Where there's no waiver, there's no way

The English High Court has provided further guidance on the interpretation of “no waiver” clauses in a recent decision.

The backdrop to this decision was a sanctions related dispute about the termination of a currency swap agreement between two banks, one of which was Russian, the other English.

The agreement had a dispute resolution clause where the forum was arbitration unless the English bank gave notice that a dispute should be heard by the English courts. 

In breach of this, the Russian bank brought proceedings before the Russian courts. The English bank sought anti-suit and anti-enforcement injunctions from the English courts, which were granted. The Russian bank then started arbitration proceedings, as it was originally supposed to do.  However, within the contractual notice period, the English bank informed the Russian bank that the dispute should be moved to the English courts. The Russian bank argued that the English bank had waived that right. 

The agreement contained a “no waiver” clause which said, “No amendment, modification or waiver in respect of this Agreement will be effective unless in writing … and executed by each of the parties or confirmed [by the parties]”.  

The UK Supreme Court in MWB v Rock set out the principles for “no oral modification” clauses being effective. The question for the court here was whether, and the extent to which, those principles applied to “no waiver” clauses. 

The Russian bank's argument is far from easy to discern but it seems to have been: 

• unilateral waivers are a type of waiver (and there is authority that a clause setting out how a unilateral waiver must be given can be effective)
• since this clause only contemplates agreement by both parties, the clause must actually be talking about variation and not waiver
• the clause did not therefore prevent the English bank from waiving its rights.

The court disagreed.  It said that the starting point was that the clause did in fact apply to all waivers, as evidenced by the express use of the term “waiver” in the parties’ agreement (rather than only a particular subset of waiver). There was no reason not to rely on the agreement as made by the parties, and any injustice which arose by relying on this formality could be cured by estoppel.  Following MWB v Rock, this requires (1) words or conduct constituting an unequivocal representation that the waiver was valid notwithstanding that the formality requirements (i.e. the clause) had not been complied with, and (2) something more than the informal waiver.  

As there was no written and agreed waiver, the Russian bank needed to meet this test to show an estoppel.  However, the court found that the conduct alleged to be the basis for the waiver—being the English bank's application, arguments, submissions and proposed orders during the injunction proceedings—did not meet this test, and nor were they acts constituting waiver.  In fact, the court found that certain parts of both banks' submissions and other documents in the injunction proceedings demonstrated that neither party had understood there to be an unequivocal waiver, nor taken any steps in reliance on such waiver.

Judgment: Barclays Bank PLC v VEB.RF