Jurisdiction(s):
United Kingdom

English Court of Appeal: non-assignment clause ‘by any Party’ does not catch transfers by operation of law; clear drafting needed for blanket prohibitions (Dassault v Mitsui Sumitomo)

Published on: 05 February 2024

Published by a LexisNexis Insurance & Reinsurance expert

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Article summary

Dassault Aviation SA v Mitsui Sumitomo Insurance Co Ltd [2024] EWCA Civ 5

What are the practical implications of this case?

This decision will interest anyone concerned with the canons of contractual construction. Those who draft or advise on non-assignment clauses will find it especially pertinent. Where an absolute bar on assignment is intended, wording must be explicit and unambiguous. Accordingly, drafters seeking to preclude transfers must choose language that leaves no room for implication. In Dassault Aviation, the Court of Appeal confirmed that it is inadequate to contend that a party should have appreciated, or in fact did appreciate, that assignment was a likely result of its conduct where the transfer is not the party’s own act but instead arises by operation of law. The Court’s stance can fairly be characterised as a strict black-letter approach. That black-letter reading is particularly stark when contrasted with the purposive approach adopted at first instance, where the judge concluded that, if the contracting party knew assignment would follow from its action, the situation fell within the clause’s scope.

What was the background?

On the appeal, the Court was required to construe a non-assignment clause under the contract in this appeal itself...

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