What is more exciting than a legal tirade between two of the most prominent English judges? Contractual interpretation is the bread-and-butter work of the commercial courts. Whilst it does not attract huge attention in an undergraduate contract law syllabus, its paramount importance in commercial contracting certainly deserves the ink spilled by the duo. In an annual lecture, Lord Sumption revisited the age-old debate on the proper approach to contractual interpretation.1 This was soon greeted with fierce criticism by Lord Hoffmann in a Law Quarterly Review article.2 I will present their arguments, and examine how successful the attempt at reconciliation has been.
A little bit of history
To understand the debate properly, one has to travel briefly back into history. Under a traditional textual analysis, the courts regarded the ‘natural and ordinary’ or ‘plain’ meaning of contractual words as almost conclusive, together with the use of dated canons of constructions. Contractual meaning is to be found within the ‘four corners’ of the document.3 In ICS v West Bromwich BS,4 Lord Hoffmann sweepingly discarded what he called the ‘old intellectual baggage of contractual interpretation’ and reformulated them into five principles.5 Broadly summarized, two points stand out. First, courts will seek a ‘common sense’ interpretation considering what an ordinary reasonable person would understand it to mean. Second, courts will also look at the legal, factual and regulatory surrounding circumstances of the contract in all cases, not just where there is an ambiguity. This extends to, in his own words, ‘absolutely anything’.6 This apparent departure from the traditional common law position has gained traction, notably in Chartbrook v Persimmon Homes7 and Rainy Sky SA v Kookmin Bank8, where an assessment of ‘business common sense’ took centre stage.
As a keen supporter of a textual approach, Sumption proclaimed that ‘language, properly used, should speak for itself and it usually does’.9 Sumption criticized Hoffmann for presuming inherent adaptability of all language. He further denounced the belittling of dictionaries and grammars as tools of interpretation.10 The overriding theme is that judges are not necessarily well-placed to determine what commercial common sense requires. This sentiment is indeed shared by many academics, who urged courts to recognise the limits and confines of the court’s commercial experience.11 Overall, Sumption sees the Supreme Court as withdrawing from the more advanced positions seized during the ‘Hoffmann offensive’, to a more ‘defensible’ position (i.e. more self-restrained approach to interpretation).12 Whether this is accurate is examined later.
This is soon greeted by Lord Hoffmann’s LQR article. His remarks are particularly damning - that Lord Sumption is plainly wrong in claiming that words have ‘autonomous meaning’ irrespective of the strength of background evidence.13 Words have conventional meanings, but one can only understand what they were used to mean if one knows the context. This is a pragmatic approach that recognises the realities of judicial decision-making. It also allows judges to be intellectually honest. Such approach has the virtue of giving effect to parties’ real intention, rather than stretching and truncating it with judicial fictions of irrebuttable presumptions.14
How could we account for the deeply divided opinions? Lord Sumption is well-known for having developed a distinctive judging style that demonstrates his remarkable judicial conservatism.15 Conservatism here refers not to political ideology, but a conceptualization of the role of judges and the extent to which a court can interfere in parties’ dealings. It can perhaps be attributed to the fact that the commercial judges, like Lord Sumption, have taken a harder line for the sake of commercial certainty. Equity lawyers, Lord Hoffmann amongst them, are arguably relatively keener to give leeway. The two conflicting approaches are based on wholly different normative policy concerns and understanding of judicial reach that are difficult to be reconciled in a technical manner.
Attempt at reconciliation
In fact, prior to this Hoffmann-Sumption debate, Lord Hodge had attempted to reconcile the two rival approaches in Wood v Capita Insurance Services,16 that ‘textualism and contextualism are not conflicting paradigms in a battle for exclusive occupation of the field of contractual interpretation’.17 However laudable, it is of limited practical significance. First, it does not accord with the attitude in the judicial and academic community, which continues to resemble a pendulum between the paradigms. Second, and more fatally, Lord Hodge’s approach lacks intellectual honesty and does not offer any greater certainty to commercial parties.
Lord Hodge, citing Lord Bingham, rejected the contention that contextualism is a new phenomenon and argued the notion that the court putting itself in the shoes of the contracting parties had a long pedigree.18 On a text/contextualism spectrum, theapproach adopted for construing the contract varies according to the circumstances of the particular agreement. He was at pains to point out that the recent history of contractual interpretation is one of continuity rather than change.
This, however, conveniently overlooks many inconsistencies between ICS and subsequent case law. The conflict was heightened by Arnold v Britton,19 endorsed by Wood despite sitting uncomfortably with it. Arnold focuses on the natural meaning of the words and appears to take away the emphasis from the wider factual matrix.20 There, Lord Neuberger downplayed the effect of surrounding circumstances. Business common sense should not be used to ‘undervalue’ the importance of the language, and what the parties meant is most obviously to be gleaned from the language of the provision. This exhibits a trend towards a more conservative approach to resolve the debate primarily on the basis of textual analysis,21 and reaffirms Lord Sumption’s position. Furthermore, whether Lord Hodge’s view is representative of the judicial attitude is unclear. The Hoffmann-Sumption exchange aside, his exposition was only mentioned in passing in Actavis UK v Eli Lilly22, where Lord Neuberger found those applicable principles ‘tolerably clear’. Thus, Wood’s agenda is still far from being the final word.
