Aston Martin MENA Limited v Aston Martin Lagonda Limited: Court considers contractual interpretation in Section 69 arbitration appeal

In Aston Martin MENA Limited v Aston Martin Lagonda Limited [2025] EWHC 2531 (Comm), Mr Justice Bright dismissed a rare appeal to the High Court under Section 69 of the Arbitration Act 1996, regarding “a question of law arising out of an award”. The appeal, brought by Aston Martin MENA Limited (“AMMENA”) against Aston Martin Lagonda Limited (“AML”), concerned whether the Tribunal had erred in its interpretation of a bespoke pricing clause within the parties’ distribution agreement. The case provides some interesting insight into the Court’s approach to contractual interpretation (particularly, as in this case, where key definitions are lacking), and more generally how it approaches arbitration appeals on the basis of errors in law.

Background

AML, a renowned manufacturer of luxury cars, appointed AMMENA as its sole distributor in the Middle East and North Africa (the “Territory”) under a Distribution Agreement dated 19 April 2018. Disputes arising from the agreement were referred to arbitration in July 2022, governed by the UNCITRAL Rules, with arbitral appointments made by the LCIA. Following a detailed evidentiary hearing in September 2024, the Tribunal issued a 144-page Award and Reasons in November 2024.

AMMENA appealed against only one specific finding. This was the Tribunal’s interpretation of Article 4(A)(1) of the Distribution Agreement, which governs the price at which AML was to sell cars to AMMENA.

Leave to appeal was granted on the basis that the Tribunal’s Award was “obviously wrong”, this being the test prescribed for the granting of leave to appeal under Section 69(3)(c)(i) of the Arbitration Act 1996.

Defining the ‘equivalent price’

Article 4(A)(1) states pricing requirements in two limbs, requiring that AML’s price to AMMENA be set on a regional basis so that the price:

1. Shall not be materially higher than “the UK factory price applicable to other territories”; and
2. Shall be in line with “[the Company’s price] applicable to other territories for equivalent vehicles with similar specifications”.

The clause does not define the critical word “price”. AMMENA’s core argument was that, as a distributor, the price charged to it should be compared to the prices AML charged to its other distributors. Since AMMENA was AML’s only independent, third-party distributor globally, AMMENA said that this meant the comparator must be the Internal Transfer Prices (“ITPs”) charged to captive distributors (associated companies within the Aston Martin group, such as in North America and China). ITPs are fixed by AML.

AML contended that the proper comparator was not the ITPs (which it said are “akin to accounting tools”) but the Dealer Net Prices (“DNPs”), i.e., the wholesale prices charged by AML directly to independent retail dealers in other territories, such as Germany. DNPs are set through commercial arm’s length arrangements (in that the retail dealers which pay DNPs are commercially independent of the Aston Martin group).

The Court’s decision

The Tribunal had rejected AMMENA’s case, finding that the comparator prices must be those fixed in the context of a commercial arm’s length relationship. The Tribunal noted that comparing AMMENA’s price with an off-market price (such as an ITP) would not serve the agreed commercial purpose of ensuring a “roughly level playing field between different territories”. By contrast, the DNPs charged by AML to retail dealers were appropriate to use as comparator prices and on this basis, the Tribunal concluded that it was acceptable to use the DNPs charged by AML to retail dealers in Germany as a comparator.

Mr Justice Bright agreed, finding that the natural meaning of the provision in Article 4(A)(1) is that AML’s prices to AMMENA included DNPs, which are UK factory prices charged by AML to independent retail dealers in other territories. However, the interpretation did not include ITPs, which are set unilaterally for internal group accounting purposes.

