Pandora Jewellery v EML Payments: when breakage payment clauses mean what they say

The High Court has handed down a significant commercial judgement on the construction of gift card programme agreements, confirming that a payment services provider was entitled to retain expired card funds following termination of a long-running retail partnership.

In Pandora Jewellery UK Limited & Anor v EML Payments Europe Limited [2026] EWHC 1047 (Comm), His Honour Judge Baumgartner, sitting as a Judge of the High Court, granted reverse summary judgement in favour of EML Payments Europe Limited and dismissed the cross-application brought by the Pandora entities. The case turned on the proper construction of a written agreement dating from 2011, under which EML had operated a gift card scheme for Pandora's UK stores and, from 2020, for its Irish business.

The Agreement, amended seven times over its lifetime, expired on 31 March 2024. Throughout the term, EML had remitted so-called "Expired Funds" — unspent balances on cards past their expiry date — to Pandora as "Breakage Payments" under Fee Schedule D. A final payment was made on 18 April 2024 in respect of funds accrued before expiry. When Pandora queried the absence of further payments in September 2024, EML took the position that its obligation had terminated with the Agreement, and that it was contractually entitled to retain any Expired Funds arising during the subsequent Transition Period and Run-off Period.

Pandora disagreed, arguing that Sections 7.3 and 7.4 of the Agreement — which provided for continued operation of "Articles 2 through Article 5" during run-off — kept alive EML's obligation to pay Expired Funds until all Card Accounts reached a zero balance. A trust claim was advanced as an alternative basis for recovery.

The court rejected both limbs of Pandora's case. On construction, the judge held that whilst Section 2.2.g of the Agreement might, read in isolation, suggest an unqualified entitlement to Expired Funds, it did no such thing. The provision expressly conditioned any payment obligation on the Breakage Payment regime set out in Fee Schedule D. That schedule defined the "Breakage Payment Period" as running only from the Programme Commencement Date "through the termination of this Agreement" and stated in terms that "Breakage Payments will terminate upon termination of this Agreement."

Applying well-established principles — including the primacy of specific provisions over general ones and the need to give effect to all parts of a contract — the judge concluded that Section 7.4's survival mechanism preserved the operative machinery of Section 2.2.g during run-off, but did not alter its substantive content. The temporal limitation in Fee Schedule D remained intact. The Claimants' reading would have rendered both the defined Breakage Payment Period and the express termination clause entirely otiose.

The court was equally unpersuaded by the submission that commercial common sense compelled a different result. Citing Arnold v Britton, the judge reaffirmed that a court should be slow to reject the natural meaning of a provision merely because it appears commercially imprudent for one party. The Agreement was detailed, had been negotiated and amended by sophisticated parties on multiple occasions, and used clear language.

On the trust question, the Quistclose trust argument failed on two grounds. First, the express terms of Section 2.2.g authorised EML to receive Expired Funds from the Programme Account in its own right; once received, the trust was discharged. Second, the Agreement's overall architecture — treating Expired Funds as the subject of a defined contractual payment obligation rather than as the Claimants' property held for return — was inconsistent with any continuing proprietary claim.

The judgement illustrates the importance of clear drafting in payment services agreements, particularly where post-termination entitlements are concerned. Survival clauses that preserve operative provisions during wind-down periods will not be read as expanding the substantive scope of those provisions. Where a payment obligation is expressly limited to a defined period, that limitation survives unless the parties have clearly provided otherwise.