencement of the Excusable Delay, then Qatar Airways shall have the right, at its own choice and upon written notice to the Supplier, to forthwith cancel all or part of the undelivered portion of these Standard Conditions and the Purchase Agreement. In such cases of cancellation, Qatar Airways shall have no liability whatsoever other than payment by Qatar Airways of properly substantiated costs incurred by the Supplier for labour already performed on, and parts already installed on the Aircraft prior to such date of commencement of the Excusable Delay, provided that the Supplier shall on written demand from Qatar Airways reimburse to Qatar Airways all predelivery payments and other payments already effected by Qatar Airways that the Supplier is not able to substantiate in accordance with the foregoing.”
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15.3 RIGHT TO WORK PRODUCT
15.3.1 Qatar Airways shall have, and the Supplier hereby grants to Qatar Airways, a perpetual, assignable, non-exclusive, royalty-free license to use any concept, product or process, patentable or otherwise, copyrighted material (including without limitation documents, specifications, calculations, notes, reports, Data, models, and electronic software) and confidential information owned by the Supplier and used by the Supplier or furnished or supplied to Qatar Airways by the Supplier in the performance of its obligations under these Standard Conditions and the Purchase Agreement.
15.3.2 Any concept, product, process (patentable or otherwise), copyrightable material (including without limitation documents, specifications, calculations, notes, reports, data, models, and electronic software) or Confidential Information first developed, produced or reduced to practice by the Supplier or any of its employees in the performance of these Standard Conditions and the Purchase Agreement (collectively, "Work Product") shall be the property of Qatar Airways upon creation, whether or not delivered to Qatar Airways at the time of creation, and shall upon request by Qatar Airways be delivered to Qatar Airways (but in no event later than thirty (30) calendar days from the date of cancellation of the Standard Conditions ·or the Purchase Agreement). Upon request by Qatar Airways, from time to time, the Supplier agrees to do all things reasonably necessary, at Qatar Airways' expense and as Qatar Airways may direct, to obtain patents or copyrights on any portion of such Work Product, to the extent the same may be patentable or copyrightable by other. The Supplier further agrees to execute and deliver or cause to be executed and delivered such documents, including in particular instruments of assignment, as Qatar Airways may in its discretion deem necessary or desirable to assign and transfer title to such Work Product as Qatar Airways may direct and to carry out the provisions of this Clause.”
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15.4 LIABILITY
UNLESS IN THE EVENT OF ITS GROSS NEGLIGENCE OR WILFUL MISCONDUCT, NEITHER PARTY SHALL HAVE ANY LIABILITY OR RESPONSIBILITY FOR ANY SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF OR IN CONNECTION WITH THESE STANDARD TERMS AND THE PURCHASE AGREEMENT, INCLUDING, WITHOUT LIMITATION, LOSS OF PROFIT OR REVENUE.”
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16.10 ENTIRE AGREEMENT
These Standard Conditions and the Purchase Agreement, including their respective exhibits and appendices, contain and constitute the entire understandings and agreement between the Supplier and Qatar Airways with respect to the subject matter hereof and supersedes and cancels any and all previous understandings, agreements, commitments or representations whatsoever oral or written in respect thereto. These Standard Conditions and the Purchase Agreement shall not be varied, discharged, released, abandoned, supplemented, changed or modified in any manner whatsoever, orally or otherwise, except by an instrument in writing concurrent or of date even herewith or subsequent hereto executed and delivered by both Qatar Airways and the Supplier or by their duly authorised representatives or officers making specific reference to these Standard Conditions and the Purchase Agreement and to the respective provisions or clauses being released , discharged, abandoned, supplemented, changed, or modified.”
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16.13 REASONABLE ACTS
Both Parties shall act in good faith in the performance of their respective responsibilities and obligations under these Standard Conditions and the Purchase Agreement and shall not, except as otherwise expressly provided to the contrary, unreasonably delay, condition or withhold the giving of any consent, decision, approval, agreement and/or any similar acts that is either requested or reasonably required by the other Party in order to exercise its rights or to perform its responsibilities and obligations under these Standard Conditions and the Purchase Agreement.”
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16.17 AMBIGUITY
If any claim is made by a Party relating to any conflict, omission or ambiguity in the provisions of these Standard Conditions or the Purchase Agreement, then no presumption or burden of proof or persuasion will be implied because these Standard Conditions or the Purchase Agreement was prepared by or at the request of any Party.”
