Aston Martin Lagonda Limited v IMR-Industrialesud SpA

This matter has come before the court this morning by way of an urgent application issued by the claimant, Aston Martin Lagonda Limited, for injunctive relief. The form of relief sought amounts in effect to a form of interim specific enforcement of what the claimant claims to be the defendant’s delivery obligations under the contractual arrangements between them.

The claimant is the well-known luxury and sports car manufacturer (to which I will refer generally as “Aston Martin”). The defendant, on the evidence presently available to the court, is an Italian manufacturer and/or procurer, and supplier, of parts in the automotive industry, and a key supplier of parts for all four of Aston Martin’s current main production models.

The fifth Aston Martin model currently in production is the very specialist limited edition Valhalla model which is outside the scope of anything I say today or these proceedings, as I am told that it does not make use of any parts supplied by the defendant (to which I will refer generally as “IMR”).

In the first place, Mr Stephens, who appears this morning for the defendant, as I recorded and confirmed at the outset of the hearing, strictly without prejudice to any possible challenge if there is an arguable challenge to bring to the jurisdiction of the court, applies for an order that the hearing today is simply adjourned to a date next week. Mr Stephens, on instructions, offered to be in a position to deal with matters more fully and substantively as soon as Wednesday of next week. My understanding of the practical reality from the court’s perspective is that if there is to be an adjournment it will need to be until Friday of next week. The difference between Wednesday and Friday, for any possible next hearing in the matter, does not affect the substance of what might be the appropriate course to take today.

Mr Stephens – understandably and up to a certain point fairly – prays in aid the extreme urgency with which the matter has been brought before the court by the claimant and, as a result, the very limited time which he and those instructing him have had to take instructions, give advice and, as a result, provide assistance to the court on what, if any, relief it might be proper and appropriate to grant.

At the same time, it appears tolerably clear on the evidence available to the court – and which I am confident could and would have been gainsaid if it was not the broad substance of the matter – that the dispute that is now urgent for resolution, at least as to whether there should be interim relief, pending eventually either a resolution of the dispute between the parties, or a trial of these proceedings, is a commercial dispute that has been created by a stance adopted now repeatedly by IMR, to the effect that Aston Martin’s refusal to concede disputed and disputable claims by IMR, for payments of sums over and above sums invoiced at what appear to be the contract prices between the parties for parts delivered, either entitles IMR to stop deliveries pursuant to the contractual arrangements or, at all events, may be used by IMR as a basis for refusing to continue deliveries as a matter of fact.

That has come to a head as the evidence for Aston Martin filed last week predicted that it was likely to – and had started to by then – with deliveries into trucks at the collection points from IMR. I do not mean by that to express any view as to what contractually speaking is the formal point of delivery in the sense of performance of the sale contract – that has not been the subject of submissions. Delivery in that sense, into trucks at IMR, scheduled for Thursday 12 June and for Tuesday to Thursday of last week, 17 to 19 June, and then also for this week, Tuesday to Thursday 24 to 26 June, has been refused by IMR. The commercial position therefore is that seven or so scheduled deliveries have not been made. Those would be deliveries of parts completed ready and available for delivery in respect of which IMR, as things stand, will not be paid because they are refusing to deliver and which are needed by Aston Martin and critically so.

The updated information from Mr Sullivan on instructions (which I will be directing is to be confirmed and, if there was any error in what he said, corrected, by supplemental witness evidence to be filed by 4.30 pm tomorrow) is that production in Wales of the DBX SUV model has ceased. Other production has been deliberately slowed to delay the point at which production would have to be halted, but: as of yesterday, all body shop and paint shop work had ceased; and as of today, all other production work at the main factory at Gaydon has had to cease, except for the work on the Valhalla model to which I referred earlier, which does not engage IMR parts.

The further commercial detail I have been given by Mr Sullivan on the same basis is that as at today therefore, as many as 155 Aston Martin production staff have had to be temporarily stood down, there being no work available for them; and after tomorrow a further 300 production line staff and up to something like 300 further logistics and parts line staff will cease to have work. The commercial consequences of that on the evidence as it presently stands will, in rapid order, become very serious for Aston Martin and certainly out of all proportion to the value at stake between the parties in terms of simply the ordinary invoice value of the seven or so deliveries that have so far not taken place.

The stance adopted by IMR is that by reference to a range of prior matters, in particular a consistent pattern in recent years of final parts volumes called for by Aston Martin pursuant to the contractual arrangements having fallen somewhat short of volume forecasts provided by Aston Martin, also pursuant to the contractual arrangements in one form or other, there are sums either due or which ought in some form to be paid by way of compensation by Aston Martin of the order in total of €9m. In short, IMR has asserted that unless that sum is paid forthwith and Aston Martin agree (though on the face of things there seems no basis for proposing that it has any obligation to agree) other changes to the contractual arrangements, IMR will halt on its side performance of what prima facie appear to be its obligations.

