Unik Bond SA v Catbalogan Holdings SaRL [2025] EWCA Civ 1594

[2025] EWCA Civ 1594

Case No CA-2025-002690

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

FINANCIAL LIST (ChD)

Mr Justice Fancourt

FL-2025-000012

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 09/12/2025

Before

LORD JUSTICE LEWISON

LORD JUSTICE ARNOLD

LORD JUSTICE MILES

Between

UNIK BOND S.A.Appellant

CATBALOGAN HOLDINGS S.à R.L.Respondent

Graham Brodie KC (instructed by Gherson Solicitors LLP) for Appellant

Anna Boase KC and Joyce Arnold (instructed by Clifford Chance LLP) for Respondent

Hearing Hearing date: 04/12/2025

Approved Judgment

This judgment was handed down remotely at 10.30am on 09/12/2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

.............................

The issue

[1]The issue on this appeal is whether UNIK Bond SA (“the Appellant”) was entitled to bring proceedings in the Tribunal de Commerce in Paris challenging steps taken to enforce liabilities under bonds. The claim form was issued on 11 June 2025; an expedited trial was heard on 7 and 8 October 2025, and Fancourt J gave an impressive judgment with equal expedition on 16 October 2025. He held that the Appellant had given up that right on the true interpretation of an agreement dated 11 November 2024 (“the Additional Agreement”) to which the Appellant was a party. His judgment is at

[2025] EWHC 2673 (Ch)

[2]On this appeal the Appellants were represented by Mr Brodie KC. He did not appear below and was not the author of the skeleton argument. Although he did not formally abandon any of its contents there were some arguments in it which he did not press. The focus of his submissions also differed considerably from those advanced in the skeleton argument. Nevertheless, it will be necessary, in due course, to deal briefly with the arguments advanced in the skeleton argument. The judge’s judgment must be read in the light of the way the case was argued before him. Whereas the argument below and the skeleton argument for this appeal focussed on clause 5 (a) of the Additional Agreement, Mr Brodie directed most of his attention in oral submissions to clause 5 (d). I quote both these clauses below. Ms Boase KC represented the Respondent.

The facts

[3]The bonds were issued by two companies: Hotel de Mandelieu La Napoule S.à.S. (“the Company”) and its parent, Poséïdon Hospitality S.à R.L. (“the Parent”). The Appellant and Financière Luminaire S.à R.L. (“FL”) were each entitled to 50 per cent of the shares in the Parent. The original subscriber and bondholder was Regera S.à R.L. (“Regera”). Although in dispute below, it is now no longer in dispute that the Respondent is the transferee of Regera’s rights under the bonds. The bonds are governed by French law, and the Tribunal de Commerce in Paris has exclusive jurisdiction to determine disputes arising under them. By an agreement made on 7 March 2023 both the Parent and the Appellant provided security for the debts created by the bonds. The security consisted of: i) A share pledge agreement (“the Lux Share Pledge”), governed by Luxembourg law, by which the Appellant and FL pledged all the shares in the Parent to Aether Financial Services (“Aether”), the administrative agent and security agent for the bonds. There is an exclusive jurisdiction clause in favour of the courts of Luxembourg. ii) A receivables pledge agreement (“the Lux Receivables Pledge”), governed by Luxembourg law, by which the Appellant and FL pledged receivables owed by the Parent to Aether. Again, there is an exclusive jurisdiction clause in favour of the courts of Luxembourg. iii) A fiducie agreement (“the Fiducie”), governed by French law, under which the Parent transferred its shares in the Company to Aloe Private Equity (“Aloe”), as trustee of a trust that was created as security for the obligations of the Company and the Parent under the bonds and for other loans by the Appellant to the Parent. There is an exclusive jurisdiction clause in favour of the Tribunal de Commerce in Paris.

[4]On the same date, the Company, the Parent, Regera, the Appellant, FL and Aether entered into an Intercreditor Agreement, governed by English law. The Intercreditor Agreement contained a number of definitions to which I will refer as necessary.