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16.19 SUPPLIER AS INDEPENDENT CONTRACTOR
The relationship of the Parties hereto is that of independent contractors. The Supplier is an independent contractor and not an agent of Qatar Airways and shall not represent differently to any third party. Nothing in these Standard Conditions or the Purchase Agreement shall constitute or be deemed to constitute a partnership, joint venture, association or similar relationship between the Parties hereto or constitute either Party as agent for the other for any purpose whatsoever. Neither Party shall have the authority or power to bind the other or to contract in the name of or create a liability against the other as against any third party in any way or for any purpose. The Supplier shall be solely responsible for personal injury, death, loss, damage and/or destruction resulting from the quality of or the manner in which the Products and Spare Parts are designed, manufactured, assembled or in which the Services are performed. All persons performing the Services shall be under the exclusive control of the Supplier, which alone shall direct and control such persons in performing the Supplier's obligations under these Standard Conditions and the Purchase Agreement. All facilities, equipment, tools, Components, Materials, Products, tooling, parts and supplies necessary to perform the Supplier's obligations shall be the responsibility of the Supplier.”
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“EXHIBIT No 2 PROGRAMME MANAGEMENT
1. THE PROGRAM MANAGER
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1.6 The Supplier shall develop and submit to Qatar Airways a schedule depicting critical milestones in the design, development, and manufacturing process of the Products in accordance with milestones as may be defined by the Aircraft Manufacturer and/or Qatar Airways, which shall include the following:
(a) Initial Technical Coordination Meeting (ITCM)
(b) Preliminary Design Reviews (PDR)
(c) Critical Design Reviews (CDR)
(d) Critical Design Freeze (CDF)
(e) Certification (DTP, DTR)
(f) First Article Configuration Inspection (FAI)
5.2 A complete Shipset of all Products shall be presented during the FAI.
The Purchase Agreement
The Purchase Agreement provided in particular as follows:
“2.1 The terms and conditions contained in the Standard Conditions are hereby incorporated by reference into this Agreement and shall constitute an integral, non-severable part and shall fully apply to this Agreement.”
2.3. To the extent that any ambiguities, inconsistencies or conflicts between the terms and conditions contained in this Agreement, the Standard Conditions, and the Specification exist or would arise, then the following order of precedence shall apply:
(a) this Agreement;
(b) the Standard Conditions as attached Exhibit N°11 -Standard Terms And Conditions For Purchase of Aircraft Products And Services (STC-005);
(c) the Specification including Exhibit N°12 - Product Specification Document.”
3.1 COVERED AIRCRAFT
This Agreement covers the sale and purchase of the Products and Services for the following Aircraft:
Aircraft: Thirty (30) Boeing 8787-9”
“3.2 AIRCRAFT DELIVERY SCHEDULE
Aircraft |
2019 |
2020 |
2021 |
2022 |
2023 |
Total |
B787-9 |
7 |
7 |
6 |
8 |
2 |
30 |
3.2.1 The first Aircraft delivery is scheduled for the end of September 2019.
3.2.2 Details of Aircraft scheduled delivery shall be as notified in writing, from time to time, by Qatar Airways to the Supplier.
3.2.3 Qatar Airways reserves the right to modify the number of Aircraft, to change the Aircraft model, and to adjust the delivery schedule of any Aircraft as it may agree with the Aircraft Manufacturer to suit its operational requirements without incurring any liability to the Supplier and without any compensation to the Supplier or increase in the price of the Products.”
4. PRICING, INVOICING AND PAYMENTS
4.1 PRODUCT PRICES
4.1.1 The prices for each item of the Products shall be as detailed in Exhibit N°6 to this Agreement.
4.1.2 All prices are established in the Base Year United States Dollars.”
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“4.9 PAYMENT TERMS
4.9.1 Invoices for Products procured as BFE by Qatar Airways from the Supplier for installation in the Aircraft shall be issued by the Supplier following delivery of the Product in full compliance with the terms and conditions set forth in this Agreement to Qatar Airways, the Aircraft Manufacturer or the Installer. The Supplier shall send all invoice(s) to the following address:
Qatar Airways Accounts Payable
Finance Department
Qatar Airways Tower 2
Airport Road
P.O. Box 22550
Doha, State of Qatar
With a electronic copy sent to: accountspayable@gatarairways.com.ga
4.9.2 Qatar Airways will make invoice payments in US Dollars to the bank account detailed on the Supplier's invoice within forty five (45) days from receipt of the Supplier's original invoice.