The restoration to Aston Martin, were it to occur, of the parts that it was expecting under the seven or so deliveries that have now not occurred – again, on instructions to be confirmed by evidence – Mr Sullivan was able to inform the court should buy Aston Martin ten working days or so of production time before there might again be a need to slow down or halt production, which production time could resume in something like five days from a trigger point of either agreement or court order requiring that those deliveries be made.

So, having noted Mr Stephens’s concerns as to the limited time within which he and those instructing him have been able to prepare any submissions for today, the general background on the evidence before the court justifies to my mind the conclusion that IMR cannot in good faith have adopted the stance that it has adopted without having identified – if it perceived that there was such a case – the case it would seek to advance as to why as a matter of English law applicable to the contractual arrangements between the parties, what it says as regards the sums it wishes to claim from Aston Martin but has never sought by way of legal proceedings, caused it to be able to cease performance of its delivery obligations for ongoing parts requirements as scheduled and made in principle ready for delivery in the absence of any claim, which as far as I can see it has never made, that it would be entitled to or would have any intention to terminate the entire contractual relationship.

There are occasions when the gravity of the consequences of not acting require the court to judge a matter provisionally as best it can on the limited material available so long as to do so is not unfair to the parties, bearing in mind it may be the limited nature of any decision that will be made on that basis. In my judgment this is such a case. The real question is whether the greater injustice to the parties in this case will be done by requiring, as effectively the price of adjourning what presently appears to the court on the material available to it quite likely to be a strong application for interim injunctive relief, that the seven or so missing deliveries now be made, so as to minimise the otherwise extreme adverse commercial consequences for Aston Martin, and it transpiring later that Aston Martin did not after all have a well founded claim; or by taking no action, so that those consequences are visited upon Aston Martin, and it later transpiring that Aston Martin had a justified claim for injunctive relief. In my judgment the balance in that regard decisively favours Aston Martin.

There will be a far greater injustice to Aston Martin in not acting today to ensure that, as on the face of the material currently available to the court appears to be its contractual entitlement, it is able to resume production by requiring the delivery to it as soon as it may be arranged of the seven or so missing deliveries. The far greater injustice will be caused to Aston Martin by not requiring that, should it turn out ultimately, that it was indeed justified in its claim, than will be caused to IMR by its being ordered today to make those seven particular deliveries as soon as possible, should it, upon a fuller hearing either at an interim stage or ultimately a trial, transpire that it was within its rights to have refused delivery.

I bear in mind in that balance of prejudice not only the losses that are already being caused to Aston Martin and would continue and be rapidly exacerbated by a failure, at least in the very short order, to hold the fort, to have deliveries resumed, but also the commercial harm to IMR, there being a certain extent to which it is, to use a rather English phrase, cutting off its nose to spite its face by refusing to effect deliveries, thereby ensuring that it will not be paid even the amounts that Aston Martin on its case will of course acknowledge that it has to pay for the deliveries that have not been made if those deliveries are now made.

So, on the presentation of the case to the court today on an urgent basis, and having to judge it in a limited and provisional way as to how best the status quo should be preserved until a fuller consideration can be given to matters, I am clear that the appropriate course is to require that what I have been referring to as the seven missing deliveries are now made, and made as soon as they can be; and in the meantime then to adjourn the matter for a further hearing which will be listed for next Friday, 4 July, at which I make clear the matter will properly be, and will need to be, re-visited de novo. Such very provisional views as I have had to form on the material currently available will necessarily be of no relevance to what views whichever judge hears the case in just over a week’s time is or is not able to form on what may then be fuller evidential material.

I should also be clear that everything I have said has been on the working assumption, which I hope that counsel with those instructing them will be able to make good off line as part of finalising an order that will need to be drawn up on today’s hearing, that it will be possible (by way of either exhibiting schedules or extracting information from schedules, to create a list or schedule in the order) to identify with clarity, and such as ought not to create room for dispute between the parties, exactly which are the scheduled deliveries into trucks I have been generically describing as the missing deliveries, to date. That can then be the subject matter of this specifically targeted interim relief to hold the fort as the legitimate and fair condition of being willing to adjourn the matter to give both parties, but in particular the defendant, a fuller opportunity to respond on the merits of the application for interim injunctive relief and, it may be, take further instructions and make informed decisions as to matters such as jurisdiction and service.

So that is as much as I wish to say by way of judgment on the interlocutory substance of what we are doing today.