The Judge stated that, in the abstract, interpreting the word “price” in a commercial context generally suggests one that results from arm’s length negotiation. He noted that “it is not normal for commercial parties to agree that one party can fix the price payable to it by reference to its own internal prices, which it sets unilaterally as accounting tools”. However he added that in reality, contractual interpretation seldom occurs in the abstract and that, “[t]he iterative process that has now become familiar means that contractual interpretation is generally undertaken with a good deal of surrounding context – not least, whatever evidence there may be about the factual matrix”. Having considered the relevant factual matrix, the Judge considered there was no sufficient basis to displace the natural meaning of the provision. He concluded therefore that the correct comparator was the prices charged by AML to independent, third-party entities.

Contractual interpretation and the factual matrix

A significant aspect of the judgment addressed the standard of review and the role of the factual matrix in contractual interpretation under Section 69.

1. The substantive test for Section 69 appeals

When seeking leave to appeal under Section 69(3)(c)(i), AMMENA had to persuade the court that the Award was “obviously wrong”. Mr Justice Bright, however, clarified that the test applied at the substantive appeal hearing is simply whether the Award was “wrong”, and that the “obviously wrong” threshold does not apply once leave is granted.

2. The relevant principles of contractual interpretation

It was common ground that the Tribunal had set out the relevant principles accurately, stating that “…contractual interpretation is the ascertainment of the objective meaning of the relevant contractual language. This requires the Tribunal to consider the ordinary meaning of the words used, in the context of the contract as a whole and the background knowledge reasonably available to the Parties at the time of the contract”.

Neither side argued that the relevant language had a special meaning, established and recognised in the trade or industry. AML’s evidence from one of its factual witnesses, to the effect that “factory price” meant the commercial price, was not paid any regard by the Tribunal, on the basis that it merely reflected the witness’s own subjective view.

As neither side had argued that the issue should be treated as one requiring an implied term, the legal principles to be applied were those relating to contractual interpretation, not those relating to implied terms. The Judge noted that, “[a]n arbitral or judicial decision that explains the meaning of a particular phrase necessarily adds a gloss to the actual words used, but this is not the same as implicitly writing in some extra words”.

3. Deference to arbitral findings

The Judge acknowledged the iterative process required by modern contractual interpretation principles (as outlined in Arnold v Britton and Wood v Capita Insurance Services Ltd), which requires consideration of the factual matrix. Mr Justice Bright noted that the Court, reviewing the Award, was “simply not in the same position as a Tribunal which conducted a multi-day evidentiary hearing”. As the Tribunal had full access to the factual context that informed the contract’s meaning, the Judge observed that “it may be right for the Court to be slow to be persuaded to overturn the Tribunal’s conclusion”. This highlights the inherent difficulty for the Court, relying only on limited materials, to conduct the same iterative process as the Tribunal. However, the Judge noted that the way the Court approaches problems of this kind will vary, and that in practical terms, it may be necessary for the Court to consider how significant the factual matrix was to the Tribunal’s decision, at least in cases where the Court’s interpretation of the relevant provision would otherwise be different from the Tribunal’s interpretation.

Here, the contractual interpretation might have changed if: (i) there were in fact other, similar independent distributors doing business with AML on a commercial, arm’s length basis (rather than only captive distributors), which could be used as comparators; or (ii) if there were evidence that AMMENA knew when the contract was entered into in April 2018 that there were no independent distributors but only captive distributors, assisting an argument that the parties had in mind the prices charged to those captive distributors when they agreed Article 4(A)(1). However, there was no suggestion of this in the Award or in Counsel’s submissions to the Court.

Final thoughts

The decision in AMMENA v AML reinforces the modern approach to contractual interpretation as a mixed question of law and fact, with the Judge noting that “[t]he nature and character of that mixture will vary from case to case”.

The judgment also offers some reminders of the Court’s approach to Section 69 appeals:

1. It confirms the distinction between the “obviously wrong” threshold for permission to appeal and the “wrong” test on the merits once leave is granted.
2. Practitioners should also note that when arguing against an interpretation derived by a detailed evidential arbitral hearing, the weight given to the Tribunal’s assessment of the factual matrix may make an appeal less likely to succeed.