4.9.3 For all other Supplier's invoices, Qatar Airways will pay the Supplier in accordance with the terms of the Standard Conditions.
NRC[33] Payment Schedule
4.9.4 A down payment in the amount of twenty-five percent (25%) of the non-recurring costs shall be invoiced by the Supplier upon completion of the Initial Technical Coordination Meeting (ITCM);
4.9.5 A progress payment in the amount of twenty-five percent (25%) of the non-recurring costs shall be invoiced by the Supplier upon completion of the Critical Design Review (CDR);
4.9.6 The payment in the amount of twenty-five percent (25%) of the non-recurring costs shall be invoiced by the Supplier upon completion of the First Article Inspection (FAI); and
4.9.7 The remaining payment in the amount of twenty five percent (25%) of the non- recurring costs shall be invoiced by the supplier upon rectification of all defects as raised in FAI or on production of a commitment letter with a target date of closure at the time of delivery of aircraft.
Qatar Airways will make payments in US Dollars for the NRC charges to the bank account detailed on the Supplier's invoice within forty-five (45) days from receipt of the Supplier's original invoice following completion of each of the above NRC payments schedule.”
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GENERAL PROVISIONS
7.9.4 The terms and conditions of this Agreement supersede those of all previous agreements, understandings and arrangements, whether written or oral, between [Optimares] and Qatar Airways relating to the Products and shall not be varied otherwise than by an instrument in writing of the same date as, or subsequent to this Agreement, executed by both Parties or by their duly authorised representatives.
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“7.10 OTHER AGREEMENTS AND COSTS DISCLAIMER
7.10.4 Other than for the prices and fees agreed herein for the Products, the Spare Parts and the Services, Qatar Airways shall not be required to pay the Supplier (or any other person or any third party) any other fees or charges, including but not limited to, service fees, support fees, licensing fees, recurring fees, software or applications fees, management fees, operational fees or maintenance fees or charges or any other similar fees or charges whatsoever in nature (the "Other Costs"), in order for Qatar Airways to be able, for the duration of the Support Period, to (i) enjoy the full, beneficial and continuous operation of the Products; and (ii) maintain and service the Products in the most cost effective and efficient manner. The Supplier hereby agrees to indemnify and hold harmless Qatar Airways against any and all Other Costs incurred by Qatar Airways for the duration of the Support Period which are not covered or explicitly mentioned or detailed in this Agreement.”
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8.4 Design and Concept
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8.4.4.3 all Foreground IP (as defined in clause 8.7 below), without limitation, in the Design and Concept and/or the Product and all right, title and interest in the Design and Concept and/or the Product, vests unconditionally, immediately and fully, in Qatar Airways, without any payment additional to the consideration under this Agreement, the adequacy of which is hereby acknowledged by the Supplier.”
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8.7 Foreground IP
8.7.1 The Parties acknowledge and agree that any Intellectual Property Rights developed or created in relation to the Products and/or the Design and Concept shall be "Foreground IP".
8.7.2 The Parties acknowledge and agree that Foreground IP includes but is not limited to the Intellectual Property Rights subsisting in or arising in relation to (i) the Design and Concept and/or the Product(s); (ii) any materials, data, documents supplied to the Supplier whether before or during the Agreement; and (iii) the performance of this Agreement.
8.7.3 Qatar Airways is the sole legal and beneficial owner of all the Foreground IP and all right, title and interest therein shall immediately vest in Qatar Airways either (i) on the Effective Date in respect of any preexisting Foreground IP; or (ii) immediately upon such creation or development of Foreground IP, whether or not it is declared or delivered at the time of creation to Qatar Airways. The Supplier shall notify Qatar Airways in writing with full details of any Foreground IP promptly upon its creation.
8.7.4 Without prejudice to the provisions of Clause 8.7.3, the Supplier hereby assigns Qatar Airways with full title guarantee by way of present and future assignment all Foreground IP which may vest in the Supplier.