[5]The Lux Share Pledge was enforceable, following an Event of Default, in a number of ways. First, under clause 6.1(c) the pledgee was entitled to exercise voting rights attached to the shares. Second, under clause 8, the pledge was enforceable either(a) by the sale of the pledged shares on commercial terms or through a stock market or

(b) by the appropriation of the shares at a fair value as determined by an independent valuer from one of the firms specified in the Lux Share Pledge. Under clause 6 of the Lux Receivables Pledge, following an Event of Default, the pledgee was entitled to receive the principal and interest paid or to be paid by the Debtor. Under clause 8 it was enforceable in a similar manner to the Lux Share Pledge (i.e. by sale or appropriation). The rights of enforcement under clause 8 in each pledge (but not those under clause 6) were, however, subject to clause 10.1 (b) of the Intercreditor Agreement. The Lux Share Pledge and the Lux Receivables Pledge were each a “Luxembourg Transaction Security” as defined by the Intercreditor Agreement. Clause 10.1 (b) of the Intercreditor Agreement provided that “the Instructing Group shall refrain from instructing the Security Agent to enforce a Luxembourg Transaction Security unless any Luxembourg Security Enforcement Event has occurred and is continuing”. A “Luxembourg Security Enforcement Event” was itself defined. The precise terms of the definition need not concern us, except to observe that it created a higher hurdle to enforcement than a mere event of default.

[6]Ms Boase submitted, correctly in my view, that there was a hierarchy of security. Enforcement of the two Lux Pledges were what she described as the “nuclear option,” which would have the effect that the Appellant would no longer be shareholder in the Parent, and would no longer be a creditor of the Parent. Whatever rights under the Fiducie it might retain following enforcement of the two Lux Pledges were of very limited economic value.

[7]The bonds became immediately due and payable on 6 September 2024 but were not repaid. This was an event of default under the terms of the bonds. Aether on behalf of itself, Regera and FV Debt formally reserved their rights by letter dated 12 September 2024 but allowed the Company and the Parent further time to refinance. It was not, at that stage, alleged that a Luxembourg Security Enforcement Event had occurred.

[8]On 11 November 2024, the Company, the Parent, the Appellant, Aether and FV Debt entered into two further written agreements, governed by English law, that are the relevant contracts to be interpreted. The first was the Standstill Agreement; and the second was the Additional Agreement. It is to be noted that FL (which, as stated, owned 50 per cent of the shares in the Parent) was not a party to the Standstill Agreement. The Standstill Agreement was originally intended to last until 2 December 2024, but on 16 January 2025 the period was extended and amendments to the Additional Agreement were made. The period of standstill was subsequently extended again; and it ultimately expired on 14 March 2025. Despite the expiry of the Standstill Agreement (and the fact that the debts due under the bonds had not been repaid), no enforcement action was taken at that time. But on 13 May 2025, Aether sent letters to the Company, the Parent and the Appellant reserving the finance parties' rights and confirming that they were prepared to forbear to enforce their rights until 23 May 2025, with no expectation of further delay. On 27 May 2025, Aether issued a demand notice, declaring all sums under the bonds to be due (though this was strictly unnecessary) and requiring payment by 10 am on 28 May 2025. Payment was not made by that date.

[9]On 28 May 2025 Aether issued a notice of enforcement, giving notice that the Lux Share Pledge and the Lux Receivables Pledge had been enforced. The shares in the Parent were appropriated to the Respondent and immediately sold to Seaside Serenity Holding B.V. Aether also gave notice to Aloe, on behalf of the Respondent, that a Triggering Event had occurred under Article 12.1(a)(ii) of the Fiducie and, exercising its voting rights to the shares of the Company, Aloe wrote to Mr Kadi dismissing him as President of the Company with immediate effect and appointing Mr Burgio as replacement.

[10]With the permission of the Tribunal de Commerce in Paris, the Appellant began proceedings in that tribunal on 5 June 2025. In those proceedings the Appellant asserts that(a) no eﬀective assignment of rights to the Respondent under the Fiducie had been made because there had not been compliance with clauses 4.2 and 18.3 of the Fiducie and there had been a change of control over Claimant on 7 May 2025 which had not been notiﬁed to it;

(b) the Demand made under the bonds was contrary to the obligation of good faith under Article 1104 of the French Civil Code and, therefore, invalid;

(d) the steps which the Respondent had taken/was seeking to take with respect to enforcement were not permitted under the terms of the Fiducie and, therefore, unlawful.

[11]We are not concerned with the merits of the Appellant’s assertions in the Tribunal de Commerce. Rather, the question for us (as it was for the judge) is whether the Appellant gave up the right to challenge actions taken in enforcement or purported enforcement of the securities for the bonds. The answer to that question depends on the interpretation of the Additional Agreement.

