Law Report: Recording agreement enforceable: Panayiotou and others v Sony Music Entertainment (UK) Ltd - Chancery Division (Mr Justice Jonathan Parker), 1 June 1994.

Where proceedings alleging that an agreement was in restraint of trade were genuinely compromised by the substitution of a new agreement, it is contrary to public policy to allow the doctrine of restraint of trade to apply to the new agreement or a renegotiated version of the new agreement.

Mr Justice Jonathan Parker dismissed claims by the plaintiff, Georgios Panayiotou, professionally known as George Michael, against Sony.

In 1983, George Michael, who performed with the group Wham], claimed that the recording agreement between Wham] and Inner Vision, a record company, was void or unenforceable because it was an unreasonable restraint of trade. Those legal proceedings were compromised by agreement and Wham] entered into a new recording agreement with CBS (UK) in 1984.

In 1987, George Michael became an outstanding commercial and international success as a solo artist. George Michael and CBS negotiated a new agreement in January 1988 so that George Michael was treated more like other superstars. In January 1988, Sony took over CBS.

George Michael spent the whole of 1988 abroad, mainly touring. For tax reasons he received advances and royalties of more than pounds 11m during 1988 under the 1988 agreement. In 1990, further renegotiations improved his financial terms so that he had reached American superstar status.

In 1991, George Michael, who had decided to change the direction of his music and image, became dissatisfied with Sony. In February 1992, George Michael was paid an advance of pounds 1m which he repaid to Sony in August 1992. He wished to rid himself of the 1988 agreement as varied as he now regarded it as being no longer in his interest.

In October 1992, he claimed that the 1988 agreement was unenforceable as an unreasonable restraint of trade or rendered void by article 85(2) of the EEC Treaty which is directed at maintaining freedom of competition within the common market.

Mark Cran QC, Jeremy Lever QC, Ian Mill, Pushpinder Saini (Sheridans) for George Michael; Gordon Pollock QC, David Unwin, Peter Duffy and Vernon Flynn (Clintons) for Sony.

MR JUSTICE JONATHAN PARKER said that the common law jurisdiction to declare a contract unenforceable as a restraint of trade was invoked in this case, and not the equitable jurisdiction to grant relief against unfair and unconscionable bargains. The common law doctrine was not concerned with the conscience of the covenantee, nor did its application require proof of morally reprehensible conduct on the defendant's part.

The first stage was for the court to determine whether the contract was one which attracted the doctrine of restraint of trade at all: for not every contract which was 'in restraint of trade', using the expression in the broad popular sense, would attract the doctrine. The second stage was to determine whether the contract satisfied the test in Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd (1894) AC 535, which involved reasonableness as between the parties and reasonableness in the public interest. The plaintiff's motives in challenging the contract were not material.

In the present case it would be wholly unrealistic to treat the 1988 agreement as if it were a new agreement, ignoring the fact it was a renegotiation of a pre-existing agreement. The 1984 agreement must be regarded as enforceable. That did not mean that the renegotiated version, the 1988 agreement, was dispensed from justification under the doctrine of restraint of trade. There were no sufficient grounds for excluding the 1988 agreement from the application of the doctrine.

The compromise of the Inner Vision was genuine and bona fide and freely entered into. Mr Michael had the benefit of one of the most experienced advisers and toughest negotiators in the business.

There was a clear public interest in upholding genuine and proper compromises and Mr Michael was seeking to have a central part of the compromise declared unenforceable. If it were open to a plaintiff to challenge a compromise of a restraint of trade issue by alleging that the compromise was itself in restraint of trade, then a restraint of trade issue could never be compromised by the substitution of a new agreement. The 1988 agreement did not attract the doctrine of restraint of trade.

Although it was strictly unnecessary, the issue of whether the provisions of the 1988 agreement were justified would be considered. There was inequality of bargaining power in the renegotiations leading to the 1988 agreement, such inequality arising purely and inevitably from the fact that the parties were renegotiating the terms of the existing enforceable 1984 agreement. But, inequality of bargaining power was of the nature of renegotiation.

Whether leaving out of account or taking account of any pre-existing restrictions imposed by the 1984 agreement, the terms of the 1988 agreement were justified.

It would be unfair to Sony and unconscionable to allow Mr Michael now to assert that the 1988 agreement was unenforceable. Sony's defence of acquiescance was made. The alleged counter-equities against Sony that Sony operated the 1988 agreement unfairly and to Mr Michael's detriment were not made out and did not defeat Sony's defence of acquiescence.

Turning to the article 85 issue, article 85, on the basis that the 1984 agreement was not challenged and was valid and enforceable, the 1988 agreement did not affect trade between member states within article 85. Further, the 1988 agreement did not have the requisite effect on trade in the context of the market for pop records and the requisite anti-competitive effect was not established.