8.7.5 The Supplier shall have no right to use, sell, transfer or licence Foreground IP or any part of it and shall not register nor attempt to register any of it, unless requested to do so in writing by Qatar Airways.
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8.7.7 The Foreground IP shall include (without limitation) all Intellectual Property Rights in inventions which [Optimares] considers may be patentable.. including but not limited to:
8.7.7.1 The door emergency mechanism
8.7.7.2 The seat design
8.7.7.3 The seat peculiarity; and
8.7.7.4 the double-folding video movement.”
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8.11 The obligations and rights in this Clause 8 are for an unlimited period and survive the termination or expiry of this Agreement.”
Exhibit No 2 further provided:
“2. TIME OF DELIVERY
For all equipment, parts, services and other goods to be provided by [Optimares] to Qatar Airways in term of the Agreement, Qatar Airways shall be entitled to stipulate, at its discretion, the time of supply of such equipment, parts, services or goods.
7. ON-DOCK-DATES
In the event that Qatar Airways elects to carry out a retrofit for any Aircraft:
7.1 The Supplier undertakes to ensure the delivery of all such Products with the latest standard modification status and latest certified part numbers then available at the time of shipment of the Products.
7.2 The Supplier shall meet all on-dock-dates of the Installer, the Aircraft Manufacturer, (and where applicable, the seats suppliers, the galleys suppliers and partition suppliers) and any other on- dock-dates that maybe determined during the ITCM.
7.3 DELIVERY OF THE ESSENCE. THE SUPPLIER MUST MEET THE ON-DOCK-DATES FOR EACH ITEM OF THE PRODUCTS AND FOR EACH AIRCRAFT AS NOTIFIED FROM TIME TO TIME BY THE AIRCRAFT MANUFACTURER. THE SUPPLIER ACKNOWLEDGES AND AGREES TO FULLY COMPLY WITH ALL THE DELIVERY TERMS AND CONDITIONS OF THIS AGREEMENT AND THE STANDARD CONDITIONS, INCLUDING WITHOUT LIMITATION ALL ITS OBLIGATIONS AND QATAR AIRWAYS RIGHTS OF LIQUIDATED DAMAGES, AGREEMENT TERMINATION AND/OR ORDER CANCELLATION WITHOUT LIABILITY OR COMPENSATION WHATSOEVER TO THE SUPPLIER.”
Exhibit No 2, clause 21 provided:
21. CHANGES
21.1 The Supplier shall accommodate Qatar Airways' reasonable changes in both design and schedule. These changes shall be accommodated in an efficient and responsive manner.
21.2 Design Changes up to the CDR shall be incorporated by the Supplier at no additional cost to Qatar Airways.
21.3 Seat Refresher:
At no additional cost to Qatar Airways, the supplier shall incorporate the trim & finish and IFE upgrade that may be requested by Qatar Airways during mid-program.
21.4 Minor Changes:
Minor changes up to the FAI shall be incorporated by the Supplier at no cost to Qatar Airways for example:
(i) Change of tedlar material color,
(ii) Change of Ultra leather or fabric color,
(iii) Change or alteration to trim and finish within the specified materials range.
21.5 Major Changes:
Major changes are defined as those changes requested by Qatar Airways that do not fit the parameter of minor changes for example:
(i) Substantial changes in material fit, form and function,
(ii) Addition or deletion of electrical components other than those required to comply with the Aircraft Manufacturer's requirements or specifications,
(iii) Changing lower attachments.”
Claimant’s position on Defendant’s summary of sums
claimed on the counterclaim as at 26 July 2022
CLAIMANT’S POSITION (per the Claimant) |
QUANTUM CLAIMED (with Claimant’s comments marked) |
Optimares response to Qatar’s position |
What do these payments represent? | |
(a) Counterclaim ¶156.1 {A/7/53} |
Amended Reply and Defence to Counterclaim ¶108 {A/10/26} |
NRC details Amount paid Date paid
B787 BC Seats - US$970,000 $237,500: 03.06.19 (ARIA - Old Design) $732,500: 16.01.20 |
Optimares position is set out in the Amended Reply and Defence to Counterclaim ¶108 (under (B)) {A/10/26}.
Optimares admit that these two payments were made; Amended Reply and Defence to Counterclaim ¶23(a) {A/10/7}.