The context in which the Additional Agreement was made

[12]The relevant context is set out in the recitals to the Standstill Agreement. They record that payment events of default were continuing in respect of the bonds because both the Parent and the Company had failed to redeem their bonds on the maturity date. The Parent and the Company had requested the bondholder to enter into the Standstill Agreement to provide a limited period for the Group to conclude a refinancing transaction so as to be able to redeem the bonds in full. By clause 3.1 the bondholder agreed not to take enforcement action during the standstill period unless action had been agreed in writing by the Company Parties (i.e. the Appellant, the Parent and the Company).

[13]The Additional Agreement was made in return for the bondholder’s agreement not to take enforcement action during the standstill period as recital (D) made clear:

“The parties to this Agreement (Parties) acknowledge that on or about the date of this Agreement they entered into a separate standstill agreement (the Standstill Agreement) and confirm that the acknowledgments and undertakings contained in this Agreement are given in consideration for the accommodations provided by the Bondholder and the Agent in the Standstill Agreement”

The terms of the Additional Agreement

[14]Clause 4 of the Additional Agreement is headed “Creditworthiness”. It provides:

“The Company Parties [i.e the Company, the Parent and the Appellant] agree and acknowledge that the Parent and the Company: (a) failed to redeem the Bonds on their respective Maturity Dates and therefore that Events of Default are continuing under (among others) clause 21.1 (Non-Payment) of the T1 Terms and Conditions and clause 20.1 (Non-Payment) of the T2 Terms and Conditions; (b) have suspended making payments on certain of their debts, including in relation to the Bonds; and (c) but for the terms of the Standstill Agreement and unless the Bonds are redeemed in full prior to the termination of the Standstill Agreement, are unable to pay their debts as they fall due, including in relation to the Bonds”

The judge recorded the following common ground at [39]:

“It is not disputed that this important clause creates, and is intended to create, a contractual estoppel in relation to the past and continuing events of default, the current inability of the Company and the Parent to pay their debts as they fall due, and (unless full redemption takes place before the end of the standstill period) their future inability to pay their debts as they fall due.”

[16]Clause 1 of the Additional Agreement incorporates defined terms from earlier documents, including the bonds themselves and the Intercreditor Agreement. The significance of the acknowledgments in clauses 4 (b) and 4 (c) was that each was an event that fell within the definition of Luxembourg Security Enforcement Event which would remove the bar (contained in clause 10.1 (b) of the Intercreditor Agreement) to the unilateral enforcement of such securities as were governed by Luxembourg law (i.e. the Lux Share Pledge and the Lux Receivables Pledge). The overall effect, therefore, was that it was agreed that the Respondent was entitled to push the nuclear button (or would be at the end of the standstill period).

[17]The critical provision is clause 5 of the Additional Agreement. It is headed “Co-operation regarding Enforcement Action.” Clause 5 continues:

“Subject to the terms of the Standstill Agreement, the Company Parties: (a) undertake to co-operate fully with the Bondholder and the Agent in relation to any Enforcement Action they may wish to take at any time (including without limitation any preparatory steps they may wish to take while the Standstill Agreement is in force); (b) agree and acknowledge that the Agent (acting on the instructions of the Instructing Group) may enforce or refrain from enforcing any Transaction Security as the Instructing Group sees fit, including as regards the sequencing of any enforcement steps in respect of any particular secured asset and any decision to enforce part but not all of the security created under any given Security Document; (c) agree and acknowledge that if the Agent (acting on the instructions of the Instructing Group) chooses, at its entire discretion, to enforce the first ranking Luxembourg law governed share pledge agreement dated 7 March 2023 over the shares in the Parent (the Lux Share Pledge) and/or the first ranking Luxembourg law governed receivables pledge agreement dated 7 March 2023 over all receivables owed by the Parent to Unik and Luminare (the Lux Receivables Pledge), it may take the following approach when appointing the "Expert" under clause 8(b) of each of the Lux Share Pledge and the Lux Receivables Pledge: (i) to seek indications from CBRE France, Cushman & Wakefield France and Jones Lang LaSalle SAS (the Specified Real Estate Firms) whether they will be able to provide an independent valuation of the relevant Shares or Receivables (as defined in the Lux Share Pledge and the Lux Receivables Pledge respectively) that are the subject of Enforcement Action or, in the alternative, whether they will be able to provide an independent valuation of the underlying real estate assets held by the Company; and (ii) if none of the Specified Real Estate Firms is able to provide an independent valuation of the relevant assets that are the subject of Enforcement Action, to appoint an independent auditor (reviseur d’entreprises), a reputable investment bank or a sales agent, in each case in its sole discretion, as the “Expert” with a Specified Real Estate Firm (or, if no Specified Real Estate Firm is able and willing to assist, such other valuation firm as the Agent may select in its sole discretion) providing an independent valuation of the underlying real estate assets held by the Company to inform the valuation of the Shares or Receivables (as the case may be); and (d) agree and acknowledge that no Company Party shall contest, or seek to contest or otherwise prevent, the validity of, or exercise by the Agent of its rights under, any Finance Document, including any Security Document, including, without limitation, the approach to the appointment of the “Expert” under the Lux Share Pledge and/or the Lux Receivables Pledge set out in paragraph (c) above, and the Company Parties hereby irrevocably release any rights or claims they may have now or in the future in this regard.”

