Legal Standstill Agreement

The second scenario involves claims against third parties. Defendants must be careful before entering into status quo agreements with the applicants, without their knowledge of the claim, if they are entitled to a third party that cannot be invoked under the Civil Liability (Contribution) Act of 1978. They may find themselves in an impossible situation if they are unable to convince the third party to enter into a no-return agreement, as happened in Nomura International Plc/Granada Group Ltd. It is an abuse to deprive an accused of a narrow defence by issuing a trial in which the application cannot be properly formulated and has no intention of advancing the complaint. Status quo agreements are also used to suspend the usual limitation period to make a claim in court. [1] Status quo agreements to extend or suspend a statute of limitations have become a regular feature of civil litigation. They allow parties to focus on the requirements of the pre-action protocol, regardless of the restriction. You can also save the cost of court tax if the dispute is settled before the action. So, what`s the problem? Two recent cases – Russell v Stone and Muduroglu against Stephenson Harwood – illustrate the flip side of the status quo agreements. We study the benefits and pitfalls. If the terms of the agreement are not clear, the courts will apply the rules of interpretation recently clarified by the Supreme Court of Wood/Capita Insurance Service Ltd. The defendant argued that the agreement had extended the limitation period, so that one day after the expiry of the status quo period was not a procedure; In Muduroglu v.

Stephenson Harwood, the applicant initiated proceedings without notice, as required by the status quo agreement. The defendant argued that this was a breach of the agreement in accordance with the refusal, with the result that the applicant could not rely on the agreement to suspend the limitation period. The court found that the offence was not at the root of the contract. The provision of the publication is not a precedent and a violation of it did not prevent the applicant from benefiting from the suspension of the restriction. A company that is pressured by an aggressive bidder or activist investor believes that a status quo agreement is useful in weakening the unsolicited approach. The agreement gives the target entity greater control over the deal process by requiring the bidder or investor to buy or sell the company`s shares or launch proxy contests.