The date of payment of $732,500 is 16 January 2020, not 11 March 2020 (see Appendix 9 to First Expert Report of Mr Humphrey {J4/10}). |
Optimares agree that these two payments relate to ARIA - Old Design.
The payment of $237,500 on 3 June 2019 was made under purchase order SV 21745363 {L/10/1} to cover NRC in relation to the Old Design following the ITCM having been achieved, which had been agreed between Optimares and Qatar Airways. The payment reflects the first milestone payment upon completion of the ITCM set out in the NRC Payment Schedule in clause 4.9.4 of the B787 Contract {L/7/8}, which was at the time not yet signed. The payment of $732,500 on 16 January 2020 was made under SV 21782467 {L/25/1} pursuant to an agreement between Mr Braca of Optimares and Mr Al Baker of Qatar Airways in October 2019 (see Day 5 pages 22-27) to cover |
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the balance of the NRC milestone payments in respect of the Old Design following the agreement between the parties to proceed with the New Design. |
B787 BC US$485,000 12.03.20 Seats - (ARIA - New Design) |
Optimares position is set out in the Amended Reply and Defence to Counterclaim ¶108 (under (B)) {A/10/26}.
Optimares admit that this payment was made.
The date of payment is 12 March 2020 {J4/10}. |
The sums were paid pursuant to purchase order SV 21825717 {L/35/1} in relation to NRC under the B787 Contract in respect of the ARIA New Design.
The B-787 Contract at clauses 4.9.4 to 4.9.7 sets out an NRC Payment Schedule with milestone payments {L/7/8}. The sum was paid in respect of the two milestones set out in clauses 4.9.4 and 4.9.5, respectively, for the completion of the ITCM and the CDR. | ||
B-777 BC US$242,500 27.02.20 Seats |
Optimares' position is set out in the Amended Reply and Defence to Counterclaim ¶108 (under (B)) {A/10/26}.
Optimares admits that this payment was made. |
The sums were paid pursuant to purchase order SV 21825118 {L/34} in relation to NRC under the B777 Contract. |
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The date of payment is 27 February 2020 (see {J4/10}). |
The B-777 Contract at clause 4.9.4 sets out an NRC Payment Schedule with milestone payments {L/6/8}.
The sum paid on 6 December 2018 was paid against the first milestone payment under clause 4.9.4, which provides that a payment in the amount of 25% of the NRC shall be invoiced by Optimares upon completion of the ITCM {L/6/8}. |
A321
EUR 378,089.25 |
Claimant's position is set out in the Amended Reply and Defence to Counterclaim ¶108 (under (B)) {A/10/26}.
Optimares admit that Qatar made two EUR denominated payments to Optimares of EUR 378,089.25 each, in total EUR 756,178.50 under purchase order SV 21670398; Amended Reply and Defence to Counterclaim ¶88 {A/10/23}.
The payments were made on 17 December 2018 and 26 |
The sums were paid pursuant to purchase order SV 21670398 {L/9} in relation to NRC under the A321 EC Contract. The A321 EC Contract at clauses 4.9.4 to 4.9.7 sets out an NRC Payment Schedule with milestone payments {L/5/10}.
The sum paid on 17 December 2018 was paid against the first milestone payment under clause 4.9.4, which provides that a payment in the amount of 25% of the NRC shall be invoiced by Optimares upon completion of the ITCM {L/5/10}. |
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September 2019, respectively {J4/10}. |
The sum paid on 26 September 2019 was paid against the second milestone payment under clause 4.9.5, which provides that a progress payment of 25% of the NRC shall be invoiced by Optimares upon completion of the CDR {L/5/10}. |
A321 BC US$475,000.00 $237,500: 6.12.18 Seats $237,500: 22.11.19 |
Claimant's position is set out in the Amended Reply and Defence to Counterclaim ¶108 (under (B)) {A/10/26}.
Optimares admit that these two payments of in total US$ 475,000 were made to Optimares; Amended Reply and Defence to Counterclaim ¶105 {A/10/25}.
The dates of payment are 6 December 2018 and 22 November 2019, respectively (see {J4/10}). |
The sums were paid pursuant to purchase order SV 21635629 {L/8} in relation to NRC under the A321 BC Contract {L/3}.
The A321 BC Contract at clauses 4.9.4 to 4.9.7 sets out an NRC Payment Schedule with milestone payments {L/3/7}.