[18]“Enforcement Action” (which is used in clause 5 (a) but not in clause 5 (c)) is defined by the Intercreditor Agreement. The definition includes “the taking of any steps to enforce or require the enforcement of any Transaction Security.” “Transaction Security” is itself defined as “the Security and Quasi-Security and any equivalent instrument having for purpose to secure performance of any Primary Liabilities which is created or evidenced or expressed to be created or evidenced under or pursuant to the Security Documents”. The “Finance Documents” also include the terms of the Subscription Agreements, the Intercreditor Agreement and the Security Documents itemised in Schedule A to the terms and conditions of the bonds, which include the Lux Share Pledge, the Lux Receivables Pledge and the Fiducie.

[19]Clause 6 of the Additional Agreement is headed “Exercise of rights under security documents”. It provides:

“The Company Parties agree and acknowledge (including without limitation for the purposes of clause 3.1 (Standstill) of the Standstill Agreement) that: (a) because Events of Default are continuing, the Agent (as Pledgee under the Lux Share Pledge) is entitled to exercise, at its entire discretion, the voting rights in relation to the Shares in any manner it deems fit for the purpose of protecting and/or enforcing its rights under the Lux Share Pledge; (b) notwithstanding the terms of the Standstill Agreement, the Agent (on the instructions of the Instructing Group) may wish, during the Standstill Period or otherwise, to exercise the voting rights in relation to the Shares to protect its rights; (c) no Company Party shall contest, or seek to contest or otherwise prevent, the exercise by the Agent of the voting rights in relation to the Shares in accordance with the terms of the Lux Share Pledge and the Company Parties hereby irrevocably release any rights or claims they may have now or in the future in this regard; (d) the Agent (as Pledgee under the Lux Share Pledge) may (during the Standstill Period or otherwise) enforce the security it holds in respect of the Shares exclusively held by Financiere Luminare S.a r.l. in the Parent (the Luminare Shares) only at any time following the occurrence of an Event of Default which is continuing; and (e) the Pledgors (as defined in each of the Lux Share Pledge and the Lux Receivables Pledge) have irrevocably waived any right of recourse, right, action and claim that they may have, whether by way of subrogation or directly or of any other nature, against any Obligor and all or any of the direct and indirect subsidiaries of such Obligor, further to an enforcement of the relevant security by any means whatsoever.”

[20]Clause 11 of the Additional Agreement states that:

“Subject to the terms of this Agreement, the Finance Documents remain in full force and effect.”

[21]Clause 16 of the Additional Agreement conferred exclusive jurisdiction on the courts of England to settle any dispute arising out of the Additional Agreement.

The general approach

[22]The principles upon which courts act in interpreting commercial contracts are well known and need not be set out in any detail. It is enough, for present purposes, to refer to the summary given by Lord Hamblen in Sara & Hossein Asset Holdings Ltd v Blacks Outdoor Retail Ltd

[2023] UKSC 2

[2023] 1 WLR 575

at [29]:

“(1) The contract must be interpreted objectively by asking what a reasonable person, with all the background knowledge which would reasonably have been available to the parties when they entered into the contract, would have understood the language of the contract to mean. (2) The court must consider the contract as a whole and, depending on the nature, formality and quality of its drafting, give more or less weight to elements of the wider context in reaching its view as to its objective meaning. (3) Interpretation is a unitary exercise which involves an iterative process by which each suggested interpretation is checked against the provisions of the contract and its implications and consequences are investigated.”

[23]This is a case in which the contractual documents were drafted by skilled professionals, so textual analysis is likely to be the most weighty consideration.

[24]In its skeleton argument, the Appellant submitted, correctly in my opinion, that the text of the contract included headings to clauses and that, unless the contract provides to the contrary, they may be taken into account in the textual analysis. Nevertheless, a heading will not ordinarily override the operative parts of the clause to which it is a heading, nor will it create an ambiguity where, but for the heading, none would otherwise exist. That said, I found it difficult to see how the headings materially advanced its case; and Mr Brodie did not found any submission on that point.

[25]One more particular principle upon which the court acts is that parties do not normally give up valuable rights without making it clear that they intend to do so. The judge was, of course, well aware of that principle. At [53] and [54] he referred to the judgment of Lord Leggatt in Triple Point Technology Inc v PTT Public Co Ltd

[2021] UKSC 29

[2021] AC 1148

at [108] to [113] and to the summary of principle (approved in Triple Point) by Andrew Burrows QC in Federal Republic ofNigeria v JP Morgan Chase Bank NA

[2019] EWHC 347 (Comm)

, [2019] 1 CLC 207, para 34 (iii):

“Applying the modern approach, the force of what was the contra proferentem rule is embraced by recognising that a party is unlikely to have agreed to give up a valuable right that it would otherwise have had without clear words. And as Moore-Bick LJ put it in the Stocznia case, at para 23, ‘The more valuable the right, the clearer the language will need to be’. So, for example, clear words will generally be needed before a court will conclude that the agreement excludes a party's liability for its own negligence.”

[26]The judge returned to this principle at various points in his judgment, including [56], [61], [65], [74] and [76]. In particular, at [65] he posed the question whether the language of the contract was sufficiently clear to have the effect for which the Respondent contended. The suggestion in the skeleton argument that the judge asked himself the wrong question is without foundation.

[27]Mr Brodie argued that the “clear words” principle applies with particular force in relation to the Additional Agreement. The right which the Appellant is said to have given up is a right to seek protection against illegality in any court or tribunal anywhere in the world. A right of access to a court is a fundamental right: R (Unison) v Lord Chancellor

[2017] UKSC 51

[2020] AC 869

. Lord Reed discussed the constitutional importance of a right of access to the courts at [66] to [85]. That right is inherent in the rule of law and is of value not merely to those who bring their disputes before a court, but to society as a whole. To conclude that the Appellant has agreed by contract to give up that right, the contract must admit of no other meaning. The Additional Agreement lacks the required clarity to justify that conclusion.

[28]In my judgment, this submission sets the bar too high. The Unison case concerned unilateral action by the state to curtail access to the employment tribunal by employees who wished to vindicate their rights, and whose complaints are often of modest financial value. Even in such cases, as Lord Reed explained at [76], a right of unimpeded access to the courts “can only be curtailed by clear words;” and at [79] that the court’s approach is to ask itself “whether the impediment … had been clearly authorised” by legislation. The test is the same: are the words clear enough? Mr Brodie also referred to the right of access to a court guaranteed by

article 6 of the European Convention on Human Rights

[29]This case, by contrast, concerns the true interpretation of a contract freely made. Strasbourg jurisprudence also recognises that parties may, by contract, waive rights under article 6. Freedom of contract is a basic principle of the common law. As Lord Collins put it in Belmont Park Investments Pty Ltd v BNY Corporate Trustee Services Ltd

[2011] UKSC 38

[2012] 1 AC 383

at [103]:

“Despite statutory inroads, party autonomy is at the heart of English commercial law. Plainly there are limits to party autonomy in the field with which this appeal is concerned, not least because the interests of third party creditors will be involved. But, … it is desirable that, so far as possible, the courts give effect to contractual terms which parties have agreed. And there is a particularly strong case for autonomy in cases of complex financial instruments such as those involved in this appeal.”

[30]It is a commonplace that in many contracts parties curtail or even exclude what would otherwise be their right of access to a court. An obvious case in which parties curtail their right to have a dispute decided by the court is a time bar clause which requires any dispute to be notified by one party to the other within a specified time (sometimes with details of the matters giving rise to the dispute). An exclusive jurisdiction clause precludes access to a court other than the court specified in the clause. An arbitration clause also precludes a party from having a dispute decided by the court and may even exclude a right of appeal. Still more so does a clause which provides for expert determination of a factual dispute.

