Banca Generali S.P.A. v CFE (Suisse) SA
| Jurisdiction | England & Wales |
| Judge | Mr Justice Richards |
| Judgment Date | 16 January 2023 |
| Neutral Citation | [2023] EWHC 323 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: BL-2022-000444 |
[2023] EWHC 323 (Ch)
Mr Justice Richards
Case No: BL-2022-000444
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
The Rolls Building
7 Rolls Building
Fetter Lane
London EC4A 1NL
Mr A De Mestre KC and Mr A Rose (instructed by Mayer Brown International LLP) appeared on behalf of the Claimant/Applicant
Mr J Goldring KC and Mr H Phillips (instructed by Macfarlanes LLP) appeared on behalf of the Defendants/Respondents
SUBSTANTIVE JUDGMENT
This application arises out of a mandatory injunction made by Falk J (as she then was) (the “Judge”) on 15 June 2022 (the “Order”). The Order contained a penal notice. Paragraph 1 of the Order was covered by the penal notice and provided as follows:
“As soon as is practicable and in any event by no later than 4pm on 17 June 2022 the Defendants shall provide to the Claimant the following documentation in respect of each of the Receivables specified in Schedule 1 of this Order: a copy of each of the transactional documents which constitute those Receivables including (insofar as may be applicable to each Receivable) loan agreements and any amendments thereof, guarantees including from any Export Credit Agency or insurer, indemnities, promissory notes, any security documents, and letters of credit.”
Paragraphs 2 and 3 contained an order in substantially similar terms, also covered by the penal notice, but specifying deadlines of 30 June 2022 and 10 July 2022 in relation to different “Receivables” specified in Schedules 2 and 3 respectively.
The question of interpretation is as to the extent of the phrase “transactional documents which constitute those Receivables.” The parties' respective positions on the meaning of that phrase can only be understood in light of the background leading up to the making of the Order.
Proceedings leading up to the Order
The background and reasoning leading up to the Order is fully set out in the Judge's reserved judgment (the “Judgment”). I will summarise some of the key points with references in this judgment to numbers in square brackets being to paragraphs of the Judgment unless I specify otherwise.
The Claimant's clients are holders of the senior notes (the “Notes”) in four securitisations known as Trade Finance I, II, III and IV (“TF I” to “TF IV”). The Notes were issued by the Second Defendant (“SCO”). The principal and interest on the Notes is to be paid out of receipts generated by underlying receivables (the “Receivables”). At a high degree of generality and leaving aside points of detail for the time being, SCO acquired rights in respect of Receivables from the First Defendant (“CFE”). The nature of that acquisition and the precise rights that SCO acquired are complicated and will feature later in this judgment, since they relate to the question of construction I must determine.
SCO is incorporated under Luxembourg law and was able to allocate the rights in respect of Receivables that it acquired from CFE to separate compartments which were segregated from each other. Rights associated with the TF I securitisation were allocated to a separate compartment from those associated with TF II and so on.
The Claimant has contractual and regulatory obligations to its clients that require it to provide them with periodic valuations of the Notes. It considered that to discharge these obligations it needed to be able to value the securitised assets out of which cash flows on the Notes were to be paid. To do that, it needed to receive information from the Defendants.
The Defendants had contractual and regulatory obligations to provide information to the Claimant but the Claimant became concerned that the documents and information the Defendants were providing were insufficient to enable the Claimant to meet its own contractual and regulatory obligations. Ultimately, it made an application to the Court for a mandatory injunction requiring the Defendants to provide it with documents. It based its claim on Clause 12 of the Fiscal and Calculation Agreement for TF II and Clause 12 of the Intercreditor Agreements for TF III and TF IV. Although set out in different documents, these clauses were in substantially similar terms and therefore the Judge referred to them by the generic label “Clause 12” and I will do the same. Ignoring immaterial differences between different versions, Clause 12 provided as follows:
“Each Party shall, within ten Business Days of a written request by another Party, supply to that other Party such forms, documentation and other information relating to it, its operations, or the Notes as that other Party reasonably requests for the purposes of that other Party's compliance with Applicable Law…”
The Claimant was therefore seeking an emergency mandatory injunction requiring the delivery of documents pursuant to Clause 12. That was expressed to be by way of interim remedy pending clarification of the Claimant's precise contractual entitlement on a Part 7 claim issued just before the Claimant's application to the Court. However, the Judge reasoned ([57] to [59]) that granting a mandatory injunction would give the Claimant substantively the whole relief it sought and so performed a more detailed analysis of the merits than might otherwise have been necessary in connection with other types of interim relief.
The Judge concluded to a “high degree of assurance” ([73] to [77]) that the Claimant did indeed have regulatory obligations to provide its clients with information on the value of underlying assets (to use a neutral expression). The Judge concluded to a “high degree of assurance” that Clause 12 required the Defendants to provide documents relating to the securitised assets (again using a deliberately neutral term), and that the Claimant's wish to obtain those documents in order to meet its obligations to its own clients would be for the purposes of compliance with Applicable Law ([83] to [88]).
At [91], the Judge concluded that documents the Claimant was seeking were “reasonably requested” for the purposes of Clause 12. At paragraphs [94] and [95], the Judge made some comments on the scope of the Claimant's request, to which I will return.
It was that process of reasoning that led the Judge to make an order requiring the Defendants to provide documents. She considered at [104] whether it was appropriate for the order to contain a penal notice and concluded that it was. Accordingly she made the Order which contained the paragraphs 1, 2 and 3 that I have mentioned above.
Events subsequent to the Order
At a high level of abstraction, the TF I to TF IV securitisations involved SCO acquiring Receivables that were expected to generate the cashflows necessary to enable SCO to pay principal and interest on the Notes. The process of the Defendants providing documents pursuant to the Order resulted in a focus on precisely what rights SCO had in relation to the Receivables and how it acquired them. That focus demonstrated that a reference to SCO “acquiring Receivables”, while accurate at a high degree of generality, risked glossing over some detail. There are competing assertions as to when the Claimant knew about this additional complexity, or should have known about it. I do not need to resolve that disagreement and simply record the actual position which is as follows.
In short, the process by which an asset was created and ultimately came to be held by SCO was more complicated than the phrase “acquisition of Receivables” might suggest. Mr Piunti, the managing director of CFE, described the process in his second witness statement as follows:
a. Interests in Receivables are first acquired by CFE in one of two ways: by direct acquisition or by sub-participation.
b. In the case of direct acquisition, CFE acquires a direct interest in a Receivable from a third party. How those interests are acquired by and transferred to CFE depends on the nature and the type of the Receivable concerned. It may involve a Loan Market Association (“LMA”) trade confirmation, a deed or a contract of assignment, or an endorsement on a promissory note. Other documents may also be generated as part of the transfer process, such as transfer certificates and SWIFT confirmations.
c. In the case of a sub-participation, an intermediary acquires a direct interest in a Receivable. That intermediary is typically Silverton Invest Limited and so I will use the expression “Silverton” to...
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Sharon Barnard v Gwendolyn Ruth Brandon
...authority to which I was referred on the proper approach to the construction of court orders, was my own judgment in Banca Generali SPA v CFE (Suisse) SA and another [2023] EWHC 323 (Ch). All parties were agreed that I should follow the approach set out in paragraphs [18] to [22] of that j......