Is breaking off negotiations with CPR even possible?

The takeover of the Isla refinery by CPR is still subject to a transaction by local bank MCB and the Central Bank, which must grant a permit due to the large dollar transaction, according to Pisa. The fact that there are falsified financial documents submitted by CPR is no reason for the Prime Minister to panic. If something really does go wrong, Pisas will not hesitate to break off the process with CPR himself. The question is whether this is even possible.

The first follow-up question in these types of cases is whether an agreement has already been reached. This is not likely to be the case. Often, no agreement has yet been reached on the content of the agreements or the conclusion of the agreement is dependent on conditions. If there is no agreement, the terminating party still runs the risk of having to pay compensation for the costs incurred by the other party in such a preliminary phase of negotiations.

Initially, each party is free to break off negotiations. This is only different if one party could legitimately trust that an agreement would be reached or if circumstances entail that there is a 'good reason' to break off negotiations. In the case of the aforementioned situations, the contracting party that is confronted with broken off negotiations can use a number of remedies in the preliminary phase, such as claiming lost profit (positive contract interest), compensation for costs incurred (negative contract interest) or continuing the negotiations (performance).

From a recent ruling by the Arnhem-Leeuwarden Court of Appeal (ECLI:NL:GHARL:2021:11869) it appears that there may even be a warning obligation for the terminating party. This warning obligation means that the terminating party should have indicated during the negotiations that there is no agreement on the content of the agreement and that the costs incurred and yet to be incurred remain at their own expense and risk. Parties are therefore well advised to continue to communicate clearly with each other, even before the signatures have been placed.