[31]One further example is a situation in which a creditor wishes to settle a dispute with a debtor without imperilling its rights against a surety, or to settle a dispute with one of two jointly liable parties without imperilling his rights against the other. This was traditionally done by a covenant not to sue (as opposed to a release). While the distinction is less important than it used to be, nevertheless a covenant not to sue is not unusual: see Chitty on Contracts (36th ed) paras 20-018 and 20-019. Such a covenant would also exclude the right of access to a court.

[32]An argument along the lines of Mr Brodie’s submission was advanced in Scottish Power UK Plc v BP Exploration Operating Company Ltd

[2016] EWCA Civ 1043

. That case concerned a clause in a long-term gas contract which, at least on one view of its meaning, precluded certain remedies which would otherwise have been available. Counsel for Scottish Power submitted to this court that:

“…the judge had lost sight of the fact that there is a presumption that the parties do not intend to give up rights or claims which the general law gives them: Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689; that clear words are required to exclude or limit that right; and that, since the judge had held that there were two possible meanings, he should have adopted the meaning which did not involve Scottish Power losing what may be very valuable rights – said in this case to amount to up to £85 million.”

[33]Christopher Clarke LJ (with whom Moore-Bick and King LJJ agreed) rejected that submission at [29] in the following terms:

“I do not regard the judge as having fallen into error in this respect. The fact that there are two possible meanings is the beginning of the inquiry, not its end. It is then necessary for the court to apply “all its tools of linguistic, contextual, purposive and common sense analysis to discern what the clause really means” per Briggs LJ in Nobahar-Cookson v The Hut Group Ltd [2016] EWCA Civ 128 [19]. If as a result of so doing the answer becomes clear the court should give effect to it even though the interpretation may deprive a party of a right at law which he might otherwise have had. It is open to parties to make an agreement which has that effect.”

[34]I respectfully agree and reject the argument that the contract must admit of no other meaning. The question is, in the light of the presumption, what does the contract really mean?

What rights did the Appellant give up?

[35]It is plain that by clause 5 the Appellant gave up something. The required clarity of the clause may depend, to some extent, on what the Appellant has given up. As I have said, it is clear from clause 4 that it was agreed that, at the end of the standstill period, the Agent would be able to press the nuclear button and enforce the Lux Pledges. The Appellant’s residual rights were those under the Fiducie. But, as Ms Boase demonstrated, those rights were of very small economic or practical value if, as expected, the Lux Pledges were to be enforced. Mr Brodie declined to give any concrete example of a right which was being given up, arguing simply that the Appellant was said to have given up the right to challenge what he called “illegality” in any court or tribunal anywhere in the world. That may be true, but it does not answer the question whether that right was a valuable one. The Appellant’s skeleton argument gave some examples, but Ms Boase demonstrated that in so far as they concerned to rights granted under the various Finance Documents, they would only arise in far-fetched circumstances; or were rights in connection with the application of the proceeds realised by and following enforcement rather than the process of enforcement itself.

The structure of the Additional Agreement

[36]In its skeleton argument the Appellant placed emphasis on the structure of the Additional Agreement. It argued that clause 6, reflecting its heading, creates a number of contractual estoppels. That in turn suggests that clause 5 was not directed at the waiver or giving up of claims in relation to the purported exercise of rights under any of the security documents: that was the purpose of clause 6.

[37]In my judgment, that suggested dichotomy is too stark. For one thing, clause 6 (c) contains an agreement (in remarkably similar terms to clause 5 (d)) that no Company Party shall “contest or seek to contest or otherwise prevent” the exercise by the Agent of voting rights in relation to the Shares. It is true that clause 6 (c) is limited to the exercise of voting rights; but it goes beyond a contractual estoppel.

[38]Second, both clauses 6 (c) and 5 (d) contain an express waiver of rights, so there is no rigid demarcation between them.

[39]Third, clause 6 is concerned with only two of the Security Documents (namely the Lux Share Pledge and the Lux Receivables Pledge), whereas clause 5 is concerned with “any Enforcement Action” and enforcing “any Transaction Security.”

