Typically, the first formal step in an M&A dispute is the serving of a notice by a buyer on a seller pursuant to the terms of the relevant share purchase agreement.

Laura Jenkins, James Le Gallais, Alexander Lerner and Mary Read consider the recent decision in TP ICAP Limited v Nex Group Limited [2022] EWHC 2700 (Comm), which offers a timely reminder of the court’s approach to the construction of contractual notices in the context of M&A disputes. The decision is also of interest because the underlying facts relate to the German authorities’ investigations into an alleged tax fraud centred around ‘cum-ex’ trading.


The facts

This case concerns the acquisition of a voice broking business, ICAP Global Broking Holdings Limited (the “acquired business”), by Tullett Prebon plc from ICAP plc in a deal worth over £1bn. The share purchase agreement (the “SPA”) was agreed on 11 November 2015, but the deal only completed on 30 December 2016.

Voice broking is a form of interdealer broking that takes place by telephone (as opposed to other forms of broking, which are generally conducted through electronic trading platforms). Voice brokers connect buyers and sellers in markets for derivatives, commodities and other assets and instruments.

Under the SPA, ICAP plc warranted that except as fairly disclosed to Tullett Prebon plc in the data room or the disclosure letter, each of the warranties it had given were true at the date of the SPA and, so far as material, the date of completion.

The seller’s warranties included warranties to the effect that, so far as it was aware, none of the directors, officers or employees of the acquired business had been subject to any non-routine investigation, review or enquiry by a governmental authority in the preceding 18 months relating to the acquired business (paragraph 9.2 of Part 1 of Schedule 4, SPA). When repeated on completion, a proviso was added to paragraph 9.2 to the effect that no such non-routine investigation review or enquiry as had been warranted against would have a material adverse impact on the operation of the acquired business. Further, for the purposes of paragraph 9.2, the seller’s awareness was agreed by the parties to be the actual knowledge, having made reasonable enquiries, of eight individuals named in the SPA.

The SPA also contained provisions prescribing how notification of any claims for a breach of warranty identified by the buyer should be made to the seller. The relevant paragraph provided that the seller would not be liable in respect of a claim unless the buyer gave the seller written notice “stating in reasonable detail the nature of the [claim] and, if practicable, the amount claimed”.

After the acquisition, the buyer (subsequently renamed TP ICAP Limited) discovered the following:

  • An investigation by the US Commodities and Futures Trading Commission/the Financial Conduct Authority, said to date back to 2015, relating to the involvement of the acquired business in certain swaps transactions and swaps trading activity related to bond issuances.
  • Investigations by various German authorities, including the Frankfurt Prosecutor and the Cologne Prosecutor, and potential civil claims by Blackrock Asset Management Deutschland AG, Investec Bank plc and Warburg Bank, relating to the involvement of the acquired business in cum-ex trading of German securities.

Pursuant to the terms of the SPA, the buyer notified the seller (whose liabilities under the SPA had subsequently been assumed by Nex Group Ltd) of potential claims for, among other things, breaches of warranty (the “Notices”) and later commenced proceedings in respect of the same.


The seller’s application

In 2021, the seller successfully applied for part of the buyer’s claim to be struck out because aspects of it failed to allege salient facts or relied on potential future events that had not yet arisen. For present purposes, it is not necessary to consider the detail of this judgment, save to note that it contained two important but obiter remarks (ie remarks made in passing by the judge that were not essential to the decision).

The first was that the Notices should have identified at least one of the eight individuals specified in the SPA as having relevant knowledge on behalf of the seller. The second was that the Notices should have stated that the relevant investigations would have a material adverse impact on the acquired business. The defendant brought a further strike out and summary judgment application on these grounds.


The decision

The court identified the following principles concerning the interpretation of contractual notices from the case law:

  1. Unilateral contractual notices should be construed objectively, taking into account the relevant objective contextual scene. Although a contract and a notice are different (because in the latter case, the court is construing words used by one party rather than agreed words), the approach to ascertaining meaning is similar. Therefore, the words used in the relevant contract and the context in which it was written are both relevant to construing a notice.
  2. The purpose of a contractual notification is to make clear in sufficiently formal terms that a claim is being made against the seller. Notice clauses are usually inserted into contracts to give some certainty to the party to be notified, and a failure to observe their terms will rarely be dismissed as a technicality.
  3. If a contract prescribes that certain information has to be included, a notice that fails to do so will be invalid (and it will not assist a buyer to argue that the seller already knows the information). If a contract does not specify precisely what information a notice must contain, and just requires the notice to state things in reasonable detail, what is reasonable will depend on the circumstances. Those circumstances include what is already known to the recipient. What is reasonable also takes its colour from the commercial purpose of the notification clause and what someone in the position of the parties would treat as reasonable. Business people would not expect or require further detail that served no commercial purpose.

On the facts, the SPA obliged the buyer to give the seller notice stating in reasonable detail the nature of the claims, and it did just that. The SPA did not expressly require the Notices to identify the names of individuals said to have knowledge of the relevant investigations and so the absence of such information did not invalidate the Notices.

The SPA also did not require the Notices to state that a particular investigation would have a material adverse impact on the acquired business, such that without that explanation the Notices would be invalid. Adding such a statement would have done no more than set out the applicable text of paragraph 9.2 and so would not have served any commercial purpose.

Although the buyer’s claims would fail at trial if the relevant investigations did not have a material adverse impact on the operation of the acquired business, the buyer’s failure to state that in the Notices did not mean that the nature of the claim had not been stated or that the Notices were invalid.

Accordingly, the Notices were valid and it could not be said that the buyer’s case was unarguable or had no real prospect of success.



The decision highlights the importance the courts attach to contractual certainty. When acting for sellers, well-drafted notice provisions may offer your client an important line of defence against prospective claims. This is because a notice that fails to conform may be invalid, which puts a significant onus on the buyer to draft notices correctly. This will not always be the case, particularly if complying with notice provisions is onerous.

Conversely, those acting for buyers should look carefully at the interaction between, on the one hand, any warranties that are drafted such that their ‘trigger’ is a material adverse impact on an acquired business and, on the other hand, the requirements for giving notice under a given contract. Although the court in this case was careful to distinguish between what a notice needed to contain to be valid and what a buyer needed to show in order to prove its case successfully at trial, in practice this will not always be an easy line to draw and sellers may seek to blur the line for just that reason.

The decision is also timely because the underlying facts relate to the German authorities’ investigations into an alleged large-scale tax fraud centred around cum-ex trading. We understand that the German authorities’ investigations concern 1,500 people, and the following banks have been linked: JP Morgan, Barclays, Bank of America, Morgan Stanley, Deutsche, Macquarie, Unicredit HypoVereinsbank, Commerzbank West LB, HSH-Nordbank, Canadian Maple Bank, Sarasin, Warburg and Fortis.

The German authorities’ investigations appear to be gathering pace. Deutsche bank was raided for a second time in October, and a German court convicted three former banking executives in November. Further, as much of the relevant trading activity relating to cum/ex took place in London, it is likely that there will also be regulatory investigations and cum/ex-related disputes in this jurisdiction in the not too distant future (albeit probably not in the form of M&A disputes).

Stewarts has extensive experience in representing shareholders, members and directors of companies (ranging from small privately-owned companies through to PLCs) in disputes. You can find further information regarding our expertise and experience on our Shareholder and Partnership Disputes and Tax Litigation and Resolution pages.



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