Blog: Supreme Court heralds new approach to restrictive covenants – Scottish Legal News

Fiona Caldow and
Gareth Hale

Fiona Caldow and Gareth Hale consider a recent decision by the Supreme Court on restrictive covenants in restraint of trade.

In Peninsula Securities Limited v Dunnes Stores (Bangor) Limited [2020] UKSC 36the Supreme Court upheld the terms of a lease, finding that a restrictive covenant provided by a landlord of a shopping centre to an anchor tenant did not engage the doctrine of restraint of trade.

The restrictive covenant did not therefore have to be shown to be reasonable in order to be enforceable. In reaching this conclusion, the Supreme Court departed from previous case law, abandoning the “pre-existing freedom” test in favour of consideration of whether the covenant is of a type that has become commercially acceptable and thus can be considered to satisfy the test of public policy.

The leading case in relation to covenants in restraint of trade had been Esso

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