Good faith in a JV: why causation matters

This article is written by Carrera Parchment and Judith Hopper.

The recent case of Matiere SAS v ABM Precast Solutions Ltd [2025] EWHC 1434 (TCC) provides a cautionary tale around good faith obligations in the context of an infrastructure joint venture.  

In this case, the Claimant Matiere was a designer, fabricator and installer of civil engineering structures. Matiere entered into a joint venture agreement with the Defendant engineering company, ABM, to bid for the manufacture supply and installation of tunnels and structures on the High-Speed 2 (HS2) rail route between London and the West Midlands. 

In August 2018 Matiere and ABM jointly replied to an Invitation to Tender for the Green Tunnels project (“Project”) along the HS2 route, as an unincorporated joint venture.   

Under the proposal, Matiere was to be responsible for the design and installation whilst ABM would be responsible for the manufacturing process.

The Contracts

In January 2019 Matiere and ABM entered into a Consortium Agreement.  This included a provision that the parties would “co-operate and collaborate with one another in accordance with the terms of this Agreement and in the course of their performance of their obligations . . . and. . . shall act in good faith towards the other and use reasonable endeavours to forward the interests of the co-operative enterprise”.  

In June 2020 the parties then entered into a Collaboration Agreement.  This was prepared by solicitors and also included a good faith provision.  However, it did not set up a JV Board, contain any provisions on decision making or any mechanics for funding the JV.    

The Fallout

In September 2020 the main contractor for the Project served a termination notice on Matiere/ ABM, stating that there remained unresolved differences on a number of issues, including concerns on operational delivery arising from the Collaboration Agreement, and on the proposals for ABM to construct a bespoke factory in Scunthorpe. 

Matiere claimed £373,295.06 for sums due under the Consortium Agreement.  The Court found that those sums were due. 

However, ABM also produced a counterclaim claiming three breaches of the duty of good faith:

• In 2019 Matiere gave a slide presentation to a key competitor of ABM, which ABM said was given in bad faith
• Matiere undermined the proposals for the Scunthorpe factory. 
• Matiere signed a direct contract with the main Contractor for the Project in November 2021.

Judgment

Although it is a well-established concept that English contract law doesn’t recognise a general doctrine of good faith, the court held that, in this case the Agreements executed by the parties imposed a contractual duty of good faith. 

Consequently, the parties were required to act honestly, not engage in commercially unacceptable conduct and to honour both the substance and the spirt of the contract, not just its literal wording (Re Compound Photonics Group Ltd [2022] EWCA Civ 1371).

The Court found that the presentation to a key competitor was not a breach of the duty of good faith, as there was some evidence that a tripartite agreement was being contemplated by both parties at that time.

The Court did find that Matiere had breached its duty of good faith by openly undermining the ABM factory proposal in front of the Contractor.  The Judge, in describing the evidence of one of Matiere’s witnesses, noted that “much of the conduct of which ABM complains is attributable to things [he] said and done . . . in the form of lies, deception and double-dealing. [He] did not deny much of this . . . He was both disarmingly frank and ashamed by what he had done”.  Another Matiere witness was described as “an unsatisfactory witness prone to giving long speeches made up of self-serving statements”.  

The Court did not find that entering into the contract with the Contractor subsequently was a breach of the duty of good faith, on the basis that the JV fell away once the termination notice was served.  

However, despite the court finding that Matiere breached its duty of good faith, ABM’s counterclaim failed on the grounds that causation could not be established. ABM was unable to demonstrate Matiere’s breach had caused the loss of a real and substantial chance of securing a subcontract. 

The fact that ABM’s prospects of securing a subcontract deteriorated during the period from 2018 to 2020 arose from other factors, including the concerns being expressed by the Contractor, rather than solely from Matiere’s conduct.

Key takeaways

• The scope of the duty of good faith will be determined in each case by the specific circumstances of the relevant contract.  Parties who wish to impose a duty of good faith should always include express terms, rather than seeking to rely on implied terms, and be clear about the extent of the obligation and when and how it will apply. 
• A key challenge for ABM was the drafting of the joint venture agreements.  The case highlights the importance of having robust, clearly defined joint venture structures.   
• Parties to a joint venture or a contract with an express duty of good faith should be clear about the importance of transparency and honesty.
• A party will face evidential hurdles in trying to establish causation where it relies on a breach of a contractual obligation to act in good faith. To be able to successfully rely on a breach of acting in good faith a claimant will have to evidence that such breach rather than other factors that caused the loss. 

Our leading Construction & Engineering team can advise you on every stage of your project from inception and choice of procurement, through the tender process, complex contractual negotiations, contract management, dispute avoidance and (if necessary) formal dispute resolution. Feel free to contact Judith Hopper if you have any questions at this stage.

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