The recent case of Takeda Pharmaceutical Company Limited v Fougera Sweden Holding 2 AB [2017] EWHC 1995 (Ch) suggests that if you are the party which wants co-operation from another after completion of a deal, you should make sure it is expressly covered in the agreement.

The case arose out of the sale of a Danish company (‘Target’) by Fougera, the Swedish seller to Takeda the Japanese buyer under a sale and purchase agreement (SPA).  One live issue at the time of the sale was whether or not the Target was liable for withholding tax on interest on monies borrowed from the seller.

The SPA contained indemnity provisions under which a payment of withholding tax to the Danish tax authorities by the Target would be indemnified by the seller, subject to limitations and exclusions including a time limit which expired on 30 September 2017.  The SPA also contained a covenant for further assurance by the seller and an entire agreement clause.

The buyer argued that the SPA imposed an obligation on the seller to provide information with which the buyer might challenge the levying of the withholding tax. They argued that the obligation arose either because of the further assurance covenant taken with the indemnity provisions, or because there were implied terms to that effect. For its own commercial and confidentiality reasons the seller did not wish to provide that information.

The judge found the SPA to be a detailed agreement which was professionally drafted on behalf of sophisticated and well-resourced parties. In interpreting the SPA the judge applied the principles recently settled by the Supreme Court namely that the court's task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement when read in the context of the factual background known or reasonably available to the parties at the time of the agreement, excluding prior negotiations. The judge rejected the buyer's claims because the SPA contained nothing requiring the seller to provide the requested information and so the further assurance clause had nothing to bite on. The implied terms were not necessary to make the SPA workable and the strong form of the entire agreement clause reinforced this finding.

This case reinforces the difficulties a party will face in asking the court to imply terms in an agreement which has been professionally drafted on behalf of sophisticated parties.