CL-2023-000396 - [2025] EWHC 1904 (Comm)

FTL is incorporated and registered in Delaware and holds itself out as a business providing bespoke finance solutions for innovative technology companies. It is a small operation. Munich Re is well-known as one of the world’s leading reinsurance companies and is incorporated and registered in Germany.

The parties’ relationship began in July 2013 within the context of a project known as Project Aerion. The parties signed a ‘Mutual Nondisclosure Agreement’ on 23 July 2013, which provided that Confidential Information included any information designated as “Confidential”, “Proprietary” or similar and included information disclosed to a disclosing party by third parties, and applied to all communications between the parties until written notice was given that subsequent communications would not be so governed.

It is FTL’s case that, from mid-2013 onwards, the parties discussed working together to develop new business using FTL’s business connections (especially in Silicon Valley) and knowhow, and Munich Re’s insurance and/or re-insurance capacity and/or investment capital to generate new business for the mutual benefit of both FTL and Munich Re.

Specifically, in the course of those discussions, in October 2014, Munich Re provided FTL with a document referred to as the ‘CIP/FTL Collaborative Venture Briefing’ document (the ‘October 2014 Briefing’), which was presented to Munich Re’s senior management as a summary of the basis on which FTL and Munich Re would work together to identify and exploit joint business opportunities including but not limited to bespoke insurance solutions. Mr Blackwood KC, on FTL’s behalf, pointed out that it is accepted by Munich Re in its Defence that this document was produced following a review and contributions by FTL, and so (at least by inference) that it was a document that reflected their joint understanding. He submitted that, in the circumstances, the October 2014 Briefing envisaged that Munich Re would be making equity investments and/or receiving equity in companies, in exchange for contingent capital loans which would then be shared with FTL, but without Munich Re holding such investments directly.

This was followed by a further document, the ‘CIP/FTL Collaboration Venture Briefing’ document in December 2014 (the ‘December 2014 Briefing’) which again was the product of the input of both Munich Re and FTL. Again, Mr Blackwood observed, the parties understood that the ultimate purpose of the relationship was to develop ‘upside’ opportunities, and that ‘upside’ meant equity. In this regard, he highlighted that FTL’s responsibility was described (in a section headed “Collaborative Venture”) as being focussed on “client acquisition and management, the development of equity (upside) opportunities”, and that, in a section headed “Summation”, FTL noted that the Collaborative Venture “would provide strong upside potential …”:

“Substantial upside potential via equity or share in turnover stake. This is the value pricing the business plan can achieve that is not possible in the traditional insurance market”.

On 24 December 2014, Dr Giarrusso of FTL did some editing of what he described as the “CV document” but which was the December 2014 Briefing, and sent it to Mr Sirr of Munich Re who then made his own edits to the remuneration section as follows:

“The objective of the CV is for CIP to be remunerated on a value-pricing basis for its insurance policy. Therefore, the remuneration will be the insurance premium and, potentially, a portion of the equity residual upside, with the "residual" being that amount of value after any liquidation of equity that is used for claims payments.

The CV will receive a ceding commission from the insurance that will essentially pay for the Management Company fees, which cover the CV's expenses.

For FTL, its only remuneration is a portion of the equity residual upside, which means it is only paid if the CV is profitable.”

Accordingly, Mr Blackwood submitted, Munich Re knew that the premise of the relationship was that FTL was seeking its remuneration through ‘upside’ and that this meant equity.

Furthermore, it is FTL’s case that on or around 30 December 2014, during a call with Munich Re, Munich Re represented (through a senior Director and member of Munich Re’s Board of Management) that Munich Re wished to proceed with a joint venture in the terms based on the principles contained in the December 2014 Briefing.