It now seems undeniable that the pendulum has swung back to the primacy of plain language, and Sumption’s observation proves accurate. Lord Hodge’s proposition is vigorously contested by Sir Geoffrey Vos. Vos argues that there have surely been ‘sea changes’ as contractual interpretation is now confined to choosing between available meanings of the words - with little scope for judicial adjustment of the language to reflect what the objective person would think the parties have meant (save in the most exceptional circumstances).23 However, Lord Hodge is not without his supporters. Goh argues that the proper debate is not a dichotomy between a textual or contextual analysis, but rather the extent to which the plain meaning rule should be applied.24 However, one would accept that no bright line can be easily drawn. It is also accepted that it is inappropriate to characterise them as two distinct and discrete factors. But the mere fact that it is a sliding scale does not undermine the conceptualisation of the two concepts battling for a bigger share in the field.
Moreover, the retreat is not a mere English phenomenon. New Zealand has recently in Firm PI 1 v Zurich Australian Insurance25 adopted a greater role for the plain meaning. Similarly, Singapore case law hasdemonstrated waning enthusiasm for the contextual approach.26 However, Lord Hoffmann’s legacy in Hong Kong in Jumbo King v Faithful Properties27 continues unscathed as his contextual approach was recently endorsed.28 These overseas battlefields signify that the debate continues to be conceptualised in polarised terms with multi-jurisdictional implications.
The difficulty ultimately boils down to an irresistible urge to reformulate again and again the principles. Jackson put it most aptly, ‘every formulation of the rules or principles is coloured by the case which is then before the court. The judge has a sense of what the right answer is and tends to slant his/her general propositions towards reaching that answer.29 This realist perspective has much to commend. Practitioners and contracting parties are now left in bewilderment after plowing through a multitude of expositions.30 It might be said that courts are afforded considerable flexibility, but masking the actual retreat only serves to create uncertainty for businesses, not least when contractual construction is the staple for the Commercial Court. Lawyers have already been flooded by various attempts at enumerating lists of interpretative principles. It is foreseeable that, for the time being, the UKSC will refrain from further reformulation.31 Lord Hodge’s attempt at reconciling the prior authorities, unfortunately, fails to add clarity to the law, but merely masks the reality of judicial interpretation.
At the end of the day, Hoffmann and Sumption’s strongly-worded exchange seems to support a criticism of the optimistic Wood decision - that a palpable change in the law and deeply divided approaches has been repeatedly played down. The status quo seems to lean in favour of Sumption’s conclusion. For the sake of commercial certainty, English judges should resist the temptation of another grand reformulation of principles. Nevertheless, it is anticipated that the academic debate will continue. Now, all eyes are on Lord Sumption’s Reith lectures on BBC Radio 4 this spring for another comeback.
 J. Sumption, ‘A Question of Taste: The Supreme Court and the Interpretation of Contracts’, Harris Society Annual Lecture, Oxford 8 May 2017
 L. Hoffmann, ‘Language and Lawyer’  134 LQR (Oct) 553.
 Lovell and Christmas Ltd v Wall (1911) 104 LT 85.
  1 WLR 896.
 Ibid, 912-913.
 Ibid, 913.
  UKHL 38,  1 AC 1101.
  UKSC 50,  1 WLR 2900.
 Sumption (n 1).
 N. Andrews, ‘Interpretation of Contracts and “Commercial Common Sense”: Do Not Overplay this Useful Criterion’ (2017) 76 Cambridge Law Journal 36
 Sumption (n 1).
 Hoffmann (n 2).
 Hoffmann (n 2).
 J. Lee, ‘The Judicial Individuality of Lord Sumption’ (2017) 40(2) UNSW Law Journal 862.
  UKSC 24,  AC 1173.
 Ibid .
 T. Bingham, ‘A new thing under the sun? The interpretation of contracts and the ICS decision’ Edin LR Vol 12, 374.
  UKSC 36,  2 WLR 1593.
 Ibid .
 D. McLauchlan, ‘The lingering confusion and uncertainty in the law of contract interpretation’  LMCLQ 406.
  UKSC 48, .
 Sir G. Vos, ‘Contractual Interpretation: Do judges sometimes say one thing and do another?’ Canterbury University, Christchurch 18 October 2017.
 Y. Goh, ‘From context to text in contractual interpretation: Is there really a problem with the plain meaning rule?’ (2016) Common Law World Review 45 (4) 298, 299.
  NZSC 147 (Arnold J).
 Sembcorp Marine v PPL Holdings Pte  3 SLR 801.
 (1999) 2 HKCFAR 279.
 Fully Profit (Asia) Ltd v SJ (2013) 16 HKCFAR 351 (Ma CJ).
 Sir R. Jackson, T. Chelmick, ‘The Construction of Contracts’, 1 May 2018, 4 New Square Conference on Construction Law.
 N. Edwards, ‘Some clarity on contracts’ (2017) New Law Journal <www.newlawjournal.co.uk/content/some-clarity-contracts> accessed 27 January 2019.
 C. Dowling, A. Denholm, ‘Literal or Contextual? What is the Correct Approach to Contractual Interpretation?’ Oxford Business Law Blog, 26 Apr 2017.