Contract

The parties in Glencore Energy UK Ltd v NIS J.S.C. Novi Sad entered into a settlement agreement that included a clause requiring them to "discuss in good faith with a view to agreeing the level of reimbursement". Prior caselaw has established that the "good faith" obligation is not a demanding obligation and it only requires "a party to refrain from conduct which in the relevant context would be regarded as commercially unacceptable by reasonable and honest people" (see Al Nehayan v Kent [2018]).

The defendant alleged that the claimant had breached the contractual obligation to negotiate in good faith by:

• Being slow to respond to its letters. The judge accepted that, at some point, leaving the negotiations at the bottom of its list of priorities could put the claimant in breach but this was not as extreme a case as was needed to make out that argument. There was no evidence that the claimant had been deliberately slowing things down – instead, the speed of its response had been affected by the pandemic, as was the case with many other businesses in its sector (oil trading) at that time.
• Making "unrealistic demands". For example, requesting documents which it knew the defendant could not obtain. On the facts, the judge found that it would not have been clear to the claimant that the documents could not be supplied. Again, this was simply not so extreme a case that it could be said that the claimant had not acted in good faith.