The Community law treatment of intellectual property rights would in any event save the 1988 agreement from contravention of article 85.

Mr Michael's claims were dismissed.

Suggested Topics
News
people
Life and Style
healthMovember isn't about a moustache trend, it saves lives
News
people
Life and Style
food + drinkFrom Mediterranean Tomato Tart to Raw Caramel Peanut Pie
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Armstrong, left, and Bain's writing credits include Peep Show, Fresh Meat, and The Old Guys
TVThe pair have presented their view of 21st-century foibles in shows such as Peep Show and Fresh Meat
Arts and Entertainment
Keys to success: Andrew and Julian Lloyd Webber
arts + entsMrs Bach had too many kids to write the great man's music, says Julian Lloyd Webber
Arts and Entertainment
Hand out press photograph/film still from the movie Mad Max Fury Road (Downloaded from the Warner Bro's media site/Jasin Boland/© 2014 Warner Bros. Entertainment Inc.)
films'You have to try everything and it’s all a process of elimination, but ultimately you find your path'
Extras
Boys to men: there’s nothing wrong with traditional ‘manly’ things, until masculinity is used to exclude people
indybest13 best grooming essentials
News
i100
Arts and Entertainment
Imelda Staunton as Dolores Umbridge in the Harry Potter films
books

New essay by JK Rowling went live on Pottermore site on Friday

News
Russia Today’s new UK channel began broadcasting yesterday. Discussions so far have included why Britons see Russia as ‘the bad guy’
news

New UK station Russia Today gives a very bizarre view of Britain

Arts and Entertainment
Keira Knightley and Benedict Cumberbatch at the premiere of The Imitation Game at the BFI London Film Festival
filmsKeira Knightley tried to miss The Imitation Game premiere to watch Bake Off
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Mobile Developer (.NET / C# / Jason / Jquery / SOA)

£40000 - £65000 per annum + bonus + benefits + OT: Ampersand Consulting LLP: M...

Humanities Teacher - Greater Manchester

£22800 - £33600 per annum: Randstad Education Manchester Secondary: The JobAt ...

Design Technology Teacher

£22800 - £33600 per annum: Randstad Education Manchester Secondary: Calling al...

Foundation Teacher

£100 - £125 per day: Randstad Education Chelmsford: EYFS Teachers - East Essex...

Day In a Page

Bryan Adams' heartstopping images of wounded British soldiers to go on show at Somerset House

Bryan Adams' images of wounded soldiers

Taken over the course of four years, Adams' portraits are an astonishing document of the aftermath of war
The drugs revolution starts now as MPs agree its high time for change

The drugs revolution starts now as MPs agree its high time for change

Commons debate highlights growing cross-party consensus on softening UK drugs legislation, unchanged for 43 years
The camera is turned on tabloid editors in Richard Peppiatt's 'One Rogue Reporter'

Gotcha! The camera is turned on tabloid editors

Hugh Grant says Richard Peppiatt's 'One Rogue Reporter' documentary will highlight issues raised by Leveson
Fall of the Berlin Wall: It was thanks to Mikhail Gorbachev that this symbol of division fell

Fall of the Berlin Wall

It was thanks to Gorbachev that this symbol of division fell
Halloween 2014: What makes Ouija boards, demon dolls, and evil clowns so frightening?

What makes ouija boards and demon dolls scary?

Ouija boards, demon dolls, evil children and clowns are all classic tropes of horror, and this year’s Halloween releases feature them all. What makes them so frightening, decade after decade?
A safari in modern Britain: Rose Rouse reveals how her four-year tour of Harlesden taught her as much about the UK as it did about NW10

Rose Rouse's safari in modern Britain

Rouse decided to walk and talk with as many different people as possible in her neighbourhood of Harlesden and her experiences have been published in a new book
Welcome to my world of no smell and odd tastes: How a bike accident left one woman living with unwanted food mash-ups

'My world of no smell and odd tastes'

A head injury from a bicycle accident had the surprising effect of robbing Nell Frizzell of two of her senses

Matt Parker is proud of his square roots

The "stand-up mathematician" is using comedy nights to preach maths to big audiences
Paul Scholes column: Beating Manchester City is vital part of life at Manchester United. This is first major test for Luke Shaw, Angel Di Maria and Radamel Falcao – it’s not a game to lose

Paul Scholes column

Beating City is vital part of life at United. This is first major test for Shaw, Di Maria and Falcao – it’s not a game to lose
Frank Warren: Call me an old git, but I just can't see that there's a place for women’s boxing

Frank Warren column

Call me an old git, but I just can't see that there's a place for women’s boxing
Adrian Heath interview: Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room

Adrian Heath's American dream...

Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room
Simon Hart: Manchester City will rise again but they need to change their attitude

Manchester City will rise again but they need to change their attitude

Manuel Pellegrini’s side are too good to fail and derby allows them to start again, says Simon Hart
Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities