Eid-Daniel Jadon, Freshfields

A dispute between financial technology provider Wex Inc, and Optal and eNett became the first major case to be hosted in the Commercial Court which was triggered by an abandoned deal during the Covid-19 crisis. For Freshfields dispute resolution associate Eid-Daniel Jadon, who joined the firm as a trainee in 2015, the landmark WEX case cemented his desire to focus on commercial litigation.

The Freshfields team, led by partners Matthew Bruce and Ali Kirby-Harris, with support from Jadon and senior associate Sean Pitt, acted for new client Wex, which in 2020 had agreed to buy Optal and eNett, as subsidiaries of Travelport, for $1.7bn. The transaction was inked on 24 January, a week before the World Health Organization declared the coronavirus outbreak a public health emergency of international concern.

The case concerned the proper construction and application of a material adverse effect (MAE) clause – the targets generated the vast majority of their revenue by facilitating payments in the travel industry and following the onset of the pandemic, their performance declined dramatically leading WEX to argue that the MAE clause in the share purchase agreement (SPA) had been triggered.

MAE Clause

The litigation was the first English case on the interpretation of an MAE clause in the context of a share purchase agreement (SPA).

Freshfields worked intensely with WEX to prepare its case for trial, which included extensive expert evidence from payment industry specialists and factual evidence from senior WEX personnel.

For WEX, it was super high stakes: “The drop in the targets’ performance following the pandemic cannot be overstated,” states Jadon. “For example, in one week in April 2020, their revenues were just 2.2 per cent of budget. Given this, it was of fundamental importance to our client that it not be forced to complete the purchase for $1.72bn.”

Jadon says that a trial on key preliminary issues was listed on an expedited basis and all steps leading up to the trial (including pleadings, disclosure, witness statements and expert reports) were completed in just four months.

He continues that the biggest legal challenge was the fact that there is a dearth of English cases on the interpretation of MAE clauses. “There is, however, a developed body of US case law in this area which, on first blush, did not appear to be supportive of our client’s reading of the clause.  We therefore had to undertake a careful review to understand the nuance of the position (including the associated academic commentary) and explain where relevant which aspects should be distinguished,” Jadon explains.

Freshfields harnessed the expertise of its US litigation team (where such clauses have a more established interpretation) and assisted the Court with submissions on US case law and academic literature.

In an expedited preliminary issue hearing in September, the Commercial Court ruled in favour of Freshfields. The claimants and WEX were gearing up for an appeal in 2021, which was set to be heard in early 2021, with a second trial later in the year.

However, Travelport dropped the case after it finalised the purchase of eNett and Optal with WEX for a lower price. WEX agreed to pay £577.5m, significantly lower than the original $1.7bn it agreed to pay in January.

As well as learning a huge amount about “virtual credit cards”, Jadon’s main takeaway from the case relates to contract drafting.

“It came down to the meaning of one word tucked away in the MAE clause – had that term been defined in the SPA, there probably wouldn’t have been litigation.  So, it has really hammered home for me the importance of drafting every clause as tightly as possible, including the boilerplate language,” he says.

Since WEX, Jadon has spent much of his time working on a large, yet confidential, SFO investigation.  He has also picked up a few interesting pieces of litigation, including a new art law case in the High Court and a litigation involving an oil supermajor.