The sum paid on 6 December 2018 was paid against the first milestone payment under clause 4.9.4, which provides that a payment in the amount of 25% of the NRC shall be invoiced by Optimares upon completion of the ITCM {L/3/7}. The sum paid on 6 December 2018 was paid against the second milestone payment under clause |
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4.9.5, which provides that a progress payment of 25% of the NRC shall be invoiced by Optimares upon completion of the CDR {L/3/8}. |
(b) Counterclaim ¶156.2 {A/7/53} |
Amended Reply and Defence to Counterclaim ¶105 {A/10/25} |
Interest on NRCs (US Prime Rate
US$74,571.62 |
It is understood to now be common ground that the appropriate interest rate for the Defendant’s US dollar claims is the US Prime Rate. The calculation of the same remains in discussion between the parties, and will be impacted by when the payment dates were, and the proposed treatment of the Euro dominated payments. |
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(c) Counterclaim ¶156.3 {A/7/53} |
Amended Reply and Defence to Counterclaim ¶108 (under (B)) {A/10/26} |
As a Freight Charge, BFE shipments to Optimares:
Costs incurred by Qatar Airways in shipping BFE to Optimares prior to termination:
US$352,056.54 |
Optimares position is that Qatar is put to proof as to the sums it claims to have incurred in shipping BFE to Optimares prior to termination; Amended Reply and Defence to |
It is understood that to the extent this sum is proved, then it relates to Freight Chares which are said to have been incurred by Qatar Airways for services rendered by freight forwarders for the shipping of BFE material. |
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Counterclaim ¶108 (under (B)) {A/10/26}. |
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(d) Counterclaim ¶156.4 {A/7/53} |
Amended Reply and Defence to Counterclaim ¶108 {A/10/26} |
As a Freight Charge, Insurance Guarantee:
Costs incurred by Qatar Airways of an insurance guarantee in respect of import duties and taxes for BFE shipped to Optimares prior to termination:
US$45,338 |
The Claimant's position is set out in the Amended Reply and Defence to Counterclaim ¶108 (under (B)) {A/10/26}.
Optimares admit that this sum was paid by Qatar Airways to Optimares; Amended Reply and Defence to Counterclaim ¶64(a) {A/10/19}.
The payment was made pursuant to purchase order SV 21777062 {N4/473} issued pursuant to a separate fiscal representative contract entered into between the parties {M1/242/1}, not the B787 Contract. The fiscal representative contract contains an exclusive jurisdiction clause in favour of the Courts of Latina, Italy; Amended Reply |
The payment is in respect of cost of insurance policy and custom operator fees in respect of the temporary importation of Panasonic IFE / BFE parts {M1/242/3} {N4/473/1}. |
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and Defence to Counterclaim ¶64(a) {A/10/19}.
Optimares note that this sum was paid on 21 November 2019 {J4/10}. |
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(e) Counterclaim ¶156.5 {A/7/53} |
Amended Reply and Defence to Counterclaim ¶108 (under (B)) {A/10/26}
Quantum admitted at Amended Reply and Defence to Counterclaim ¶108 (under (B)) |
As a Freight Charge, BFE return to Qatar Airways: US$ 352,154.76 and €115,500 |
Claimant's position is set out in its Amended Reply and Defence to Counterclaim ¶108 (under (B)) {A/10/26}.
Optimares admit that these payments were made by Qatar to Optimares {A/10/26}.
The sums were paid on 19 July 2021 {J4/10}. |
This was a payment for freight charges for the return of the BFE to Qatar Airways (or its designee). |
Removal, packaging, shipment €28,500 fees |
The total sum of $115,000 was paid against invoice no 48/2021 dated 13 July 2021 {N6/111}. |
Optimares agree that these sums relate to the removal, packaging, shipment fees, the negotiation fee and the management fee due under the BFE Agreement. | ||
Negotiation Fee €72,000 | ||||
Management Fee €15,000 | ||||
Insurance and Storage costs $352,154.76 |
The sum was paid against invoices no 79/2020, 80/2020, 86/2020, 01/2021, 15/2021 and 38/2021 {N5/419}. |
That these sums relate to costs for insuring and storing Panasonic IFE/ BFE equipment and for custom insurance policy. |
[1] References to the Purchase Agreement throughout this judgment refer to the Purchase Agreement for business seats for the B787-9. The Purchase Agreements for the four different programmes were materially identical.