Munich Re accepts that there was a call on that date, and that Mr Blunck of Munich Re “expressed a wish for the parties to work together”, but denies that he indicated that Munich Re wished to proceed in terms contained in the December 2014 Briefing. Mr Blackwood submitted that the inference to be drawn from this is that FTL’s case is correct: if Munich Re had not agreed to proceed with FTL, there would be documentary evidence of the same and it would be highly unlikely that FTL would have carried on with Munich Re. (It should be noted in this connection that, although in his oral submissions Mr Swainston drew attention to paragraph 22 of the Particulars of Claim, where the conversation on 31 December 2014 is pleaded, and suggested that the allegation made by FTL is that the representation made by Munich Re was by reference to a later document prepared in June 2015, as referred to in paragraph 23, rather than the December 2014 Briefing, in support of a submission that accordingly the plea makes no sense, that is not right since paragraph 22 clearly refers to the earlier document, not the later one).

Subsequently, in February 2015, FTL introduced Equidate to Munich Re, and later that year, in June 2015, Munich Re (Jeffrey Sirr and Michael Berger of the CIP Emerging Strategies Department) prepared a document (as mentioned above and pleaded in paragraph 23 of the Particulars of Claim) entitled the ‘CIP/FTL Partnership’ (the ‘CIP/FTL Partnership Document’) which was then sent to FTL. FTL’s case is that this document reflected the existing arrangement between the parties. Specifically, Mr Blackwood submitted that in this document the parties considered that there were two (separate but complementary) strands to their relationship: a collaboration venture and a transactional relationship, paragraph 4 stating as follows:

“The partnership consists of two parts:

A Collaboration Venture (CV).

Transactional Relationship: CIP/FTL working together to create and enter into innovative transactions as well as enhancing business assumption and activities with certain, important, current clients.”

Mr Blackwood went on to observe that the two parts were symbiotic: as the CIP/FTL Partnership document set out, again in paragraph 4:

“The CV is about enhancing the skill sets of CIP to create value-added solutions. With its successful implementation, this leads into the second part of the partnership (Transactional Relationship), which is being better equipped to create and successfully enter into innovative transactions…”.

The stated purpose of the collaboration venture, Mr Blackwood noted, was to provide a framework allowing Munich Re to “rethink core aspects of the business” (paragraph 5).

Furthermore, Mr Blackwood highlighted how the price for one year of “providing training, client access, support in marketing, office space and intellectual property” was US$3 million (reflecting the US$750,000 payment per quarter under the Collaboration Agreement). This was set out in a separate section to ‘FTL Remuneration’ which was in a section headed “Part 2: Transactional Relationship” and was on a wholly different basis. The obvious inference, Mr Blackwood suggested, is that the parties understood that work done and payment under the collaboration venture was separate and distinct from the transactional relationship.

Mr Blackwood noted that there were various deliverables in relation to the collaboration venture aspect. He explained that these were subsequently set out at Annex 1 to the Collaboration Agreement entered into on 8 July 2015 but which ran from 1 June 2015 until 1 June 2016 (and was subsequently, in June 2016, extended until 30 September 2016 by an Extension Agreement).

The Collaboration Agreement required FTL to provide the ‘Services’ (as defined in Appendix 1). These ‘Services’ included: (i) sales and marketing support for Munich Re’s existing efforts; (ii) supporting Munich Re’s existing product range, starting with cyber risk; (iii) training and education through internal workshops and client workshops; (iv) creating new products for new and existing risks which could be positioned and sold at a higher level within the client organisation (i.e. products for a market, rather than bespoke products for a particular client; (v) basing select Munich Re employees with FTL in Silicon Valley; (vi) FTL acting as a guide (‘docent’) and conduit for Munich Re employees to become steeped in Silicon Valley culture; and (vii) advantaged access with Munich Re having “first look at FTL-generated deals. This provides [Munich Re] with advantaged access, and the ability to participate on a most-favored basis”.

Coming back to the CIP/FTL Partnership Document, FTL’s remuneration in respect of the transactional relationship was described at paragraph 13 as follows:

“The partnership is about enhancing the skill sets of CIP to create value added capabilities through the CV. With the CV’s successful implementation, it will lead to the second part of the partnership (Transactional Relationship) and being better equipped to create and successfully enter into innovative transactions; thereby, growing CIP’s business profitability and moving away from the product commoditization environment of the traditional corporate insurance market. Furthermore, FTL views itself in a similar manner to the other companies within its Silicon Valley environment where the ‘real’ remuneration/profit is in the upside/economic benefit created by successful transactions.