[40]Fourth, I do not accept that the use of the phrase “agree and acknowledge” simply creates a contractual estoppel. It is important not to let the correct interpretation of a substantive clause in a contract to be dictated by a convenient shorthand label. The force of the word “agree” therefore depends in large part on what is agreed. As

the judge correctly said at [77]:

“Although words such as “agrees and acknowledges” often signify a fact that is intended to take effect only as a contractual estoppel, those words do not necessarily have that effect. Whether they do or not is likely to depend on the substance of the matter stated.”

[41]Thus, in clause 5 (d) what is agreed is that “no Company Party shall contest, or seek to contest or otherwise prevent, the validity of, or exercise by the Agent of its rights under, any Finance Document, including any Security Document.” The word “shall” is not only an imperative but it connotes future conduct. It is, to my mind, clearly a promise about the future, not a statement of things as they were either at or before the making of the Additional Agreement. If anything is misplaced in clause 5 (d) it is the word “acknowledge”.

The judge said at [83]:

“An agreement that something shall not be “contest[ed] or otherwise prevent[ed]” does not, despite the use of the words “agree and acknowledge”, have effect only as a contractual estoppel. It does not only prevent the Company Parties in future from contesting that rights were not validly executed but obliges the Company Parties not to seek to prevent the exercise by the Agent of its rights under any Finance Document. It therefore creates a binding obligation that the Company Parties were to perform.”

[42]I agree.

[43]Fifth, clause 5 (a) plainly goes beyond the creation of a contractual estoppel. It is couched in terms of an undertaking to co-operate.

[44]Mr Brodie did not press this argument in oral submissions.

Clause 5 (d)

[45]As I have said, Mr Brodie concentrated on cluse 5 (d); and Ms Boase accepted that if the Respondent did not succeed on clause 5 (d) it was unlikely to succeed on clause 5 (a). For convenience I quote clause 5 (d) again. By that Clause the Company Parties:

“agree and acknowledge that no Company Party shall contest, or seek to contest or otherwise prevent, the validity of, or exercise by the Agent of its rights under, any Finance Document, including any Security Document, including, without limitation, the approach to the appointment of the “Expert” under the Lux Share Pledge and/or the Lux Receivables Pledge set out in paragraph (c) above, and the Company Parties hereby irrevocably release any rights or claims they may have now or in the future in this regard.”

[46]The obvious means of contesting the validity of some action by the Agent is by contesting that action in court. In the absence of some other agreed dispute resolution mechanism, I find it impossible to give that phrase any other meaning. In the Tribunal de Commerce in Paris the Appellant is seeking to contest the exercise of rights under the bonds and the Fiducie. Yet that is exactly what the Appellant has promised not to do. Not only has the Appellant promised not to contest action by the Agent, it has promised not to seek to challenge such action. There is no temporal limit on either phrase so they both cover challenges whether before or after the action in question. The promise not to “prevent” the exercise of rights is, by contrast, more naturally limited to prevention before the exercise of the right actually takes place.

[47]Nor is there any geographical limitation on the scope of the promise.

[48]Although there was some doubt at the beginning of the appeal, Mr Brodie accepted that the release of rights or claims that the Appellant might have “now or in the future” encompassed the whole of the preceding parts of clause 5 (d), and not merely with that part of the clause dealing with the appointment of the Expert.

[49]Mr Brodie argued that clause 5 (d) of the Additional Agreement would not preclude a challenge to action which is unlawful or could not be described as the “exercise by the Agent of its rights under any Finance Document.” But the Respondent accepts (and the judge agreed) the restriction on challenging action did not, as a matter of interpretation, prevent a challenge to conduct which is fraudulent or dishonest. Nor did it extend to seeking to prevent something that was manifestly not the exercise of rights under a Finance Document as defined at all. But on the facts of this case, neither of those scenarios is in play, so this argument does not undermine the ultimate conclusion to which the judge came.

[50]Mr Brodie stressed the point that the subject matter of the promise related only to the exercise of “rights” under the Finance Documents. If the challenge was that the Agent did not have the right that it purported to exercise, the challenge was not caught by the clause. But that argument led to a bizarre conclusion. Mr Brodie accepted that the likely challenge would be an argument about whether the Agent had the right it was claiming to exercise. If the challenge failed (and the Agent did in fact have the claimed right) then the Appellant would be liable for damages for breach of contract. But the whole purpose of clause 5 (d), in my view, was to preclude such a challenge arising for adjudication. To limit the clause to a liability in damages for a failed challenge would deprive the clause of any real commercial utility.

