This summer, the courts argued in two cases over the importance of certain status quo agreements – Russell v Stone and Muduroglu against Stephenson Harward. We examine the common pitfalls that the parties should be following in the management of status quo agreements. The agreement is reached by those who want to preserve things as they are. The second scenario involves claims against third parties. Defendants must be careful before entering into status quo agreements with the applicants, without their knowledge of the claim, if they are entitled to a third party that cannot be invoked under the Civil Liability (Contribution) Act of 1978. They may find themselves in an impossible situation if they are unable to convince the third party to enter into a no-return agreement, as happened in Nomura International Plc/Granada Group Ltd. It is an abuse to deprive an accused of a narrow defence by issuing a trial in which the application cannot be properly formulated and has no intention of advancing the complaint. A status quo agreement is an agreement between all parties to maintain the current state of affairs, including the suspension or extension of a statutory or contractual statute of limitations. The decision to extend or suspend (or refuse) a statute of limitations may have significant practical effects that should be fully considered. The agreement must (i) reflect the appropriate parties, including all parties to the dispute, and (ii) all claims or cases that are the subject of litigation. Parties should consider whether to take a broad or narrow approach. In the case of the status quo agreement, trading strategies can be useful even after the contract is signed – to make the most of the overtime window and make decisions in the best interests of the company or an individual. A status quo agreement can be granted to the applicant`s position with respect to the restriction, either by suspending the time limit or by extending it.
Where the status quo agreement has the effect of suspending the period, the applicant has the same time to assert his rights as at the date of the agreement at the end of the status quo period. If the status quo agreement only extends the period, the applicant must initiate proceedings at the end of the status quo period. One of the most important conditions for a status quo contract is the “extension” of a period and not just its “suspension.” This is particularly the case for agreements to extend the statute of limitations. In Russell, the parties did not understand the structure and intent of the practical law proposition. The proposal suspends the limitation period, so that the parties are in the same position as they were when they entered into the agreement at the end of the status quo period. If they had one month before the statute of limitations expired, they would still have one month at the end of the status quo period. In the case of the applicants, for example, they had one month from the six-year limitation period during which they had entered into the status quo contracts, a one-month period during which the third status quo agreement had expired, a one-month period. In the case of the defendant, the period for the opening of the proceedings had expired at the end of the third status quo agreement (i.e. November 30, 2016).