Therefore, FTL is neither a broker nor a consultant where remuneration/profit is achieved through payments of commissions and fees regardless of the outcomes of transactions, etc. Instead, FTL makes its profit through the successful outcome of transactions that CIP agrees to undertake.

…

Transactional Relationship:

As previously stated, this is not a traditional broker or consultant relationship. Transactions will be value pricing based with FTL sharing in the upside/economic benefit gained, which would not come to fruition if the transaction is not successful. FTL will not be paid fees or commissions in the traditional insurance manner. In effect, it is sharing in the risk of the transaction because its remuneration is based on the transaction’s successful outcome to CIP.

There will be no upfront payments to FTL for this part of the Partnership. Consequently, it will share in the upside/economic benefits of a transaction (given sufficient remuneration for CIP’s risk capital provided) provided it is successful. The amount of upside/economic benefit FTL will participate in will be decided on a transaction by transaction basis.”

Mr Blackwood submitted that the collaboration venture was (and was intended to be) separate from the transactional relationship. Accordingly, it was his submission that, whilst one of the premises of the transactional relationship was to provide Munich Re with a first look at FTL-generated deals, and that was a ‘Service’ under the Collaboration Agreement, any transaction and work on such transaction thereby generated was not a ‘Service’ within Appendix 1 of the Collaboration Agreement. There was nothing in that agreement, he added, by which FTL agreed to work on bespoke products and/or transactions in exchange for payment by Munich Re. Indeed, Mr Blackwood submitted, that would have been inconsistent with the whole premise of the parties’ relationship as described in the documents above: the implementation of the collaboration venture was to lead to the transactional relationship, which is where both parties always intended that the real ‘upside’ and economic benefit would be generated and FTL would share in the proceeds of such ‘upside’.

Mr Blackwood went on to observe that, as the last paragraph of paragraph 13 in the CIP/FTL Partnership Document indicates (as set out above), the amount of ‘upside’/economic benefit was to be decided on a transaction-by-transaction basis. That was further addressed, Mr Blackwood pointed out, in a document entitled FTL/CIP Strategic Alliance (the ‘FTL/CIP Strategic Alliance Document’) from February 2017, which, although expressed to be a draft, FTL contends reflected FTL and Munich Re’s understanding of the existing relationship between them, in particular as to remuneration for ‘upside’ transactions. The FTL/CIP Strategic Alliance Document stated as follows (under the heading “Sharing Value”):

“The Parties will endeavor to share the value created on each deal. This sharing will be determined on a project by-project basis when the project is evaluated using the Balanced Scorecard. The value may be determined as an estimate of future value, or a final, realized, actual value received. Whether the sharing is based on future projected or estimated value, or actual value realized, will be determined by the Parties at the time.

Based on the calculated value, and the Parties preferences, the Parties will agree to appropriate transfer payments between them Parties, if any is required, so as to effect an appropriate sharing of the value created.

If value is created and to be shared, the Parties will first determine any outstanding costs associated with the project and those costs will be paid to each Party before value is determined and shared.

…

Examples

The following examples of past deals serve to illustrate how the Alliance is intended to operate.

Deals generated by CIP, with FTL assistance, and with value accruing solely to CIP

Examples include GSK, Bosch, BAE, etc.

As these are CIP deals, and FTL does not participate in the value being created, the Parties will estimate the value being created and determine an appropriate way to share that value, commensurate with the value contribution. This may be through a fixed fee to FTL, or some other manner that is mutually agreeable.

Deals generated by FTL, with value accruing solely or primarily to CIP

Examples include: Equidate, Reterro

As these are FTL-generated deals, but FTL does not participate in the value being created, the Parties will estimate the value being created and determine an appropriate way to share that value.