[2] Clause 2.2 of the Standard Conditions. The covered aircraft and aircraft delivery schedule were set out in clauses 3.1 and 3.2 of the Purchase Agreement respectively.
[3] “Shipset” is defined in clause 1.1 of the Standard Conditions as “all the Software, Products and all parts and Material purchased by Qatar Airways for installation in or use on an Aircraft”. For the B787-9, 30 shipsets were contracted for, between 2019 and 2023: see clause 3.2 of the Purchase Agreement.
[4] Clause 7.1.1 and 7.1.2 of the Standard Conditions.
[5] Clause 4.1.1 and 4.1.2 of the Purchase Agreement.
[6] Clauses 4.9.1, 4.9.2 and 7.4.2 of the Standard Conditions.
[7] Exhibit No 2 to the Purchase Agreement, clauses 7.2 and 7.3.
[8] Clause 4.10 of the Purchase Agreement.
[9] Clause 4.9.4 of the Purchase Agreement. See also Exhibit No 2 to the Standard Conditions.
[10] Clause 4.9.5 of the Purchase Agreement. See also Exhibit No 2 to the Standard Conditions.
[11] Clause 4.9.6 of the Purchase Agreement. See also Exhibit No 2 to the Standard Conditions.
[12] Clause 4.9.7 of the Purchase Agreement. See also Exhibit No 2 to the Standard Conditions.
[13] See SV 21745363, SV 21782467, SV 21825717, SV 21825118, SV 21670398, SV 21635629.
[14] Clause 2.2 of the Purchase Agreement.
[15] Clause 1.3 of the Standard Conditions and clause 2.3 of the Purchase Agreement.
[16] Clause 2.3(c) of the Purchase Agreement.
[17] See the 1st witness statement of Alessandro Braca, paragraph 64.
[18] Wood v Capita [2017] AC 1173 at [13]; applied in Astor Management AG v Atalaya Mining PLC [2022] EWHC 628 (Comm), per Calver J at [60(iii)].
[19] This is not a dispute which it is necessary for me to resolve in this case by reason of my findings on the proper construction of the relevant contractual clauses.
[20] Phones 4U Ltd (in administration) v EE Ltd [2018] EWHC 49 (Comm), [2018] 1 Lloyd’s Rep. 204, Chitty on Contracts, (34th Edn), at 25-054.
[21] See Chitty on Contracts (34th Edn), at 25-054.
[22] Clause 16.19 of the Standard Conditions.
[23] See in this respect the illuminating analysis of David Foxton QC (now Foxton J) in Lloyd’s Maritime and Commercial Law Quarterly, “Good faith Obligations and Contractual Termination Rights”, pp. 360-384.
[24] Contrary to Optimares’ submission, the fact that Qatar Airways may have other, additional contractual entitlements to adjust the delivery schedule without liability (clause 3.2.3 of the Purchase Agreement); or to liquidated damages where there has been late delivery (ibid, clause 7.5); or to terminate the Purchase Agreement forthwith or at any time under clause 12.2.1 of the Standard Conditions does not in any way support or compel the conclusion that Qatar Airways can only exercise its right to terminate under clause 12.2.3 in good faith.
[25] See paragraphs 211 and 215 of its written closing submissions. I would not have drawn the suggested inference concerning bad faith in paragraph 215(c) in any event; and there is no justification for drawing the inference suggested in paragraph 215(d)(iii) in respect of the new design (as opposed to the old design).
[26] See also clause 8.7.1 of the Purchase Agreement.
[27] Clause 8.5.1 of the Purchase Agreement.
[28] Clause 8.7.4 of the Purchase Agreement.
[29] Clause 8.7.5 of the Purchase Agreement.
[30] Clause 8.11 of the Purchase Agreement.
[31] Cambridge Dictionary.
[32] Optimares’ legal team’s failure to spot this important document may be explained by the fact that no adequate core bundle was supplied to the court, contrary to the commercial court guide and the court’s request, until almost the last day of the trial. In response to the court’s request for a useable core bundle, four “core bundles” were made up as the trial progressed. Every time a document was referred to, it was indiscriminately added to these bundles. This was of no assistance to the court, as a Judge is not allocated time to read four core bundles after a trial has concluded.
[33] Non-recurring costs.