[51]In addition, this argument overlooks clause 5 (b) by which the Appellant agreed that the Agent might enforce any Transaction Security “as the Instructing Group sees fit”.

The judge said at [74]:

“I cannot accept the argument that any rights conferred on FV Debt and Aether by clause 5(a) were subject to proof by them (and therefore always liable to challenge by the Defendant) that what was done by way of Enforcement Action was or was not lawful. To construe the clause in that way would deprive it of much of its commercial effect, once it is accepted that it extends, as it does, to anything done by the Company Parties after Enforcement Action is taken to attempt to undermine its effect. Although that means that the Company Parties were giving up their rights of recourse to the court to adjudicate on the lawfulness of what FV Debt or Aether might do, both the language and the circumstances are sufficiently clear, in my judgment, that that is what was being agreed as the price of giving the Defendant the chance to refinance its subsidiaries' debts.”

[53]I agree.

The obligation to co-operate

(d) The obligation to co-operate

[54]It was argued in the Appellant’s skeleton argument that the obligation to co-operate applied only to inchoate Enforcement Action. Once Enforcement Action had been taken, there was nothing more for the Appellant to do. Thus clause 5(a) did not operate to preclude a challenge to the lawfulness of Enforcement Action once taken. The relevant cooperation is forward looking, viz. it pertains to any particular enforcement step or action proposed by the Respondent before it is taken. If Enforcement Action has already been taken, it does not require the cooperation of the Appellant to bring it about. Co-operation is not required to assist in doing something that has already been done. Moreover, there is nothing illogical about a party agreeing to co-operate with a counterparty as regards enforcement but also retaining a right to challenge the lawfulness of that action.

[55]It was also argued that the judge had given too expansive a meaning to the phrase “co-operate fully”. An obligation to co-operate means that a party agrees that it will do all that is necessary on its part for the purposes of carrying out a particular thing, where that thing cannot be done unless both parties to the contract concur in doing it. An obligation to “co-operate” is not, without more, a negative covenant under which a party agrees not to do certain things; and still less is it the same as a duty to accept without question or to refrain from challenging unilateral action taken by the other party.

[56]This was one argument that Mr Brodie abandoned, rightly in my view. If a party expressly agrees to co-operate fully in achieving result X, that party is, in my view, plainly obliged not to do anything that would impede the achievement of result X. Taking active steps to prevent or undo result X is the very reverse of full co-operation. Any other conclusion would, in my view, be absurd.

The scope of clause 5

[57]What, then, does clause 5 cover?

The judge answered that question at [76]:

“If the Claimant is right, the Company Parties were nevertheless giving up the right to challenge any action by FV Debt or Aether in the course of purported Enforcement Action on the basis that it was invalid formally, or by being a breach of a term of the Finance and Security Documents, or as being unlawful in some other respect. Recognising that clear language is needed for such a conclusion, I do however conclude that that is exactly what was being done, in order for the Company Parties to have a final chance to redeem the bonds. It is a conclusion supported by the other terms of the Additional Agreement, particularly clause 5(d), when properly construed, and the admitted circumstances of the Company Parties at the date when it was made.”

[58]I agree.

Conclusion and result

[59]In Re Portsmouth City Football Club Ltd (in liquidation)

[2013] EWCA Civ 916

, [2013] Bus LR 1152 Mummery LJ (with whom Rimer and Underhill LJJ agreed) posed the question at [36]:

“What sensible purpose could be served by this court repeating in its judgments detailed discussions of every point raised in the grounds of appeal and the skeleton arguments when they have already been dealt with correctly and in detail in the judgment under appeal? No purpose at all, in my view.”

[60]He continued at [38]:

“The proper administration of justice does not require this court to create work for itself, for other judges, for practitioners and for the public by producing yet another long and complicated judgment only to repeat what has already been fully explained in a sound judgment under appeal. If the judgment in the court below is correct, this court can legitimately adopt and affirm it without any obligation to say the same things over again in different words. The losing party will be told exactly why the appeal was dismissed: there was nothing wrong with the decision appealed or the reasons for it.”

[61]Although the focus of the appeal has been on clause 5 (d) rather than on 5 (a), I am content to adopt the judge’s decision on the effect of the Additional Agreement and his reasons for it. I would dismiss the appeal.

[62]I agree.

[63]I also agree.