Absent any other agreement, the value will be shared equally between the two Parties when it is paid to CIP. For purposes here, value creation does not include the direct underwriting cost of a policy, but does include any desired return to shareholders (ie profit)”.

It is against this background that, as previously noted, FTL brings two sets of claims: the ‘Services Claim’ and the ‘Transactional Claims’.

The Services Claim is concerned with the period after 30 September 2016, when the Collaboration Agreement extension had come to an end, FTL’s case being that Munich Re continued to request services and FTL agreed – through conduct - to provide services until 13 April 2017, when Mr Wettemann of Munich Re stated that Munich Re had reached the conclusion “to discontinue our discussion about a reissue of the CV”. On that basis, monies are said to be due either on the basis of an implied agreement arising through the parties’ conduct on the same terms of the Collaboration Agreement, or by way of quantum meruit.

As for the Transactional Claims, these are said by FTL to arise out of the CIP/FTL Partnership Document as supplemented by a document that FTL put forward in January 2017 and which was modified in February 2017 by the FTL/CIP Strategic Alliance Document as reflecting FTL and Munich Re’s understanding of the existing relationship between them, and the conduct of the parties when working with, inter alia, Equidate. FTL contends that the CIP/FTL Partnership Document contained binding contractual terms between FTL and Munich Re, alternatively that Munich Re accepted and/or became bound to the terms of the CIP/FTL Partnership Document by conduct, including in respect of the ‘upside’ transactions, on the basis that it worked together with FTL on Equidate and at least one further ‘upside’ transaction, namely the Reterro transaction.

FTL’s case is that a “successful transaction” (the phrase used in the CIP/FTL Partnership Document) which triggered FTL’s share in any ‘upside’ fell to be construed as including a transaction in which the company went public in an IPO, with the IPO date constituting a “successful transaction”. FTL maintains that the provision of its skills, effort and knowhow in designing and redesigning Equidate policies allowed Munich Re to gain access to substantial amounts of Equidate Confidential Information, in particular its quarterly transaction reports, which gave (for an insurer) unparalleled access into the otherwise confidential financial position of a private company such as Equidate as well as details about its trajectory.

Mr Blackwood highlighted in this connection the emails attaching the quarterly transactions which came from Equidate to FTL Risk Innovations which were then passed on to Munich Re. The quarterly transaction reports listed by name each transaction that took place on Equidate’s secondary market (its business being the sale of shares in companies which would otherwise not be available or were restricted in some way). That, FTL says, allowed Munich Re to decide whether to make investments into a target company such as Equidate, which was the purpose of the relationship between the parties.

FTL alleges that Munich Re made investments in Equidate in 2018 and 2019 using FTL’s knowhow without accounting to FTL for its share of the ‘upside’. Munich Re admits that it made investments through Munich Re Ventures LLC (‘MRV’, a wholly owned subsidiary of Munich Re) in 2018, 2019 and 2020. In March 2022, Equidate completed a successful IPO. FTL’s case is that Munich Re’s (or MRV’s) investment into Equidate was, as a result, a “successful transaction” at the IPO date, and so that FTL was entitled to a share in the ‘upside’ arising out of that successful transaction.

Accordingly, FTL alleges that: (i) Munich Re was obliged to transfer or direct the transfer of FTL’s 50% share of the ‘upside’ to FTL by Equidate’s IPO date at the latest and/or could or should have realised FTL’s 50% share on the day that Equidate became subject to the IPO, with FTL giving credit for Munich Re’s initial capital investment, and/or that Munich Re’s failure to do so caused FTL loss and damage; (ii) Munich Re holds 50% of the ‘upside’ (whether as a monetary sum or shares or the traceable proceeds thereof) on trust for FTL and Munich Re has either failed to account to FTL in respect of this, and/or FTL is entitled to an order that Munich Re convey the trust property and/or the traceable proceeds thereof to FTL; (iii) that FTL is entitled to a quantum meruit for the Equidate transaction; and (iv) that Munich Re is liable for trade secret misappropriation under California law.